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Strategic Management

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Mohammad Sohail

on 23 October 2015

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Transcript of Strategic Management

Strategic Management
Businesses Number One Goal?
Ultimate goal for any business should be superior profitability
Above-average returns ~
Producing standardized good or services at costs below those of competitors
Producing differentiated goods or services for which customers are willing to pay a premium price
Competitive Nature
Businesses compete in a number of various competitive environments
Monopoly Environment ~
Advantage ~
Absolute competitive advantage that delivers excessive business profits
Disadvantage ~
Are illegal, with some exceptions
Oligopoly Environment ~
Contains a few players who do not directly compete against each other
There is only one player and no competition
Advantage ~
Higher profits since there is less competition
Simple choices since there are few competitors
Disadvantage ~
Less choices
Fixed prices are sometimes bad
Returns that exceed what an investor could earn by investing in alternative opportunities of equal risk
Identify and Analyze current:
Analyze external and internal environments:
Industry and external environment (opportunities and threats)
Organizational resources and capabilities (strengths and weaknesses)
Revise mission and objectives, and select new strategies:
Implement Strategies:
Corporate governance
Management systems and practices
Strategic leadership
Evaluate results:
Strategic control
Renew strategic management process
Strategy Formulation: Creating strategies
Strategy Implementation: Putting strategies together
5 Strategic Management Tasks
1) Identify organizational mission and objectives
What business are we in? Where do we want to go?
2) Assess current performance with regard to mission and objective
How well are we going to do?
3) Create strategic plans to accomplish purpose and objectives
How can we get where we really want to be?
4) Implement the strategic plans
Has everything been done that needs to be done?
5) Evaluate results; Change strategic plan if necessary
Are things working out as planned? What can be improved?
Mission statement
~ Identifies the domain in which the organization intends to operate - including the customers it intends to serve, the products and/or services it intends to provide, and the location in which it intends to operate.
Create value for our stakeholders
We are committed to providing superior value in our products and services
We think of our suppliers as partners who share our goal of highest quality
We are committed to being caring and supportive corporate citizens within the worldwide communities in which we operate
We are dedicated performing in a manner that will enhance returns on investments
We respect the individuality of each employee creativity and productivity are encouraged, valued, and rewarded
Operating Objectives
Specific results that organizations trying to accomplish
~ Producing at a net profit in business
Market share
~ Gaining and holding specific market share
Human talent
~ Recruiting and maintaining a high-quality workforce
Financial health
~ Acquiring capital; earning positive returns
Cost efficiency
~ Using resources well to operate at a low cost
Product quality
~ Producing high-quality good or services
~ Developing new products and/or processes
Social responsibility
~ Making a positive contribution to society
Businesses might consider the following objectives
Analysis of organizational resource and capabilities
Two Critical in Strategic management process are...
Analysis of the organization
Analysis of the environment
SWOT Analysis:
Internal analysis of organizational strengths and weaknesses as well as the external analysis of environmental opportunities and threats.
Core competency:
A special strength that gives an organization a competitive advantage
Important in a business because they need something that stands out against their competition
SWOT Analysis
Manufacturing efficiency
Skilled workforce
Good market share
Strong financing
Outdated facilities
Obsolete technologies
Weak management
Past palling failures
New competitors
Shortage of resources
New regulations
Substitute products
Possible new markets
Strong economy
Weak market rivals
Emerging technologies
Internal Assessment of the organization
External Assessment of the Environment
5 Competitive Forces
Industry competitors
~ Intensity of rivalry among firms in the industry

New entrants
~ Threats of new competitors entering the market

~ Beginning power of suppliers

~ Bargaining power of buyers

~ Threats of substitutes products or services
Industry Competition
Rivalry among competing firms
New Entrants
Threats of potential new competitors
Bargaining power of buyers
Substitute Products
Threat of substitute products or services
Bargaining powers of suppliers
Strategies used by Organizations
Corporate Strategy:
Sets long-term direction for the total
enterprise, and directs the organization as a whole toward sustainable competitive advantage.
"In what industries and markets should we compete in?"
Business Strategy:
Identifies how a division or strategic
business will compete in its product or service domain
Functional Strategy:
Guides activities within one
specific enterprise
"How can we best utilize resources to implement our business strategy?"
Corporate Strategy
What business are we in?
Business Strategy
How do we compete in each of our major businesses?
Functional Strategy
How do we best support each of our business strategies?
Division 1
Division 3
Division 2
Research and Development
Human Resources
Growth and Diversification Strategies
Growth Strategy:
Involves expansion of current
operations by the organization
Different approaches to growth are...
Concentration ~
Where expansion is within the same business area
Diversification ~
Where expansion takes place through the acquisition of or investment in new and sometimes different business areas
Vertical Integration ~
Where a business seeks added value creation by acquiring suppliers (backward vertical integration) or distributors (forward vertical integration)
Restructuring and Divestiture Strategies
Retrenchment Strategy:
Involves reducing the scale
of current operations
Changing the scale and/or mix of
operations to gain efficiency and improve performance
Restructuring can be achieved by...
Downsizing ~
Decreasing the size of operations in the intent to become more streamlined
Divestiture ~
Sell off parts of the organization to focus attention and resources on core business areas
Cooperative Strategies
Strategic Alliance:
Where two or more organizations
join together in partnership to pursue an area of mutual interest
Outsourcing Alliances
Contracting to purchase important services from another organization
Supplier Alliances
Preferred supplier relationships guarantee a smooth and timely flow of quality supplies among alliance partners
Distribution Alliances
Firms join together to accomplish product or services sales and distributions
E-Business Strategies
What is an E-Business Strategy?
Strategic use of the internet to gain a competitive advantage
B2B (Business to Business)
Using the internet to link the organizations with members of their supply chains
B2C (Business to Customer)
Using the internet to link the organization with their customers
Amazon.com, Priceline.com, and dell.com

By: Mohammad, Shershaw, Tommy, Igor, Jordan
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