Chapter 1: The Strategic Management Process by:by: Khursheed Yusuf

Preview 4Overview 4Strategic Management 4Strategic Managers 4Strategic Leadership 4Strategy as an Emergent Process 4Strategic Management in Practice 4Improving Strategic Decision Making

Overview Why do some firms succeed while others fail?Why do some firms succeed while others fail? Strategy DefinedStrategy Defined Strategic Management ProcessStrategic Management Process

Strategic Management Rational Planning by Top Management?Rational Planning by Top Management?

Basic Planning Process Missions and Goals External Analysis - Opportunities and Threats Internal Analysis - Strengths and Weaknesses Selection of Appropriate Strategies Implementation of Strategies Strategic Management Let’s Look More Closely at Each Step...Let’s Look More Closely at Each Step... A Basic Planning Model A Basic Planning Model

Missions and Goals Basic Management Process

Mission and Major Goals MissionMission Major GoalsMajor Goals Secondary GoalsSecondary Goals Strategic Management (Continued)

Missions and Goals External Analysis - Opportunities and Threats Basic Planning Process Strategic Management (Continued)

Identify Strategic Opportunities and Threats in Three EnvironmentsIdentify Strategic Opportunities and Threats in Three Environments External Analysis Strategic Management (Continued)

Missions and Goals External Analysis - Opportunities and Threats Internal Analysis - Strengths and Weaknesses Basic Planning Process Strategic Planning (Continued)

Internal Analysis Identify StrengthsIdentify Strengths Strategic Planning (Continued)

Internal Analysis Identify StrengthsIdentify Strengths and Weaknessesand Weaknesses Strategic Planning (Continued)

Basic Planning Process Missions and Goals External Analysis - Opportunities and Threats Internal Analysis - Strengths and Weaknesses Selection of Appropriate Strategies Strategic Planning (Continued)

SWOT and Strategic Choice WeaknessesOpportunities StrengthsThreats Strategic Planning (Continued)

SWOT and Strategic Choice (Continued) Functional Business Corporate Global Strategic Planning (Continued)

Functional-Level Strategy Functional-Level Strategy –Manufacturing –Marketing –Materials Management –Research and Development –Human Resources Strategic Planning (Continued) SWOT and Strategic Choice (Continued)

Business-Level Strategy Business-Level Strategy –Cost Leadership –Differentiation –Market Niche Focus Strategic Planning (Continued) SWOT and Strategic Choice (Continued)

Global Strategies Global Strategies –Multidomestic –International –Global –Transnational Strategic Planning (Continued) SWOT and Strategic Choice (Continued)

Corporate-Level Strategy Corporate-Level Strategy –Vertical Integration –Diversification –Strategic Alliances –Acquisitions –New Ventures –Business Portfolio Restructuring Strategic Planning (Continued) SWOT and Strategic Choice (Continued)

Figure 1.1: Basic Planning Process Missions and Goals External Analysis - Opportunities and Threats Internal Analysis - Strengths and Weaknesses Selection of Appropriate Strategies Implementation of Strategies Strategic Planning (Continued)

Designing Organizational Structure Designing Organizational Structure Strategic Planning (Continued) Strategy Implementation

Designing Control Systems Designing Control Systems –Market and Output Controls –Bureaucratic Controls –Control Through Organizational Culture –Rewards and Incentives Strategic Planning (Continued) Strategy Implementation (Continued)

Matching Strategy, Structure and Controls Matching Strategy, Structure and Controls Strategy Structure Controls Strategic Planning (Continued) Strategy Implementation (Continued)

Strategic Planning (Continued) Strategy Implementation (Continued) Managing Strategic ChangeManaging Strategic Change –The Only Constant Is Change –Strategy and Structure Adaptation

Strategic Planning (Continued) Strategy Implementation (Continued) Managing Strategic ChangeManaging Strategic Change –The Only Constant Is Change –Strategy and Structure Adaptation The Feedback LoopThe Feedback Loop

Strategic Managers General ManagersGeneral Managers Functional ManagersFunctional Managers

Copyright  1998 by Houghton Mifflin Company. All rights reserved. Figure 1.2: Levels of Strategic Management Corporate Level CEO, Board of Directors Corporate Staff Business Level Divisional Managers and Staff Functional Level Functional Managers Strategic Managers (Continued)

Strategic Leadership Vision, Eloquence, and ConsistencyVision, Eloquence, and Consistency CommitmentCommitment Being Well InformedBeing Well Informed Willingness to Delegate and EmpowerWillingness to Delegate and Empower Astute Use of PowerAstute Use of Power

Strategy as an Emergent Process Strategy Making in an Unpredictable WorldStrategy Making in an Unpredictable World Strategy Making by Lower Level ManagersStrategy Making by Lower Level Managers Intended and Emergent StrategiesIntended and Emergent Strategies

Figure 1.3: Emergent and Deliberate Strategies Intended Strategy Realized Strategy Deliberate Strategy Unrealized Strategy Emergent Strategy

Figure 1.4.A: Strategic Management Process for Intended Strategies Missions and Goals Strategic Choice Organizing for Implementation Internal Analysis External Analysis INTENDED STRATEGY

Figure 1.4.B: Strategic Management Process for Emergent Strategies Missions and Goals Internal Analysis External Analysis EMERGENT STRATEGY Strategic Choice Does It Fit? Strategic Choice Does It Fit? Organizational Grassroots

Strategic Planning In Practice Planning Under UncertaintyPlanning Under Uncertainty Ivory Tower PlanningIvory Tower Planning Planning for the PresentPlanning for the Present –Strategic Intent

Improving Strategic Decision Making Cognitive Biases and Strategic DecisionsCognitive Biases and Strategic Decisions

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued)

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued) Prior Hypothesis Bias

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued) Prior Hypothesis Bias Escalating Commitment

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued) Prior Hypothesis Bias Escalating Commitment Reasoning by Analogy

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued) Prior Hypothesis Bias Escalating Commitment Reasoning by Analogy Representa- tiveness

Figure 1.5: Five Well-Known Cognitive Biases Improving Strategic Decision Making (Continued) Prior Hypothesis Bias Escalating Commitment Reasoning by Analogy Representa- tiveness Illusion of Control

Improving Strategic Decision Making Groupthink and Strategy DecisionsGroupthink and Strategy Decisions Techniques for Improving Decision MakingTechniques for Improving Decision Making –Devil’s Advocacy –Dialectic Inquiry Cognitive Biases and Strategic Cognitive Biases and Strategic Decisions Decisions

Two Decision-Making Processes Two Decision-Making Processes Improving Strategic Decision Making (Continued) Expert Plan #2 (Antithesis) Expert Plan #1 (Thesis) Debate (Synthesis) Final Plan Expert Plan Devil’s Advocate Plan Final Plan Devil’s Advocacy Dialectic Inquiry

Chapter Summary   STRATEGIC PLANNING   STRATEGIC MANAGERS   STRATEGIC LEADERSHIP   STRATEGY AS AN EMERGENT PROCESS   STRATEGIC PLANNING IN PRACTICE   IMPROVING STRATEGIC DECISION MAKING