The Nature and Value of Strategic management:
* Managers must manager internal activities along with responding to problems posed by the immediate and remote external environments * Immediate external environment: competitors, suppliers, increasingly scarce resources, gov agencies, regulations, shifts in customer preference * Remote external: economic, social, political, technology, * Must be anticipated monitored, assessed and incorporated into decision making * Strategic management- the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives. * There are 9 critical tasks:
* Formulate the mission
* Analyze internal conditions and capabilities
* Asses external environment
* Analyze options—match resources with external environment * Identify most desirable options (evaluate in light of the mission) * Select long term objectives and grand strategies to achieve the most desired options * Develop annual objectives and aligned short term strategies * Implement: resource allocation, match tasks, people, structures.. etc * Evaluate success
* Planning directing organizing controlling
* Strategy= large-scale, future oriented plans for interacting with the competitive environment to achieve company objectives; ‘Game Plan’ * Dimensions of Strategic Decisions:
* Strategic Issues Require Top Management Decisions- imply it over arches several areas of operations * Broad implications
* Strategic Issued Require Large Amount of the Firm’s Resources- they commit the firm to actions over an extended period, therefore they require substantial resources. * Strategic Issues Often Affect the Firm’s Long Term Prosperity- commit the firm for typically 5 years, but the impact lasts much longer. Once committed to a strategy, the firms image and competitive advantage are linked to that strategy. * Strategic Issues are Future Oriented: based on what managers forecast; anticipatory, proactive stance * Strategic Issues usually have multifunctional or multibusiness consequences- involve many SBU (strategic business units)., divisions, or program units all will be affected by allocations of responsibility and resource. * Strategic Issues Require Considering the Firm’s External Environment- To optimally place the firm, manager must look beyond their own operations * Three Levels of Strategy:
* Corporate Level- composed of board of director, CEO.. etc. * Responsible for firm’s financial performance and nonfinancial goals * Set objectives and formulate strategies that span the acitivies and functional areas. * Decisions at this level are greater risk, cost, and profit potential, need greater flexibility, and longer time horizons * Business Level- business and corporate managers
* Translate statements of direction and intent into concrete objectives and strategies for individual business divisions (SBU’s). * Decisions here help bridge the decisions above and below * Eg) plant location, marketing segment…etc
* Functional Level- composed of managers of product, geographic, and functional areas * Develop objectives and short-term strategies in such areas as production, operations, R&D, accounting, finance, marketing and HR.
* Responsibility is to IMPLEMENT or execute the strategic plans * Decisions at this level are actions oriented, short range, low risk * Corporate and business focus on doing the right things, function level focuses on doing things right * Formality in Strategic Mgmt
* Formality- the degree to which participation, responsibility, authority, and discretion in decision making are specified in strategic mgmt. * Factors that...
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