Presentation on theme: "Introduction to Strategic Management"— Presentation transcript:
1 Introduction to Strategic Management Strategic ImperativeStrategic Management (BA 491)Introduction to Strategic Management
2 Strategic ManagementStrategic management is the study of why some firms outperform others.How to create a competitive advantage in the market place that is unique, valuable, and difficult to copy“Total organization” perspective, integrating across functional areas.Two perspectives of leadership: romantic view and external control perspective.Strategies put together an understanding of the external environment with an understanding of internal strengths and weaknesses.
3 Definition of Strategic Management Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages (Dess, Lumpkin, & Eisner, Strategic Management: Creating Competitive Advantage, 3rd Ed., p. 9).
4 Definition of Strategic Management AnalysisStrategic goals (vision, mission, strategic objectives)Internal and external environment of the firmDecisionsWhat industries should we compete in?How should we compete in those industries?ActionsAllocate necessary resourcesDesign the organization to bring intended strategies to reality
5 Attributes of Strategic Management Directs the organization toward overall goals and objectives.Includes multiple stakeholders in decision making.Needs to incorporate short-term and long-term perspectives.Recognizes trade-offs between efficiency and effectiveness.
6 Mintzberg’s Views of Strategy Plan - consciously intended course of actionPloy - maneuver to outwit opponentPattern - consistency in behaviorPosition - location in environmentPerspective - way of perceiving the world
7 Forms of StrategyFormal versus informal - associated with size of firm and stage of development. Mintzberg’s distinction between entrepreneurial and planning mode.Intended versus realized - intended strategies are the plans managers develop; realized strategies are the actions that actually take place over time.
8 Forms of StrategySource:H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and Emergent,” Strategic Management Journal 6 (1985), pp
9 Strategic Management Process AnalysisHierarchy of goalsAnalysis of external and internal environmentsFormulationWhat business(es) should we be in?For each, what is the basis for competitive advantage (low cost, differentiation, focus)?ImplementationFunctional tacticsCulture and organization structure
10 Coherence in Strategic Direction Company visionMassively inspiringOverarchingLong-termDriven by and evokes passionFundamental statement of the organization’sValuesAspirationGoalsHierarchy of GoalsCompany vision
11 Coherence in Strategic Direction Mission statementsPurpose of the companyBasis of competition and competitive advantagesMore specific than visionFocused on the means by which the firm will competeHierarchy of GoalsCompany visionMission statements
12 Coherence in Strategic Direction Strategic objectivesOperationalize the mission statementMeasurable, specific, appropriate, realistic, timely, challenging, resolve conflicts that arise, and yardstick for rewards and incentivesHierarchy of GoalsCompany visionMission statementsStrategic objectives
13 Levels of StrategyCorporate-levelBusiness-levelFunctional-level
14 Does Strategic Planning Pay Off? Original research showed mixed results. Planning might not pay off for firms in static or turbulent environments or for small firms.Miller and Cardinal’s (1994) meta-analysis found that strategic planning affects firm growth and profitability. In particular, they found that:Planning performance link true for formal and informal planning.Planning performance link even stronger in turbulent environments.Firm size unrelated to effectiveness of planning.