UNIT 1- Introduction to strategic management Flashcards
The GPS analogy of strategic decisions
- Where am I?
- Where do I want to go?
- How do I want to go?
- What are the alternatives?
- Go
Characteristics of strategic decisions
- long term
- scope of several organization activities
- create advantage over competitors
- fit the business environment (identifying and positioning in the market)
- consider the expectations of powerful actors (stakeholders)
Implications of strategic decisions
- Complexity (locations of suppliers, geographical scope, technological changes)
- Uncertainty (the future: competitors, government, etc.)
- Affect all business decisions (suppliers, logistics, product, technology)
- Require integrated strategy for all areas of the company
- Require relationships and networks (all supply chain)
- Require organization changes (resources and cultural)
The strategy checklist
- strategic position
- strategic choices
- strategy in action
Strategic position
- What are the environmental opportunities and threats?
- What are the organisation’s strengths and weaknesses?
- What is the basic purpose of the organisation?
- How does culture fit the strategy?
Strategic choices
- How should business units compete?
- Which businesses to include in a portfolio?
- Where should the organisation compete internationally?
- Is the organisation innovating appropriately?
- Should the organisation buy other companies, ally or go it alone?
Strategy in action
- Are strategies suitable, acceptable and feasible?
- What kind of strategy- making process is needed?
- What are the required organisation structures and systems?
- How should the organisation manage necessary changes?
- Who should do what in the strategy process?
Strategic position is concerned with:
- the impact on strategy of the external environment
- an organization’s strategic capability, and
- the influence of stakeholders and culture.
The strategic position includes:
- Environment (opportunities and threats)
- Capabilities (resources and competences = strengths and weaknesses)
- Purposes (stakeholder expectations)
- Culture (cultural and historical influences)
Strategic choices involve:
- corporate and business unit level
- directions and methods of development
The strategic choices
- Corporate-level (diversification decisions about the portfolio of products and the spread of markets, relationship between the separate parts of the business)
- Business level (involve pricing and differentiation strategies, how to compete or collaborate with competitors)
- International strategy
(diversification into new geographical markets) - Evaluation (organic grow, mergers/acquisitions, strategic alliances)
- Innovation (first-mover or follower)
The strategic in action
- Structuring (to support successful performance)
- Processes (to control the way in which strategy is implemented: intended and emergent)
- Resourcing (people, information, finance, technology)
- Practice (activities involved: people, activities, methodologies)
- Changing (managing: changes and styles)
Identify and translate customer needs
- What is your Product?
- Who is your CLIENT?
- What does the CLIENT want?
- How can the environment influence (positively and negatively)?
- What is the value of your business?
What is a vision?
A VISION statement is concerned with what the organization aspires to be.
What is a mission?
A MISSION statement provides employees and stakeholders with clarity about the overall purpose of the organization.
VMOSA
Vision
Mission
Objectives
Strategies
Action
Mission definition
Overall purpose of the organization (in line with stakeholders’ values and expectations)
Example: Be healthy and fit
Vision definition
Desired future
(what the organization aspires to be)
Example: To run the NY marathon
Goal definition
General statement of aim or purpose
Example: Lose weight and do short / middle distance competitions
Objective definition
Quantification or more precise statement of the goal
Example: Lose 6 kilos in 3 month , run the San Silvestre (10 km) in 6 month, run a half marathon in one year and run a marathon in 1 1/2 year.
Strategic capability definition
Resources, activities and processes that provide ‘competitive advantage’
Example: Proximity to a fitness center, friends that will train with me, …
Strategies definition
Long-term direction
Example: Exercise regularly, appropriate diet, participate in short / middle distance competitions
Business model definition
How goods, service, information and material ‘flow’ between participating parties
Example: Join running club, following or consulting a nutritionist
Control definition
Monitoring of action:
● assess effectiveness of strategies and actions
● modify as necessary strategies and/or actions
Example: Monitor weight, kilometers run and measure times. If progress satisfactory, do nothing. If not, consider other strategies and actions
Corporate-level strategy
Corporate-level strategy is concerned with the overall scope of an organisation and how value is added to the constituent business units.
The top of the strategy triangle
Business-level strategy
Business-level strategy is concerned with the way a business seeks to compete successfully in its particular market.
The middle of the strategy triangle
Operational strategy
Operational strategy is concerned with how different parts of the organisation deliver the strategy, managing: resources, processes and people.
The bottom of the strategy triangle
What is stakeholders?
STAKEHOLDER is everybody that can be affected by a company or its strategy, in a good or bad way.
Internal stakeholders:
- employees
- manager
- owners
External stakeholders:
- suppliers
- society
- government
- creditors
- shareholders
- customers
Types of stakeholders
- internal stakeholders
- external stakeholders
4 types of external stakeholders
– Economic (e.g. suppliers; shareholders, banks)
– Social/political (e.g. government agencies)
– Technological (e.g. standards agencies)
– Community (e.g. local residents)
Stakeholders of a large organization
- owners/shareholders
- financial community
- activist groups
- customers
- managers
- unions
- employees
- trade associations
- competitors
- suppliers
- government
- political groups
stakeholder mapping
identifies stakeholder interest and power and helps in understanding political priorities.
Stakeholder mapping issues
- Determining purpose and strategy – whose expectations need to be prioritised?
- Who are the key blockers and facilitators of strategy?
- Is it desirable to try to reposition certain stakeholders?
- Can the level of interest or power of key stakeholders be maintained?
- Will stakeholder positions shift according to the issue/strategy being considered?
Power
Power is the ability of individuals or groups to persuade, induce or coerce others into following certain courses of action.
Sources of power- within organizations
- Hierarchy (formal power)- e.g. autocratic decision making
- Influence (informal power)- e.g. charismatic leadership
- Control of strategic resources- e.g. strategic products
- Possession of knowledge and skills- e.g. computer specialists
- Control of the human environment- e.g. negotiation skills
- Involvement in strategic implementation- e.g. by exercising discretion
For external stakeholders
- Control of strategic resources- e.g. materials, labour, money
- Involvement in strategy implementation- e.g. distribution outlets, agents
- Possession of knowledge or skills- e.g. subcontractors, partners
- Through internal links- e.g. informal influence
Corporate social responsibility (CSR)
is the commitment by organisations to behave ethically and contribute to economic, social and environmental development, while improving the quality of life of their stakeholders.
The “triple-bottom-line”
is the balance of economic, environmental and social imperatives while at the same time addressing the expectations of shareholders and stakeholders.
