1. Strategic Management Process
10.2

2. What is Strategic Management?
Application of the basic planning process at the highest levels of the company
Top management sets goals for the performance of the company
Carefully formulating, implementing, and evaluating plans and strategies

3. What is Strategic Management?
Most important part is developing strategic plans
Plans must remain current as changes occur inside and outside the company
Involves many levels of management
Top level formally develops basic plans
Different departments may be asked to develop plans for their own areas
A solid plan guarantees that plans are coordinated and are supported by everyone in the company

4. Strategic Management Approach
Three phases critical to the success of the process
Formulation
Developing the strategic plan
Implementation
Putting the formulated plan to work
Evaluation
Continuously evaluating and updating the strategic plan

5. Formulating Strategy
Developing the grand- and business-level strategies to be used by the company
Company’s strengths/weaknesses and threats/opportunities shape the strategies
First step is to understand the current position of the company
Identify mission, identify past and present strategies, diagnose the company’s past and present performance, set objectives for the company’s operation

6. Formulating Strategy Identify the mission statement
Outlines why the company exists
Describes the company’s basic products and/or services and defines markets and sources of revenue
Designed to accomplish several goals and ensures a common purpose within the company

7. Apple’s Mission Statement
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.

8. Who’s Mission Statements?
"To bring inspiration and innovation to every athlete in the world."  
"To enable people and businesses throughout the world to realize their full potential."
“. . .seeks to be the world’s most customer-centric company, where customers can find and discover anything they may want to buy online at a great price."
Nike, Microsoft, Amazon.com

9. Identifying Past and Present Strategies
Companies need to understand and appreciate their corporate history
Strategic managers should ask
Has past strategy been developed?
If not, can past history of the company be analyzed to identify the strategy that has evolved?
If yes, has the strategy been recorded in writing?

10. Diagnosing Past and Present Performance
A corporate planner must decide if past strategies worked and if strategic changes are needed by asking:
How is the company currently performing?
How has it performed during the past few years?
Is the performance trend moving up or down?

11. Setting Goals
Concise statements that provide direction employees and set standards for achieving the company’s strategic plan
Established in many areas (see handout)
Goals must be reevaluated as the environment and opportunities change
Multiple goals are used to reflect the desired performance

12. Policies, Procedures, and Rules
Policies are broad general guides to action that establish boundaries within which employees must operate
“answering all written customer complaints in writing within 10 days”

13. Policies, Procedures, and Rules
Procedures are detailed series of related steps/tasks written to implement a policy
Define methods through which policies are achieved
“the customer service representative must note the complaint of Form 622 and forward the yellow copy of the form…”
Rules detail specific and definite corporate actions that employees must follow
Leave little doubt about what is to be done
“no smoking in the conference room”

14. SWOT Analysis Strengths, Weaknesses, Opportunities, Threats
Process that allows companies to evaluate overall health
Internal (SW) and external (OT)
Most important result of a SWOT analysis is the ability to draw conclusions about the attractiveness of the company’s situation and the need for strategic action

15. Implementing Strategy
Action stage of strategic management
Managers determine and implement the most appropriate company structure, motivate employees, develop short-range goals, and establish functional strategies
Strategy must fit with current company policies
Or conflicting policies must be changed
A. T. Cross Company
Manufacturer of world-class pens and pencils
Policy of unconditionally guaranteeing its products for life
B/C customers have come to expect this policy, Cross would find this policy difficult to discontinue

16. Evaluating and Controlling the Strategic Plan
Process of continuously monitoring the company’s progress toward its long-range goals and mission
Managers should ask:
Does the grand strategy need revising?
Where are problems likely to occur?
Basic strategy evaluation strategies:
Review external and internal factors that are the bases for current strategies
Measure performance
Take corrective action

17. Evaluating and Controlling the Strategic Plan
Emphasis is making the company’s managers aware of the problems that are likely to occur and of the actions to take if they do arise
Plan ahead and avoid disaster
Strategic planning and evaluation should be done on a predetermined schedule and as frequently as necessary, determined by internal and environmental factors