Strategic Management

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Strategic Management

• Foundation Concepts

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Lecture Topics

• Concept of Strategic Management
• Path od Course
• Roles in Strategic Management
• Deliberate and Emergent Strategies
• Vision
• Mission
• Objectives
• Financial
• Strategic
• Case Study Sears Roebuck

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Concept of Strategic Management

• Analysis (External and Internal Environments)
• Decisions (Formulating Strategy)
• Actions (Implementing Strategy
• An organization undertakes in order to create and
  sustain competitive advantages and satisfy its
  multiple stakeholders.

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In short,

• Strategic Management is about how an organization
  adds value and competes in its environment.

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Strategic Management seeks to answer 6 key
questions

• What good or service do we really sell?
• How will we produce our goods or deliver our
  services?
• Who will buy our goods or services?
• How will we finance the operation?
• How much risk are we willing to take?
• How will we implement our strategy?

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More Broadly, Three Big Strategic Questions

• Where are we now?
• Where do we want to go?
• Business(es) to be in and market positions to try
  and achieve?
• Buyer needs and groups to serve?
• Outcomes to achieve?
• How do we get there?

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Path of this course

• Given this background on strategic management,
  the course follows a path intended to give you
  experience in thinking about and applying
  strategic management concepts for
• Analysis (External and Internal Environments)
• Decisions (Formulating Strategy)
• Actions (Implementing Strategy

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Strategic Management Course Skills

• Identification of core problems or issues in a
  business situation or case
• Assessment of opportunities and threats in the
  environment and the strengths and weaknesses of
  an organization and its managers.
• Analysis of strategic alternatives from the
  perspectives of a variety of stakeholders.

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Strategic Management Course Skills (Continued)

• Formulation and selection of specific courses of
  action to implement chosen strategies
• Focused application of analytical skills from
  functional areasproduction, finance, marketing,
  operations research, personnel, and so forthto
  effectively develop, select, and implement
  competitive strategies
• Oral and written communication of analyses and
  recommendations for action.

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Roles in Strategic Managementor, Who Makes
Strategy?

• Top ManagementPresident, Senior Organization
  Executives
• Board of Directors
• Managers of Subsidiary Business Units
• Functional Area Managers
• Operating Managers
• Empowered Employees

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Traditional Flow of Strategic Management

• Top Management
• Subsidiary Functional
• Management Management
• Operating Management
• Employees

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Modern Flow of Strategic Management

• Top Management
• Subsidiary Functional
• Management Management
• Operating Management
• Employees

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Why Modern Flow of Strategic Management?

• Changes in and heightened competition driven by
• Pressure for low cost products and services
• Higher quality requirements
• Globalization
• Increasing rate of technological change and
  diffusion
• Information technology
• Knowledge as an organizational resource

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Deliberate and Emergent Strategies
Intended Strategy
Deliberate Strategy
Realized Strategy
Emergent Strategy
Unrealized Strategy
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Setting Direction for the Organization

• Vision
• Mission
• Objectives
• Financial
• Strategic

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Vision

• An inspiring, long-term dream about what the
  organization will achieve in the future
• Represents a destination driven by and invoking
  passion

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ExampleMicrosoft Vision

• Empower people through great software anytime,
  anyplace, and on any device

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Mission

• Provides more specifics for the vision
• Includes such considerations
• Identification of products offered and customers
  served (What business are we in?)
• How the company will compete (low price,
  innovation, service)
• Ethical values of organization
• Relations with employees and other stakeholders

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Example Points FromHonda Mission Statement

• Proceed always with ambition and youthfulness.
• Respect sound theory, develop fresh ideas, and
  make the most effective use of time.
• Enjoy your work and always brighten your working
  atmosphere.
• Strive constantly for a harmonious flow of work.
• Be ever mindful of the value of research and
  endeavor.

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Develop a Vision and Mission Statement for the
College of Economics and Business
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Objectives

• Provides more specific direction on what the
  organization must do to achieve its vision and
  missioninterim steps toward achieving the vision
  and mission.
• As interim steps, objectives are
• Long-term
• Short-term

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Objectives

• Strategic
• Outcomes focused on improving long-term
  competitive position of the organization

• Financial
• Outcomes focused on improving financial
  performance

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Example Strategic Objectives

• Increase firms market share
• Boost firms reputation with customers
• Strengthen presence in international markets
• Become leader in new product innovation
• Attain lower overall costs than rivals
• Surpass competitors in quality or product
  performance

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Example Financial Objectives

• Increase sales growth 6 to 8 per year
• Cut costs by 5 per year every year
• Increase annual dividends to shareholders by 5
  per year
• Achieve highest Return on Investment (ROI) in
  industry

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Criteria for Objectives

• Specific precisely what needs to be achieved
• Measurable at least one indicator that measures
  progress toward fulfilling objective
• Appropriate consistent with vision and mission
  statements
• Realistic must be achievable
• Time-based must have a deadline for achieving
  the objective

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Vision, Mission, and Objectives

• Concluding points
• Set a philosophy and direction for strategy
  development and organizational action
• Should represent permanent principles for the
  organization, but adaptable to changing
  circumstancesbeware changes that reduce
  ambitions.

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Sears Roebuck Case Discussion