Strategy and the organization

Topics: Strategic management, Management, Organization Pages: 5 (746 words) Published: October 16, 2014
Chapter 1a:Strategy and the organisation

1.0What is an organization?

1.1An organization as a collection of components

1.1.1Internal environment
An organization can be seen as consisting of the following components: Strategies
Shared beliefs: Social systems

Note:McKinsey’s 7S framework

1.2Organisations as collections of people and entities

1.2.1Internal Stakeholders
(i) Board of Directors
(ii) Managers
(iii) Staff
(iv) Unions

1.2.2External stakeholders
(i) Government:Political (PEST)
(ii) Users:Social (PEST), Customer behaviour
(iii) Customers:Buyers (Porter’s 5 Forces) Distributors, Retailers, (iv) Financiers:Investors, Banks
(v) Owners:Corporate Governance
(vi) Suppliers:Suppliers (Porter’s 5 Forces)
(vii) CompetitorsCompetitor Analysis

1.3 Organisations, politics, power and rationality
Assumption that organization and individuals behave rationally Organisational politics and power
(i) Information the decision-makers have
(ii) Relative power of stakeholders and their influence on strategic choice

1.4 The nature and value of strategic management
Strategic management includes:
Managing activities internal to the firm (operations environment) Monitoring and responding to the immediate (micro) environment (i) Competitors
(ii) Suppliers
(iii) Increasingly scare resources
(iv) Government agencies
(v) Government regulations
(vi) Customers
Monitoring and responding to the remote (macro) environment (i) Political priorities
(ii) Economic conditions
(iii) Social conditions
(iv) Technological developments
Managers have to subordinate the demands of the firm’s internal activities and external environment to the multiple and often inconsistent requirements of stakeholders: owners, top management, employees, communities, customers and country. To deal effectively and enhance the growth and profitability of the firm To employ management processes that position the firm strongly in the competitive environment To anticipate changes in the environment and of unexpected internal and competitive demands

1.4.1Strategic management is defined as the set of decisions and actions that result in the formulation, implementation and control of long-term plans designed to achieve the firm’s objectives.

Strategic management comprises nine critical tasks:
(i) Formulate the firm’s mission, including its purpose, philosophy and goals (ii) Conduct an analysis that reflects the firm’s internal conditions and capabilities (iii) Assess the firm’s external environment, including both the competitive and the general contextual factors (iv) Analyse the firm’s options by matching its resources to the external environment (SWOT, TOWS) (v) Evaluate and identify the most desirable option(s) in the light of the firm’s mission ( opportunity / threat matrix, RACES, Mc’Kinseys 7S framework) (vi) Select a set of long-term objectives and strategies that will achieve the most desirable options (vii) Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and long-term strategies (viii) Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structure, technologies, skills, reward systems and shared beliefs is emphasized (7s framework) (ix) Evaluate the success of the strategic process as an input for future decision-making.

1.5 Dimensions of strategic decisions
Strategic issues:
(i) Require top-management decisions
(ii) Require large amounts of firm’s resources
(iii) Often affect the firm’s long-term profitability
(iv) Are future-oriented
(v) Usually have multi-functional or multi-business consequences (vi) Require considering firm’s external environment

1.6 Organisational behaviour and strategic planning
Bounded rationality
Human beings fallible
Cannot process all information and reach perfect...
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