MGT603 Handouts by VUBuddy

STRATEGIC MANAGEMENT - MGT603

Table of Contents: · Lesson · Topics · Page

Key Terms of Strategic Management …………………………………………… Internal Factors and Long Term Goals …………………………………………. Benefits of Strategic Management ………………………………………………. Comprehensive Strategic Model ……………………………………………….... Characteristics of a Mission Statement ………………………………………….. External Assessment ………………………………………………........................ Key External Factors ………………………………………………....................... External Assessment (Key external factors) …………………………………… Technological Forces ………………………………………………....................... Industry Analysis ……………………………………………….............................. IFE Matrix ………………………………………………...……………………. Functions of Management ……………………………………………….............. Functions of Management ……………………………………………….............. Internal Assessment (Finance/Accounting) …………………………………….. Analytical Tools ………………………………………………...………………. The Internal Factor Evaluation (IFE) Matrix …………………………………… Types of Strategies ………………………………………………...……………. Types of Strategies ………………………………………………...……………. Types of Strategies ………………………………………………...……………. Types of Strategies ………………………………………………...……………. Types of Strategies ………………………………………………...……………. Strategy-Formulation Framework ………………………………………………. Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix …………………. The Strategic Position and Action Evaluation (SPACE) Matrix …………………. The Strategic Position and Action Evaluation (SPACE) Matrix (Contd) ………… Boston Consulting Group (BCG) & IE Matrix ………………….……………... Boston Consulting Group (BCG) & IE Matrix (Contd) ………………………... Grand Strategy Matrix & QSPM ………………….………………….…………. Grand Strategy Matrix & QSPM ………………….………………….…………. The Nature of Strategy Implementation ………………….…………………….. Resource Allocation ………………………………………………...…………… Organizational Structure ………………………………………………...………. Restructuring & Reengineering ………………………………………………...... Production/Operations Concerns When Implementing Strategies ……………… Marketing Issues (Market Segmentation) ………………….………………….… Marketing Issues (Marketing Mix) (Cont) ………………….………………….… Finance/Accounting Issues ………………….………………….………………. Research and Development Issues ………………….………………….……….. Strategy Review, Evaluation and Control ………………….………………….… Porter’s Supply Chain Model ………………….………………….……………..

Reviewing Bases of Strategy ………………….………………….……………… Measuring Organizational Performance ………………….………………….….. Characteristics of an Effective Evaluation System ………………….…………… Lesson 1

This Lecture provides an overview of strategic management. It introduces a practical, integrative model of the strategic-management process and defines basic activities and terms in strategic management and discusses the importance of business ethics. After reading this lecture you will be able to know that: What Is Strategic Management? Discuss the nature of strategy formulation, implementation, and evaluation activities.

What is strategic management?

Strategic Management can be defined as “the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective.”

Definition:

“The on-going process of formulating, implementing and controlling broad plans guide the organizational in achieving the strategic goods given its internal and external environment”.

Interpretation:

1. On-going process:

Strategic management is a on-going process which is in existence through out the life of organization.

2. Shaping broad plans:

First, it is an on-going process in which broad plans are firstly formulated than implementing and finally controlled.

3. Strategic goals:

Strategic goals are those which are set by top management. The broad plans are made in achieving the goals.

4. Internal and external environment:

Internal and external environment generally set the goals. Simply external environment forced internal environment to set the goals and guide them that how to achieve the goals?

How the strategic management show:

Influenced On-going Process

Shaping & achieving broad plans

Broad plans are for achieving strategic

External Environment

Top management or Internal Environment to achieve Forced Environment Scanning Strategy Fermentation Strategy Implication Evaluation Control

Importance of strategic Management

Why do we need to lay so much stress on strategic management?

Strategic management becomes important due to the following reasons:

¾ Globalization: The survival for business

First, global considerations impact virtually all strategic decisions! The boundaries of countries no longer can define the limits of our imaginations. To see and appreciate the world from the perspective of others has become a matter of survival for businesses. The underpinnings of strategic management hinge upon managers' gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide. The price and quality of a firm's products and services must be competitive on a worldwide basis, not just a local basis. The distance between the business sectors are becoming less due to the provisions of certain facilities. Although political boundaries are there but in order to become successful in business it is essential to laid stress on globalization.

¾ E-Commerce: A business tool

A second theme is that electric commerce (e-commerce) has become a vital strategic-management tool. An increasing number of companies are gaining competitive advantage by using the Internet for direct selling and for communication with suppliers, customers, creditors, partners, shareholders, clients, and competitors who may be dispersed globally. E-commerce allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, eliminate paperwork, and share information. In total, electronic commerce is minimizing the expense and cumbersomeness of time, distance and space in doing business, which yields better customer service, greater efficiency, improved products and higher profitability. The Internet and personal computers are changing the way we organize our lives; inhabit our homes; and relate to and interact with family, friends, neighbors, and even ourselves. The Internet promotes endless comparison shopping which enables consumers worldwide to band together to demand discounts. The Internet has transferred power from businesses to individuals so swiftly that in another decade there may be "regulations" imposed on groups of consumers. Politicians may one day debate the need for "regulation on consumers" rather than "regulation on big business" because of the Internet's empowerment of individuals. Buyers used to face big obstacles to getting the best price and service, such as limited time and data to compare, but now consumers can quickly scan hundreds of vendors’ offerings. Or they can go to Web sites such as that offers detailed information on more than 100,000 consumer products. The Internet has changed the very nature and core of buying and selling in nearly all industries. It has fundamentally changed the economics of business in every single industry worldwide

¾ Earth environment has become a major strategic issue

A third theme is that the natural environment has become an important strategic issue. With the demise of communism and the end of the Cold War, perhaps there is now no greater threat to business and society than the continuous exploitation and decimation of our natural environment. The resources are scarce but the wants are unlimited. In order to meet the wants of the world, the resources should be efficiently utilized. For example, the use of oil resources or energy resources will make the people to use these resources for a long time.

Strategic management – A route to success:

The study of strategic management integrates different topics. Different courses are integrated due to the study of this course so that businesses become successful in every sector. It integrates the following: ¾ Marketing ¾ Management ¾ Finance ¾ Research and development The management and marketing are essential part of a business sectors. They should be integrated. Just like other sections of the business are integrated under this study. This term is mostly used by academia but this is also used in media.