STRATEGIC MANAGEMENT LESSON 1 INTRODUCTION AND OVERVIEW

1. STRATEGIC MANAGEMENT LESSON 1 INTRODUCTION AND OVERVIEW

2. STRATEGIC MANAGEMENT • Strategic management is the art & science of formulating, • implementing, and evaluating cross-functional decisions that • enable an organization to achieve its objectives. • It is the planning of strategies and tactics to achieve success! • The strategic plan is the organization’s action plan. • It shapes the future of the organization. • Provides systematic, logical and rational direction of the • organization and its people.

3. STRATEGIC MANAGEMENT The strategic plan may be seen as a “how to” plan, i.e. how to: • Outcompete rivals; • Respond to changing conditions in the environment and • capitalize on growth opportunities; • Manage and integrate functional activities within the • organization; • Improve the organization’s financial and market performance.

4. STRATEGIC MANAGEMENT Strategic planning is the integration of the organization’s functional level activities including: • Distribution and logistics; • Supply chain; • Sales; • Marketing; • Manufacturing; • Operations; • Research and development; • Finance and accounting; • Human resources; • MIS • et al

5. THE STRATEGIC MANAGEMENT PLANNING PROCESS • Establish the vision and mission of the organization • Assess the organization’s external environment* • Assess the organization’s internal environment* • Set goals and objectives • Plan (and select) strategies • Implement and control • Collect data

6. VISION AND MISSION • The vision of the organization is where it wants to go and who it wants to • become over time. It comprehends the achievement of goals and • objectives. • The mission is a clear and concise statement of: • *who we are, • *what we do, and • *who we do it for. Peter Drucker: “Think through the overall mission of a business. Ask the key question: What is our Business?”

7. ASSESS THE INTERNAL ENVIRONMENT *The first step in the SWOT analysis: A thorough assessment of the organization’s internal Strengths and Weaknesses: • Leadership and management • Organizational structure • Technology • Marketing • Finance/accounting • Production/operations • Research & development • Information systems

8. ASSESS THE EXTERNAL ENVIRONMENT *The second step in the SWOT analysis: A thorough assessment of the organization’s external Opportunities and Threats: • Economic • Social • Cultural • Demographic/environmental • Political, legal, governmental • Technological • Competitors

9. GOALS AND OBJECTIVES *Goals and objectives coincide with the organization’s external opportunities and threats, and their internal strengths and weaknesses. • Clear; • Concise; • Reasonable; • Reachable; • Provide direction; • Aid in evaluation; • Basis for planning; • Focus coordination; • Essential for control; • Can be motivators.

10. PLAN AND SELECT STRATEGIES Strategies are the essence of strategic planning. They consider: • The industry, • The competition, • Technology, • Politics and regulations, • Societal trends, • Capabilities of the organization and its talent, • Vision and mission.

11. PLAN AND SELECT STRATEGIES Strategies are the essence of strategic planning. Examples of strategies may be: • Geographic expansion; • Diversification; • Merger; • Acquisition; • Market expansion; • New Market entry; • Retrenchment; • Liquidation; • Joint venture.

12. IMPLEMENTATION AND CONTROL Essential and ongoing. Requires: • An organizational alignment to drive the strategic plan; • Effective managers and leaders; • Overall understanding of business/corporate level objectives; • Meaningful reporting relationships; • Strategic allocation of people with essential talents; • Strategic allocation of other resources;

13. COLLECT DATA* For: • Feedback into the ongoing SWOT analysis; • Recognize the necessity for changes in the strategic plan; • Timely realignment and redirection of the strategic plan. *Strategic planning is ongoing. The strategic plan is a living document that is revised and realigned in conjunction with changes in the organization’s internal and external environment. It is planned change, i.e. a plan for change.

14. STRATEGIC MANAGEMENT Key questions: • What kind of business do we want to be? • Are we in the right business? • Who are our existing competitors? • Are there, or will there be new competitors? • Who are our customers? • How are our customers changing? • What strategies should we pursue? • How should we change? • What are our available resources? • What access to resources do we have? • How should we allocate resources?

15. STRATEGIC MANAGEMENT The strategic plan is a winner if it: • Fits the organizations situation, i.e. capabilities, resources, talents, management and leadership, etc. in consideration of its market opportunities. • Helps the organization achieve a sustainable competitive advantage. • Results in good organizational performance, i.e. • *profitability and financial strength; • *efficiency in operations and processes; • *employees who are self-actualized; • *competitive strength and market standing, • *a strong, positive image (quality, value, ethics) • *satisfied and loyal customers.