Strategic Management MGT 3310

Definition Art & 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 9 3

Levels of Strategy

Strategic Planning 9-5

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 Planning Strategic 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 9 11

Mission Management - Chapter 9 12

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 Strengths Weaknesses Opportunities Threats 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 businesses 2. It has its own competitors 3. It has a manager who is accountable for its operation 4. 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 Planning Strategic Management (continued) ◦ Strategy Formulation: Types  Differentiation  Cost Leadership  Focus  Sample Organizational Strategies  Growth  Stability  Retrenchment  Divestiture 9-19

Strategic Planning Strategic Management (continued) ◦ Strategy Implementation 1. Interacting skill 2. Allocating skill 3. Monitoring skill 4. Organizing skill ◦ Strategic Control Monitor and evaluate the whole strategy management process 9-20

Tactical Planning Comparing and Coordinating Strategic and Tactical Planning Basic differences between strategic and tactical planning: 1. Strategic plans are usually developed by upper-level management and 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 time whereas tactical plans cover a relatively short period of time 9-21

Tactical Planning 9-18

Planning and Levels of Management 9-23

More Corporate governance Principle-Agent issue Internal Risk Strategic Risk