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Introduction to Strategic Management

Successfully formulate and implement value-creating strategy
Based on (sustainable) competitive advantageTo earn above-average returnsTo create value for stakeholders


Strategic Management Process
Strategic Inputs: Internal and External ScanningStrategic Actions: Formulation and implementation of strategyStrategic Outcomes: Above, at or below average returns


From Organizational Vision to Tactical Steps
Define the Organization:
Vision

Mission Statement
Understand the Operating Environment
External Environment (Threats and Opportunities)

Internal Conditions (Strengths and Weaknesses)
Determine Strategic Alternatives Formulate Strategy (long term)Implement Strategy through Tactics (short term)


SWOT Analysis

External Analysis EFAS Matrix (Chapter 3)

Internal Analysis - IFAS Matrix (Chapter 4)

Strategy Implementation

Organizing (Chapter 8)

Staffing (Chapter 9)

Evaluating (Chapter 10)

Strategy Formulation

Alternative Strategies TOWS Matrix (Chapter 5)

Corporate Strategy (Chapter 6)

Functional Strategy (Chapter 7)


The New Competitive Landscape

The Global Economy
Movement of goods, services, capital/financing, technology and innovation, information, and people across borders



The Global Economy

Competitive Implications
Managing supply and logistics (raw materials, components manufacturing, assembly, distribution)Adaptation-standardization decisions in management practices and marketing programs



Technology and Technological Change
Increasing Rate of ChangeIncreasing Rate of Diffusion
Impact of Technology Convergence.Application of Nanotechnology.



Information Intensity
Declining costsIncreasing accessibility
Knowledge Intensity (Information, Intelligence, Expertise)
Increasing proportion of shareholder valueStrategic Flexibility, Capacity to Learn & Reorient



Information and Knowledge Intensity

Knowledge management systems (SAP)Control versus flexibility (strategic alliances)


Mission of Firm

Clearly articulate 3-5 year plan of firm

Identify:
The industry(ies) it wishes to participate inHow it wishes to participate
Marketing mix (product, price, place, promotion

Customer wants and needs it will serve

Position it will hold in its chosen markets


Mission is:

What is the ultimate accomplishment goal for the firm?

Usually stated in the eyes of the customers and key stakeholders

How it is achieved (core competencies of the firm)


Examples of Vision and Mission Statements
Vision: S C JohnsonMission Statement: Proctor & GambleDilberts Mission Statement Generator


Triggering

events
New CEOExternal interventionThreat of change in
ownership
Performance gapStrategic inflection point
Stimulus

for change

in

strategy

What leads to a formulating a new strategy?


Strategy: Levels and Dynamics
Corporate: general perspective towards growth and management of various business units, product lines, functional areasBusiness: Strategic Business Units (SBUs), focus on improvement of competitive position of products and servicesFunctional: focus on marketing, R & D, etc. to achieve SBU and overall corporate objectives.


Corporate goals and objectives include:
Profitability (net profits)Growth (increase in total assets, etc.)Utilization of resources (ROE or ROI)Market leadership (market share)


Intended Strategy

Deliberate Strategy

Unrealized Strategy

Emergent Strategy

Realized Strategy


The Importance of Stakeholders

Capital Market Stakeholders - shareholders and major suppliers of firms capital

Product Market Stakeholders - primary customers, suppliers, host communities, and unions

Organizational Stakeholders - employees (managerial and non-managerial)

Societal Stakeholders - environmental and social responsibility organizations

Private Organizations

Joint Venture partners and Alliances

Governments

Supply Chain Associates

Local Communities and Citizens

Regulatory Authorities

Unions

Investors, Shareholders and Lenders

Customers and Users

Employees

THE CORPORATION

CORPORATION

RESOURCE BASE

Investors: Shareowners & Lenders

Customers & Users

Employees

INDUSTRY STRUCTURE

SOCIAL POLITICAL ARENA

Unions

Regulatory Authorities

Supply ChainAssociates

Joint Venture partners& Alliances

PrivateOrganizations

Local communities & Citizens

Governments

MONSANTO

RESOURCE BASE

Investors

Customers:- Domestic- Global

Employees:- US- Global

INDUSTRY STRUCTURE


EPA regulations

GlobalJointventures

Strategic alliances

EU Approvals; Import licenses

EnvironmentalIssues

Greenpeace

Community Relations

GMOs

FrankensteinFoods

Suppliers

CORPORATION

RESOURCE BASE

Investors: Shareowners & Lenders

Customers

& Users

Employees

INDUSTRY STRUCTURE


Unions

Regulatory

Authorities

Supply Chain

Associates

Joint Venture

partners

& Alliances

Private

Organizations

Local communities

& Citizens

Governments

Private Organizations

Joint Venture

partners and

Alliances

Governments

Supply Chain

Associates

Local Communities

and Citizens

Regulatory

Authorities

Unions

Investors,

Shareholders and

Lenders

Customers and Users

Employees

THE CORPORATION

MONSANTO

RESOURCE BASE

Investors

Customers:

- Domestic

- Global

Employees:

- US

- Global

INDUSTRY STRUCTURE


EPA

regulations

Global

Joint

ventures

Strategic

alliances

EU Approvals;

Import licenses

Environmental

Issues

Greenpeace

Community

Relations

GMOs

Frankenstein

Foods

Suppliers

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