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Discussion (In groups of 5s)
Why should we even study/embark on
strategic planning.
What makes a decision strategic?
What is strategic management?
Prentice Hall, Inc. 2009 1-1
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Definitions of strategy (1)
..a pattern in a stream of decisionsHenry Mintzberg
..the long-term direction of an organisation
Exploring Strategy
Competitive strategy is about being different. It meansdeliberately choosing a different set of activities to delivera unique mix of valueMichael Porter
Sources:H. Mintzberg, Tracking Strategy: Toward a General Theory, Oxford University Press, 2007, p. 3
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Prentice Hall, Inc. 2009 1-3
Strategic Management: a set of managerial decisionsand actions that determines the long-run performanceof a corporation.
Includes:
Internal and external environment scanning
Strategy formulation
Strategy implementation
Evaluation and control
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Prentice Hall, Inc. 2009 1-4
Mission- the purpose or reason for the organizationsexistence
Vision- describes what the organization would like tobecome
Objectives- the end results of planned activity
Basic Elements of Strategic Management
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Prentice Hall, Inc. 2009 1-5
Strategies- form a comprehensive master plan thatstates how the corporation will achieve its missionand objectives
Corporate Business
Functional
Policies- the broad guidelines for decision makingthat links the formulation of a strategy with itsimplementation
Basic Elements of Strategic Management
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Strategic decisions
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Prentice Hall, Inc. 2009 1-7
Benefits of Strategic Management:
Clearer sense of strategic vision for the
firm Sharper focus on what is strategically
important
Improved understanding of a rapidlychanging environment
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Prentice Hall, Inc. 2009 1-8
Improved organizationalperformance
Achieves a match
between theorganizationsenvironment and itsstrategy, structure andprocesses
Important in unstableenvironments
Strategic thinking
Organizational learning
Additional Benefits of Strategic Management:
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Prentice Hall, Inc. 2009 1-9
Strategic flexibility:the ability to shift from onedominant strategy to another and requires:
Long-term commitment to the development andnurturing of critical resources
Learning organization
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Prentice Hall, Inc. 2009 1-10
Learning organization: an organization skilled atcreating, acquiring, and transferring knowledge and at
modifying its behavior to reflect new knowledge andinsights
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Prentice Hall, Inc. 2009 1-11
Main activities of a learning organization include:
Solving problems
systematically
Experimenting with newapproaches
Learning from pastexperience, history andexperiences of others
Transferring knowledgequickly and easilythroughout theorganization
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Prentice Hall, Inc. 2009 1-12
Basic Elements of Strategic Management
1. Environmental scanning
2. Strategy formulation3. Strategy implementation
4. Evaluation and control
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Prentice Hall, Inc. 2009 1-13
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Prentice Hall, Inc. 2009 1-14
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Prentice Hall, Inc. 2009 1-15
Basic Elements of Strategic Management
Environmental Scanningis the monitoring, evaluatingand disseminating of information from the externaland internal environments to key people within theorganization
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Prentice Hall, Inc. 2009 1-16
Strategy Formulation: the development of long-range
plans for the effective management of environmentalopportunities and threats in light of organizationalstrengths and weaknesses (SWOT)
Basic Elements of Strategic Management
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Prentice Hall, Inc. 2009 1-17
Basic Elements of Strategic Management
Strategy implementation: the process by which
strategies and policies are put into action through thedevelopment of:
Programs
Budgets Procedures
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Prentice Hall, Inc. 2009 1-18
Basic Elements of Strategic Management
Evaluation and control: the process in whichcorporate activities and performance results are
monitored so that actual performance can becompared to desired performance
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Prentice Hall, Inc. 2009 1-19
Basic Elements of Strategic Management
Performance: the end result of organizational activities
Feedback/Learning Process: revise or correctdecisions based on performance
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Prentice Hall, Inc. 2009 1-20
Triggering event: something that acts as a stimulus fora change in strategy and can include:
New CEO
External intervention
Threat of change of ownership
Performance gap
Strategic inflection point
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Prentice Hall, Inc. 2009 1-21
Strategic Decision Making Process:
1. Evaluate currentperformance results
2. Review corporategovernance
3. Scan and assess theexternal environment
4. Scan and assess theinternal corporateenvironment
5. Analyze strategic(SWOT) factors
6. Generate, evaluate andselect the bestalternative strategy
7. Implement selected
strategies8. Evaluate implemented
strategies
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Prentice Hall, Inc. 2009 1-22
Strategic audit provides a checklist of questions, by
area or issue, that enables a systematic analysis to bemade of various corporate functions and activities
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Levels of strategy (1)
Operational strategy
Business-level
strategy
Corporate-
level
strategy
News Corporation
diversifying from print
journalism into social
networking.
Website and marketing
improvements at My
Space to attract more
users.
MySpace engineers
increasing processing
Capacity.
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Levels of strategy
Corporate-Level Strategyis concerned withthe overall purpose and scope of anorganisation and how to add value tobusiness units.
Business-Level Strategyis concerned withthe way a business seeks to competesuccessfully in its particular market.
Operational Level Strategyis concerned
with how different parts of the organisationdeliver the strategy in terms of managingresources, processes and people.
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Strategy statements
Strategy statements should have threemain themes:
the fundamental goalsthat the organisation
seeks, which draw on the stated mission,vision and objectives
the scopeor domain of the organisationsactivities
and the particular advantages orcapabilitiesit has to deliver all these.
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Working with strategy (1)
All managers are concerned with strategy: Top managersfrequently formulate and
control strategy but may also involve others inthe process.
Middle and lower level managershave tomeet strategic objectives and deal withconstraints.
All managershave to communicate strategyto their teams.
All managers can contribute to the formationof strategy through ideas and feedback.
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Working with strategy (2)
Organisations may also use strategyspecialists:
Many large organisations have in-house
strategic planning or analyst roles. Strategy consultantscan be engaged from
one of many general management consultingfirms (e.g. Accenture, IBM Consulting, PwC).
There are a growing number ofspecialiststrategy consulting firms(e.g. McKinsey &Co,The Boston Consulting Group).
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Prentice Hall, Inc. 2009 1-28
1. Why has strategic management become so importantto todays corporations?2. How does strategic management typically evolve
in a corporation?3. What is a learning organization? Is this approach to
strategic management better than the more traditionaltop-down approach in which strategic planning is primarilydone by top management?
4. Why are strategic decisions different from other kinds
of decisions?
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Summary of todays Lectures
Thank you
Prentice Hall Inc 2009 1 29