STRATEGIC MANAGEMENT
FUNCTIONS OF
MANAGEMENT- PLOCS
-planning
-leading
-organizing
-controlling
-staffing
PLANNING
-defining goals and objectives
-deciding what type of activities the
company will engage in
-determining the resources needed
to achieve the organization's goals
and objectives
LEADING
-specifying job responsibilities
-grouping jobs into work units
-acquisition and allocation of
resources
-creating good working conditions
ORGANIZING
-directing, motivating, and
communication with employees,
individually and in groups
-conflict resolution
CONTROLLING
-monitoring performance of people
and units
-provision of feedback or information
about progress
-identification of performance
problems and actions to correct it.
-comparing desired result vs actual
WHAT IS STRATEGY
*STRATEGY is management's overall
plan and actions for deploying
resources and skills taking into
consideration the strength, weakness,
opportunities and threats in the
environment
- to achieve it's mission, vision, and
objectives
- to establish a favorable competitive
position
STRATEGY INVOLVES:
- an organization's goals
-a series of related decisions and actions
-takes into account key internal
strength, weaknesses, external
opportunities and threats
-analysis, communication, coordination,
and action
WHAT IS STRATEGIC MANAGEMENT?
-Strategic management can be defined as
the art and science of formulating,
implementing, and evaluating cross-
functional decisions that enables
organizations to achieve its objectives
-focuses on how managers formulate and
implement, and evaluate strategies aimed
at developing and maintaining competitive
advantage
- the reason some firms enjoy higher levels of
performance that their rivals or competitors
-strategic management is therefore concerned
with the overall PLOCS
-four aspects that sets strategic management
apart:
*interdisciplinary-involving two or more
academic, scientific and artistic discipline
*external focus
*internal focus
*future directions
IMPORTANCE OF STRATEGIC MANAGEMENT
*GIVES EVERY EMPLOYEE A ROLE TO PLAY
IN MAKING THE FIRM SUCCESSFUL
-applies to all professional employees, not just
those in management
-allows decision making, allocation of resources
and management of people to be based on a
firm's strategic plan
-success as a manager (as measured by your
promotion, job security, and pay increases) is
often determined by your efforts and
departments contribution to overall
organization's success
*MAKES A DIFFERENCE IN
PERFORMANCE LEVELS
-research suggest that successful
companies use strategic management
concepts & techniques
-success evolves from "knowing what
you're doing" and often implies having a
strategic plan
*PROVIDES SYSTEMATIC APPROACH
TO UNCERTAINTIES THAT
ORGANIZATIONS FACE
-competitive and global environment are
dynamic(changing)
-change, whether significant or minor,
must be recognized and analyzed and
dealt with
-strategic management allows for the
analysis of the situation(identifying the
sources of change in environment)
*COORDINATES AND FOCUSES
EMPLOYEES TO ACHIEVE
ORGANIZATION'S GOALS
-allows for team effort which is
coordinated for firm success
-allows for development of a plan,
communication, coordination, and
cooperation among diverse depths and
functions
STRATEGIC MANAGEMENT PROCESS
*ESTABLISHING A MISSION, VISION
AND OBJECTIVES
*ENVIRONMENTAL ANALYSIS
-internal analysis
-external analysis
*STRATEGY FORMULATION
*STRATEGY IMPLEMENTATION
*STRATEGIC CONTROL AND
PERFORMANCE EVALUATION
* A company's mission is a statement of
- the basic purpose or reason for its
existence
-its values (role to stakeholders-
customers, employees, society, etc.)
* The vision goes beyond the mission
statement
- clarifies the long-term direction of the
company (where the company is going)
-reflects management's aspirations for the
company
* Objectives are yardsticks for tracking a
company's performance or end result.
-Financial performance objectives (eg. ROA,
ROI, ROE, dividend growth, stock price)
-Strategic performance objectives (eg.
Market share, growth, innovation leader,
customer service, community &
environmental responsibility)
ENVIRONMENTAL ANALYSIS
- involves the evaluation of the business
environment of the organization
-all internal and external influences that impact a
company's decision and performance
ENVIRONMENT OF A FIRM ARE CLASSIFIED INTO:
- micro-environment (company level- controllable)
- macro-environment (the big picture-
uncontrollable)
ENVIRONMENTAL ANALYSIS
* The micro-environment consists of
-the industry environment such as the competitors,
suppliers, customers, unions and employees,
owners and shareholders
* The macro-environment
- the international/national economy ,changes in
demographic structures, social and political trends,
economic: technology and the natural environment
INTERNAL ANALYSIS
*Involves the evaluation of the inventory of the
firm's resources and capabilities.
* Resources/capabilities can be classified as:
-tangible resources: financial and physical assets
-intangible resources: brand name, reputation,
organizational culture
-capabilities or competencies: managerial ability,
specialized skill and knowledge base of employees
STRATEGY FORMULATION
*The strategy formulation process
- involves designing a course of action for
addressing strategic issues facing the firm
after going through the external and
internal evaluation processes
*Actual strategy of a company involves:
-Planned or Intended actions
-Reactive or Emergent Actions (as-need
reactions to unanticipated events in firm's
micro and macro environments
*Strategy formulation is concerned with
the following parts of a company:
-Corporate(whole company)---Corporate
strategies: deals with what business the
company want to be in and how to manage
those businesses
-Businesses--Competitive strategies: How
to compete in specific business or industry
-Functional areas--Functional strategies:
short goal-directed decisions & actions of
an organization's various functional
departments.
STRATEGY IMPLEMENTATION
*is the process of putting a company's various
strategies into action
-development of programs, policies, budgets &
procedures
*It can take several months or years to complete
EXAMPLE: expansion strategies of SM Group
was formulated 1990's but was implemented in
the year 2000's-full blast- 2011
*most difficult of the strategy process
*the job of implementing strategy involves
managers at all levels
STRATEGIC CONTROL & EVALUATION
*process by which desired outcomes
(mission, vision & objectives) are compared
with realized outcomes to determine if there
are gaps
*initiate corrective actions by monitoring
changes in environment--competitor
actions, new market opportunities,
customer needs and expectations
STRATEGIC MANAGEMENT PROCESS
*On-going and continuous cycle of :
-situation analysis: internal evaluation and
environmental scanning
-strategy formulation
-strategy implementation
-strategy evaluation
MISCONCEPTIONS ABOUT STRATEGY &
STRATEGIC MANAGEMENT
*Strategy & Strategic planning are dead
-every organization needs the focus and
direction provided by its strategies and the
strategic management process
*Strategy is strictly for top management
-top management play a crucial role, but
everyone in the organization has a part to
play
*Strategy is only about planning
-strategic management process shows that strategy is not
only about planning but also about doing
*Strategy is stable and constant
-organizations compete in dynamic environments.
Flexibility and change needed to respond to environmental
opportunities & threats, strength & weaknesses
*Strategic management outlines ultimate destination
& route
-it establishes a systematic approach to analyzing relevant
information & using it to design, implement and evaluate
appropriate strategies
