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What is strategic management? The set of managerial decisions and actions that determines the long-run performance of an organisation.

Strategic management

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Why strategic management is important
1. 2.

The strategic management process

It results in higher organisational performance. It requires that managers examine and adapt to business environment changes. It coordinates diverse organisational units, helping them focus on organisational goals. It is very much involved in the managerial decision-making process.

3.

4.

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

Figure 8.1

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Strategic management process Step 1: Identifying the organisation’s current mission, objectives, and strategies Mission: the firm’s reason for being
The scope of its products and services

Components of a mission statement
• Customers: Who are the organisation’s customers? • Products or services: What are the organisation’s major products or services? • Markets: Where does the organisation compete geographically? • Technology: How technologically current is the organisation? • Concern for survival growth, and profitability: Is the organisation committed to growth and financial stability? • Philosophy: What are the organisation’s basic beliefs, values, aspirations, and ethical priorities? • Self-concept: What is the organisation’s major competitive advantage and core competencies? • Concern for public image: How responsive is the organisation to societal and environmental concerns? • Concern for employees: Does the organisation consider employees a valuable asset? Source: Based on F. David, Strategic Management, 8th ed. (Upper Saddle River, NJ: Prentice Hall, 2001), pp. 65–66.

Goals: the foundation for further planning
Measurable performance targets

Step 2: Conducting an external analysis
The environmental scanning of specific and general environments Focuses on identifying opportunities and threats

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Strategic management process (cont’d) Step 3: Conducting an internal analysis Assessing organisational resources, capabilities, activities, and culture: Strengths (core competencies) create value for the customer and strengthen the competitive position of the firm. Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.

Identifying the organisation’s opportunities

Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)

Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

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Robbins, Bergman, Stagg, Coulter: Management 4e © 2006 Pearson Education Australia

Figure 8.3

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Strategic management process (cont’d) Step 4: Formulating strategies Develop and evaluate strategic alternatives Select appropriate strategies for all levels in the organisation that provide relative advantage over competitors Match organisational strengths to environmental opportunities Correct weaknesses and guard against threats

Strategic management process (cont’d) Step 5: Implementing strategies Implementation: effectively fitting organisational structure and activities to the environment The environment dictates the chosen strategy; effective strategy implementation requires an organisational structure matched to its requirements.

Step 6: Evaluating results
How effective have strategies been? What adjustments, if any, are necessary?

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