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An Overview
SEQUENCE
1. Thinking Strategically 2. Five Tasks of Strategic Management 2.1. Developing Mission and Strategic Vision 2.2. Setting Objectives 2.3. Crafting a Strategy 2.4 Implementing & Executing Strategy 2.5 Evaluating Performance and Initiating Corrective Adjustments 1. Characteristics of Strategic Management Process
1- Thinking Strategically
Thinking Strategically
First-rate strategic thinking is conscious strategy management as opposed to freewheeling improvisation, gut feel, and hoping for good luck. Doing a good job of managing inherently requires good strategic thinking. Todays managers have to think strategically about their organizations position and about the impact of changing conditions. (Continued)
They have to monitor the organizations external environment and internal capabilities closely enough to know when to institute strategy changes. They have to know the business well enough to determine what kinds of strategic changes to initiate. Simply said, the fundamentals of strategic management need to drive the whole approach to managing organizations.
Advantages
1. Providing better guidance to the entire organization on the
3. Helping to unify the organization; 4. Creating a more proactive management posture; 5. Promoting development of a constantly evolving business
model that will produce sustained bottom-line success for the enterprise; and budget requests a rationale that argues strongly for steering resources into strategy-supportive, results-producing areas.
Strategic management is not a box of tricks or a bundle of techniques. It is analytical thinking and commitment of resources to action. Peter Drucker
Strategic Management
The term strategic management refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate.
Task 2
Task 3
Craft a Strategy to Achieve Objectives
Task 4
Implement and Execute Strategy
Task 5
Monitor, Evaluate, and Take Corrective Action
Set Objectives
Revise as Needed
Revise as Needed
Improve/ Change
Improve/ Change
Recycle as Needed
2.1.
Strategic Vision
A strategic vision is a roadmap of a companys futureproviding specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.
Strategic Vision
A roadmap of a companys future
Future technology-product-customer focus Geographic and product markets to pursue Capabilities to be developed Kind of company that management is trying to create
Mission Statement
A companys mission statement is typically focused on its present business scope "who we are and what we do"; mission statements broadly describe an organizations present capabilities, customer focus, activities, and business makeup.
Current product and service offerings Customer needs being served Technological and business capabilities
A strategic vision concerns a firms future business path -- where we are going
Markets to be pursued Future technologyproduct-customer focus Kind of company that management is trying to create
2.2.
Setting Objectives
Objectives
Objectives are an organizations performance targetsthe results and outcomes it wants to achieve. They function as yardsticks for tracking an organizations performance and progress.
Strategic Objectives
Strategic objectives relate to outcomes that strengthen an organizations overall business position and competitive vitality; Financial objectives relate to the financial performance targets management has established for the organization to achieve.
Setting of Objectives
Financial Objectives Strategic Objectives
Outcomes focused on improving longterm, competitive business position
2.3.
Crafting a Strategy
What Is Strategy?
A strategy consists of the competitive efforts and business approaches that managers employ to please customers, compete successfully, and achieve organizational objectives. Strategy is both proactive (intended and deliberate) and reactive (adaptive). Strategies are partly visible and partly hidden to outside view.
Crafting a Strategy
Involves deciding how to
Respond to changing buyer preferences Respond to new market conditions Grow the business over the long-term Achieve performance targets Outcompete rivals
gy New initiativ es plus ong oing strategy fea tures contin u ed from prior p eriods
to ctions a ptive re stances Ada m g circu hangin
Planned Stra t
y Strateg e Reactiv
Aggressively altering strategy to make waves and drive change Anticipating change and initiating strategic actions to ride the crest of change
Source: Adapted from Derek F. Abell, Competing Today While Preparing for Tomorrow, Sloan Management Review 40, No. 3 (Spring 1999), p. 75.
Strategy Selection
Each of the four basic strategy-making approaches has strengths and weaknesses, and each is workable in the "right" situation.
An Ongoing Process
Strategy making is fundamentally a market-driven and customer-driven entrepreneurial activitythe essential qualities are a talent for capitalizing on emerging market opportunities and evolving customer needs, a bias for innovation and creativity, an appetite for prudent risk taking, and a strong sense of what needs to be done to grow and strengthen the business. The march of external and internal developments dictate that a companys strategy change and evolve over timea condition that makes strategy making an ongoing process, not a one-time event.
Strategic Plans
A strategic plan consists of an organizations mission and future direction, near-term and longterm performance targets, and strategy. The faster a companys external and internal environment changes, the more frequently that its short-run and long-run strategic plans have to be revised and updatedannual changes may not be adequate. In todays world strategy life cycles are growing shorter, not longer.
Strategy Implementation
Strategy implementation and execution is an action-oriented, make-it-happen process involving people management, developing competencies and capabilities, budgeting, policy-making, motivating, culture-building, and leadership. Excellent execution of an excellent strategy is the best test of managerial excellenceand the most reliable recipe for organizational success.
Strategy Execution
Strategy implementation concerns the managerial exercise of putting a freshly chosen strategy into place. Strategy execution deals with the managerial exercise of supervising the ongoing pursuit of strategy, making it work, improving the competence with which it is executed, and showing measurable progress in achieving the targeted results. Strategy execution is fundamentally an action-oriented, make-it-happen processthe key tasks are developing competencies and capabilities, budgeting, policy making, motivating, culture-building, and leadership.
Evaluating Performance
A companys vision, objectives, strategy, and approach to implementation are never final; Evaluating performance, reviewing changes in the surrounding environment, and making adjustments are normal and necessary parts of the strategic management process.
Best-Managed Organizations
Two factors separate the best-managed organizations from the rest:
1. Superior strategy making and entrepreneurship, and 2. Competent implementation and execution of the chosen strategy.
Quality of managerial strategy making and strategy implementing has a significant impact on organization performance. An organization that lacks clear-cut direction, has vague or undemanding objectives, has a muddled or flawed strategy, or cant seem to execute its strategy competently is a company whose performance is probably suffering, whose business is at long-term risk, and whose management is lacking. The better conceived an organizations strategy and the more proficient its execution, the greater the chances the company will be a leading performer in its markets and truly deserve a reputation for talented management.
Tightly-Knit Process
Strategic management is a tightly-knit process. The boundaries between the five tasks are conceptual, not fences that prevent some or all of them being done together.
Broad Participation
Every company manager has a strategy-making/ strategy-implementing roleit is flawed thinking to view strategic management as solely the province of senior executives. Broad participation in a companys strategycreating exercises is usually a strong plus. Corporate Enterpreneuring relies upon middle and lower-level managers and teams to spot new business opportunities, develop strategic plans to pursue them, and create new businesses.
Characteristics
Need to do the five tasks never goes away. Boundaries among the five tasks are blurry. Strategizing is not isolated from other managerial activities. Time required comes in lumps and spurts. The Big Challenge is to get the best strategy
Supportive performance from employees, Perfect current strategy, and Improved strategy execution
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