strama Flashcards
Strategic Management 1
- the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
Strategic Management reason
used to refer to strategy formulation, implementation, and evaluation, with strategic planning referring only to strategy formulation.
strategic plan
results from tough managerial choices among numerous good alternatives, and it signals commitment to specific markets, policies, procedures, and operations.
Strategy Formulation
developing a vision and mission
identifying an organization’s external opportunities and threats
determining internal strengths and weaknesses
establishing long-term objectives
generating alternative strategies
choosing particular strategies to pursue
Strategy Formulation Decisions
Strategy Formulation Decisions
What new businesses to enter
What businesses to abandon
Whether to expand operations or diversify
Whether to enter international markets
Whether to merge or form a joint venture
How to avoid a hostile takeover
Strategy Implementation
requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed
;;often called the action stage
Strategy Evaluation
Determining which strategies are not working well:- reviewing external and internal factors that are the bases for current strategies
-measuring performance
-taking corrective actions
Strategists
Individuals most responsible for the success or failure of an organization
Help an organization gather, analyze, and organize information
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?”
External Opportunities and Threats
economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization
Internal Strengths and Internal Weaknesses
an organization’s controllable activities that are performed especially well or poorly
determined relative to competitors.
Some Opportunities and Threats:
Availability of capital can no longer be taken for granted.
Consumers expect green operations and products.
Marketing is moving rapidly to the Internet.
Commodity food prices are increasing.
An oversupply of oil is driving oil and gas prices down.
Long-Term Objectives
-specific results that an organization seeks to achieve in pursuing its basic mission
-long-term means more than one year
-should be challenging, measurable, consistent, reasonable, and clear
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
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
Policies
the means by which annual objectives will be achieved
Benefits of Strategic Management:
Strategic management allows an organization to be more proactive than reactive in shaping its own future;
It allows an organization to initiate and influence (rather than just respond to) activities—and thus to exert control over its own destiny.
Financial Benefits
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
Nonfinancial Benefits:
Enhanced awareness of external threats
Improved understanding of competitors’ strategies
Increased employee productivity
Reduced resistance to change
Clearer understanding of performance–reward relationships
Why Some Firms Do No Strategic Planning:
No formal training in strategic management
No understanding of or appreciation for the benefits of planning
No monetary rewards for doing planning
No punishment for not planning
Too busy “firefighting” (resolving internal crises) to plan ahead
View planning as a waste of time, since no product/service is made
Laziness; effective planning takes time and effort; time is money
Content with current success; failure to realize that success today is no guarantee for success tomorrow; even Apple Inc. is an example
Overconfident
Prior bad experience with strategic planning done sometime/somewhere
