STRATEGIC MANAGEMENT PROCESS (2) Flashcards
- Setting objectives
- Making basic planning forecasts
- Reviewing alternative courses of action
- Evaluating which options are best
5.Choosing and implementing your plan
5 STEPS IN THE BASIC MANAGEMENT PROCESS
—views the goals from the top of the firm down to frontline employees as a chain
—The company president sets a long-term goal, then the vice president sets their own goal according to the initial goal set, and so on and so forth down the line of employees until even their subordinates have their own goals in line with the top goal
Hierarchy of Goals
broad guidelines delineating how employees should act
Policies
spell out what to do in a specific situation
Procedures
—company’s overall plan for matching its internal strengths and weaknesses with the
external opportunities and threats in order to maintain a competitive position
—“What are we now as a business and where do we want to be?”
Strategic Plan
course of action
Strategy
—process of identifying and executing the strategic plan by matching company’s
capabilities with the demands of the environment
—Note: A strategic plan contains strategies to reach the end goal. The strategies will be
executed in strategic management
Strategic Management
- Define the company’s current business
- Perform external and internal “audits”
- Formulate a new direction
- Translate the mission into strategic goals
- Formulate strategies to achieve strategic goals
- Implement the strategies
- Evaluate performance
Strategic Management Process
—What products are they selling?
—How are they being sold?
—How do the products differ from other competitors?
- Define the company’s current business
Study both the firm’s environment and the internal strengths and weaknesses
- Perform external and internal “audits”
—includes economic, competitive, and political trends
—has information on the company’s environment (external)
Environmental scan worksheet
(Methods of Perform external and internal “audits”)
Strengths and Weaknesses (internal) Opportunities and Threats (external)
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)
(Methods of Perform external and internal “audits”)
(Political, Economic, Social, Technological) all external factors
PEST Analysis (Political, Economic, Social, Technological)
(Methods of Perform external and internal “audits”)
What should our business be?
Essence of the business
Vision Statement
—general statement of the firm’s
—intended direction what the company wants to become
—future-oriented
Mission Statement
—what the company’s main tasks are today
—present-oriented
- Formulate a new direction
—What would the mission statement mean for each department?
—Laid out goals in accordance with the broad mission statement task
- Translate the mission into strategic goals
Having specific courses of action in order to achieve strategic goals
- Formulate strategies to achieve strategic goals
Putting plans into action
- Implement the strategies
—Assessment of the progress of their strategic decisions
—If it doesn’t work out as planned, re-strategize
- Evaluate performance
Note: Summary is, the company should first define what their business is currently. They then branch into identifying stregnths and weaknesses (internal) and general company environment (external). Given this data, the company should formulate a NEW direction by identifying what they want to become (vision) and what they should do in order to be what the want to become (mission). Given the mission, it is divided into smaller goals (strategic goals). These smaller goals are further broken down into specific tasks (strategies). After the goals and tasks have been laid out, the strategies will then be executed and eventually evaluated. Repeat step 5 if strategic goals are not met.
From specific to broad: strategy ⇒ strategic goals ⇒ mission statement
Strategic Management Process
Corporate Strategy
•Concentration Strategy
•Diversification Strategy
•Vertal Integration Strategy
•Consolidation Strategy
•Geographic Expansion
Competitive Strategy
•Competitive Advantage
Functional Strategy
Types of Strategies
identifies portfolio of businesses that, in total, comprise the company and how these businesses relate to each other
Corporate Strategy
—single-business
—one product line in one market
Concentration Strategy
—expansion by adding new product lines
example: Apple introducing self-driving cars
Diversification Strategy
—expansion by producing its own raw materials or by directly selling their products
example: Apple stores being established
Vertal Integration Strategy
—Reducing company size by merging with other business units or companies into a
single, larger organization
—operational efficiency, eliminating competition, and getting access to new markets
example: Disney acquiring Marvel and Fox
Consolidation Strategy
—entering new territorial markets
example: Jollibee in USA and UAE
Geographic Expansion
—identifies how to build and strengthen the business’ competitive position in the
marketplace
—how one company competes with another company
Competitive Strategy
—factors that allow a company to differentiate its product or service from those of its competitors to increase market share
—what makes a company better than other companies?
Competitive Advantage
•Cost leadership - becoming the low-cost leader in the industry; prices
•Differentiation - seeks to be unique along dimensions valued by buyers; innovation
•Focus - market niche; targeting specific markets (often minorities)
Three Standard Competitive Strategies
what each department must do to help the business accomplish its strategic goals
Functional Strategy
—formulating and executing human resource policies and practices that produce employee competencies and behaviors the company need to achieve its goals
—dynamic, not static
–this means that HR managers should identify where each HR activity is now and where it should be to support strategic goals
–how to transform HR activities in order to align with and support the company goals
Strategic Human Resource Management
—identify company’s strategic goals
—determine employee competencies and behaviors required to achieve the goal
—produce HR policies and practices to produce said competencies and behaviors
Process of Strategic Human Resource Management
•Strategy Map
•HR Scorecard
•Digital Dashboards
Tools of Strategic Human Resource Management
—summarizes the role of each department in achieving the company’s strategic goals
—clarifies employees’ “line of sight” by visually linking efforts with company’s
ultimate goals
Strategy Map
—process for assigning financial and nonfinancial goals or metrics to the strategy map chain of activities required for achieving company strategic goals
—“balanced scorecard” planning approach - balances hard data (finances) with soft
data (customer satisfaction) to measure overall performance
—a specific evaluation standard for activities in the strategic map
–standards in the HR scorecard must be met in order to assume that the activity
in the strategy map is executed successfully
HR Scorecard
—desktop graphs and charts showing how the company is doing on all metrics from
the HR scorecard
—specific measurement of performance in one activity in the strategy map according
to the metrics set in the HR scorecard
Digital Dashboards
quantitative gauge of a human resource management activity
Human Resource Metrics
comparing the results of high-performing companies to current company to understand what makes them better
Benchmarking
—measures the activities that contribute to achieving a company’s strategic goals
—measure of internal performance as opposed to comparison with other companies
Strategy-Based Metrics
—analysis of the completeness, efficiency, and effectiveness of HR functions
—generally involves using a checklist to review functions and ensuring adherence to federal law and company policies
HR Audit
—set of HRM policies and practices that produce superior employee performance
—Managers use HR metrics to assess company performance and compare them with other firms
—The steps in ensuring high-performance systems must be illustrated
•can be in the form of hiring based on validated tests and extensive training for
employees
—High-performance work systems aspire to encourage employee involvement and self- management
•They aim to nurture a motivated workforce
High Performance Work Systems
—being psychologicall involved in, connected to, and committed to getting one’s jobs done
—engaged employees = high connectivity with work tasks = more effort to accomplish task-related goals
—Managers can improve employee engagement through supportive supervision
•focusing support and coaching on employees’ strengths
•make sure employees understand how their departments contribute to company goals
•make sure employees see how their efforts contribute to achieving company goals
•make sure employees get a sense of accomplishment from working in the company
•make sure employees are involved
Employee Engagement