Strategic Management Process

Question 1

Strategic Management

Answer 1

Set of decisions and actions used to formulate and implement strategies that will provide a competitively superior fit between the org and its environment so as to achieve organizational goals.
Top execs use this to define an overall direction for the org, which is the firm’s grand strategy.
Grand Strategy - Strategy formulation(Planning) - Strategy Implementation - Strategic Control.

Question 2

Grand Strategy

Answer 2

The general plan of major action by which a firm intends to achieve its long-term goals.
Grand strategies can be defined for four categories - growth, stability, retrenchments, global operations.

Question 3

Grand Strategy - Growth

Answer 3

Internally - invest in expansion, development of new or change products or expansion of current products into new markets.
Externally - Acquire additional business divisions, diversification(acquire businesses that are related to current product lines or that take the corporation into new areas.)

Question 4

Grand Strategy - Stability

Answer 4

Sometimes called Pause Strategy.
The organization wants to remain the same size or grow slowly in a controlled fashion.
After organizations have undergone a turbulent period of rapid growth, executives often focus on a stability strategy to integrate SBU’s and to ensure the organization is working efficiently.

Question 5

Grand Strategy - Retrenchment

Answer 5

The organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses.
Liquidation - sell off a business unit for the cash value of the assets, thus terminating its existence.
Divestiture - sell off the businesses that no longer seem central to the corporation.

Question 6

Grand Strategy - Global Operations

Answer 6

Senior executives try to formulate coherent strategies to provide synergy among worldwide operations for the purpose of fulfilling common goals.
Companies faced with a dilemma - global integration, national responsiveness, or both.
Global Operations Strategies - globalization, multidomestic, or transnational.

Question 7

Global Operations - Globalization Strategy

Answer 7

Product design and advertising strategies are standardized throughout the world.
Based on assumption that a single global market exists and that people everywhere want to buy the same products and live the same way.
This strategy can help organisation to reap efficiencies.

Question 8

Global Operations - Multidomestic

Answer 8

Competition in each country is handled independently of industry competition in other countries.
A multi-national company is present in many countries but it encourages marketing, advertising, and product design to be modified and adapted to the specific needs of each country.
Many companies reject the idea of a single global market.

Question 9

Global Operations- Transnational

Answer 9

Achieve both global integration and national responsiveness.
Difficult to achieve - one goal requires close global coordination while the other goal requires local flexibility.
Want to achieve some degree of global integration but global products require some customization due to local demands.

Question 10

Organizational Goal

Answer 10

Is a desired state of affairs that the organization attempts to reach

Question 11

Organizational Purpose

Answer 11

Organizations are created and continued in order to accomplish something. This purpose may be referred to as the overall goal or mission.

Question 12

Mission

Answer 12

The overall goal for an organization.
the organization’s reason for existence.
The mission describes the organization’s vision, its shared values and beliefs, and its reason for being.

Question 13

Operative Goals

Answer 13

These describe specific measurable outcomes and are often concerned with the short term.
Operative vs official goals represents actual versus stated goals.
They typically pertain to the primary tasks an organization must perform.

Question 14

Purpose of Strategy

Answer 14

Goals define where the organization wants to go and strategies tell us how it will get there.
The essence of formulating a strategy is choosing how the organization will be different.

Question 15

Company’s Core Competence

Answer 15

I something the organization does especially well in comparison to its competitors.
It represents a competitive advantage.

Question 16

Partnership Strategies and Business Ecosystems

Answer 16

An alternative approach to strategy emphasizes collaboration.

Question 17

Contingency Effectiveness Approaches

Answer 17

Contingency approaches to measuring effectiveness focus on different parts of the organization.
Traditional approaches include the goal approach, the resource-based approach, and the internal process approach.
Goal - Concerned with the output side and whether the organization achieves its goals in terms of desired levels of output.
Resource - Assesses effectiveness by observing the beginning of the process and evaluating whether the organization effectively obtains resources necessary for high performance.
Internal - Looks at internal activities and assess effectiveness by indicators of internal health and efficiency.

Question 18

Strategy Formulation

Answer 18

Includes the planning and decision-making that lead to the establishment of the firm’s goals and the development of a specific strategic plan.
Often begins with an assessment of the internal and external factors that will affect the organization’s competitive situation

Question 19

SWOT

Answer 19

Internal Strengths - Positive internal characteristics that the organization can exploit to achieve its strategic performance goals.
Internal Weaknesses - Are internal characteristics that might inhibit or restrict the organization’s performance.
External Threats - Are characteristics of the external environment that may prevent the organization from achieving its strategic goals.
External Opportunities - Are characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals.

Question 20

Strategy Implementation

Answer 20

Once a new strategy is selected it is implemented through changes in leadership, structure, information and control systems, and employees.
This step is essential for effective strategic management.
Without effective implementation, even the most creative strategy will fail.

Question 21

Strategic Control

Answer 21

The goal of the control system is to detect and correct problems in order to keep plans on target.
Negative results should prompt corrective action at the steps immediately before and after the problem identification.

Question 22

Tools to develop strategies

Answer 22

1) SWOT Analysis - analysis of a situation
2) Pest - political, economic, social, and technological analysis focuses only on the external environment (political agendas, economic cycles, social trends, technological factors.
3) Market-opportunity matrix - focuses only on the external environment (customers, products, markets).
4) SMART guidelines - goals, and objectives must be specific, measurable, achievable, realistic, timely. Focus on the training aspects of managers and executives.
5) Fit-gap analysis - focuses only on the internal environment. What fits and what doesn’t fit. Also known as gap analysis.
SWOP - strengths, weaknesses, opportunities, problems focuses on internal environments. Focus on operational aspects of a company to solve day-to-day operational problems.
Force field analysis - identifies all inhibiting and facilitating forces or positive and negative variables acting on a specific situation at hand, whether those situations are internal or external to an organization. Problem-solving tool.

Question 23

What is the output of the strategic planning process?

Answer 23

The development of a strategic plan.

Question 24

What are the four components of the strategic planning process?

Answer 24

Mission / Objectives / Strategies / Portfolio Plan.

Question 25

Organizational Mission

Answer 25

It is the long-term vision of what the organization is trying to become, what makes it unique from others.
In developing this statement management must take into account three key elements: organization history, its distinctive competencies, and its environment.

Question 26

What does the organization’s environment dictate?

Answer 26

It dictates the opportunities, constraints, and threats that must be identified before a mission statement is developed.

Question 27

What does an effective mission statement focus on?

Answer 27

It focuses on markets rather than products and achievable, motivating, and specific.

Question 28

What is a key feature of mission statements?

Answer 28

It is their external rather than internal focus.
A mission statement should focus on the broad class of needs that the organization is seeking to satisfy (external focus) not on the physical product or service that the organization is offering at present (internal focus).
Peter Drucker - what is our business? can be answered only by looking at the business from the outside, from point of view of customer and market.

Question 29

What is our business?

Answer 29

A business is defined by the want the customer satisfies when he or she buys a product or service.
Satisfying the customer is the mission and purpose of every business.

Question 30

Organizational Objectives

Answer 30

An organization’s mission is converted into specific, measurable, and action-oriented commitments and objectives.
These objectives, in turn, provide direction, establish priorities, and facilitate management control.
When these objectives are accomplished then the organization’s mission is also accomplished.

Question 31

Which 8 areas does Peter Drucker recommend for establishing objectives?

Answer 31

1) Market Standing
2) Innovations
3) Productivity
4) Physical and financial resources
5) Profitability
6) Manager performance and responsibility
7) Worker performance and attitude
8) Social Responsibility

Question 32

Organizational Strategy

Answer 32

This identifies the general approaches a business should take in order to achieve its objectives.
Mission/Objectives - where the organization wants to go.
Strategies help an organization get there.

Question 33

Product/Market Matrix

Answer 33

Current Customers & Current Products - Market Penetration
New Customers and Current Products - Market development
Current Customers and New Products - Product Development
New Customers and New Products - Diversification

Question 34

Market Penetration Strategy

Answer 34

Focuses on improving the position of the current product with am organization’s current customers. Can involve a marketing plan to encourage customers to purchase more of a product or a production plan to produce more efficiently.

Question 35

Market Development Strategy

Answer 35

This would seek to find new customers for current products.

Question 36

Product Development Strategy

Answer 36

New products are developed to direct to current customers.

Question 37

Diversification Strategy

Answer 37

This seeks new products for new customers.

Question 38

Organizational Portfolio Plan

Answer 38

An organization - portfolio of businesses (different product lines and divisions).
Management will need to decide which products or services to build, maintain, add, eliminate.

Question 39

Blue Ocean Strategy

Answer 39

Authors - Kim and Mauborgne
The scope is all industries not in existence today - unknown market space.
Create uncontested market space
Make the competition irrelevant
Create and capture new demand
Break the value-cost tradeoff
Align the whole system of company activities in pursuit of differentiation and low cost simultaneously.

Question 40

Red-Ocean Strategy

Answer 40

Works within established market spaces that are slowly and steadily shrinking.
Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trafe off
Align the whole system of company activities with its strategic choice of differentiation or low cost separately.

Question 41

McKinsey 7 S Framework

Answer 41

Criteria for an organizations success
Developed by McKinsey and Company
1) Structure - the way in which tasks and people are specialized and divided and authority are distributed. Four basic forms - functional, divisional, matrix, and network. Functional is the most common.
2) Strategy - the way in which competitive advantage is achieved - low cost/differentiation.
3) Skills - distinctive competencies that reside in an organization - people, management practices, systems, technology.
4) Staff - employees, backgrounds, competencies. Recruitment, selection, training.
5) Style - leadership style of top management and overall operating style of organization.
6) Systems - formal and informal processes and procedures used to manage an organization. Planning, budgeting, performance measurement, management control systems.
7) Shared Values - the core set of values that are widely shared in the organization and serve as guiding principles.
Hard S - strategy, structure, systems - easier to change than soft S, and the change process can begin with hard S.
Soft S - staffing, skills, style, shared values - harder to change directly and take longer.

Question 42

Business Policy

Answer 42

Business Policy is a part of strategy execution and implementation in that the policy supports the strategy.
They are explicit statements of management’s intentions to support a business strategy.
Mission/Vision - Goals/Objectives - Business Strategy - Business Policy.
Can be established at a high or low level.
Can be proactive and reactive.
Business Strategy - Business Policy - Business Ethics - Social Responsibility - Policies - Rules and Procedures.