Formulation, Implementation and Evaluation

1. Understand the Strategic management concepts.

2. How to be a strategic thinker .3. How to create a competitive advantages

to your business.4. Develop students’ skills in strategy design,

implementation and evaluation.5. How culture differences affect

management.6. Develop the knowledge on the influence of

social responsibility on business strategy.

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1. Lecturing and discussions.2. Using cases in teaching : Real cases

and problem solving.3. Presentations from students.4. Group work, teamwork and

assignments.

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Concepts and definitions: Strategy, Strategic management, strategic planning, Importance of strategic management, Internal and external environment analysis, competitive advantages, stakeholders, social responsibility and so on.

Tools will be used in analysis, e.g., SWOT, value chain, resource – based approach, industrial analsis.

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Types of Strategies: Corporate-Level Strategies, Business Unit Strategies, Functional/operational Strategies.

Strategy Formulation: Business Mission, strategy analysis and choice, corporate objectives and strategies.

Strategy Implementation: Organizational Structure, assessment of Organizational Structure, restructuring and reengineering, short-term objectives and programs and activities.

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Strategy Evaluation and control: processes of evaluation, measuring performance and corrective action.

Global Issues in strategic management: global competition, managing cross-cultures.

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

Strategy“Top Management’s plan to attain outcomes

consistent with the organization’s mission and goals” (Wright, Kroll and Parnell,1998)

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A continuous process of change and modification: intended strategy, realized strategy.

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Strategic Management Defined

Set of managerial decisions and actions that determines the long-run performance of a firm.It includes environmental scanning, strategy formulation, strategy implementation, and evaluation and control.

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Strategy Formulation

Strategy Implementation

Strategy Evaluation

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Strategy Formulation

Vision & Mission

Alternative Strategies

Long-Term Objectives

Strengths & Weaknesses

Opportunities & Threats

Strategy Selection

Issues include:What new businesses to enterWhat businesses to abandonHow to allocate resourcesExpand operations or diversifyEnter international marketsMerge or form joint ventureAvoidance of hostile takeover

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Strategy Implementation

Employee Motivation

Policies

Annual Objectives

Resource Allocation

Action Stage of strategic management:Most difficult stage Mobilizing employees and managers Interpersonal skills are criticalConsensus on pursuing goals

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Strategy Evaluation

Performance Measurement

External Review

Internal Review

Corrective Action

Final stage of strategic management: All strategies subject to future modification Success today is no guarantee of success

tomorrow Success creates new and different problems Complacency\satisfaction leads to demise \

end.

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According to Peter Drucker…The prime task is to think through the overall mission of a business

Ask the question:What is our Business?

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The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty.

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Intuition based on:Past experiencesJudgmentFeelings

Useful for decision makingConditions of great uncertaintyConditions with little

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Intuition and judgmentManagement at all levelsAnalyses are influenced

Analytical thinking and intuitive thinkingComplement each other

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Organizations must monitor eventsOn-going processInternal and external eventsTimely changes

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Rate and magnitude of changesIncreasing dramatically

E-commerce Demographics Technology Merger-mania (fashion)

Effective Adaptation Long-run focus

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Key strategic-management questions: What kind of business should we become? Are we in the right fields? Should we reshape our business? What new competitors are entering our

industry? What strategies should we pursue? How are our customers changing?

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Strategists Most responsible for success or failure of an

organization Various job titles:

Chief executive officer President Owner Chair of the Board Executive Director Entrepreneur

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Strategic-Management Process –

Dynamic and Continuous More formal in larger organizations

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Proactive in shaping organization’s future Initiate and influence activities Formulate better strategies

Systematic, logical, rational approach

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Financial benefits Improvement in sales Improvement in profitability Improvement in productivity

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Non-Financial benefits Enhanced awareness of external threats Improved understanding of competitors’

strategies Increased employee productivity Reduced resistance to change Understanding of performance-reward

relationshipsEnhances problem-prevention capabilities

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1. Identification of opportunities2. Objective view of management problems3. Improved coordination and control4. Minimizes adverse conditions and changes5. Decisions to better support objectives6. Effective allocation of time and resources7. Internal communication among personnel

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8. Integration of individual behaviors9. Clarifies individual responsibilities10.Encourages forward thinking11.Encourages favorable attitude toward

change12.Discipline and formality to the

management of the business

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Poor reward structures Fire-fighting Waste of time Too expensive Laziness Content with success

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Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Suspicion

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Basic Concepts of Strategic Management

4 Phases of Strategic Management• Firms evolve through the following

faces of strategic management. 1. Basic financial planning2. Forecast-based planning3. Externally-oriented planning4. Strategic management

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Basic Concepts of Strategic Management

1. Basic financial planning: initiate some planning when they requested to set up their budgets; considers activities for one year.

2. Forecast-based planning: consider projects for more than a year. The time horizon is usually 3-5 years. Extrapolate current trends in the future.

3. Externally-oriented planning: conduct strategic planning by top management and they leave implementation to low level.

4. Strategic management: planning by forming a team from all levels in the company.

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Organizational Adaptation

Organization “fit” with environment

• Theory of population ecology\biology: org. unable to adapt to changing conditions, because lack of interest in change.

• Institution theory: org. can adapt to changes by imitating others.

• Strategic choice perspective: not only adapt to changes but also it can reshape its environment.

• Organizational learning theory:

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Organizational Adaptation

Strategic flexibility

• Demands long-term commitment to development of critical resources

• Demands firm become a learning organization

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Learning Organizations

An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights

1. New CEO2. External intervention e.g., from banks.3. Threats of change in ownership.4. Performance gap.5. Strategic inflection point.

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Strategic Decision Making

Strategic Decisions

–Rare: unusual, no precedent to follow.– Consequential : require substantial resources and commitment from all.– Directive: set precedent for future action.

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Strategic Decision Making

Top managers tend to use one of four modes/approach of strategy formulation: Mintzberg’s Modes

–Entrepreneurial mode–Adaptive mode–Planning mode–Logical incrementalism

– Entrepreneurial mode: the strategy is made by powerful individual. The focus on opportunities.

– Adaptive mode: using reactive solution rather than proactive.

– Planning mode: it uses reactive and proactive mode. Data gathering and analysis and select strategies.

– Logical incrementalism: strategy is set based on a series of incremental commitment rather than through global formulation of total strategies. This suitable when environment is changing rapidly.

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Hambrick and Fredrickson – Good Strategy

5 Elements of Good Strategy

1. Arenas2. Vehicles3. Differentiators4. Staging5. Economic logic