chapter 1: the strategic management process by:by: khursheed yusuf
TRANSCRIPT
Chapter 1: The Strategic Chapter 1: The Strategic Management ProcessManagement Process
• by:by:
Khursheed YusufKhursheed Yusuf
PreviewPreview OverviewOverview Strategic ManagementStrategic Management Strategic ManagersStrategic Managers Strategic LeadershipStrategic Leadership Strategy as an Emergent Strategy as an Emergent
ProcessProcess Strategic Management in Strategic Management in
PracticePractice Improving Strategic Decision Improving Strategic Decision
MakingMaking
OverviewOverview
• Why do some firms succeed while Why do some firms succeed while others fail?others fail?
• Strategy DefinedStrategy Defined• Strategic Management ProcessStrategic Management Process
Strategic ManagementStrategic Management
• Rational Planning by Top Rational Planning by Top Management?Management?
Basic Planning Process
Missions and GoalsMissions and Goals
External Analysis - Opportunities and ThreatsExternal Analysis - Opportunities and Threats
Internal Analysis - Strengths and WeaknessesInternal Analysis - Strengths and Weaknesses
Selection of Appropriate StrategiesSelection of Appropriate Strategies
Implementation of StrategiesImplementation of Strategies
Strategic Management Strategic Management
• Let’s Look More Closely at Each Step . . .Let’s Look More Closely at Each Step . . .
• A Basic Planning ModelA Basic Planning Model
Missions and GoalsMissions and Goals
Basic Management ProcessBasic Management Process
Mission and Major GoalsMission and Major Goals• MissionMission• Major GoalsMajor Goals• Secondary GoalsSecondary Goals
Strategic Management Strategic Management (Continued)(Continued)
Missions and GoalsMissions and Goals
External Analysis - Opportunities and ThreatsExternal Analysis - Opportunities and Threats
Basic Planning ProcessBasic Planning Process
Strategic Management Strategic Management (Continued)(Continued)
• Identify Strategic Opportunities and Threats in Three Identify Strategic Opportunities and Threats in Three EnvironmentsEnvironments
Immediate
(Industry)
National Macro-
environment
External AnalysisExternal Analysis
Strategic Management Strategic Management (Continued)(Continued)
Missions and GoalsMissions and Goals
External Analysis - Opportunities and ThreatsExternal Analysis - Opportunities and Threats
Internal Analysis - Strengths and WeaknessesInternal Analysis - Strengths and Weaknesses
Basic Planning ProcessBasic Planning Process
Strategic Planning Strategic Planning (Continued)(Continued)
Internal AnalysisInternal Analysis
• Identify Strengths Identify Strengths
Strategic Planning Strategic Planning (Continued)(Continued)
Internal AnalysisInternal Analysis
• Identify StrengthsIdentify Strengths
• and Weaknessesand Weaknesses
Strategic Planning Strategic Planning (Continued)(Continued)
Basic Planning ProcessBasic Planning Process
Missions and GoalsMissions and Goals
External Analysis - Opportunities and ThreatsExternal Analysis - Opportunities and Threats
Internal Analysis - Strengths and WeaknessesInternal Analysis - Strengths and Weaknesses
Selection of Appropriate StrategiesSelection of Appropriate Strategies
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and Strategic ChoiceSWOT and Strategic Choice
Weaknesses Opportunities
Strengths Threats
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and SWOT and Strategic ChoiceStrategic Choice
(Continued)(Continued)
Functional
Business
Corporate
Global
Strategic Planning Strategic Planning (Continued)(Continued)
• Functional-Level StrategyFunctional-Level Strategy– ManufacturingManufacturing– MarketingMarketing– Materials ManagementMaterials Management– Research and DevelopmentResearch and Development– Human ResourcesHuman Resources
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and Strategic ChoiceSWOT and Strategic Choice (Continued) (Continued)
• Business-Level Strategy Business-Level Strategy – Cost LeadershipCost Leadership– DifferentiationDifferentiation– Market Niche FocusMarket Niche Focus
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and Strategic ChoiceSWOT and Strategic Choice (Continued) (Continued)
• Global StrategiesGlobal Strategies– MultidomesticMultidomestic– InternationalInternational– GlobalGlobal– TransnationalTransnational
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and Strategic ChoiceSWOT and Strategic Choice (Continued) (Continued)
• Corporate-Level StrategyCorporate-Level Strategy– Vertical IntegrationVertical Integration– DiversificationDiversification– Strategic AlliancesStrategic Alliances– AcquisitionsAcquisitions– New VenturesNew Ventures– Business PortfolioBusiness Portfolio
RestructuringRestructuring
Strategic Planning Strategic Planning (Continued)(Continued)
SWOT and Strategic ChoiceSWOT and Strategic Choice (Continued) (Continued)
Figure 1.1: Basic Planning ProcessFigure 1.1: Basic Planning Process
Missions and GoalsMissions and Goals
External Analysis - Opportunities and ThreatsExternal Analysis - Opportunities and Threats
Internal Analysis - Strengths and WeaknessesInternal Analysis - Strengths and Weaknesses
Selection of Appropriate StrategiesSelection of Appropriate Strategies
Implementation of StrategiesImplementation of Strategies
Strategic Planning Strategic Planning (Continued)(Continued)
• Designing Organizational StructureDesigning Organizational Structure
Strategic Planning Strategic Planning (Continued)(Continued)
Strategy ImplementationStrategy Implementation
• Designing Control SystemsDesigning Control Systems– Market and Output Market and Output
ControlsControls– Bureaucratic ControlsBureaucratic Controls– Control Through Control Through
Organizational CultureOrganizational Culture– Rewards and IncentivesRewards and Incentives
Strategic Planning Strategic Planning (Continued)(Continued)
Strategy Implementation Strategy Implementation (Continued)(Continued)
• Matching Strategy, Structure and ControlsMatching Strategy, Structure and Controls
Strategy
Structure
Controls
Strategic Planning Strategic Planning (Continued)(Continued)
Strategy Implementation Strategy Implementation (Continued)(Continued)
Strategic Planning Strategic Planning (Continued)(Continued)
Strategy Implementation Strategy Implementation (Continued)(Continued)• Managing Strategic ChangeManaging Strategic Change
– The Only Constant Is ChangeThe Only Constant Is Change– Strategy and Structure Strategy and Structure
AdaptationAdaptation
Strategic Planning Strategic Planning (Continued)(Continued)
Strategy Implementation Strategy Implementation (Continued)(Continued)• Managing Strategic ChangeManaging Strategic Change
– The Only Constant Is ChangeThe Only Constant Is Change– Strategy and Structure Strategy and Structure
AdaptationAdaptation
• The Feedback LoopThe Feedback Loop
Strategic ManagersStrategic Managers• General ManagersGeneral Managers• Functional ManagersFunctional Managers
Copyright 1998 by Houghton Mifflin Company. All rights reserved.
Figure 1.2:Figure 1.2: Levels of Strategic ManagementLevels of Strategic Management
Division A
Business
Functions
Market A
Head Office
Division B
Business
Functions
Market B
Division C
Business
Functions
Market C
Corporate LevelCEO, Board of DirectorsCorporate Staff
Business LevelDivisional Managers and Staff
Functional LevelFunctional Managers
Strategic Managers Strategic Managers (Continued)(Continued)
Strategic LeadershipStrategic Leadership
• Vision, Eloquence, and ConsistencyVision, Eloquence, and Consistency• CommitmentCommitment• Being Well InformedBeing Well Informed• Willingness to Delegate Willingness to Delegate
and Empowerand Empower• Astute Use Astute Use
of Powerof Power
Strategy as an Emergent Strategy as an Emergent ProcessProcess
• Strategy Making in an Strategy Making in an Unpredictable WorldUnpredictable World
• Strategy Making by Strategy Making by Lower Level ManagersLower Level Managers
• Intended and Emergent Intended and Emergent StrategiesStrategies
Figure 1.3: Emergent and Figure 1.3: Emergent and Deliberate StrategiesDeliberate Strategies
IntendedStrategy
RealizedStrategy
DeliberateStrategy
UnrealizedStrategy
EmergentStrategy
Figure 1.4.A: Strategic Management Figure 1.4.A: Strategic Management Process for Process for IntendedIntended Strategies Strategies
Missionsand Goals
Missionsand Goals
Strategic Choice
Strategic Choice
Organizing forImplementation
Organizing forImplementation
InternalAnalysis
InternalAnalysis
ExternalAnalysis
ExternalAnalysis
INTENDED STRATEGY
Figure 1.4.B:Figure 1.4.B: Strategic Management Strategic Management Process for Process for EmergentEmergent Strategies Strategies
Missionsand Goals
Missionsand Goals
InternalAnalysis
InternalAnalysis
ExternalAnalysis
ExternalAnalysis
EMERGENT STRATEGY
Strategic ChoiceDoes It Fit?
Strategic ChoiceDoes It Fit?
OrganizationalGrassroots
OrganizationalGrassroots
Strategic Planning In Strategic Planning In PracticePractice
• Planning Under UncertaintyPlanning Under Uncertainty• Ivory Tower PlanningIvory Tower Planning• Planning for the PresentPlanning for the Present
– Strategic IntentStrategic Intent
Improving Strategic Improving Strategic Decision MakingDecision Making
• Cognitive Biases and Strategic Cognitive Biases and Strategic DecisionsDecisions
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Prior Hypothesis
Bias
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Prior Hypothesis
Bias
EscalatingCommitment
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Prior Hypothesis
Bias
EscalatingCommitment
Reasoningby
Analogy
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Prior Hypothesis
Bias
EscalatingCommitment
Reasoningby
Analogy
Representa-tiveness
Figure 1.5: Five Well-Known Cognitive BiasesFigure 1.5: Five Well-Known Cognitive Biases
Improving Strategic Decision Improving Strategic Decision Making Making (Continued)(Continued)
Prior Hypothesis
Bias
EscalatingCommitment
Reasoningby
Analogy
Representa-tiveness
Illusion of
Control
Improving Strategic Improving Strategic Decision MakingDecision Making
• Groupthink and Strategy Groupthink and Strategy DecisionsDecisions
• Techniques for Improving Techniques for Improving Decision MakingDecision Making– Devil’s AdvocacyDevil’s Advocacy– Dialectic InquiryDialectic Inquiry
• Cognitive Biases and Strategic Cognitive Biases and Strategic DecisionsDecisions
Two Decision-Making ProcessesTwo Decision-Making Processes
Improving Strategic Improving Strategic Decision Making Decision Making (Continued)(Continued)
ExpertPlan #2
(Antithesis)
ExpertPlan #1(Thesis)
Debate(Synthesis)
Final Plan
ExpertPlan
Devil’s Advocate
Plan
Final Plan
Devil’s Advocacy Dialectic InquiryDevil’s Advocacy Dialectic Inquiry
Chapter SummaryChapter Summary
STRATEGIC PLANNING
STRATEGIC MANAGERS
STRATEGIC LEADERSHIP
STRATEGY AS AN EMERGENT
PROCESS
STRATEGIC PLANNING IN PRACTICE
IMPROVING STRATEGIC DECISION
MAKING