Introduction to Strategic Management

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Introduction to Strategic Management

• BUS496
• Strategic Management Policy
• Prof. Steven E. Phelan

2
Exercise

• In groups of 3 to 5 answerWhat is the
  difference between
• Planning strategy
• A business plan, corporate plan, strategic plan
• Strategy tactics
• A goal an objective
• A vision a mission

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Comparison military and corporate strategy

• Military
• Fight to win
• Zero-sum-game cooperation extremely difficult if
  at all possible
• Discrete with limited timeframe

• Corporate
• Compete to win/gain
• Positive-sum-game likely cooperation not easy
  but very likely
• Continuous

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Key issues of strategic management

• Why do some organizations succeed while others
  fail?
• How do I make my firm succeed?
• What is strategy?
• An action a company takes to attain one or more
  of its goals (textbook)
• An action a company takes to attain superior
  performance (textbook)
• An action taken to increase the firms
  (perceived?) value to its present or future
  owners (in a for-profit enterprise)
• How do these definitions differ?
• Why should managers care about the last
  definition?

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Firm-Specific Performance and Profitability

• Competitive advantage
• A firms profitability is greater than the
  average profitability for all firms in its
  industry
• Sustained competitive advantage
• A firm maintains competitive advantage for a
  number of years
• Business model
• Managements model of how strategy will allow the
  company to gain competitive advantage and achieve
  superior profitability

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What is the strategic management process?

• The process by which managers choose, implement,
  and adapt a set of strategies for the enterprise
  to pursue its vision.
• Distinguish between strategic (what to do?),
  tactical (how and when to do it?) and operational
  (do it now!) decisions.

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Basic Planning Model
Basic Strategic Planning Model
Define Vision/Mission and Set Top-Level Goals
External Analysis of Opportunities and Threats
Internal Analysis of Strengths and Weaknesses
Selection of Appropriate Strategies
Implementation of Chosen Strategies
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Levels of Strategic Management
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SWOT and Strategic Choice

• Strengths and Weaknesses
• Opportunities and Threats(SWOT Analysis)

Strategic ChoiceBusinessFunctionalGlobalCorpor
ate
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The Mission or Vision

• What the company is trying to achieve over the
  medium to long term
• The Boeing Company in 2016
• People working together as a global enterprise
  for aerospace leadership
• Microsoft
• To empower people through great software, any
  time, any place, on any device

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Values

• How managers and employees should conduct
  themselves
• Organizational culture
• The set of values, norms, and standards that
  control how employees work to achieve an
  organizations mission and goals
• Often seen as a source of competitive advantage
• In high-performing organizations, values respect
  the interests of key organizational stakeholders.

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Values at Nucor

• Management is obligated to manage Nucor in such
  a way that employees will have the opportunity to
  earn according to their productivity.
• Employees should be able to feel confident that
  if they do their jobs properly, they will have a
  job tomorrow.
• Employees have the right to be treated fairly
  and must believe that they will be.
• Employees must have an avenue of appeal when
  they believe they are being treated unfairly.

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Strategic Leadership

• Vision, eloquence, and consistency
• Commitment to the vision
• Being well informed
• Willingness to delegate and empower
• Astute use of power
• Emotional intelligence

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Intended and Emergent Strategies
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Strategy as an Emergent Process

• Strategy making in an unpredictable world
• Creates the necessity for flexible strategic
  approaches.
• Strategy making by lower-level managers
• Strategy evolves through autonomous action.
• Serendipity and strategy
• Accidental discoveries and happenstances can have
  dramatic effects on strategic direction.
• Intended and emergent strategies
• Realized strategies are combinations of intended
  and emergent strategies.

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Different processes
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Strategic Planning in Practice

• Planning under uncertainty
• Scenario planning for dynamic environmental
  change
• Ivory tower planning
• Lack of contact with operational realities
• The importance of involving operating managers
• Procedural justice in the decision-making process
• Engagement, explanation, and clarity of
  expectations
• Planning for the present Strategic Intent
• Recognition of the static nature of the strategic
  fit model
• Strategic intent in focusing the organization on
  winning by achieving stretch goals

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Improving Strategic Decision Making

• Cognitive biases systematically influence the
  rationality of decision makers.

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Groupthink and Strategic Decisions

• Pitfalls of groupthink
• Failing to question underlying assumptions.
• Coalescing around a single person or policy.
• Filtering out conflicting information.
• Developing after-the-fact rationalizations.
• Having an emotional (nonobjective) commitment to
  an action.

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Techniques for Improving Decision Making

• Two decision-making processesthat
  counteractcognitive biases and groupthink.

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Exercises

• Design a planning system for an internet
  role-playing company
• Yahoo Case