Strategic Management: A Comprehensive Overview

Posted on Nov 22, 2024 in Economy

Strategies in Action

Integration:

  • Forward
  • Back
  • Horizontal

Diversification:

  • Related
  • Unrelated

Intensive:

  • Market Penetration
  • Market Development
  • Product Development

Defensive:

  • Reduction
  • Disinvestment
  • Clearance

Management Strategies for Michael Porter

  • Cost Leadership: Emphasizes manufacturing standardized products at a very low unit cost for price-sensitive consumers.
  • Differentiation: Consists of developing unique products and services for consumers insensitive to price.
  • Focus: Involves developing products and services that meet the needs of small consumer groups.

Means to Carry Out Strategies

Strategic Alliances and Associations: Two or more companies form a temporary partnership or consortium to exploit an opportunity, sharing ownership in the new entity. This enables improved communication, networking, globalized operations, and risk minimization.

Mergers & Acquisitions: Acquisitions occur when one company buys another. Mergers occur when two equally sized companies unite to form a new one. Note: When an acquisition or merger isn’t desired by both parties, it’s called a “hostile takeover”.

Strategic Management in Non-Profit and Government Organizations

  • Educational Institutions: Offering new academic programs, internet services, and outreach.
  • Medical Institutions: Focusing on disease prevention, timely diagnosis, and healthcare programs.
  • Government Offices and Departments: Developing social welfare programs and efficient resource administration.

Nature of Analysis and Strategy Selection

Identifying alternative courses of action to help companies achieve their mission and objectives.

Analytical Outline of Strategy Development

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SWOT Matrix

  • A tool helping managers develop four types of strategies: SO, WO, ST, WT.
  • Generates viable alternative strategies but doesn’t determine the best ones. Not all strategies in the matrix will be implemented.

Boston Consulting Group Matrix

  • Developing separate strategies for each business unit competing in various industries.
  • Enhances multidivisional company efforts, focusing on cash flow, investment characteristics, and divisional needs.

Quantitative Strategic Planning Matrix (QSPM)

  • Determines the attractiveness of viable alternative actions.
  • Objectively evaluates alternative strategies based on critical success factors.
  • Uses information from Stage 1 and suitability analysis from Stage 2 to objectively decide the best alternative strategies.

Stage 2a: Strategy Implementation

  • Mobilizing managers and employees to implement strategies, understand the business, and feel part of the company.
  • Change occurs during implementation and evaluation, not planning.

1. Establishing annual targets

2. Policies supporting work towards targets

3. Resource allocation: Financial, physical, human, and technological

Annual Objectives (Features)

  • Quantifiable, consistent, reasonable, clear, and time-bound.
  • Establish quantity, quality, cost, and verifiability.
  • Compatible with manager and employee values, supported by clear policies.

Policies

Specific guidelines, methods, procedures, rules, and administrative practices supporting work towards goals. They set boundaries, limit actions, reward and punish behavior, and define what can and cannot be done.

  • Clarify employee expectations.
  • Provide a basis for management control.
  • Promote coordination between business units.
  • Define work and responsibilities.
  • Promote decision-making delegation.

Resource Allocation

Aligned with priorities established by annual objectives.

Resource types:

  • Financial
  • Physical
  • Human Factor
  • Technological

Conflict Management

  • Avoidance: Ignoring the problem or separating individuals.
  • Smoothing: Minimizing differences and emphasizing common interests.
  • Confrontation: Exchanging perspectives or holding meetings to discuss differences.

Relationship of Structure to Strategy

  • Functional Structure: Groups tasks by business function (production, marketing, finance).

Advantages:

  • Promotes labor specialization.
  • Reduces the need for elaborate control.
  • Enables quick decision-making.

Other Structures:

  • Divisional by geographic area
  • Divisional by product
  • Divisional by customer
  • Divisional by process
  • Strategic Business Units (SBUs)
  • Matrix structure (complex, shared authority)

Restructuring

  • Reducing company size (employees, divisions, hierarchy).
  • Improving efficiency, effectiveness, and reducing costs.
  • Prioritizing shareholder welfare.

Reengineering

  • Breaking down functional barriers and creating process-based work systems.
  • Based on decentralization, interdependence, and information exchange.
  • Helps employees see how their work affects the product/service.

Managing Resistance to Change

  • Change creates anxiety due to fear of economic loss, discomfort, uncertainty, and social disruption.
  • Resistance can threaten strategy implementation.
  • Organizational change is an ongoing process, not a project. Organizations constantly adapt to change and must anticipate it.