Knowledge Objectives

1. Knowledge Objectives • Define the term strategic management and explain components of strategy formulation and implementation • Understand synergy and identify examples • Describe generic competitive strategies. • Explain the nature and purpose of SWOT analysis.

2. Understanding Strategic Management • Strategic view helps frame decision making for other managers • Employees who think in strategic terms understand top management rationales • Trend is toward greater teamwork and cooperation throughout the planning cycle

3. Strategic Management = Strategic Planning + Implementation + Control • Strategic Management • Creating a fit between the organization and its changing environment. • Includes budget control, long-range planning, and strategic planning. • Merges strategic planning, implementation, and control to create a dynamic process.

4. Strategic Management = Strategic Planning + Implementation + Control (cont’d) • Strategy • An integrated externally-oriented perception of how to achieve the organization’s mission. • Strategic Planning • The process of determining how to pursue the organization’s long-term goals with resources expected to be available.

5. Thinking Strategically • Synergy • The whole is greater than the sum of the parts • Types of synergy • Market: extending products to new markets. • Cost: savings from combinations of common-base operations, resources, and facilities (scope economies). • Technological: the transfer and application of technologies to new markets.

6. The Strategic Management Process • Steps in the Strategic Management Process • Formulate overall strategy • Formulate supporting strategic objectives • Make implementation decisions • Establish control systems

7. Porter’s Generic Competitive Strategies • Model’s Competitive Variables • 1. How to compete (cost vs. being unique) • 2. How broad is the target market • Cost Leadership Strategy • Lowest cost structure position - provides advantages in pricing, supplier negotiation • Differentiation Strategy • Unique/superior value position - provides brand loyalty.

8. Porter’s Generic Competitive Strategies (cont’d) • Focus Strategies • Variations on cost/differentiation but with a focus on narrow or regional market segment

9. Forecasting Techniques • Scenario analysis • Preparing written descriptions of alternative but equally likely future situations. • Longitudinal scenarios: describing how the future situations will evolve from the present. • Cross-sectional scenarios: describing future situations at a given point in time.

10. Thinking Strategically • The “Internet” World • There are still a lot of ways to make money on the Internet. • Customer loyalty is built with reliable brand names and “sticky” web sites. • Next Big Thing - Broadband/WiFi

11. Formulation • Which customers to serve?. • Identify Current & Future Competitive (dis)advantages • Find “fit” potential with SWOT (Strengths, Weaknesses, Opportunities, and Threats) • Assess likely competitive response(s)

12. Formulation • Identify, then perform competitive comparison of key capabilities, e.g. • Quick response to market trends. • Rapid product development. • Rapid production and delivery. • Continuous cost reduction. • Continuous improvement of processes, human resources, and products. • Greater flexibility of operations.

13. Formulation • Select option(s) • Formulate key objectives (Results-oriented, measurable objectives ) • Identify required activities • Assign responsibilities • Estimate time and sequencing of activities • Determine required resources • Lead, communicate, and coordinate the elements

14. Strategic Implementation • Implementation of Strategic Plans • Cascading the plan - shift to implementation & build middle-manager commitment • new organizational structure(s) • (reorient or replace) people. • Culture (new?). • Control systems.