Strategic management - Wikipedia. Strategic management involves the formulation and implementation of the major goals and initiatives taken by a company's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision making in the context of complex environments and competitive dynamics. Vladimir Kvint defines strategy as . Operational management is concerned primarily with improving efficiency and controlling costs within the boundaries set by the organization's strategy.
Definition. Strategic planning is analytical in nature and refers to formalized procedures to produce the data and analyses used as inputs for strategic thinking, which synthesizes the data resulting in the strategy. Strategic planning may also refer to control mechanisms used to implement the strategy once it is determined. In other words, strategic planning happens around the strategic thinking or strategy making activity. While described sequentially below, in practice the two processes are iterative and each provides input for the other. Formulation ends with a series of goals or objectives and measures for the organization to pursue. Environmental analysis includes the: Remote external environment, including the political, economic, social, technological, legal and environmental landscape (PESTLE); Industry environment, such as the competitive behavior of rival organizations, the bargaining power of buyers/customers and suppliers, threats from new entrants to the industry, and the ability of buyers to substitute products (Porter's 5 forces); and. Internal environment, regarding the strengths and weaknesses of the organization's resources (i.
Strategic Planning Models. The six models of strategic planning. PhD Program in Strategic Management. Strategic Management PhD Program Curriculum. Eight research seminars form the core of the strategy doctoral student curriculum. As a Vice President of Research he focuses on strategic planning and advanced technologies and in bio- aero- and energy.
IT systems).? Implementation results in how the organization's resources are structured (such as by product or service or geography), leadership arrangements, communication, incentives, and monitoring mechanisms to track progress towards objectives, among others. Because of this, he could not point to one process that could be called strategic planning. Instead Mintzberg concludes that there are five types of strategies: Strategy as plan . Where the realized pattern was different from the intent, he referred to the strategy as emergent; Strategy as position . The first group is normative. It consists of the schools of informal design and conception, the formal planning, and analytical positioning. The second group, consisting of six schools, is more concerned with how strategic management is actually done, rather than prescribing optimal plans or positions.
The six schools are entrepreneurial, visionary, cognitive, learning/adaptive/emergent, negotiation, corporate culture and business environment. The third and final group consists of one school, the configuration or transformation school, a hybrid of the other schools organized into stages, organizational life cycles, or . Among the numerous early contributors, the most influential were Peter Drucker, Philip Selznick, Alfred Chandler, Igor Ansoff, and Bruce Henderson. Prior to 1. 96. 0, the term .
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He addressed fundamental strategic questions in a 1. The Practice of Management writing: . He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility. Andrews in 1. 96.
SWOT analysis, in which the strengths and weaknesses of the firm are assessed in light of the opportunities and threats in the business environment. Interactions between functions were typically handled by managers who relayed information back and forth between departments. Chandler stressed the importance of taking a long term perspective when looking to the future.
In his 1. 96. 2 ground breaking work Strategy and Structure, Chandler showed that a long- term coordinated strategy was necessary to give a company structure, direction and focus. He says it concisely, .
He developed a grid that compared strategies for market penetration, product development, market development and horizontal and vertical integration and diversification. He felt that management could use the grid to systematically prepare for the future. In his 1. 96. 5 classic Corporate Strategy, he developed gap analysis to clarify the gap between the current reality and the goals and to develop what he called .
The experience curve refers to a hypothesis that unit production costs decline by 2. This supported the argument for achieving higher market share and economies of scale. The idea of strategy targeting particular industries and customers (i.
The prevailing concept in strategy up to the 1. If you created a product that worked well and was durable, it was assumed you would have no difficulty profiting.
This was called the production orientation. Henry Ford famously said of the Model T car: . The fallacy of the production orientation was also referred to as marketing myopia in an article of the same name by Levitt. This marketing concept, in the decades since its introduction, has been reformulated and repackaged under names including market orientation, customer orientation, customer intimacy, customer focus, customer- driven and market focus. It's more important than ever to define yourself in terms of what you stand for rather than what you make, because what you make is going to become outmoded faster than it has at any time in the past. Jim Collins. Change creates novel combinations of circumstances requiring unstructured non- repetitive responses; Affects the entire organization by providing direction; Involves both strategy formulation processes and also implementation of the content of the strategy; May be planned (intended) and unplanned (emergent); Is done at several levels: overall corporate strategy, and individual business strategies; and.
Involves both conceptual and analytical thought processes. Chaffee further wrote that research up to that point covered three models of strategy, which were not mutually exclusive: Linear strategy: A planned determination of goals, initiatives, and allocation of resources, along the lines of the Chandler definition above. This is most consistent with strategic planning approaches and may have a long planning horizon.
The need for continuous adaption reduces or eliminates the planning window. There is more focus on means (resource mobilization to address the environment) rather than ends (goals). Strategy is less centralized than in the linear model.
Interpretive strategy: A more recent and less developed model than the linear and adaptive models, interpretive strategy is concerned with . It places emphasis on symbols and language to influence the minds of customers, rather than the physical product of the organization.
These reflect an increased focus on cost, competition and customers. This framework came to be known by the acronym SWOT and was . Andrews helped popularize the framework via a 1. It has been empirically confirmed by some firms at various points in their history. Author Walter Kiechel wrote that it reflected several insights, including: A company can always improve its cost structure; Competitors have varying cost positions based on their experience; Firms could achieve lower costs through higher market share, attaining a competitive advantage; and.
An increased focus on empirical analysis of costs and processes, a concept which author Kiechel refers to as . Further, the experience curve provided a basis for the retail sale of business ideas, helping drive the management consulting industry. By 1. 97. 9, one study estimated that 4. Fortune 5. 00 companies were using some variation of the matrix in their strategic planning. This framework helped companies decide where to invest their resources (i. He mentioned four concepts of corporate strategy; the latter three can be used together. The corporation shifts resources among the units and monitors the performance of each business unit and its leaders.
Each unit generally runs autonomously, with limited interference from the corporate center provided goals are met. Restructuring: The corporate office acquires then actively intervenes in a business where it detects potential, often by replacing management and implementing a new business strategy. Transferring skills: Important managerial skills and organizational capability are essentially spread to multiple businesses. The skills must be necessary to competitive advantage. Sharing activities: Ability of the combined corporation to leverage centralized functions, such as sales, finance, etc. The growth- share matrix, a part of B.
C. G. Analysis, was followed by G. E. Companies continued to diversify as conglomerates until the 1. This advantage derives from attribute(s) that allow an organization to outperform its competition, such as superior market position, skills, or resources. In Porter's view, strategic management should be concerned with building and sustaining competitive advantage. In five forces analysis he identified the forces that shape the industry structure or environment. The framework involves the bargaining power of buyers and suppliers, the threat of new entrants, the availability of substitute products, and the competitive rivalry of firms in the industry.
These forces affect the organization's ability to raise its prices as well as the costs of inputs (such as raw materials) for its processes. Companies can maximize their profitability by competing in industries with favorable structure.
Competitors can take steps to grow the overall profitability of the industry, or to take profit away from other parts of the industry structure.