Chapter 1 Flashcards
Strategic Management
A process that includes top management’s analysis of the environment in which the org operates prior to a strategy and plan for implementation/control of said strategy.
What must be done before a strategy is implemented…
An organization has a plan, its competitive advantage is understood, and its members understand the reason for its existence. Mission - Strategy - Competitive Advantage
Mission
Broadly defined but enduring statement of purpose that identifies scope of an org’s operations and its offerings to various stakeholders
Strategy
top management’s plans to develop and sustain competitive advantage so that the org’s mission is fulfilled
Competitive Advantage
A state whereby a firm’s successful strategies cannot be easily duplicated by its competitors
Strategic Management Process - 5 Steps
1) External Analysis
2) Internal Analysis
3) Strategy Formulation
4) Strategy Execution
5) Strategic Control
Strategic Management Process - 1) External Analysis
Analyze opportunities and threats (constraints) that exist in org’s external environment, including industry and forces in the external environment swOT
Strategic Management Process - 2) Internal Analysis
Analyze org’s strengths and weaknesses in its internal environment. Managerial ethics and corporate social responsibility SWot
Strategic Management Process - 3) Strategy Formulation
Formulate strategies that build and sustain competitive advantage by matching org’s strengths and weaknesses with environment’s opportunities and threats (SWOT)
Strategic Management Process - 4) Strategy Execution
Implement strategies that have been developed
Strategic Management Process - 5) Strategic Control
Measure success and make corrections when the strategies are not producing the desired outcomes
Business Model
The mechanism whereby the organization seeks to earn a profit by selling its goods or services.
Org seeks to earn a profit by selling its goods
Magazine Publisher Adopts different business models
1) Subscription Model - profits come from readers
2) Advertising Model - profits come from advertisers
Business models that have high prices on consumables
Gillette - Deep discounts on razors with hopes of future purchases of blades
Cell Phones - given away for 2 year contracts
Printers - cheap but ink is expensive
Factors typically associated with successful strategies
1) Org’s competitive environment is well understood, in detail
2) Strengths and weaknesses assessed in thorough and realistic manner
3) The strategy is consistent with mission/goals of org
4) Plans for putting strategy into action are designed with specificity before implementation
5) Possible future changes in proposed strategy (strategic control) are evaluated before strategy adopted
Progressive Firms
Often devise innovative business models that extract revenue/profits from sources not identified by competitors
Strategic Management - not just for profit firms
Top managers of any firm (for profit/non-profit) must understand org’s environment and capabilities to develop strategies to assist in attaining its goals; i.e. Drexel University president
Henry Mintzberg
Introduced two terms:
Intended strategy
Realized strategy
Intended Strategy
What management originally planned
May be realized just as planned
May be realized in a modified plan
May be realized in an entirely different form
Realized Strategy
What management actually implements
Usually differs from the intended strategy
Gap between intended and realized strategies
Stems from:
1) unforeseen environmental or org events
2) improvement in top management’s ability to assess its environment
Creates constant need for strategic management to continue to ensure firm is staying on course.
Managers should search for new information and be willing to make changes when necessary - i.e. strategic control
Scientific Perspective on Strategic Management
Most strategy scholars endorse this
Strategic managers are encouraged to systematically assess the firm’s external environment and evaluate pros and cons of alternatives before formulating strategy
Strategic managers should be trained, highly skilled analytical thinkers capable of digesting objective data and translating it into desired direction for firm
Artistic Perspective on Strategic Management
Lack of environmental predictability & fast pace change render elaborate strategy planning suspect as best
Incorporate large amounts of creativity and intuition to design comprehensive strategy for firm
Mintzberg says craftsman (individual skill/dedication/ perfection through mastery of detail) embodies artistic model
Outcomes of various alternatives, chart course based on holistic thinking, intuition, & imagination
Strategy Scientists
Minimize/reject the role of imagination/creativity in strategy process and not open to alternatives that don’t come from an analytical approach
Business Policy
1950s term and start of strategic management
