Strategic Management

Process
10.2

What is Strategic Management?

Application of the basic planning process at the highest
levels of the company
Top management sets goals for the performance of the
company
Carefully formulating, implementing, and evaluating plans and
strategies

What is Strategic Management?

Most important part is developing strategic
plans
Plans must remain current as changes occur inside
and outside the company

Involves many levels of management

Top level formally develops basic plans
Different departments may be asked to develop plans
for their own areas
A solid plan guarantees that plans are coordinated
and are supported by everyone in the company

Strategic Management Approach

Three phases critical to the success of the
process
Formulation
Developing the strategic plan

Implementation
Putting the formulated plan to work

Evaluation
Continuously evaluating and updating the strategic
plan

Formulating Strategy
Developing the grand- and business-level
strategies to be used by the company
Companys strengths/weaknesses and
threats/opportunities shape the strategies
First step is to understand the current position of
the company
Identify mission, identify past and present strategies,
diagnose the companys past and present
performance, set objectives for the companys
operation

Formulating Strategy
Identify the mission statement
Outlines why the company exists
Describes the companys basic products
and/or services and defines markets and
sources of revenue
Designed to accomplish several goals and
ensures a common purpose within the
company

Apples Mission Statement

Apple ignited the personal computer revolution
in the 1970s with the Apple II and reinvented the
personal computer in the 1980s with the
Macintosh. Today, Apple continues to lead the
industry in innovation with its award-winning
computers, OS X operating system and iLife and
professional applications. Apple is also
spearheading the digital media revolution with its
iPod portable music and video players and
iTunes online store, and has entered the mobile
phone market this year with its revolutionary
iPhone.

Whos Mission Statements?

1. "To bring inspiration and innovation to every
athlete in the world."
2. "To enable people and businesses throughout
the world to realize their full potential."
3. . . .seeks to be the worlds most customercentric company, where customers can find
and discover anything they may want to buy
online at a great price."

Identifying Past and Present

Strategies
Companies need to understand and
appreciate their corporate history
Strategic managers should ask
Has past strategy been developed?
If not, can past history of the company be analyzed
to identify the strategy that has evolved?
If yes, has the strategy been recorded in writing?

Diagnosing Past and Present

Performance
A corporate planner must decide if past
strategies worked and if strategic changes
are needed by asking:
How is the company currently performing?
How has it performed during the past few
years?
Is the performance trend moving up or down?

Setting Goals
Concise statements that provide direction
employees and set standards for
achieving the companys strategic plan
Established in many areas (see handout)
Goals must be reevaluated as the
environment and opportunities change
Multiple goals are used to reflect the
desired performance

Policies, Procedures, and Rules

Policies are broad general guides to action
that establish boundaries within which
employees must operate
answering all written customer complaints in
writing within 10 days

Policies, Procedures, and Rules

Procedures are detailed series of related
steps/tasks written to implement a policy
Define methods through which policies are achieved
the customer service representative must note the
complaint of Form 622 and forward the yellow copy of
the form

Rules detail specific and definite corporate

actions that employees must follow
Leave little doubt about what is to be done
no smoking in the conference room

SWOT Analysis
Strengths, Weaknesses, Opportunities,
Threats
Process that allows companies to evaluate
overall health
Internal (SW) and external (OT)

Most important result of a SWOT analysis

is the ability to draw conclusions about the
attractiveness of the companys situation
and the need for strategic action

Implementing Strategy
Action stage of strategic management
Managers determine and implement the
most appropriate company structure,
motivate employees, develop short-range
goals, and establish functional strategies
Strategy must fit with current company
policies
Or conflicting policies must be changed

A. T. Cross Company

Evaluating and Controlling the

Strategic Plan
Process of continuously monitoring the
companys progress toward its long-range goals
and mission
Managers should ask:
Does the grand strategy need revising?
Where are problems likely to occur?

Basic strategy evaluation strategies:

Review external and internal factors that are the bases
for current strategies
Measure performance
Take corrective action

Evaluating and Controlling the

Strategic Plan
Emphasis is making the companys
managers aware of the problems that are
likely to occur and of the actions to take if
they do arise
Plan ahead and avoid disaster
Strategic planning and evaluation should
be done on a predetermined schedule and
as frequently as necessary, determined by
internal and environmental factors