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Introduction to Strategic Management

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1 Introduction to Strategic Management
Strategic Imperative Strategic Management (BA 491) Introduction to Strategic Management

2 Strategic Management Strategic 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
Analysis Strategic goals (vision, mission, strategic objectives) Internal and external environment of the firm Decisions What industries should we compete in? How should we compete in those industries? Actions Allocate necessary resources Design 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 action Ploy - maneuver to outwit opponent Pattern - consistency in behavior Position - location in environment Perspective - way of perceiving the world

7 Forms of Strategy Formal 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 Strategy Source:H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and Emergent,” Strategic Management Journal 6 (1985), pp

9 Strategic Management Process
Analysis Hierarchy of goals Analysis of external and internal environments Formulation What business(es) should we be in? For each, what is the basis for competitive advantage (low cost, differentiation, focus)? Implementation Functional tactics Culture and organization structure

10 Coherence in Strategic Direction
Company vision Massively inspiring Overarching Long-term Driven by and evokes passion Fundamental statement of the organization’s Values Aspiration Goals Hierarchy of Goals Company vision

11 Coherence in Strategic Direction
Mission statements Purpose of the company Basis of competition and competitive advantages More specific than vision Focused on the means by which the firm will compete Hierarchy of Goals Company vision Mission statements

12 Coherence in Strategic Direction
Strategic objectives Operationalize the mission statement Measurable, specific, appropriate, realistic, timely, challenging, resolve conflicts that arise, and yardstick for rewards and incentives Hierarchy of Goals Company vision Mission statements Strategic objectives

13 Levels of Strategy Corporate-level Business-level Functional-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.

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