CHAPTER 1 Basic Concepts of Strategic • Externally-oriented planning - conduct Objectives are the end results of planned

Management strategic planning by top management activity.

and they leave implementation to low Goal is often used interchangeably with the term
Globalization level. objective.
Internationalization of markets and • Strategic management – involves Corporate Goals/Objectives (PEGR2C2MTSP)
corporations various departments and levels across • Profitability (net profit)
Global (worldwide) markets rather than the organization. An ongoing process • Efficiency (low costs, etc)
national markets that includes implementation, evaluation • Growth (increase in total assets, sales,
Electronic Commerce and control issues. etc)
Use of the Internet to conduct business Highly Rated Benefits • Resource utilization (ROE, ROI)
transactions • Clearer sense of strategic vision • Reputation (being considered a “top”
Basis for competition on a more strategic • Sharper focus on strategic importance firm
level rather than traditional focus on product • Improved understanding of changing • Contributions to employees
features and costs environment (employment security, wages, diversity)
Not Always a Formal Process • Contributions to society (tax paid,
Electronic Commerce – Trends (FMBCPIK) • Where is the organization now? (not participation in charities)
• Forcing company transformation where do we hope it is) • Market leadership (market share)
• Market access & branding changing – • If no changes are made, where will the • Technological leadership (innovation,
disintermediation of traditional organization be in 1,2,5 or 10 years? creativity)
distribution channels • What specific actions should • Survival (avoiding bankruptcy)
• Balance of power shift to consumer management undertake? • Personal need of top management
• Competition changing • What are the risks and payoffs? (using the firm for personal purposes,
• Pace of business increasing Basic Elements of the Strategic Management such as providing jobs for relatives)
• Internet purchasing beyond Process (ESSE) Strategy of a corporation forms a comprehensive
traditional boundaries • Environmental Scanning master plan that states how the corporation will
• Knowledge key asset – source of • Strategy Formulation achieve its mission and objectives. It maximizes
competitive advantage • Strategy Implementation competitive advantage and minimizes
Strategic Management • Evaluation and Control competitive disadvantage
- Is a set of managerial decisions and actions that Environmental Scanning - Monitoring, Policy is a broad guideline for decision making
determines the long-run performance of a firm. evaluation, and disseminating information from that links the formulation of a strategy with its
-Is the process by which managers set an external and internal environments –to key implementation.
organization’s (or several organizations’) long- people in the firm 1.Policies include guidelines, rules, and
term course, develop plans in the light of internal SWOT Analysis procedures established to support efforts to
and external circumstances, and undertake • Strengths – Weaknesses achieve stated objectives.
appropriate action to reach those goals • Opportunities – Threats 2.Policies are most often stated in terms of
-It includes environmental scanning, strategy Strategy Formulation - Development of long- management, marketing, finance/accounting,
formulation, strategy implementation, and range plans for effective management of production/operations, research and
evaluation and control. opportunities and threats in light of corporate development, and computer information systems
strengths and weaknesses activities.
4 Phases of Strategic Management (BFES) Mission Statement Examples: smoking policy, recruitment policy
• Basic financial planning – internal • Purpose/reason for organization
focus on budgeting (1 yr horizon) • Promotes shared expectations Strategy implementation is a process by which
• Forecast-based planning – extrapolate • Communicates public image strategies and policies are put into action through
the current situation into the future (3-5 yr • Who we are; what we do; what we aspire the development of programs, budgets, and
horizon) to procedures.
Budgeting: Is the process of allocating resources 4 Chief Activities (SNLI) • Consequential: require substantial
to be employed to achieve objectives. • Systematic problem solving resources and commitment from all.
Procedures: Sometimes termed Standard • New approach experimentation • Directive: set precedent for future
Operating Procedures (SOP), are a system of • Learning from experiences action
sequential steps or techniques that describe in • Intra-organization knowledge transfer Top managers tend to use one of four modes
detail how a particular task or job is to be done. Hierarchy of Strategy (CBF) of strategy formulation:
Corporate strategy: Overall Direction of Mintzberg’s Modes (EAPL)
Strategy control and evaluation Company and Management of its Business • Entrepreneurial mode: the strategy is
Ensure that a company is achieving what Business (Division Level) Strategy: Competitive made by powerful individual. The focus
it sets out to accomplish. It compares and Cooperative strategies is on opportunities.
performance with desired result and provides the Functional Strategy: Maximizing Resource • Adaptive mode: using reactive
feedback necessary for management to evaluate Productivity solution rather than proactive.
results and take corrective action, as needed. • Planning mode: it uses reactive and
Corporate Goals/Objectives (PGRM) proactive mode. Data gathering and
Performance is the end result of activities; it • Profitability (net profit) analysis and select strategies.
includes the outcomes of the strategic • Growth • Logical incrementalism: strategy is
management process. • Resource utilization (ROE, ROI) set based on a series of incremental
• Market leadership commitment rather than through global
Theory of Organization Adaptation 3 Types of Strategy (CBF) formulation of total strategies. This
Organization “fit” with environment (TISO) • Corporate strategy suitable when environment is changing
Theory of population ecology - proposes that • Business strategy rapidly.
once an organization is successfully established • Functional strategy
in the environment, it is unable to adapt to A strategic decision-making process is put into
changing conditions Corporate strategy action through a technique known as the
Institution theory-proposes that organizations Describes a company’s overall direction strategic audit.
can do adapt to changing conditions by imitating in terms of its general attitude toward growth and Strategic audit provides a checklist of questions,
other successful organizations. the management of its various businesses and by area or issue, that enables a systematic
Strategic choice perspective-proposing that not product lines. analysis to be made of various corporate
only do organizations adapt to a changing Corporate Strategy (SGR) functions and activities.
environment, but they also have the opportunity • Stability
and power to reshape their environment • Growth 5 Elements of Good Strategy (AVDSE)
Organizational learning theory-an organization • Retrenchment • Arenas – Where?
adjust defensively to a changing environment and Business Strategy (CC) • Vehicles – How to get there?
uses knowledge offensively to improve the fit • Competitive strategies • Differentiators – How to win?
between itself and its environment. • Cooperative strategies • Staging – Speed and sequence –
Functional strategy (TLTF) tactics
Strategic flexibility Is the approach taken by a functional area to • Economic logic – How will we gain
• Demands long-term commitment to achieve corporate and business unit objectives a return?
development of critical resources and strategies by maximizing resource
• Demands firm become a learning productivity.
organization • Technological leadership
Learning organization - An organization skilled • Technological followership
at creating, acquiring, and transferring knowledge
and at modifying its behavior to reflect new Strategic Decisions (RCD)
knowledge and insights • Rare: unusual, no precedent to follow.