Strategic Management
Its Role in Organizations
Why strategic management is
important
– Individually: you will be evaluated on and
rewarded for doing your job well, which
means understanding how and why strategic
decisions are made
– Organizationally: it can make a difference in
how well an organization performs; it also
helps with adapting to changing situations and
coordination of various divisions, functions,
and work activities
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 2
The Four Characteristics of Strategic
Management
• Interdisciplinary
– It focuses on the whole organization, rather than
any functional part
• External Focus – interaction of organization
with external environment
– Economy
– Competitors
– Market demographics
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 3
The Four Characteristics of Strategic
Management – cont’d
• Internal Focus
– Understands the resources and capabilities the
organization does or does not have
• Future Direction of the Organization, includes
– Decisions
– Planning
– Shifts or changes in products or markets
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 4
Figure 1.2
Note: This is from 5th edition – PowerPoints not yet available for 6th – thus
chapters don’t line up
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 5
Situation Analysis
• Situation analysis is required before deciding
upon a strategic direction or response and it
involves scanning and evaluating
– The current organizational context
– The external environment
– The organizational environment
(See SWOT analysis for a tool often used for this
process)
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 6
Strategy Formulation
• Strategy formulation is developing and
choosing appropriate strategies, as guided by
the situation analysis, and includes three main
types of strategies
– Functional Strategies (also called operational
strategies)
– Competitive Strategies (also called business
strategies)
– Corporate Strategies (these are guiding strategies
by which all efforts are aligned)
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 7
Functional Strategies
• Functional strategies or operational strategies are
goal oriented plans and actions of the functional
areas of an organization, they include:
–
–
–
–
–
–
Production-Operations – see Operations Management
Marketing – see Marketing Mix
Research & Development – see Investopedia
Human Resources – see HR & Talent Management
Financial-Accounting – see Financial Management
Information Technology & Support – see AIIM
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 8
Competitive Strategies
• Competitive strategies or business strategies
are goal directed plans and actions concerned
with how an organization competes in a
specific business or industry
– Looks at all aspects of strategies and actions
– Seeks to determine what the company currently
can do and what it wants to do
– Focus is on how it might more effectively compete
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 9
Corporate Strategy
• Corporate strategies are goal directed plans
and actions that are concerned with what
business or businesses a firm wants to be in
and what to do with those businesses; for
example
– FedEx’s decision to acquire Kinko's
– PepsiCo’s decision to spin off their fast-food
division
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 10
Strategy Implementation
• It is not enough to formulate great strategies,
they must be implemented
– Strategy implementation is putting the various
stages of strategies into action
– How a strategy is implemented must be
considered
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 11
Strategy Evaluation
• Strategy evaluation involves evaluating both
the outcomes of the strategies and how they
have been implemented
– Determine if they produced the expected strategic
goals
– Helps with the evaluation of results and, if
necessary, any modification of strategies
Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall
1- 12