Strategic Management: A Plan for Success
Strategic Management
Concept
Strategic management is a method of defining an organization’s position, objectives, and how it plans to achieve them. It provides stability amidst changing circumstances, often involving a formal, written strategic plan.
Characteristics of Strategic Management
- Fundamental
- Long-term
- Forward-looking
- Purpose-driven
- Seeks competitive advantage
- Positions scope of activities
- Focuses on strategic fit, stretching, and leverage
Corporate Strategy
- Mission Statement/Vision: What business are we in?
- Corporate Objectives/Goals/Aims: Where do we want to go, and how do we get there?
- Market Research: Who are our customers, and what are their needs?
- External Environment Audit: What threats and opportunities do we face?
- Resource Analysis: What are our strengths and weaknesses?
- Marketing Objectives: How do we achieve our objectives in marketing terms?
- Strategic Plan: How do we match our objectives with our resources?
- Action Plan: What steps must we take to achieve our objectives?
The Strategic Plan
Types of Strategy
- Planned Strategy: A predetermined course of action.
- Intended Strategy: A planned pattern of decision-making.
- Deliberate Strategy: An intended strategy that is successfully implemented.
- Imposed Strategy: A strategy enforced by an external entity.
- Realized Strategy: An accomplished strategy.
- Unrealized Strategy: A planned strategy that is not implemented.
- Emergent Strategy: An unintended strategy that develops over time.
Typical Business Stakeholders
- Shareholders: Own the company, receive dividends.
- Financial Bodies: Fund the company, receive interest.
- Employees: Provide labor and skills, receive pay.
- Managers: Provide organization and control, receive pay.
- Government: Legislates, regulates, receives taxes.
- Customers: Consume the product, receive benefits.
- Suppliers: Provide raw materials, receive payment.
Competitive Forces of Strategy: Porter’s Five Forces
- Threat of New Entrants: Focus on economies of scale, product differentiation, brand identity, switching costs, capital requirements.
- Threat of Substitute Products
- Bargaining Power of Suppliers: Consider supplier concentration, switching costs, input differentiation.
- Bargaining Power of Buyers: Consider bargaining leverage, buyer concentration vs. firm concentration, buyer volume, switching costs, buyer information, backward integration.
- Intensity of Rivalry: Consider industry growth, fixed/storage costs, value added, product differentiation, brand identity.
The Planning Process: Business Plan
- Marketing: Research customer needs, establish outlets and distribution channels, conduct pilot studies.
- Sales: Establish contacts, initiate advertising and sales promotion.
- Production: Redesign products, organize production expansion, coordinate transport and distribution.
- Personnel: Recruit sales and administrative staff, relocate employees.
- Finance: Consider capital outlay, establish cash flow plans, support investment in design and production.
Barriers to Strategy
Effects of Strategic Planning
- Promotes consistent handling of similar issues.
- Establishes control over independent actions through clear policies.
- Ensures faster decisions with a decision-making framework.
- Provides predetermined solutions to routine problems.
- Reduces resistance to change after plan agreement.
- Prevents hasty decisions.
- Establishes a timeframe for monitoring progress.
- Establishes long-term, medium-term, and short-term activity patterns.