Eight
Strategic Management
1. INTRODUCTION.
Effective managers recognize the role that strategic management plays in their organization’s performance. An underlying theme of this chapter is that good strategies can lead to high organizational performance.
2. THE IMPORTANCE OF STRATEGIC MANAGEMENT.
The role that the environment plays has influenced managers in developing a systematic means of analyzing the environment, asssing their organization’s strengths and weakness, identifying opportunities that would give the organization a competitive advantage, and incorporating the findings into their planning. The value of thinking strategically has an important impact on organization performance.
A. What is strategic management?
1. Strategic management is that t of managerial decisions and actions that determines the long-run performance of an organization.
2. It entails all of the basic management functions—planning, organizing, leading, and controlling.
B. Why is Strategic Management Important?
1. One reason strategic management is important is becau it can make a difference in how well an organization performs.
2. Another reason has to do with the fact that organizations of all types and sizes face continually changing situations.
3. Strategic management is also important becau of the nature of organizations. They are compod of diver divisions, units, functions and work activities that need to be coordinated.
4. Strategic management is also important becau it’s involved in many of the decisions that managers make.
3. THE STRATEGIC MANAGEMENT PROCESS.
The strategic management process is s six-step process that encompass strategic planning, implementation, and evaluation. (See Exhibit 8.1)
A. Step 1: Identifying the Organization’s Current Mission, Objectives, and Strategies.
1. Every organization needs a mission, which defines the purpo of the organization. What is the organization’s reason for being in business? Exhibit 8.2 describes some common components found in organizational mission statements.
2. It’s also important to identify the organization’s current objectives and strategies, as well.
B. Step 2: External Analysis.
1. Managers in every organization need to do an external analysis. Factors such as competition, pending legislation, and labor supply could have an impact.
2. After analyzing the environment, managers need to asss what they have learned in terms of opportunities and threats. Opportunities are positive trends in external environmental factors; threats are negative trends.
3. The same environment can prent opportunities to one organization and po threats to another in the same industry becau of different resources and capabilities.
C. Step 3: Internal Analysis.
1. Should lead to a clear asssment of the organization’s resources and capabilities.
2. Any activities the organization does well or any unique resources that it has are called strengths.
3. Weakness are activities the organization does not do well or resources it needs but does not posss.
If any of the organizational capabilities or resources are exceptional or unique, they’re called the organization’s core competencies.
4. Organizational culture is important in internal analysis. It can promote or hinder an organization’s strategic actions.
5. Combined external and internal analys are called SWOT analysis becau it’s an analysis of the organizations’ strengths, weakness, opportunities and threats.
D. Step 4: Formulating Strategies.
1. After the SWOT, managers develop and evaluate strategic alternatives and lect strategies that are appropriate.
2. Strategies need to be established for corporate, business and functional levels.
E. Step 5: Implementing Strategies.
1. A strategy is only as good as it implementation.
F. Step 6:Evaluating Results.
1. How effective have the strategies been? Are adjustments
necessary?
4. TYPES OF ORGANIZATIONAL STRATEGIES.
There are three different and distinct levels of strategy: corporate, business, and functional. (See Exhibit 8.4)
A. Corporate Level Strategy
The corporate-level strategy eks to determine what business a corporation should be in or wants to be in.
1. Three main corporate strategies:
a. Growth: growth strategy eks to increa the organization’s business by expanding the number of products offered or markets rved.
