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Teacher Development Course on Successful Strategic Management

Dr. Theresa LauAssociate Professor

Hong Kong Polytechnic University

Dr. K.F. ChanAssociate Professor

Hong Kong Polytechnic University

November 2004

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Strategic Management

Strategic Management

The set of managerial decisions and actions that determines the long-run performance of a corporation

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What is Strategy

Strategy is a pattern in a stream of decisions or actions – H. Mintzberg It is a plan: intended course of action It is a pattern: a stream of actions It is a position: a product/market domain;

related to environment It is a perspective: a concept; a shared

ideology; driving force; the heart beat It is a ploy: a specific manoeuvre to outbeat a

competitor

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Deliberate and Emergent Strategies

Intended Strategy

RealizedStrategy

Unrealized

Strategy

Emergent Strategy

Deliberate Strategy

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Three Key Strategic Questions

Where is the organization now?If no changes are made, where will the

organization be in one, two, five or ten years? Are the answers acceptable?

If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved?

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Benefits of Strategic ManagementClearer sense of strategic visionSharper focus on what is

strategically importantBetter coordination, communication

and staff commitmentBusinesses with strategic

management are more effectivePositive relationship between

strategy and financial performance

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Basic Elements of the StrategicManagement Process

Evaluation and

Control

Strategy Implementation

Environmental Scanning

Strategy Formulation

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Involves thinking strategically about Firm’s future business plans Where to “go”

Tasks include Providing long-term direction Giving firm a strong identity

Developing a Strategic Vision

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Missions vs. Strategic Visions

A mission statement focuses on current business activities -- “who we are and what we do” Current product and

service offerings Customer needs being

served Technological and

business capabilities

A strategic vision concerns a firm’s future business path -- “where we are going” Markets to be pursued Future technology-

product-customer focus Kind of company that

management is trying to create

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Environmental Scanning

Defined:

The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the firm.

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Environmental Scanning

Identify strategic factors SWOT Analysis

• Strengths, Weaknesses • Opportunities, Threats

Internal EnvironmentStrengths & Weaknesses

• Within the organization but not subject to short-run control of management

External EnvironmentOpportunities & Threats

• External to the organization but not subject to short-run control of management

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Environment Scanning

Industry Analysis

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The Value Chain

Adapted from Exhibit 3.1 The Value Chain: Primary and Support Activities

Source: Adapted with permission of The Free Press, a division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter.

General administration

Human resource management

Technology development

Procurement

Inbound logistics

OperationsOutbound logistics

Marketing and sales

Service

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Strategy Formulation

Defined:

Development of long-range plans for the effective management of environmental opportunities and threats in light of corporate strengths and weaknesses.

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Hierarchy of Strategy

C orp ora teS tra teg y

B u s in ess(D ivison L eve l)S tra teg y

F u n c tion a l S tra teg y

S tra teg icB u s in ess

U n it

M an u fac tu rin g F in an ce M arke tin g R esearchan d

D eve lop m en t

H u m anR esou rces

S tra teg icB u s in ess

U n it

S tra teg icB u s in ess

U n it

C orp ora te H ead q u arte rs

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Corporate Strategy I

Corporation’s overall direction and the management of its business

– Key Issues:

Firm’s directional strategy Firm’s portfolio strategy

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Corporate Strategy II Directional Strategy

Growth Strategy

*Concentration growth *Vertical integration *Diversification

Stability Strategy

Retrenchment Strategy

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Corporate Strategy III

Portfolio Analysis

BCG (Boston Consulting Group) Matrix Product life cycle and funding

decisionsQuestion marksStarsCash cowsDogs

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BCG Matrix

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Business Strategy

Emphasizes improving the competitive position of a corporation’s products or units

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Porter’s Competitive Strategies

Generic Competitive Strategies: - Lower cost strategy . Design, produce, market more efficiently than competitors - Differentiation strategy . Unique and superior value in terms of product quality, features, service - Niche strategy

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Functional Strategy

Functional Strategy:

- The approach a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity.

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Functional Strategy

Core competency:Something that a corporation can do

exceedingly well – a key strength

Distinctive competencies:When core competencies or core

capabilities are superior to those of the competition.

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Definition of Strategy Implementation

Strategy Implementation

The process of putting strategies and policies into action

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Strategy Implementation

Implementation Process Questions:

Who are the people to carry out the strategic plan?

What must be done to align operations with new direction?

How is work going to be coordinated?

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The Seven S FrameworkThe Seven S Framework

SuperordinateGoals

Structure

Staff

Systems

StyleSkills

Strategy

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Definition of Evaluation and Control

Evaluation and Control

The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance