SESSION 2-3 Flashcards
What is Strategic Management?
The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.
What is the goal of Strategic Management?
Competitive advantage
What does Strategic Management say about Competition?
- We operate in a world of
competition. - We have to out-run competition
- But we compete not just to be the
best, but to be UNIQUE vs.
competition, and to sustain it.
What does Strategic Management say about Plan?
You have to have an objective and a plan to meet that objective.
What is the role of management according to Peter Drucker?
To make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change
What are the four functions of Management?
Planning, Organizing, Leading, Controlling
What is Planning?
This involves identifying short-term and long-term goals, establishing strategies and developing policies and procedures that will serve as the framework for decision making.
What is Organizing?
Organize resources to execute initiatives required to attain goals. Identify activities, delegating them, and establish
relationships with others. This also involves staffing or organizing the right people for the job.
What is Leading?
Leading your team comes next, and is the most obvious yet difficult function to accomplish. Entails properly communicating with your team, and motivating them.
What is Controlling?
The final phase involves controlling or monitoring results to see if you have achieved your goals or not. Involves performance measurement, identifying errors and correcting them.
What is Strategic Thinking?
It highlights a mindset involved
with making action plans or decisions grounded on a vision or long-term objectives.
The goal now is to shift from simply doing things towards doing things with a purpose.
- Identifying “the purpose” is one of the key measures of strategic thinking.
What is Strategic Management Process/Plan?
A strategic plan is a company’s game plan or battle plan.
To have any chance of success a company needs a strategic plan to compete successfully.
Strategic plans also involve making trade-offs and tough decisions among several alternatives.
What are the three stages of Strategic Management Process?
Formulate, Implement, Evaluate
What is Strategy Formulation?
- Developing a vision and a mission
- Identifying external opportunities and
threats - Determining internal strengths and
weaknesses - Establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.
- Strategy Formulation Decisions:
- What new businesses to enter
- What businesses to abandon
- Whether to expand operations or diversify
- Whether to enter other markets
- Normally happens at the top-level of the organization
What is Strategy Implementation?
- Stage where a firm will establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed
- Also called the action stage
- The most difficult part of the Process
because it involves working with people - Strategy has to be communicated clearly to the entire organization
What is Strategy Evaluation?
*Determining which strategies are not
working well
*Three fundamental activities:
✓reviewing external and internal factors that are the bases for current strategies
✓measuring performance
✓taking corrective actions if needed
What is the Role of Managers?
To ensure that work activities are completed efficiently and effectively by the people responsible for doing them
Is Strategic Management Process a “pure” or “hard” science? Explain.
No. Strategic Management Process is not a “pure” or “hard” science.
- Objective, logical, systematic
approach to making major decisions - Data-based
- Organizes qualitative and
quantitative information to allow
effective decision-making in times of uncertainty - But there is still room for “intuition” or experience
What are the key takeaways on Strategic Management?
- Strategic management is focusing on
a single vision and linking all activities and decisions into that long-term goal or objective. - It is important to stand out and
differentiate yourself from competition in order to become the premier choice of your customers. - It all boils down to having a competitive advantage, and devising strategies to ensure that such advantage is sustained.
- To do so requires the three stages of
the strategic management process.
What is Competitive Advantage?
- Micheal Porter
*Any activity a firm does especially well compared to activities done by rival firms or any resource a firm possesses that rival firms desire.
- An attribute that allows an organization to out- perform its competitors.
- Can be natural resources, such as high-grade ores or a low-cost power source, highly skilled labor, geographic location, high entry barriers, and
access to new technology. - A firm must strive to achieve sustained
competitive advantage
What are Strategists?
- Individuals most responsible for the success or failure of an organization
- Help an organization gather, analyze, and organize information
- Values, ethics, personal beliefs impact corporate strategies
- Founder, CEO, President, Chief Strategy Officer, Strategic Planning
Director - “Visionary”
- Good communicators
- With great imagination
- Sports coaches
What are Vision and Mission Statements?
- A vision statement answers the
question “What do we want to
become?” - A mission statement answers the
question “What is our business?” and
why an organization exists
What are Opportunities and Threats?
External Environment
- Economic, social, cultural, demographic, environmental, political,
legal, governmental, technological, and competitive trends and events - Factors the firm cannot control
What are Strengths and Weaknesses?
Internal Environment
- An organization’s controllable activities that are performed especially well or really poorly
- Determined relative to competitors
What are Long Term Objectives?
- Specific results that an organization seeks to achieve in pursuing its basic mission
- Long-term means more than one year, at least 3 years
- Should be challenging, measurable, consistent, reasonable, and clear
- Provide CLEAR direction and basis for evaluation of results
What are Strategies?
- The means by which long-term objectives will be achieved
- May include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures
- Actions that require management decisions and allocation of the
firm’s resources
What are Annual Objectives?
- Short-term milestones that organizations must achieve to reach long-term objectives
- Should be measurable, quantitative, challenging, realistic, consistent, and prioritized
- Should be established at the corporate, divisional, and functional levels in a
large organization
What are Policies?
- The means by which annual objectives will be achieved
- Guidelines, rules and procedures established to support objectives
- Outlines what is expected of the employees (attendance, performance
appraisal, uniforms, routines, etc)
What are three important questions to answer when making a strategic plan?
Where are we now?
Where do we want to go?
How are we going to get there?
What are the benefits of Strategic Management: Financial?
- Businesses using strategic-
management concepts show significant improvement in sales, profitability, and
productivity compared to firms without systematic planning activities - High-performing firms tend to do
systematic planning to prepare for
future fluctuations in their external
and internal environments
What are the benefits of Strategic Management: Non-Financial?
- Enhanced awareness of external threats
- Improved understanding of competitors’ strategies
- Increased employee productivity
- Reduced resistance to change
- Clearer understanding of performance–reward relationships
What are the Benefits of Strategic Management?
- Strategic management allows an
organization to be more proactive
than reactive in shaping its own future; - Stringent process: Long-range, 3-year,
annual Planning, clear objectives - Involvement among key stakeholders
in all levels of the organization. - Communication, ownership and buy-
in are key.
What are Ethics?
Ethics are moral principles
that govern a person’s behavior or the conducting of an activity.
What is Business Ethics?
Business ethics can be defined as
principles of conduct within organizations that guide decision-making and behavior.
Basic ethical principles for businesses?
- Be trustworthy, nobody wants to deal with someone you can’t trust
- Be open-minded
- Honor commitments and obligations
- Do not misrepresent, exaggerate, or mislead
- Be a visibly responsible community citizen
- Utilize your accounting practice to eliminate questionable activities
- Do unto others as you would have them do unto you
Examples of unethical behavior?
- Misleading advertising or labeling
- Causing environmental harm
- Poor product or service safety
- Padding expense accounts
- Insider trading
- Dumping banned or flawed products in foreign markets
- Not providing equal opportunities for women and minorities
- Over-pricing
- Sexual harassment
- Using company funds or resources for personal gain
- Bribery
- Faking company records
Is unethical behavior rare? Who is prone to be unethical?
Research suggests that misconduct is a normal phenomenon and that “wrongdoing” is as prevalent as “right doing,”
It is most often done by people who are primarily good, ethical, and
socially responsible
All of us are candidates to be unethical under the “right”
circumstances in any organization.
Key is to develop and ethical culture…
- Punish wrong-doing swiftly and severely when it is detected.
- Be careful to hire employees who possess high ethical standards.
- Develop socialization programs to reinforce desired cultural
values. - Alter chains of command so subordinates report to more than one
superior. - Develop a culture whereby subordinates may challenge their
superior’s orders when they seem questionable. - Develop a better understanding of internal policies, procedures,
systems, and mechanisms that could lead to misconduct.
What are the three contemporary ethical issues?
Whistleblowing
Bribery
Workplace romance
What is Whistleblowing?
Whistleblowing refers to employees reporting any unethical violations they discover or see in the firm.
What is Bribery?
Bribery is defined as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an
official or other person in discharge of his duty
A bribe is a gift bestowed to influence a recipient’s conduct.
Bribery is a crime in most countries of the world
What is Workplace Romance?
Workplace romance is an intimate relationship between two consenting employees.
What is the issue of workplace romance?
Workplace romance can be detrimental to workplace morale and productivity, for a number of reasons:
1. Favoritism complaints can arise
2. Confidentiality of records can be breached
3. Reduced quality and quantity of work can become a problem
4. Personal arguments can lead to work arguments
5. Whispering secrets can lead to tensions and hostilities among coworkers
6. Sexual harassment (or discrimination) charges may ensue, either by the involved
female or a third party
7. Conflicts of interest can arise, especially when well-being of the partner trumps
well-being of the company.
What is Social Responsibility?
- Social responsibility refers
to actions an organization
takes beyond what is legally required to protect or enhance the well-being
of its employees, consumers, communities, shareholders and other
groups.
What is Sustainability?
- Sustainability refers to
the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.
*No business wants to be known as a “polluter.”
* It will hurt the firm in the market
* Gives it a bad reputation in the community
* Invites scrutiny from regulators
Takeaway of session 3?
It used to be that the only real mission
of a business is to earn a profit and to make money for its owners or investors.
Nowadays, it is no longer enough for a
business to turn a profit. Money is still
important, but it was no longer the be-all and end-all of business. Money has become both result and tool to achieving another end – that is, to fulfill a purpose.
Profit for a purpose
Business ethics, social
responsibility, and environmental
sustainability issues therefore are
interrelated and impact all areas of
the strategic management process.
