Why All Managers Need an Understanding of Strategic Management

A strategic orientation encourages far-sightedness in managers. Employees who think in strategic terms tend to understand better how top managers think and why they make the decisions they do. The trend toward greater teamwork and cooperation throughout the planning cycle is eroding the traditional distinction between those who plan and those who implement plans.

Key Dimensions of Strategic Farsight

Five Different Strategy-Making Modes

Strategic Management = Strategic Planning + Implementation + Control

Strategy: Integrated, externally oriented perception of how to achieve the organization’s mission

Strategic Management

The ongoing process of ensuring a competitively superior fit between an organization and its changing environment, includes budget control, long-range planning, and strategic planning, merges strategic planning, implementation, and control to create a dynamic process, Requires a holistic view from a longer-term perspective. 

Thinking and Acting Strategically(Internet and Social Media Strategies)

Synergy: The concept that the whole is greater than the sum of the parts

Types of Synergy

1. Market synergy: Extending products to new markets
2. Cost synergy: Savings from combinations of common-base operations, resources, and facilities
3. Technological synergy: The transfer and application of technologies to new markets
4. Management synergy: Complementary skills that make for more effective overall management

Porter’s Generic Competitive Strategies

Model’s Competitive Variables

—         Competitive advantage: How to compete in a market

—         Competitive scope: How broad of a market to target

Cost Leadership Strategy

Having the lowest overall cost in a market to provide a competitive advantage in pricing over competitors

Differentiation Strategy

Providing unique and superior value for the customer that builds brand loyalty

Porter’s Generic Competitive Strategies

Cost Focus Strategy

Attempting to gain a competitive edge in a narrow (or regional) market segment by controlling (competitively dominating) the segment

Focused Differentiation

Achieving a competitive edge by delivering a superior product and/or service to a limited audience.

Business Ecosystems

An economic community of organizations and all their stakeholders, including suppliers and customers. Organizations need to be as good at cooperating as they are at competing if they are to succeed. Key organizations selectively cooperate and compete to achieve both their individual and collective goals.

Needed: More Strategic Cooperation

Greater strategic cooperation is needed to foster the spread of realized innovation.

Strategies for the Internet and Social Media

Internet Strategy Lessons

The Internet is not static. Internet technologies are still emerging. Corporate strategist and entrepreneurs are challenged to build business models based on where they expect these technologies to be X years down the road.  There is no one-size-fits-all Internet strategy. Customer loyalty is built with reliable brand names and “sticky” web sites.

E-Business Strategies for the Internet

Emerging Business Models for Social Media

Social media are second-generation web tools. Include but are not limited to blogs, social networking sites, micro-blogging sites, video and photo sharing sites. Represents the advent of user-generated content. Social media strategies are a work-in-progress as new technologies are unfolding

The Strategic Management Process

Four Steps in the Strategic Management Process

1.      Formulation of a grand strategy

2.      Formulation of strategic plans

3.      Implementation of strategic plans

4.      Strategic control

The Strategic Management Process

Formulation of a Grand Strategy

Grand Strategy: A general explanation of how the organization’s mission is to be accomplished

Situational Analysis

Finding the organization’s niche by performing a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to match unfolding opportunities with resources being acquired.

Capability profile: Identifying the organization’s strengths and weaknesses

Determining Strategic Direction Through SWOT Analysis

Key capabilities for today’s companies

—  Quick response to market trends

—  Rapid product development

—  Rapid production and delivery

—  Continuous cost reduction

—  Continuous improvement of processes, human resources, and products

—  Greater flexibility of operations

The Need for Speed

Speed has become an important competitive advantage. Speed involves more than just doing the same old things faster. Reengineering: Radically redesigning the entire business cycle for greater strategic speed

Formulation of Strategic Plans

Develop clear results-oriented objectives stated in measurable terms. Identify activities required to accomplish the objectives. Assign specific responsibilities to the appropriate personnel. Estimate times to accomplish activities and their appropriate sequencing. Determine resources required to accomplish the activities. Communicate and coordinate the above elements and complete the action plan.

Strategic Implementation and Control

Implementation of Strategic Plans

Developing a systematic filtering-down process that facilitates the implementation process and builds middle-manager commitment requires a company to consider:

—  Organizational structure

—  People

—  Culture

—  Control systems

Strategic Control

A formal control system should be developed that helps keep strategic plans on track. Setting up and testing channels for information on progress, problems, and the fit of strategic assumptions to the environment. Ultimate goal: Detect and correct downstream problems in order to keep strategies updated and on target

Corrective Action Based on Evaluation and Feedback

Negative feedback should prompt corrective action at the step immediately before the problem occurs.

Possible corrective actions include:

—  Updating strategic assumptions

—  Reformulating strategic plans

—  Rewriting policies

—  Making personnel changes

—  Modifying budget allocations

Forecasting

Forecasts: Predictions, projections, or estimates of future situations

Types of Forecasts

       Event outcome forecasts: Predictions of the outcome (effects) of highly probable future events

      Event timing forecasts: Predictions of when a given event will occur

      Time series forecasts: Estimates of future values in a statistical sequence (e.g., sales forecast)

Types of Forecasts

Forecasting Techniques

Informed Judgment: Forecasts relying on intuitive judgments that are based on how well informed the forecaster is

Scenario Analysis: Preparing written descriptions of alternative but equally likely future situations.

Longitudinal scenarios: Describing how the future situations will evolve from the present

Cross-sectional scenarios: Describing future situations at a given point in time

Surveys

A forecasting technique involving face-to-face interviews and mail or e-mail questionnaires

Problems with surveys

—  Construction of the survey instrument

—  Cost of administration

—  Errors in data collection and interpretation

Trend Analysis: The hypothetical extension of a past series of events into the future.