STRATEGIC MANAGEMENT INTRODUCTION AND OVERVIEW WHAT IS IT? WHY IS IT IMPORTANT?

STRATEGIC MANAGEMENT Strategic management is the art & science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. It is the planning of strategies and tactics to achieve success! The strategic plan is the organization’s action plan. It shapes the future of the organization. Provides systematic, logical and rational direction of the organization and its people.

STRATEGIC MANAGEMENT The strategic plan may be seen as a “how to” plan, i.e. how to: Outcompete rivals Respond to changing conditions in the environment and capitalize on growth opportunities Manage and integrate functional activities within the organization Improve the organization’s financial and market performance

STRATEGIC MANAGEMENT Strategic planning is the integration of the organization’s functional level activities including: Distribution and logistics Supply chain Sales Marketing Manufacturing Operations Research and development Finance and accounting Human resources MIS et al

THE STRATEGIC MANAGEMENT PLANNING PROCESS 1. Establish the vision and mission of the organization 2. Assess the organization’s internal environment 3. Assess the organization’s external environment 4. Set goals and objectives 5. Plan (and select) strategies 6. Implement and control 7. Collect data

1. VISION AND MISSION The vision of the organization is where it wants to go and who it wants to become over time. It comprehends the achievement of goals and objectives The mission is a clear and concise statement of: *who we are, *what we do, and *who we do it for. Peter Drucker: “ Think through the overall mission of a business. Ask the key question: What is our Business? ”

2. ASSESS THE INTERNAL ENVIRONMENT A thorough assessment of the organization’s internal Strengths and Weaknesses: Leadership and management Organizational structure Technology Marketing Finance/accounting Production/operations Research & development Information systems

3. ASSESS THE EXTERNAL ENVIRONMENT A thorough assessment of the organization’s external Opportunities and Threats: Economic Social Cultural Demographic/environmental Political, legal, governmental Technological Competitors

4. GOALS AND OBJECTIVES Goals and objectives coincide with the organization’s external opportunities and threats, and their internal strengths and weaknesses. Clear Concise Reasonable Reachable Provide direction Aid in evaluation Basis for planning Focus coordination Essential for contro Can be motivators

5. PLAN AND SELECT STRATEGIES Strategies are the essence of strategic planning. They consider: The industry The competition Technology Politics and regulations Societal trends Capabilities of the organization and its talent Vision and mission

5. PLAN AND SELECT STRATEGIES (cont’d) Strategies are the essence of strategic planning. Examples of strategies may be: Geographic expansion Diversification Merger Acquisition Market expansion New Market entry Retrenchment Liquidation Joint venture

6. IMPLEMENTATION AND CONTROL Essential and ongoing. Requires: An organizational alignment to drive the strategic plan Effective managers and leaders Overall understanding of business/corporate level objectives Meaningful reporting relationships Strategic allocation of people with essential talents Strategic allocation of other resources

7. COLLECT DATA* Collecting data in the implementation of the strategic plan for: Feedback into the ongoing SWOT analysis Recognize the necessity for changes in the strategic plan Timely realignment and redirection of the strategic plan *Strategic planning is ongoing. The strategic plan is a living document that is revised and realigned in conjunction with changes in the organization ’ s internal and external environment. It is planned change, i.e. a plan for change.

STRATEGIC MANAGEMENT Key questions: What kind of business do we want to be? Are we in the right business? Who are our existing competitors? Are there, or will there be new competitors? Who are our customers? How are our customers changing? What strategies should we pursue? How should we change? What are our available resources? What access to resources do we have? How should we allocate resources?

STRATEGIC MANAGEMENT The strategic plan is a winner if it: Fits the organizations situation, i.e. capabilities, resources, talents, management and leadership, etc. in consideration of its market opportunities. Helps the organization achieve a sustainable competitive advantage. Results in good organizational performance, i.e. *profitability and financial strength *efficiency in operations and processes *employees who are self-actualized *competitive strength and market standing *a strong, positive image (quality, value, ethics) *satisfied and loyal customers