Mgnted32 Chapter 1, 2 & 4 Flashcards
*can be described as the
identification of the purpose of the organization
and the plans and actions to achieve
that purpose.
*is to
bring about the conditions under which the
organization can create this vita
l additional value.
*must also ensure
that the organization adapts to changing circumstances
so that it can continue to add value
in the future.
Strategic management
The resources and capabilities of an organization
include its human resource skills, the investment
and the capital in every part of
the organization.
RESOURCES STRATEGY
Environment encompasses every aspect external to the
organization itself: not only the economic and
political circumstances, which may vary widely around
the world, but also competitors, customers and suppliers.
ENVIRONMENTAL STRATEGY
Add value to the supplies brought into
the organization. To ensure its long-term survival,
an organization must take the supplies it
brings in, add value to these through
its operations and then deliver its output
to the customer.
ADDING VALUE
Customers are crucial to strategic management because they make the buying decision, not competitors. This may seem obvious, but much of the literature on strategic management has focused more heavily on competitors than on customers.
Existing and new customers
for the long-term survival of the organization, it is important that the strategy is sustainable.
Offer sustainable competitive advantage
to deliver the strategy Is at least partly about how to develop organization or allow them to evolve towards their chosen purpose.
Implementation processes to deliver the strategy
links that cannot easily be duplicated and will contribute to superior performance. The strategy must exploit the many linkages that exist between the organization and its environment: suppliers, customers, competitors and often the government itself.
Exploit linkages between the organization and its environment
the ability to move the organization forward in a
significant way beyond the current environment. This is likely to involve
innovative strategies.
Vision and purpose
CORE AREAS OF STRATEGIC MANAGEMENT
Strategic analysis
Strategy Development
Strategy Implementation
The organization, its mission and objectives must be examined and analyzed. Strategic management provides value for the people involved in the organization its stakeholders – but it is often the senior managers who develop the view of the organization’s overall objectives in the broadest possible terms.
Strategic analysis
The strategy options must be developed and then selected. To be successful, the strategy is likely to be built on the skills of the organization and the special relation- ships that it has or can develop with those outside – suppliers, customers, distributors and government.
Strategy development
The selected options now must be implemented. There may be major difficulties in terms of motivation, power relationships, government negotiations, company acquisitions and many other matters.
Strategy Implementation
-the environment within which the strategy operates and is developed. In the IBM case during the 1t80s, the context was the fast-changing technological development in personal computers.
Context
how the actions link together or interact with each other as the strategy unfolds against what may be a changing environment.
Process
the main actions of the proposed strategy. The content of the IBM strategy was the decision to launch the new PC and its subsequent performance in the marketplace.
Content
TWO MAIN APPROACHES TO STRATEGIC MANAGEMENT DEVELOPMENT:
The Prescriptive Approach
The Emergent Approach
takes the view that the three core elements are linked together sequentially.
The Prescriptive Approach
regards the three core areas as being essentially interrelated.
The Emergent Approach
-means everything and everyone outside the organisation: competitors,
customers, suppliers plus other influential institutions such as local and national governments.
- understanding of the competitive environment is an essential element of the development of strategic management
Competitive Environment
– exploring the skills and resources available inside the organisation (e.g.
human resources, plant, fi nance).
Analysis of resources
is an advantage over competitors that cannot easily be imitated.
sustainable competitive advantage
environment can usefully be predicted for many market. (prescriptive strategists )
Prediction is inaccurate because the environment is chaotic (emergent strategists )
- The prescriptive versus emergent debate .
all strategists regard the environment as uncertain.
- The uncertainty
One solution to the problem posed by such a wide range of factors might be to produce a list of every element.
- The range of influences
Two types of results from the analysis:
Proactive outcomes
Reactive outcomes
The environmental analysis will identify positive opportunities or negative threats.
Proactive outcomes
The environmental analysis will highlight important strategic changes over which the organisation has no control but to which, if they happen, it will need to be able to react.
Reactive outcomes
Three Areas
Market definition and size
Market growth
Market Share
it helps in developing sustainable competitive
advantage, identifies opportunities and threats and may provide opportunities for productive
co-operation with other organisations.
Environmental Analysis
What is the size of the market? , how to define the ‘market’.
The answer will depend on the customers and the extent to which other products are a real substitute.
Market definition and size
To estimate how much the market has grown over the previous period – usually the previous year.
Market growth
Large share may make it possible to influence prices and may also reduce costs through scope for economies of scale, thereby increasing profitability.
Market Share
it is important to consider the basic conditions surrounding the organisation.
if the forces are exceptionally turbulent, they may make it difficult to use some of the analytical techniques.
Degree of Turbulence in the Environment
Two Main Measures:
Changeability
Predictability
the degree to which the environment is likely to change.
Changeability
the degree to which such changes can be predicted.
Predictability
Changeability comprises:
Complexity
Novelty
the degree to which the organisation’s environment is affected by factors such as internationalisation and technological, social and political complications.
Complexity
the degree to which the environment presents the organisation with new situations.
Novelty
Predictability comprises:
rate of change of the environment (from slow to fast);
Visibility of the future in terms of the availability and usefulness of the information used to predict the future.
scenario is a model of a possible future environment for the organisation, whose strategic implications can then be investigated.
Scenarios are concerned with peering into the future, not predicting the future.
The aim is not to predict but to explore a set of possibilities;
Scenario-based Analysis
is a model of a possible future environment for the organisation, whose strategic implications can then be investigated.
Scenario
