business management strategic management

BUSINESS MANAGEMENT

Strategic Management Management by Stephen P. Robbins ,Mary

Coulter Chp 9 11th Ed

STRATEGIC MANAGEMENT

LEARNING OBJECTIVES:

1) Define strategic management and explain why it’s important.

2) Explain what managers do during the six steps of the strategic management process

3) Describe the three types of corporate strategies

4) Describe competitive advantage and the competitive strategies organizations use to get it.

WHAT IS STRATEGIC MANAGEMENT?

Strategic Management-

a)Business Model; b)How a

company is going to make money

1)Planning

2)Organizing

3)Leading

4)Controlling

WHAT IS STRATEGIC MANAGEMENT

Strategic management is what managers do to develop the organization’s strategies. It’s an important task involving all the basic management functions—planning, organizing, leading, and controlling.

What are an organization’s strategies? They’re the plans for how the organization will do whatever it’s in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goals. Business Model


Management functions

• Planning

• Organizing

• Leading

• Controlling

Organization’s

strategies

• Plans for how the organization will do whatever it’s in business to do

• How it will compete successfully

• How it will attract and satisfy its customers in order to achieve its goals

MANAGEMENT FUNCTIOS

are planning, organizing, leading and

controlling

→ how well managers perform these

functions determines how efficient and

effective their organizations are

PLANNING

… is a process that managers use to

identify and select appropriate goals and

course of action

Three steps in the planning process are:

1. deciding which goals the organization

will pursue

2. deciding what courses of action to adopt

to attain these goals

3. deciding how to allocate organizational

resources to attain those goals

PLANNING

Goals

•Eg to increase sales

•Ultimate goal to increase profit

Courses of action

•Eg increase advertisement

•Increase no. of sale representative

Allocate organizatio

nal resources

•Eg to budget for Advertisement & new recruits

The outcome of planning is a strategy, a

cluster of decisions concerning what

organizational goals to pursue, what

actions to take, and how to use resources

to achieve goals

PLANNING

ORGANIZING

…is a process used to establish a

structure of working relationships that

allows to interact and cooperates to

achieve organizational goals

ORGANIZING

ORGANISATION STRUCTURE

Head of Department

Executive Executice Executive

Assistant Head

CEO

Department Department Department Department

PA

Departments- HR,

Finance, Production,

Sales, etc

is a process used to

establish a structure

of working

relationships that

allows to interact and

cooperates to achieve

organizational goals

ORGANIZING

Work scope of employee

Reporting to superior

Interactions with other

department

is a process used to establish a

structure of working

relationships that allows to

interact and cooperates to

achieve organizational goals

ORGANIZING

The outcome of organizing is the creation

of an organizational structure, a

formal system of task and reporting

relationships that coordinates and

motivates members so that they work

together to achieve organizational goals

→ determines how an organization’s

resources can be best used to create goods

and services

LEADING

…is articulating a clear vision for

organizational members to follow and

energizing and enabling organizational

members so that they understand the part

they play in achieving organizational

goals

LEADING- OUTCOME

3)Individuals , group motivate

to achieve to the highest

potentials of goal

2)Leader use Vision , influence, motivate & communicate to

coordinate

1)Leadership lead

Leadership depends on the use of

power, influence, vision, persuasion,

and communication skills to

coordinate the behaviors of

individuals and groups so that their

activities and efforts are in harmony

and to encourage employees to

perform at a high level

CONTROLLING

…is evaluating how well an organization

is achieving its goals and take action to

maintain or improve performance.

CONTROLLING- MONITOR

EMPLOYEES ACTIVITIES

Goals Actual Performance

Actions to take

Evaluation

Variance analysis

Budget

Targets

Standards

WHY IS STRATEGIC MANAGEMENT IMPORTANT?

3) Organizations are complex and diverse.

Each Part need to work together Strategic Management helps to

coordinate to achieve the Orgn Goals

2) Managers in organizations face continually changing situations

Use Strategic management to decide on course of actions

To cope with uncertainty

1)It can make a difference in how well an organization performs.

Business Fail Business Succeed

SIX STEPS OF THE STRATEGIC

MANAGEMENT PROCESS


MANAGEMENT PROCESS

Step 1

• Identifying the Organization’s Current Mission,Goals, and Strategies

• mission—a statement of its purpose; to identify what it’s in business to do

Step 2

• Doing an External Analysis (opportunies, threat)

• examine the economic, demographic, political/legal, sociocultural, technological, their impact on the organsation

Step 3

• Doing an Internal Analysis (strengths, weaknesses)

• information about an organization’s specific resources and capabilities.


MANAGEMENT PROCESS

Step 4

• Formulating Strategies

• design strategies that will help an organization achieve its goals.

Step 5

• Implementing Strategies

• need to implement once strategies are formulated

Step 3

• Evaluate results

• How effective have the strategies been at helping the organization reach its goals?

• What adjustments are necessary?

EXAMPLE

Example – YTL POWER

Vision To be the leading provider of integrated utilities and energy solutions

for a sustainable future.

Mission We aim to provide value-added solutions in the generation and retail

of multi-utilities, trading and tank leasing by leveraging on our

operational efficiencies, people and leading technologies.

VISION, MISSION

Search for a company vision and mission statement and evaluate the mission statement using the following :

Customers: Who are the firm’s customers?

Markets: Where does the firm compete geographically?

Concern for survival, growth, and profitability: Is the firm committed to growth and financial

stability?

Philosophy: What are the firm’s basic beliefs, values, and ethical priorities?

Concern for public image: How responsive is the firm to societal and environmental concerns?

Products or services: What are the firm’s major products or services?

Technology: Is the firm technologically current?

Self-concept: What are the firm’s major competitive advantage and core competencies?

Concern for employees: Are employees a valuable asset of the firm?

THREE TYPES OF STRATEGIES

Multibusiness

Corporation

Strategic

Business Unit 1

Strategic

Business Unit 2

Research and

Development Manufacturing Marketing Human

Resources Finance

Strategic

Business Unit 3

Corporate

Strategy-Top

management Competitive

Strategy-

Middle

management Functional

Strategy- Lower

management

THREE (3) TYPES OF CORPORATE

STRATEGIES

1) Growth strategy

• expands the number of markets served or products offered

• through its current business(es) or through new business(es).

• 1) > concentration- Focuses on its primary line of business and increases the number of products offered or markets served in this primary business

• 2) >Vertical integration- Either backward, forward, or both.

• Backward -the organization becomes its own supplier so it can control its inputs.e,g . Ebay owned on line payment business

• Forward - becomes its own distributor and is able to control its outputs. E.g Apple own its worldwide distribution store

TYPES OF CORPORATE STRATEGIES

Growth strategy

• 3) >Horizontal integration - combining with competitors e.g French cosmestice L’Oreal acquire body shop, maybelline ,etc

• 4) > Diversification - expand to either related or unrelated business


2) Stability strategy

• a corporate strategy in which an organization continues to do what it is currently doing.

• e.g. continue to serve existing customers, offering same products, maintaining market share.

• The organization doesn’t grow, but doesn’t fall behind either.


3) Renewal Strategy

• retrenchment strategy – cut no. of staffs

• turnaround strategy- restructure- more drastic> cut cost and restructure organisation operations.

• e.g. close down a section of the plant, or sell off its subsidiary etc

TYPES OF CORPORATE

STRATEGIES

How Are Corporate Strategies

Managed?

A business unit is evaluated using a

SWOT analysis and placed in one of the

four categories

HOW ARE CORPORATE STRATEGIES

MANAGED

SWOT ANALYSIS

WORKSHOP

Log into You tube and listen to the Mc

Donald SWOT ANALYSIS

To discuss in group next week

COMPETITIVE STRATEGIES

A competitive strategy is a strategy for how

an organization will compete in its

business(es).


Developing an effective competitive strategy requires an understanding of competitive advantage, which is what sets an organization apart—that is, its distinctive edge.

Competitive advantage-Organization’s core competencies by doing something that others cannot do or doing it better than others can do it


FIVE FORCES MODEL

Five competitive forces dictate the rules of

competition.

Together, these five forces determine

industry attractiveness and profitability,

which managers assess using these five

factors:

FIVE FORCES MODEL

1

• Threat of new entrants. How likely is it that new competitors will come into the industry?

2

• Threat of substitutes. How likely is it that other industries’ products can be substituted for our industry’s products?

3 • Bargaining power of buyers. How

much bargaining power do buyers (customers) have ?

FIVE FORCES MODEL

4

• Bargaining power of suppliers. How much bargaining power do suppliers have?

5

• Current rivalry. How intense is the rivalry among current industry competitors?

FIVE FORCES MODEL

CHOOSING A COMPETITIVE STRATEGY

Once managers have assessed the five

forces and done a SWOT analysis, they’re

ready to select an appropriate competitive

strategy—that is, one that fits the

competitive strengths (resources and

capabilities) of the organization and the

industry it’s in.

CHOOSING A COMPETITIVE STRATEGY

WORKSHOP

1) Explain what managers do during the six steps

of the strategic management process.

2) Describe the three types of corporate strategies

3) Describe competitive advantage and the

competitive strategies organizations use to get it.

business management strategic management

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