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THE STRATEGIC MANAGEMENT PROCESS

THE STRATEGIC MANAGEMENT PROCESS. G. Tyge Payne (2). Strategic Management Process. 1. Analysis (Where are we now?) Strategic goals (vision, mission, strategic objectives) Internal and external environment of the firm 2. Strategic decisions (Where are we going?)

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THE STRATEGIC MANAGEMENT PROCESS

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  1. THE STRATEGIC MANAGEMENT PROCESS G. Tyge Payne (2)

  2. StrategicManagement Process 1. Analysis(Where are we now?) Strategic goals (vision, mission, strategic objectives) Internal and external environment of the firm 2. Strategic decisions (Where are we going?) What industries should we compete in? How should we compete in those industries? 3. Actions (How do we get there?) Allocate necessary resources Design the organization to bring intended strategies to reality

  3. Formulating Directions - Develop Vision/Mission (1) -Set Objectives (2) Organizational Culture Stakeholder Influence Values / Ethics Opportunities and Threats from Economic, Political, Technological etc Sources Strategic Analyses (3) Strategic Control (6) External Environment Opportunities and Threats from Competition and Key Stakeholders Competitor/Stakeholder Internal Organization Organizational Culture Stakeholder Influence Values / Ethics Strategy Formulation (4) -Formulate and Consider Alternatives -Make Strategy Choice Implementation (5) Context of Strategy (type of organization, culture, values, life cycle competitive position)

  4. The Strategic Management Process – Competing for Advantage

  5. Developing a Vision and Mission (1) • Begins with thinking strategically about: • The firm’s future business makeup • Where to take the firm • The task is to: • Create a roadmap of a company’s future • Decide what future business position to stake out • Provide long-term direction • Give the firm a strong identity

  6. Setting Objectives (2) • Establishing OBJECTIVES • Converts vision/mission into specific performance targets • Creates yardsticks to track performance • Pushes firm to beinventiveandfocused • Helps prevent coasting and complacency if targets require stretch

  7. Types of Objectives Required Financial Objectives Strategic Objectives Outcomes focused on improving a firm’s financial performance. Outcomes focused on improving a firm’s competitiveness and its long-term business position. -- May includesocialobjectives.

  8. Strategic Analysis (3) • A complete strategic analysis requires one to extensively examine the organization from all angles: the outside, the inside, and the fit between. • External Analysis • Environmental Forecasting • The General Macro-environment • Porters 5-forces Model • Strategic Groups • Internal Analysis • Resource Strengths/Weaknesses • Value Chain • Strategic Fit

  9. Strategy Formulation (4) • Strategic Formulation involves determining whether to: • Concentrate on a single business or several businesses (diversification) • Cater to a broad range of customers or focus on a particular niche • Develop internationally or not • Develop a wide or narrow product/service line • Pursue a competitive advantage based on • Low costor • Differentiation – product / service superiority or unique organizational capabilities

  10. Competitive Advantage Lower Cost Differentiation Strategy 1 Cost Leadership Strategy 2 Differentiation Broad Target Competitive Scope Strategy 3A Cost Focus Strategy 3B Differentiation Focus Narrow Target Porter’s Generic Strategies

  11. Implementing Strategy (5) • Creating fits between way things are done and what it takes for effective strategy execution • Getting the organization to execute strategy proficiently and efficiently • Producing excellent resultsin a timely manner • Strategy Implementation: an internal, operations-driven activity involving organizing, budgeting, motivating, culture-building, supervising, and leading to “make the strategy work” as intended!

  12. Control & Evaluating Performance (6) • The “processes” of strategic management are nota one-time only exercise because • Times and conditions change • Events unfold • Better ways to do things emerge • New managers with different ideas take over • Thus, corrective adjustments are often needed to: • Alter long-term direction • Redefine the business • Raise or lower performance objectives • Modify the strategy • Improve strategy execution

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