Strategic Management (Levels of Strategy)

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

Chapter 1

The Strategic Management Process

Strategic Charles W. L. Hill

Management Gareth R. Jones

Fifth Edition

PowerPoint Presentation by Charlie Cook

An Integrated Approach

Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-2

Overview

Why do some firms succeed while others fail? A central objective of strategic management is to

learn why this happens.

What is strategy? An action a company takes to attain superior

performance.

What is the strategic management process? The process by which managers choose a set of

strategies for the enterprise to pursue its vision.


Defining the Mission and Setting Top-Level Goals

External Analysis of Opportunities and Threats

Internal Analysis of Strengths and Weaknesses

Selection of Appropriate Strategies

Implementation of Chosen Strategies

Strategic Planning

Rational planning by top management?

Basic Strategic Planning Model


FIGURE 1.1

The Main Components of the Strategic Planning Process


Mission and Goals

Mission Sets out why the organization

exists and what it should be doing.

Major goals Specify what the organization hopes

to fulfill in the medium to long term.

Secondary goals Are objectives to be attained that lead to superior

performance.


External Analysis

Identify strategic opportunities and threats in the operating environment.

Macroenvironment National

Immediate (Industry)


Internal Analysis

Identify strengths Quality and quantity of resources available Distinctive competencies

Identify weaknesses Inadequate resources Managerial and

organizational deficiencies


Strengths and Weaknesses

Opportunities and Threats(SWOT Analysis)

Strategic ChoiceBusiness

FunctionalGlobal

Corporate

SWOT and Strategic Choice


Business-Level Strategies

Cost leadership Attaining, then using the lowest total cost basis as a

competitive advantage.

Differentiation Using product features or services to distinguish the

firm’s offerings from its competitors.

Market niche focus Concentrating competitively on

a specific market segment.


Functional-Level Strategies

Focus is on improving the effectiveness of operations within a company.

Manufacturing Marketing Materials management Research and development Human resources


Global-Level Strategies

Multidomestic

International

Global

Transnational


Corporate-Level Strategies

Vertical integration

Diversification

Strategic alliances

Acquisitions

New ventures

Business portfolio restructuring


Strategy Implementation

Designing organizational structure

Designing control systems Market and output controls Bureaucratic controls Control through organizational culture Rewards and incentives

Matching strategy, structure, and controls

Congruence (fit) among strategy, structure, and controls

Structure

Strategy

Controls


Managing Strategic Change

The only constant is change.

Success requires adapting strategy and structure to a changing world.

The feedback loop in strategic planning. Corporate

Functional

BusinessOperational


Strategic Managers

General managers Responsible for the overall (strategic) performance

and health of the total organization.

Operations managers Responsible for specific business

functions or operations.


Strategic Managers for All Levels

FIGURE 1.2


Strategic Leadership

Vision, eloquence, and consistency

Commitment to the vision

Being well informed

Willingness to delegate and empower

Astute use of power

Emotional intelligence


Strategy as an Emergent ProcessStrategy making in an unpredictable world

Creates the necessity for flexible strategic approaches.

Strategy making by lower-level managers Strategy evolves through autonomous action.

Serendipity and strategy Accidental discoveries and happenstances can have dramatic

effects on strategic direction.

Intended and emergent strategies Realized strategies are combinations of intended and

emergent strategies.


FIGURE 1.3

Intended and Emergent Strategies

Source: Reprinted from “Strategy Formation in an Adhocracy,” by Henry Mintzberg and Alexandra McGugh, published in Administrative Science Quarterly, Vol. 30, No. 2, June 1985, by permission of Administrative Science Quarterly.


FIGURE 1.4

The Strategic Management Process for Intended and Emergent Strategies


Strategic Planning in Practice

Planning under uncertainty Scenario planning for dynamic environmental change

Ivory tower planning Lack of contact with operational realities The importance of involving operating managers Procedural justice in the decision-making process

Engagement, explanation, and expectations

Planning for the present: Strategic Intent Recognition of the static nature of the strategic fit model Strategic intent in focusing the organization on winning by

achieving stretch goals


Improving Strategic Decision MakingCognitive biases systematically influence the rationality of decision makers.

FIGURE 1.5


Groupthink and Strategic DecisionsPitfalls of groupthink

Failing to question underlying assumptions. Coalescing around a single person or policy. Filtering out conflicting information. Developing after-the-fact rationalizations. Having an emotional (nonobjective)

commitment to an action.


Techniques for Improving Decision MakingTwo decision-making processesthat counteractcognitive biases and groupthink.

FIGURE 1.6

Strategic Management (Levels of Strategy)

Documents

Transcript of Strategic Management (Levels of Strategy)