Please enable JavaScript.
Coggle requires JavaScript to display documents.
The Nature of Strategic Management - Coggle Diagram
The Nature of Strategic Management
The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
What new businesses to enter
What businesses to abandon
Whether to expand operations or diversify
Whether to enter international markets
Whether to merge or form a joint venture
How to avoid a hostile takeover
Strategy Implementation
requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed
often called the action stage
Strategy Evaluation
Determining which strategies are not working well
Three fundamental activities:
reviewing external and internal factors that are the bases for current strategies
measuring performance
taking corrective actions
Competitive Advantage
any activity a firm does especially well compared to activities done by rival firms, or
any resource a firm possesses that rival firms desire.
A firm must strive to achieve sustained competitive advantage
Some Opportunities and Threats
Consumers' expectation for green operations and products is rising 8 percent annually in Western Europe.
Internet marketing is growing 11 percent annually in the United States.
Commodity food prices rose 6 percent the prior year.
Oil and gas prices declined 18 percent in the last twelve months.
Computer hacker problems are increasing 14 percent annually.
Strategists
Individuals most responsible for the success or failure of an organization
Help an organization gather, analyze, and organize information
Vision and Mission Statements
A vision statement answers the question “What do we want to become?”
A mission statement answers the question “What is our business?”
External Opportunities and Threats
economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization
Internal Strengths and Internal Weaknesses
an organization’s controllable activities that are performed especially well or poorly
determined relative to competitors
Long-Term Objectives
specific results that an organization seeks to achieve in pursuing its basic mission
long-term means more than one year
should be challenging, measurable, consistent, reasonable, and clear
Strategies
the means by which long-term objectives will be achieved
may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures
Annual objectives
short-term milestones that organizations must achieve to reach long-term objectives
should be measurable, quantitative, challenging, realistic, consistent, and prioritized
should be established at the corporate, divisional, and functional levels in a large organization
Policies
the means by which annual objectives will be achieved
Strategic management allows an organization to be more proactive than reactive in shaping its own future;
It allows an organization to initiate and influence (rather than just respond to) activities-and thus to exert control over its own destiny.
Strategic planning is a matter of vital importance to the state: a matter of life or death, the road either to survival or ruin. Hence, it is imperative that it be studied thoroughly
Know your enemy and know yourself, and in a hundred battles you will never be defeated
Skillful leaders do not let a strategy inhibit creative counter-movement
Financial Benefits
Organizations using strategic-management concepts show significant improvement in sales, profitability, and productivity compared to firms without systematic planning activities
High-performing firms tend to do systematic planning to prepare for future fluctuations in their external and internal environments