strategic management (overview) dr. fred mugambi mwirigi jkuat
TRANSCRIPT
Definition
• … a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises. [Ansoff (1990) Implanting Strategic Management]
Strategic Management
Strategy Profit
Strategy: goal and set of policies designed to achieve competitive advantage in a particular marketplace
Competitive Advantage: ability to transform inputs into goods andservices at a maximum profit on a sustained basis, better than competitors
FirmCompetitive Advantage
ShareholderValue
Strategic Management Process• Step 1: Identifying the organization's current
mission, objectives, and strategies– Mission: the firm’s reason for being
• Who we are,• What we do, and • Where we are now
– Goals: the foundation for further planning• Measurable performance targets
• Step 2: Conducting an external analysis– The environmental scanning of specific and general
environments– Focuses on identifying opportunities and threats
7
Strategic Management Process (cont’d)
• Step 3: Conducting an internal analysis– Assessing organisational resources,
capabilities, activities and culture:• Strengths (core competencies) create value
for the customer and strengthen the competitive position of the firm.
• Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.
8
Strategic Management Process (cont’d)
• Step 4: Formulating strategies– Develop and evaluate strategic alternatives– Select appropriate strategies for all levels in
the organisation that provide relative advantage over competitors
– Match organisational strengths to environmental opportunities
– Correct weaknesses and guard against threats
9
Triggeringevents
•New CEO
•External intervention
•Threat of change inownership
•Performance gap
•Strategic inflection point
Stimulusfor change
instrategy
What leads to a formulating a new strategy?
Forms of Strategy
• Formal versus informal - associated with size of firm and stage of development. Mintzberg’s distinction between entrepreneurial and planning mode.
• Intended versus realized - intended strategies are the plans managers develop; realized strategies are the actions that actually take place over time.
Strategic Management Process (cont’d)
• Step 5: Implementing strategies– Implementation: effectively fitting organizational
structure and activities to the environment– Effective strategy implementation requires an
organizational structure matched to its requirements.
• Step 6: Evaluating results– How effective have strategies been?– What adjustments, if any, are necessary?
13
Strategies Evolve….
• A company’s strategy is a work in progress• Changes may be necessary to react to
– Shifting market conditions– Technological breakthroughs– Fresh moves of competitors– Evolving customer preferences– Emerging market opportunities– New ideas to improve strategy– Crisis situations
In Summary 15
Strategic analysis
StrategicImplemen-
tation
Strategic choice
Theenvironment
Expectations,objectives
andpower
Resources
Resourceplanning
Organisationstructure
Selection of strategy
People and systems
Evaluation of options
Generationof options