AGENDA 09/09 & 09/10 F Nature of Strategic Challenge & F Strategic Management F The Strategy Concept and Process F Strategic Plan - Team Meetings

Strategic Challenge F To survive F To grow F To die

In order to survive and to prosper (meet the strategic challenge) every organization must: F Develop and maintain an alignment with the environment F Create the future F Define and grow Internal Competencies

Meeting the Strategic Challenge

1950s F Finding a profit-producing match between products/services of the organization and the needs of the market.

1960s F Transforming the internal structure and competencies of the organization.

1970s & 1980s F Planning interfaces with suppliers because of limited resources. F Acknowledging power of society/environment to impact an organization. F Recognizing the global nature of competition.

1990s F Realizing that the speed of change is often greater than the speed of strategic response. F Focusing competitive advantage on information.

2000s

Arenas that need to be addressed if the organization is to meet the strategic challenge F Products/Services F Competencies F Inputs F Society F Globalization F Change F Information F Future

What is Strategic Management?

Early Definition F Determination of basic long-term goals and objectives F Adoption of courses of action F Allocation of resources necessary for carrying out these goals F Chandler, A Strategy & Structure: Chapters in the History of the Industrial Enterprise, Cambridge: M.I.T. Press, p.13

Another way of saying it F Art and Science F Formulating, Implementing, and Evaluating F Cross-Functional Decisions F Enabling an Organization F To set and achieve its Mission and Objectives Mission Objectives Decisions Actions Environmental Scanning Evaluation

Art and Science F Intuition (art) –past experiences, judgment, feelings –particularly useful for making decisions in situations of great uncertainty or little precedent. F Analysis (science) –logical, systematic approach –organization of quantitative information/data to be used for decision making.

Emphasis of Strategic Management F VALUE CREATION –What is Value? F CONFIGURATION –Multimarket scope u product, geographic, and vertical boundaries F COORDINATION –Management of activities and businesses within company

Strategic Management is a Process F Process: flow through interrelated stages toward the achievement of an aim F The flow of information involves historical, current, and forecasted data on the environment and operations of an organization. F Never finished.

Implications of viewing Strategic Management as a Process F Inter-relatedness –A change in one part affects several others F Formulation and Implementation are often interwoven F Allowance for continuous feedback and updates F Communication & Commitment

Strategic Management F involves long-term, future-oriented, complex decision making F requires considerable resources F participation at all levels of an organization –Top management is essential

Specifics

I. Strategy Formulation F 1. Developing a business vision/mission –Mission = enduring statements of purpose that distinguish one business from other firms. F 2. Establishing long-term objectives –Specific results - more than one year. –Challenging, measurable, reasonable, clear. –Established for overall corporation and each division

F 3. Identifying external opportunities and threats...could benefit or harm an organization in the future. –Macro Environment –economic, social, cultural, demographic, environmental, political, legal, governmental, and technological –largely beyond the control of the organization –Micro Environment –Industry –Competitive trends & events

F 4. Determining internal strengths and weaknesses –Controllable activities within an organization that are performed especially well or poorly. –Competencies (skills) –Functional activities are areas where strengths or weaknesses arise.

Strategy Formulation Con’t F 5. Generate and choose corporate strategies –Means by which long-term objectives will be achieved.

II. Strategy Implementation F Establish annual objectives –Short-term milestones that organizations must achieve to reach long-term objectives. –Measurable and established at corporate, business, and functional levels. F Devise policies –Guidelines, rules, procedures F Structure alignment F Mobilizing all functions to put formulated strategies into action.

III. Strategy Evaluation F Assess the outcomes of formulation and implementation. F Three fundamental activities –reviewing external and internal factors –measuring performance –taking corrective actions

Who uses Strategic Management F Profit –Big Corporations –Medium Size Corporations –Small Businesses F Government F Nonprofit F Individual Career Management Levels of FORMALITY will vary

When is Corporate Strategy Practiced? F Real Time F Always

Where in Larger Organizations is Strategic Management Practiced? F Corporate Level –Board of Directors; CEO; Administrative Officers –Determine mission; set objectives and strategies F Business Level –How Firm will compete in selected product/market arenas F Functional Level –Execute the plans