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Strategic management process

What is SMP????
The strategic management process is a way for businesses to build strategies that help the company respond quickly to new challenges. This dynamic process helps organizations find new and more efficient ways to do business

A five-component approach to promote successful organizational performance

1. Vision formulation which leads to the statement of the Mission. 2. The mission is then converted into performance


3. To achieve objectives you develop Strategies

4. Strategy Implementation 5. Evaluation of performance

1.The vision formulation which leads to the statement of the Mission

what is business? what will be the business? it established long-term direction it needs to use simple terminology it needs to be inspirational buy in Entrepreneurial recognition of threats & opportunities

Three Components of the mission statement

the needs to be served by the company the targeted customer group how the company will provide the product/service

2. The mission is then converted into performance objectives

measurable statements specified performance specified time short-range objectives long-range objectives top-down rather than bottom-up

Two types of performance yardsticks

Financial objective Strategic objective

3. To achieve objectives you develop Strategies

action steps the concepts of unified and consistent strategies the moves and approaches used to achieve objectives Dynamic continual review and refinement adjust to internal and external forces

Levels of strategies
Corporate Business Functional Operating game plan for a diversified company game plan for single business strategy initiatives of one part of a business initiatives of key operating units

Factors affecting strategies

society forces political and regulatory forces citizenship considerations the industry and competitive conditions opportunities and threats organizational strengths and weaknesses ethical considerations personal managerial ambitions company culture

Strategy making styles

Master Strategist Delegate-to-Others Collaborative Champion self- explanatory bottom-up middle approach bottom up with manager interest

4.Strategy Implementation
making it happen structuring an organization Budgeting Motivating creating reward structures creating work environment information & reporting systems

5. Evaluation of performance
review process adjust mission adjust objectives adjust strategies initiate corrective measures

Generic strategy

Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage.

The generic strategies are: 1. Cost leadership 2. Differentiation 3. Focus.

1. Cost Leadership. The low cost leader in any market gains competitive advantage from being able to produce at the lowest cost. 2. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. 3. Focus or Niche strategy. The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable.

The danger of being 'stuck in the middle.'

Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then fail to achieve them, that your organization gets stuck in the middle without a competitive advantage.

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