Strategic Management Its Role in Organizations

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 2 Why strategic management is important – Individually: you will be evaluated on and rewarded for doing your job well, which means understanding how and why strategic decisions are made – Organizationally: it can make a difference in how well an organization performs; it also helps with adapting to changing situations and coordination of various divisions, functions, and work activities

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 3 The Four Characteristics of Strategic Management Interdisciplinary – It focuses on the whole organization, rather than any functional part External Focus – interaction of organization with external environment – Economy – Competitors – Market demographics

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 4 The Four Characteristics of Strategic Management – cont’d Internal Focus – Understands the resources and capabilities the organization does or does not have Future Direction of the Organization, includes – Decisions – Planning – Shifts or changes in products or markets

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 5 Figure 1.2 Note: This is from 5 th edition – PowerPoints not yet available for 6 th – thus chapters don’t line up

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 6 Situation Analysis Situation analysis is required before deciding upon a strategic direction or response and it involves scanning and evaluating – The current organizational context – The external environment – The organizational environment (See SWOT analysis for a tool often used for this process)SWOT

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 7 Strategy Formulation Strategy formulation is developing and choosing appropriate strategies, as guided by the situation analysis, and includes three main types of strategies – Functional Strategies (also called operational strategies) – Competitive Strategies (also called business strategies) – Corporate Strategies (these are guiding strategies by which all efforts are aligned)

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 8 Functional Strategies Functional strategies or operational strategies are goal oriented plans and actions of the functional areas of an organization, they include: – Production-Operations – see Operations ManagementOperations Management – Marketing – see Marketing MixMarketing Mix – Research & Development – see InvestopediaInvestopedia – Human Resources – see HR & Talent ManagementHR & Talent Management – Financial-Accounting – see Financial ManagementFinancial Management – Information Technology & Support – see AIIMAIIM

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 9 Competitive Strategies Competitive strategies or business strategies are goal directed plans and actions concerned with how an organization competes in a specific business or industry – Looks at all aspects of strategies and actions – Seeks to determine what the company currently can do and what it wants to do – Focus is on how it might more effectively compete

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 10 Corporate Strategy Corporate strategies are goal directed plans and actions that are concerned with what business or businesses a firm wants to be in and what to do with those businesses; for example – FedEx’s decision to acquire Kinko's – PepsiCo’s decision to spin off their fast-food division

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 11 Strategy Implementation It is not enough to formulate great strategies, they must be implemented – Strategy implementation is putting the various stages of strategies into action – How a strategy is implemented must be considered

Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall1- 12 Strategy Evaluation Strategy evaluation involves evaluating both the outcomes of the strategies and how they have been implemented – Determine if they produced the expected strategic goals – Helps with the evaluation of results and, if necessary, any modification of strategies