2 What is Strategic Management? Application of the basic planning process at the highest levels of the companyTop management sets goals for the performance of the companyCarefully formulating, implementing, and evaluating plans and strategies
3 What is Strategic Management? Most important part is developing strategic plansPlans must remain current as changes occur inside and outside the companyInvolves many levels of managementTop level formally develops basic plansDifferent departments may be asked to develop plans for their own areasA solid plan guarantees that plans are coordinated and are supported by everyone in the company
4 Strategic Management Approach Three phases critical to the success of the processFormulationDeveloping the strategic planImplementationPutting the formulated plan to workEvaluationContinuously evaluating and updating the strategic plan
5 Formulating StrategyDeveloping the grand- and business-level strategies to be used by the companyCompany’s strengths/weaknesses and threats/opportunities shape the strategiesFirst step is to understand the current position of the companyIdentify mission, identify past and present strategies, diagnose the company’s past and present performance, set objectives for the company’s operation
6 Formulating Strategy Identify the mission statement Outlines why the company existsDescribes the company’s basic products and/or services and defines markets and sources of revenueDesigned to accomplish several goals and ensures a common purpose within the company
7 Apple’s Mission Statement Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.
8 Who’s Mission Statements? "To bring inspiration and innovation to every athlete in the world." "To enable people and businesses throughout the world to realize their full potential."“. . .seeks to be the world’s most customer-centric company, where customers can find and discover anything they may want to buy online at a great price."Nike, Microsoft, Amazon.com
9 Identifying Past and Present Strategies Companies need to understand and appreciate their corporate historyStrategic managers should askHas past strategy been developed?If not, can past history of the company be analyzed to identify the strategy that has evolved?If yes, has the strategy been recorded in writing?
10 Diagnosing Past and Present Performance A corporate planner must decide if past strategies worked and if strategic changes are needed by asking:How is the company currently performing?How has it performed during the past few years?Is the performance trend moving up or down?
11 Setting GoalsConcise statements that provide direction employees and set standards for achieving the company’s strategic planEstablished in many areas (see handout)Goals must be reevaluated as the environment and opportunities changeMultiple goals are used to reflect the desired performance
12 Policies, Procedures, and Rules Policies are broad general guides to action that establish boundaries within which employees must operate“answering all written customer complaints in writing within 10 days”
13 Policies, Procedures, and Rules Procedures are detailed series of related steps/tasks written to implement a policyDefine methods through which policies are achieved“the customer service representative must note the complaint of Form 622 and forward the yellow copy of the form…”Rules detail specific and definite corporate actions that employees must followLeave little doubt about what is to be done“no smoking in the conference room”
14 SWOT Analysis Strengths, Weaknesses, Opportunities, Threats Process that allows companies to evaluate overall healthInternal (SW) and external (OT)Most important result of a SWOT analysis is the ability to draw conclusions about the attractiveness of the company’s situation and the need for strategic action
15 Implementing Strategy Action stage of strategic managementManagers determine and implement the most appropriate company structure, motivate employees, develop short-range goals, and establish functional strategiesStrategy must fit with current company policiesOr conflicting policies must be changedA. T. Cross CompanyManufacturer of world-class pens and pencilsPolicy of unconditionally guaranteeing its products for lifeB/C customers have come to expect this policy, Cross would find this policy difficult to discontinue
16 Evaluating and Controlling the Strategic Plan Process of continuously monitoring the company’s progress toward its long-range goals and missionManagers should ask:Does the grand strategy need revising?Where are problems likely to occur?Basic strategy evaluation strategies:Review external and internal factors that are the bases for current strategiesMeasure performanceTake corrective action
17 Evaluating and Controlling the Strategic Plan Emphasis is making the company’s managers aware of the problems that are likely to occur and of the actions to take if they do arisePlan ahead and avoid disasterStrategic planning and evaluation should be done on a predetermined schedule and as frequently as necessary, determined by internal and environmental factors