Basic Concept of Strategic Management

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A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives: - Corporate strategy: company’s overall direction
- Business strategy: occurs at the business unit or product level - Functional strategy: at a functional area to achieve corporate and business objectives and strategies Strategic Management: a set of managerial decisions and actions that determines the long-run performance of a corporation. Includes:

Internal and external environment scanning
Strategy formulation
Strategy implementation
Evaluation and control

Phases of Strategic Management:

Phase 1: Basic financial planning
Phase 2: Forecast-based planning
Phase 3: Externally oriented strategic planning
Phase 4: Strategic management

Benefits of Strategic Management:

Clearer sense of strategic vision for the firm
Sharper focus on what is strategically important
Improved understanding of a rapidly changing environment

Improved organizational performance
Achieves a match between the organization’s environment and its strategy, structure and processes Important in unstable environments

Strategic thinking
Organizational learning

Impact of Globalization:

Globalization: the integration and internationalization of markets and corporations

Impact of Environmental Sustainability:

Environmental Sustainability: the use of business practices to reduce a company’s impact on the natural, physical environment

Regulatory risk
Supply chain risk
Product and technology risk

Litigation risk
Reputational risk
Physical risk

Strategic flexibility: the ability to shift from one dominant strategy to another and requires:

Long-term commitment to the development and nurturing of critical resources Learning organization

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

Main activities of a learning organization include:
Solving problems systematically

Experimenting with new approaches

Learning from past experience, history and experiences of others

Transferring knowledge quickly and easily throughout the organization

Basic Elements of Strategic Management

Environmental scanning
Strategy formulation
Strategy implementation
Evaluation and control

Basic Elements of Strategic Management

Environmental Scanning is the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the organization

Strategy Formulation: the development of long-range plans for the effective management of environmental opportunities and threats in light of organizational strengths and weaknesses (SWOT)

Mission- the purpose or reason for the organization’s existence

Vision- describes what the organization would like to become

Objectives- the end results of planned activity

Strategies- form a comprehensive master plan that states how the corporation will achieve its mission and objectives Corporate
Business
Functional
Policies- the broad guidelines for decision making that links the formulation of a strategy with its implementation

Basic Elements of Strategic Management

Strategy implementation: the process by which strategies and policies are put into action through the development of:

Programs
Budgets
Procedures

Basic Elements of Strategic Management

Evaluation and control: the process in which corporate activities and performance results are monitored so that actual performance can be compared to desired performance

Basic Elements of Strategic Management

Performance: the end result of organizational activities

Feedback/Learning Process: revise or correct decisions based on performance

What Makes a Strategic Decision?

Strategic decision making focuses...
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