Intro to Strat Mgt2
Transcript of Intro to Strat Mgt2
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Business Strategy/Policy 2008/9Topic 1 : Introduction to Strategy and
Strategic Management Part 2
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Definition of Strategic Management
Strategic management is concerned with thelong-term policy decisions affecting the entire
organisation and involving major decisions onresource allocation, the overall objective beingtopositionthe organisation to deal effectivelywith its environment.
(Gunnigle et al., 1997)
This definition reflects a resource-based viewof Strategic Management
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What is Strategic Management
in Practice?
Strategic management includes
understanding the strategic position of aorganisation, making strategic choices forthe future, and managing strategy in action.
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Key Strategic Management Terms
1. Strategists2. Vision statements
3. Mission statements4. External opportunities and threats5. Internal strengths and weaknesses6. Long-term objectives
7. Strategies8. Annual objectives9. Policies
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Key Strategic Management Terms
1. Strategists
Usually found in the higher levels of management
Help organisation gather, analyse, andorganise information
Track industry and competitive trends
Develop forecasting models
Evaluate corporate and divisional performance
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2. Vision Statement
Answers the question: What do we want to become?
First step in strategic planning
Often just a single sentence
Our vision is to take care of your vision.
(Stokes Eye Clinic, Florence, South Carolina)
Key Strategic Management Terms
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Key Strategic Management Terms
3. Mission statement
answers the question:
What is our business?
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Kingston University:
Mission Statement
To promote participation in higher education,which it regards as a democratic entitlement; to
strive for excellence in learning, teaching, andresearch; to realize the creative potential andfire the imagination of all its members; and toequip its students to make effectivecontributions to society and the economy
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4. External Opportunities & Threats
Largely beyond the control of asingleorganisation
Economic Social Cultural Demographic Environmental Political Governmental Technological Competitive trends & events
Key Strategic Management Terms
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5. Internal Strengths & Weaknesses Controllable activities that are performed well or poorly relative
to competitors
Based on functional analysis of activities in the organisations keyresult areas:
Management Marketing Finance/accounting
Production/operations Research and development Computer information systems
Organisations strive to pursue strategies that capitalise onstrengths and improve on weaknesses
Key Strategic Management Terms
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6. Long-Term Objectives
Results to be achieved in pursuing the organisations
mission. Time frame is beyond one year
State direction
Aid in evaluation
Create synergy
Reveal priorities
Focus co-ordination
Provide basis for effective management
Key Strategic Management Terms
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7. Strategies1. Potential actions that require top management decisions and
large amounts of resources2. Mechanisms by which long-term objectives are realised
Geographic expansion
Diversification
Acquisition
Product development Market penetration
Retrenchment
Divestiture
Liquidation
Joint venture
Key Strategic Management Terms
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8. Annual Objectives1. Short-term milestones necessary to achieve long-
term objectives2. Represent the basis for allocating resources3. Established at corporate, divisional, and functional
levels4. Stated in terms of accomplishments for:
management marketing finance/accounting production/operations research and development information systems etc.
Key Strategic Management Terms
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9. Policies
Important in strategy implementation as the means
by which annual objectives will be achieved
Guide to decision-making
Address repetitive situations
Established at corporate, divisional, or functionallevels
Allow consistency & coordination within andbetween organisational departments
Key Strategic Management Terms
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Exhibit 1.2 The vocabulary of strategy
The Vocabulary of Strategy: Personal Examples
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The Key Elements of theStrategic Management Process:
Four Basic Elements
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Environmental scanning:
The monitoring, evaluating, anddisseminating of information from theexternal and internal environments to key
people within the organisation to avoidstrategic surprises and ensure the long-term health of the organisation
Environmental scanning is a strategic activity inorganisations and should be treated as such bymanagement
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Environmental Scanning
Identifies the strategic factors affecting the organisation Internal Environment
Strengths & Weaknesses Factors within the organisation but not subject to short-run
control of management
External Environment Opportunities & Threats
Factors external to the organisation but not subject to short-run control of management
SWOT Analysis (combines the results of internal andexternal analysis) allowing organisations to:
Use internal strengths to take advantage of externalopportunities, and
Address internal weaknesses to avoid/minimise the effect ofthreats in the external business environment
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Environmental Scanning: a model (David, 2002)