Strategic Management Defined

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Strategic Management Defined

• The art and science of formulating,
  implementing, and evaluating cross-functional
  decisions that enable an organization to achieve
  its objectives.

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Strategic Management Process Four Stages

• Environmental Scanning
• Strategy Formulation
• Strategy Implementation
• Evaluation and Control

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1. Environmental Scanning

• Environmental scanning is the monitoring,
  evaluating and disseminating of information from
  the external and internal environments to key
  people in the corporation
• Simplest way to conduct environmental scanning a
  SWOT Analysis
• Strengths, Weaknesses, Opportunities, and Threats

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2. Strategy Formulation

• Formulating strategy consists of four
  interrelated tasks
• Defining the corporate mission
• Specifying achievable objectives
• Developing strategies
• Corporate level
• Business level
• Functional level
• Setting policy guidelines

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3. Strategy Implementation

• Implementation is where the rubber meets the
  road
• Implementation depends on three key elements
• Programs
• Budgets
• Procedures

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4. Evaluation and Control

• Evaluation and control is the process in which
• corporate activities and performance results are
  compared to expectations
• Corrective actions are taken where necessary
• This system depends on accurate, honest, and
  timely relay of information to decision-makers

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Benefits of Strategic Management

• A clearer sense of strategic vision
• Sharper focus on what is strategically important
• Formulate better strategies
• Systematic, logical, and rational approach
• Improved understanding of rapid change
• More proactive approach
• Initiate and influence activities
• Helps shape firms own future

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Benefits of Strategic Management (Contd)

• Financial Benefits
• More profitable and successful
• Improvements in sales, profitability, and
  productivity
• High-Performing Firms
• Systematic planning
• Fluctuations in external and internal environments

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Benefits of Strategic Management (Contd)

• Nonfinancial Benefits
• Creating a learning organization
• Understanding of competitors strategies
• Increased employee productivity
• Reduced resistance to change
• Clear performance-reward relationships
• Order and discipline to the firm
• View change as opportunity

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Why Some Firms Do No Strategic Planning

• Poor reward structures
• A fire-fighting mentality
• Waste of time or money
• Content with success
• Overconfidence
• Fear of failure (or the unknown)
• Organizational politics

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Pitfalls to Avoid in Strategic Planning

• Failing to communicate to employees
• Failing to use as standard for performance
  measurement
• Failing to involve key personnel
• Failing to create collaborative environment
• Instituting formality that stifles creativity and
  flexibility