Strategic ManagementMGT 3310

DefinitionArt & science of formulating,

implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives.

• Analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages

Those actions (or by default, inactions) which determine the long term future of an organization.

Competitive Advantage

◦Competitive advantage — operating

with an attribute or set of attributes

that allows an organization to

outperform its rivals.

◦Sustainable competitive advantage

— one that is difficult for competitors

to imitate.

Management - Chapter 93

Levels of Strategy

Strategic Planning

9-5

Strategic Planning

Strategic Planning

Strategic Management◦ Environmental Analysis

The General Environment The Economic Component The Social Component The Political Component The Legal Component The Technology Component

The Operating Environment The Customer Component The Competition Component The Labor Component The Supplier Component The International Component

The Internal Environment

9-7

Strategic Planning

9-8

Strategic Planning

9-9

Strategic PlanningStrategic Management

◦Establishing Organizational Direction Determining Organizational Mission Developing a Mission Statement The Importance of Organizational Mission The Relationship Between Mission and

Objectives

9-10

Mission

Analysis of mission:◦The reason for an organization’s

existence.◦Good mission statements identify:

Customers Products and/or services Location Underlying philosophy

◦An important test of the mission is how well it serves the organization’s stakeholders.

Management - Chapter 911

Mission

Management - Chapter 912

Strategic Planning Strategic Management (continued)

◦ Strategy Formulation: Tools Critical Question Analysis

What are the purposes and objectives of the organization?

Where is the organization presently going? In what kind of environment does the

organization now exist? What can be done to better achieve

organizational objectives in the future?• SWOT Analysis

StrengthsWeaknessesOpportunitiesThreats

9-13

SWOT Analysis

Porter’s model of five strategic forces affecting industry competition

9-15

Strategic Planning

Strategic Management (continued)◦ Strategy Formulation: Tools (continued)

Business Portfolio Analysis The BCG Growth-Share Matrix

Strategic business units (SBUs)1. It is a single business or collection of related businesses2. It has its own competitors3. It has a manager who is accountable for its operation4. It is an area that can be independently planned for within the organization

Categorize each SBU as: Stars Cash Cows Question Marks Dogs

The GE Multifactor Portfolio Matrix.

The BCG Growth – Share Matrix

9-16

Strategic Planning

9-17

Strategic Planning

9-18

Strategic PlanningStrategic Management

(continued)◦Strategy Formulation: Types

Differentiation Cost Leadership Focus Sample Organizational Strategies Growth Stability Retrenchment Divestiture

9-19

Strategic PlanningStrategic Management

(continued)◦Strategy Implementation

1. Interacting skill2. Allocating skill3. Monitoring skill4. Organizing skill

◦Strategic ControlMonitor and evaluate the whole strategy

management process

9-20

Tactical PlanningComparing and Coordinating Strategic and

Tactical Planning

Basic differences between strategic and tactical planning:

1. Strategic plans are usually developed by upper-level managementand tactical plans by lower-level management

2. Facts on which to base strategic plans are more difficult to gather

3. Strategic plans are generally less detailed than tactical plans

4. Strategic plans cover a relatively long period of timewhereas tactical plans cover a relatively short period of time

9-21

Tactical Planning

9-18

Planning and Levels of Management

9-23

MoreCorporate governancePrinciple-Agent issueInternal RiskStrategic Risk