Strategic Management.ppt

Definition of Strategic
Management
 Strategic management is a process through
which:
 Organizations analyze and learn from their
internal and external environments,
 Establish strategic direction,
 Create strategies that are intended to
move the organization in that direction,
and
 Implement those strategies
 All in an effort to satisfy key stakeholders

Three Perspectives on Strategic
Management
 Traditional Perspective
 Origin
 Economics, other business disciplines, and consulting firms
 View of Firm
 An economic entity
 Approach to Strategy Formulation
 Situation analysis of internal and external environments
leading to formulation of mission and strategies
 Source of Competitive Advantage
 Best adapting the organization to its environment by taking
advantage of strengths and opportunities and overcoming
weaknesses and threats

Traditional Strategic
Management Process
Strategic
Direction
(mission
& goals)
Strategy Formulation
(take advantage of
strengths/overcome
weaknesses & threats)
Strategy Implementation
(development &
execution of
implementation plans)
Situation Analysis
(external environment)

Strategy Fundamentals
 Traditional View
 Environmental
determinism (the best
strategy is determined
by the environment)
 Firms should adapt to
the environment
 Strategy is deliberate
(intended)
 Contemporary View
 Enactment (firms can
influence their
environments)
 A firm should pursue
actions to make the
environment more
hospitable
 Strategy emerges from
a stream of decisions
as firms learn

Three Perspectives on Strategic Management
 Resource-based View
 Origin
 Economics, distinctive competencies and general
management capability
 View of Firm
 A collection of resources, skills and abilities
 Analysis of organizational resources, skills and abilities.
Acquisition of superior resources, skills and abilities
 Possession of resources skills and abilities that are
valuable, rare and difficult to imitate by competitors

The Organization as a
Bundle of Resources
Organizational
Knowledge
and Learning
General Organizational
Resources
•Firm Reputation
•Brand Names and Patents
•Contracts
•Stakeholder Relationships
Physical Resources
•Plants and Equipment
•Organizational Locations
•Access to Raw Materials
Human Resources
•Skills, Background and
Training of Managers and
Employees
•Organization Structure
Financial Resources
•Internal and External
Sources of Financing
•Financial Strength

Three Perspectives on Strategic
Management
 Stakeholder View
 Origin
 Business ethics and social responsibility
 View of Firm
 A network of relationships among the firm and its stakeholders
 Analysis of the economic power, political influence, rights and
demands of various stakeholders
 Superior linkages with stakeholders leading to trust, goodwill,
reduced uncertainty, improved business dealings and ultimately
higher firm performance

A Typical Stakeholder Map
The Organization
Owners/Board of Directors
Managers
Employees
Financial
Intermediaries
Government Agencies
and Administrators
Local
Communities
Competitors
Suppliers Customers
Activist
Groups
Unions The Media

Nine critical Task
1. Formulate the company’s mission,
including broad statements about its
purpose, philosophy, and goals
2. Conduct an analysis that reflects the
company’s internal conditions and
capabilities
3. Assess the company’s external
environment, including both the
competitive and general contextual
factors.

Nine critical Task
4. Analyze the company’s options by
matching its resources with the external
environment
5. Identify the most desirable options by
evaluating each option in light of the
company’s mission.
6. Select a set of long-term objectives and
grand strategies that will achieve the
most desirable options.

Nine critical Task
7. Select a set of long-term objectives and
short-term objectives that are
compatible with the selected set of long-
term objectives and grand strategies.
8. Implement the strategic choices by
means of budgeted resource allocations
in which the matching of tasks, people,
structures, technologies, and reward
systems is emphasized.
9. Evaluate the success of he strategic
process as an input for future decision
making.

The Strategic
Management Process
Establish
Strategic
Direction
(Ch. 4)
Formulate Strategies
Business-Unit (Ch. 5)
Corporate-Level (Ch. 6)
Entrepreneurship (Ch. 9)
Implement Strategies
& Establish Controls
(Chs. 7 & 8)
Analyze the Environment,
Stakeholders and
Organizational Resources
(Chs. 2 & 3)

Strategy Formulation in a
Multibusiness
Organization
Entire Corporation
(Corporate Level:
Domain Definition)
Business 2
(Business Level:
Domain Direction/Navigation)
Business 1
(Business Level:
Domain Direction/Navigation)
Marketing Finance Operations Research Human Resources
(Functional Level: Implementation and Execution)

What is the Strategic Issue Facing Tesla?
On January 7, 2020, Tesla Inc. became the most valuable US automaker in history. Valued at $81.39 billion, Tesla
passed Ford Motor Company as most valuable. Approximately two weeks later, Tesla passed Volkswagen to become
the second most valuable car company worldwide. Still well behind Toyota, which has a $233 billion market
capitalization, Tesla’s growth is unprecedented in the automotive industry. Can Tesla become number one
worldwide?
Despite tremendous growth, Tesla has its share of problems as well. Its founder, Elon Musk, tweeted that the
company’s stock price was too high; sending the stock tumbling, the Model 3 lost Consumer Reports
recommendations, and COVID-19 shutdowns of factories slowed production. These problems raise serious
questions. Will Elon’s Twitter use continue to cause problems? Are the quality problems going to tank Tesla’s
growth? Can Tesla emerge from the COVID-19 shutdown successfully?
The company faces stiff competition from automakers attempting to regain their footholds in a highly aggressive
market. Competitors are attempting to compete in the same areas as Tesla. Porsche’s Taycan, a Tesla competitor, got
a huge win with a purchase from Bill Gates. As competitors continue to develop autonomous capabilities and better
electric batteries, will Tesla continue to dominate US auto markets?

 More favorable climate for foreign business
 Trade barriers falling
 Newly industrializing countries
 Worldwide shift towards market economies
 Easier to exchange capital in foreign markets
 Communication systems are worldwide
 English universally spoken
 Technical standards universal
 Domestic markets saturated
 Sometimes foreign markets more profitable
 Acquire state-of-the-art resources
 Lower cost for goods and services
 Acquire technical knowledge

Strategic Management Process
1. Mission, Vision, Values
2. Assess firm performance, external and competitive
environment, and internal firm environment
3. Develop SWOT analysis
4. Define strategic issue(s)
5. Formulate strategies that
6. Address the strategic issue(s)
7. Take advantage of firm’s strengths & opportunities
8. Mitigates firm’s weaknesses and threats
9. Implement successfully the strategies

Strategic Planning Process vs.
Strategic Thinking
 The strategic planning process is often
rigid and unimaginative, with detailed
instructions pertaining to every aspect of
the process
 Strategic thinking leads to creative
solutions and new ideas
 The best firms use both!

Elements of Strategic
Thinking
 Intent Focused
 Strategic intent--a managerial vision of where the firm is going
 Comprehensive
 A “systems” perspective. Envisions the firm as a part of a
larger system of value creation.
 Opportunistic
 Seizes unanticipated opportunities
 Long-term Oriented
 Looks several years into the future at what the firm will
become
 Built on Past and Present
 learns from the past and builds on a foundation of the realities
of the present
 Hypothesis Driven
 Creative ideas are then critically evaluated. Takes risks

Strategic Issues
STRATEGIC ISSUE – the primary, long-term matter facing the
organization, typically long-term in nature, requires a significant
commitment of organizational attention and resources to resolve, and
is difficult/impossible to avoid. Is likely the result of multiple causes.
What’s going on?
What’s causing it?
What should we do?
https://thenounproject.com/search/?q=business+AN
D+decision&i=2272269 @b farias, CL CC BY 3.0

Strategic Alternatives
1.Resolve the strategic issue, all resolve the same issue, just in
different ways
2.Address root causes – they do not address or mask symptoms
3.Are forward looking – don’t fix yesterdays problem
4.They are realistic – practically, ethically & economically viable
5.They can be implemented by the firm
6.Must be well developed and explained
7.Must be evaluated based on the key points identified in your
analysis
8.Are almost always strategic, not tactical (no coupons,
sponsoring the local soccer team, etc.)
Career Point – the ability to develop solutions that create value
to the organization will make you a star.

Criteria to Evaluate Alternatives
Does it fix the causes of the issue?
Add value and be able to earn a profit
Add value increase price?
Add value without increasing cost?
Improve profitability?
Create a competitive advantage?
Feasible given constraints?

Benefits of Strategic Management
 Strategic formulation activities enhance the firm’s
ability to prevent problems.
 Group based strategic decisions are likely to be drawn
from the best available alternatives.
 The involvement of employees in strategy formulation
improves their understanding of the productivity-reward
relationship in every strategic plan and, thus, heightens
their motivation.
 Gaps and overlaps in activities among individuals and
groups are reduced as participation in strategy
formulation clarifies differences in roles.
 Resistance to change is reduced.

Alternatives Exercise
What is the strategic issue facing Netflix?
https://www.researchgate.net/publication/350041166_An_A
nalysis_of_Netflix%27s_Business_Strategy_and_How_the_C
ompany_is_Coping_with_the_Challenges_Posed_by_the_Cor
onavirus_Crisis
What are three alternatives (i.e., new actions / initiatives) that
the firm might consider to resolve this strategic issue? Which
would you recommend?
Criteria Alt # 1 Alt #2 Alt #3
TOTAL

Alternatives Exercise
What is the strategic issue facing Netflix?
https://www.researchgate.net/publication/350041166_An_A
nalysis_of_Netflix%27s_Business_Strategy_and_How_the_C
ompany_is_Coping_with_the_Challenges_Posed_by_the_Cor
onavirus_Crisis
What are three alternatives (i.e., new actions / initiatives) that
the firm might consider to resolve this strategic issue? Which
would you recommend?
CRITERIA ALT 1 ALT 2 ALT 3
New Content New features
Forge more
partnerships with
other channels
Cost 6 10 10
Feasibility 10 10 5
Management 5 8 10
TOTAL 21 28 25

Strategic Management.ppt

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