Strategic thinking Chapter 1

Strategic Management Definition The process through which organizations analyze and learn from their internal and external environments, establish strategic direction, create strategies that are intended to help achieve established goals, and execute those strategies, all in an effort to satisfy key organizational stakeholders External and Internal Environmental Analysis Strategic Direction Strategy Formulation Strategy Implementation and Control Strategic Restructuring

What is a strategy? Strategy – a set of decisions and actions intended to move an organization toward the achievement of its goals and its fundamental purpose. Three levels of strategy formulation: Corporate strategy – selecting business areas in which the company will compete (If these areas are related to each other, it’s known as “related diversification.”) Business strategy – how to compete in the business areas selected (A company that has selected to compete in more than one business area will have a business strategy in each area.) Functional strategy – details how functional areas (such as marketing, operations, finance, etc.) should work together to facilitate the business strategy

The Broad Environment The Task Environment Sociocultural Forces Technological Forces The Task Environment Competitors Gov’t agencies Customers Unions The Organization Owners & Directors Managers Employees Activist Groups Suppliers Financial Intermediaries Local Communities Economic Forces Political/Legal Forces

Analysis Internal Strengths Weaknesses External Opportunities Threats

SWOT ANALYSIS Strengths Opportunities Weaknesses Threats

Approaches to Strategic management Situation Analysis Analyze the internal and external environments, develop a SWOT analysis, and derive mission, goals and strategy Environmental Determinism Determine the best strategy that best fits environmental forces and work to carry it out Principle of Enactment Create your own environment; do not wait for external forces to dictate your strategy Deliberate/Emergent Strategy Strategies are intended courses of action but can also emerge from a stream of decisions Resource-based View Acquire and manage resources to achieve sustainable competitive advantage Stakeholder Management Develop mutually beneficial relationships and alliances with external stakeholders

What does it take to have a successful company strategy? Strategic Thinking Situation Analysis Environmental Determinism Principle of Enactment Deliberate / Emergent Strategy Resource-based View Stakeholder Management

Strategic thinking: characteristics Intent Focused Long-Term Oriented Consideration of Past and Present Systems Perspective Ability to Seize Opportunities Scientific Approach