1_introduction to strategic management

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  • DFM 1103INTRODUCTION TO STRATEGIC MANAGEMENTPROF DR HASLINDA ABDULLAHMobile: 019-3273122Email: drhaslinda@gmail.com

  • OverviewIntroductionWelcoming to the Course SyllabusGround rulesWeek 1 Chapter 1

  • What is Strategic ManagementAK & AJ

  • What is Strategic Management?Defined as a set of decisions and actions that result in the formulation and implementation of plans designed to achieve a firms objectives

  • Strategic Management achieves a firms success through integration ManagementMISProduction/OperationsFinance/AccountingMarketingResearch & Development

  • Purpose To exploit and create new and different opportunities for tomorrow: long range planning

  • HistoryUsed synonymously with the term strategic planning (SP)Strategic Planning originated in the 1950s & very popular between 1960s and 1970s

  • Stages of Strategic ManagementStage 1 : FormulationStage 2 : ImplementationStage 3: Evaluation

  • Vision & MissionStrategy FormulationExternal Opportunities & ThreatsInternal Strengths & WeaknessesLong-Term ObjectivesAlternative StrategiesStrategy Selection

  • Strategy ImplementationEstablish Annual ObjectivesDevise PoliciesMotivate Employee Allocate ResourcesSo that formulated strategies can be executed

  • Strategy ImplementationOften called the action stage of strategic managementImplementing strategy means mobilizing employees to execute strategiesConsidered as the most difficult stageRequires personnel discipline, commitment and sacrificeSuccessful strategy hinges upon manager's ability to motivate and influence

  • Strategy EvaluationInternal ReviewExternal ReviewMeasuring Performance

    Corrective Actions

  • Strategy EvaluationFinal Stage of Strategic Management

    Subject to future modificationTodays success no guarantee of future successNew & different problemsComplacency leads to demise

  • Strategic Management process is based on the belief that organizations must monitor eventsOn-going processInternal and external eventsTimely changes can be madeAdapting to Change

  • 9 Key Terms/Concepts in Strategic ManagementCompetitive advantageStrategistsVision and mission statementsExternal Opportunities and threatsInternal strengths and weaknessesLong term objectives StrategiesAnnual objectives Policies

  • Concepts DefinedCompetitive advantage : anything that a firm does especially well compared to rival firmsStrategists : Individuals responsible for the success or failure of an organisationVision : What do we want to become? Mission : What is and How?

  • External opportunities and threats refer toEconomicSocialCulturalDemographic & environmentalPolitical, legal & governmentalTechnologicalCompetition/Competitive trends and eventsThese can significantly harm or benefit an organization in the future

  • Basic Tenet of Strategic Management Opportunities & ThreatsStrategy Formulation Take advantage of External Opportunities Avoid/minimize impact ofExternal Threats

  • Strengths & Weaknesses (Internal)

    Typically located in functional areas of the firmManagementMarketingFinance/AccountingProduction/OperationsResearch & DevelopmentComputer Information Systems

  • Long term objectives: specific results that an organisation seeks to achieve in pursuing it basic mission (> 1 year)Strategies : means by which long term objectives will be achievedAnnual objectives: short term milestones that organisations must achieve to reach long term objectivesPolicies : means by which annual objectives will be achieved

  • Comprehensive strategic management model

    ExternalAudit

    InternalAudit

    Long-TermObjectives

    Generate,Evaluate,SelectStrategies

    ImplementStrategies

    Measure &Evaluate Performance

    Vision & Mission

  • Strategic Management ModelQuestions:Where are we now?Where do we want to go?How are we going to get there?Strategic management process is dynamic and continuousTypically more formal in larger and well established organisation

  • Benefits of Strategic ManagementFinancialImprovement in salesProfitabilityProductivityNon FinancialImproved understanding of competitors strategiesEnhanced awareness of threats Reduced resistance to change Enhanced problem-prevention capabilities

  • Benefits of Strategic Management (Greenley)Identification of OpportunitiesObjective view of management problemsImproved coordination & control of activitiesMinimizes adverse conditions & changesDecisions that better support objectives6. Effective allocation of time & resources7. Internal communication among personnel

  • Benefits of Strategic Management (Greenley contd)8. Integration of individual behaviors9. Clarify individual responsibilities10. Encourage forward thinking12. Encourages favourable attitude toward change13. Provides discipline and formality to the management of the business

  • Why Some Firms Do No Strategic PlanningPoor reward structuresFire-fightingWaste of timeToo expensiveLazinessContent with success

  • Why Some Firms Do No Strategic PlanningFear of failureOverconfidencePrior bad experienceSelf-interestFear of the unknownSuspicion

  • Pitfalls in Strategic PlanningUsing strategic planning to gain control over decisions and resourcesDoing strategic planning only to satisfy accreditation or regulatory requirementsToo hastily moving from mission development to strategy formulationFailing to communicate the plan to employees

  • Making intuitive decisions that conflict with the formal planTop management not actively supporting the strategic planning processFailing to use plans as a standard for measuring performanceDelegating planning to a planner rather than involving all managersFailing to involve key employees in all phases of planning

  • Failing to create a collaborative climate supportive of changeViewing planning as unnecessary or unimportantBecoming so engrossed in current problems that insufficient or no planning is doneBeing so formal in planning that flexibility and credibility are stifled

  • Guidelines for Effective Strategic ManagementShould be a people process more than a paper processShould be a learning process for all managers and employeesShould be words supported by numbers rather than numbers supported by wordsShould be simple and non routineShould vary assignments, team memberships, meeting formats and even the planning schedule

  • Should challenge the assumptions underlying the current corporate strategyShould welcome bad newsShould welcome open-mindedness and a spirit of inquiry and learningShould not be a beauracratic mechanismShould not become ritualistic, stilted or orchestratedShould not be too formal, predictable or rigid

  • Should not contain jargon or arcane planning languageShould not be a formal system for controlShould not disregard qualitative informationShould not be controlled by techniciansDo no pursue too many strategies at onceContinually strengthen the good ethics is good business policy

  • Business Vs Military StrategyThe study of strategic management was formed on a strong military heritageAccording to New World Dictionary, strategy is defined as the science of planning and directing large-scale military operations, of manoeuvring forces into the most advantageous position prior to actual engagement with the enemyDerived from the Greek word strategos - refers to a military general and combines stratos (the army) and ago (to lead)

  • To gain competitive advantageUse strengths to exploit competitors' weaknessesIf overall is wrong (ineffective) then all the efficiency in the world may not be enough to allow successAccidental strategies are not a favoured and happy resultSuccess is the result: continuous attention to changing external and internal conditions and formulation and implementation of insightful adaptations to external & internal conditionsElement of surprise provides great competitive advantagesInformation systems that provide data on opponents' or competitors' strategies and resources are vitally important

    Similarities

  • DifferenceBusiness:Strategy is formulated, implemented and evaluated with an assumption of competitionMilitary:Strategy is based on an assumption of conflict

  • IntegrationBoth business and military organisations must adapt to change and constantly improve to be successfulNapoleon won = because his opponents were committed to the strategy tactics and organization of earlier warsHe lost against Wellington, Russians & Spaniards = because he used tried and true strategies against enemies who thought afresh, who were developing the strategies not of the last war but of the next

  • ConclusionAll firms have strategy even if it is informal, unstructured and sporadicAll firms are heading somewhere but some do are not sureThe strategic management process is becoming more widely used by all firms, nonprofit institutions, governmental organisations and MNCsThe process of empowering managers and employees has almost limitless benefits

  • All organisations should take a proactive rather than a reactive approachShould strive to influence, anticipate and initiate rather than respond to eventsStrategic management process represents a logical, systematic and objective approach for determining an organisation's future direction

  • People and organisation that plan ahead are more likely to achieve their objectives than those who do not plan at all.

    By failing to prepare, you are preparing to fail. Benjamin Franklin

    Always focus on the front windshield and not the review