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By the end of this class you should be able to:
1. Explain the functions of management
2. Define and explain strategy and strategic management
3. Explain why strategic management is important
4. Explain the strategic management process
5. Describe the levels of organizational strategies
OBJECTIVE #1Functions of Management Planning, Organizing, Leading; &
Controlling (PLOC)
Planning defining goals and objectives deciding what type of activities the
company will engage in determining the resources needed to
achieve the organization’s goals & objectives.
Functions of Management
Leading Attracting people to the
organization. Specifying job responsibilities Grouping jobs into work units Marshalling and allocation of
resources Creating good working conditions
Functions of Management
Organizing Directing, motivating, and communication
with employees, individually & in groups. Conflict resolution.
Controlling Monitoring performance of people & units. Provision of feedback or information about
progress. Identification of performance problems &
actions to correct problems.
OBJECTIVE #2What’s Strategy?
Strategy is management’s overall plan and actions for deploying resources and skills taking into consideration opportunities and threats in the environment to achieve it’s mission, vision and
objectives to establish a favorable competitive
position.
Strategy involves:
An organization’s goals A series of related decisions &
actions Takes into account key internal
strengths & weaknesses and external opportunities threats
Analysis, communication, coordination, & action
What is Strategic Management? Focuses on how managers
formulate and implement, and evaluate strategies aimed at developing and maintaining competitive advantage:
the reason some firms enjoy higher levels of performance than their rivals or competitors.
“Big picture” view of anorganization influenced byits external environment
Strategic management is therefore concerned with overall PLOC
Four aspects that set strategic management apart: Interdisciplinary External focus Internal focus Future directions
OBJECTIVE #3Importance of Strategic Management Gives every employee a role to play
in making the firm successful Applies to all professional employees,
not just those in management Allows decision-making, allocation of
resources and management of people to be based on a firm’s strategic plan
Success as a manager (as measured by your promotion, job security, and pay increases) is often determined by your efforts & departments contribution to overall organization’s success
Makes a difference in performance levels
Research suggest that successful companies use strategic management concepts & techniques
Success evolves from “knowing what you’re doing” and often implies having a strategic plan
Importance of Strategic Management Provides systematic approach to
uncertainties that organizations face Competitive & global environment are dynamic
(changing) Change, whether significant of minor, must be
recognized and analyzed, & dealt with Strategic management allows for the analysis of
the situation (identifying the sources of change in environment)
Coordinates and focuses employees to achieve organization’s goals
Allows for team effort which is coordinated for firm success
Allows for development of a plan, communication, coordination, & cooperation among diverse depts & functions
OBJECTIVE #4Strategic Management Process
Establishing a mission, vision and objectives Environmental Analysis Internal Analysis Strategy Formulation Strategy Implementation Strategic Control and Performance Evaluation
The Strategic Management Process
Mission, Vision &
Objectives
InternalAnalysis
Environ.Analysis
StrategyFormul-
ation
StrategyImplem-entation
StrategicEval. &Control
Mission, Vision & Objectives
A company’s mission is a statement of the basic purpose or reason for its existence its values (role to stakeholders - customers,
employees, society, etc.).
The vision goes beyond the mission statement clarifies the long-term direction of the company
(where the company is going) reflects management’s aspirations for the
company
Mission, Vision & Objectives
Objectives are yardsticks for tracking a company’s performance or end result. Financial performance objectives (e.g.,
ROA, ROI, ROE, Dividend growth, Stock price, etc.).
Strategic performance objectives (e.g., market share, growth, innovation leader, customer service, community & environmental responsibility, etc.)
Examples of Mission & Vision Southwest Airlines:
Mission: To provide high quality service at a lower price in the airline industry.
Vision: Opening air travel to a wider group of leisure travelers while infusing the organization with a sense of fun.
Apple Computer: Mission: To bring the best personal
computing products and support to consumers around the world.
Vision: One person, one computer.
Financial & Strategic Objectives
Alcan Aluminum Financial: To outperform the average return on
equity of the S&P’s industrial stock index. Strategic: To be lowest-cost producer of
aluminum. GE
Financial: To achieve an average of 10 inventory turns and a corporate operation profits margin of 16% by 1998.
Strategic: To become most competitive enterprise in the world by being #1 or #2 in market share in every business the company is in.
Environmental Analysis
Involves the evaluation of the business environment of the organization. All external influences that impact a
company’s decision and performance.
Environment of firm classified by proximity into
(1) Macro-environment; and
(2) Micro-environment or task environment.
Environmental Analysis
The macro-environment consists of The international/national economy; changes in
demographic structures; social and political trends; technology; and the natural environment.
The micro-environment consists of The industry environment such as competitors,
suppliers, customers; unions and employees; owners and shareholders, etc.
Internal Analysis
Involves the evaluation of the inventory of the firm’s resources and capabilities.
Resources/Capabilities can be classified as: Tangible resources: Financial or physical
assets Intangible resources: brand name, reputation
(product & firm), organizational culture, etc. Capabilities or competencies: managerial
ability, specialized skill & knowledge base of employees, etc.
Strategy Formulation
The strategy formulation process involves designing a course of action for
addressing strategic issues facing the firm after going through the external and internal evaluation processes.
Actual strategy of a company involves: Planned or Intended Actions
(Deliberate & purposeful actions). Reactive or Emergent Actions (As-
need reactions to unanticipated events in firm’s micro and macro environments).
Strategy Formulation Strategy formulation is concerned with the
following parts of a company: Corporate (whole company) --
Corporate strategies: Deals with businesses company wants to be in & how to manage those businesses
Businesses -- Competitive strategies: How to compete in specific business or industry
Functional areas -- Functional strategies: short goal-directed decisions & actions of an organization’s various functional departments.
Strategy Implementation
Strategy implementation is the process of putting a company’s various strategies into action development of programs, policies, budgets &
procedures. It can take several months to years to complete. Most difficult part of the strategy process. The job of implementing strategy involves
managers at all levels
Strategic Control & Evaluation
Process by which desired outcomes (mission, vision, & objectives) are compared with realized outcomes to determine if there are gaps.
Initiate corrective actions by monitoring changes in environment - competitor actions, new market opportunities, customer needs & expectations.