Strategic management

[imrancenakk]

INTRODUCTION

Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team.
It provides overall direction to the whole enterprise. An organization s strategy must be appropriate for its resources, circumstances, and objectives. The process involves matching the companies' strategic advantages to the business environment the organization faces.
One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organization s goals, policies, and action sequences (tactics) into a cohesive whole.

FUNCTION LEVEL STRATAGIES
Functional-level strategies are concerned with coordinating the functional areas of the organization (marketing, finance, human resources, production, research and development, etc.) so that each functional area upholds and contributes to individual business-level strategies and the overall corporate-level strategy. This involves coordinating the various functions and operations needed to design, manufacturer, deliver, and support the product or service of each business within the corporate portfolio. Functional strategies are primarily concerned with:
Efficiently utilizing specialists within the functional area.
Integrating activities within the functional area (e.g., coordinating advertising, promotion, and marketing research in marketing; or purchasing, inventory control, and shipping in production/operations).
Assuring that functional strategies mesh with business-level strategies and the overall corporate-level strategy.
Functional strategies are frequently concerned with appropriate timing. For example, advertising for a new product could be expected to begin sixty days prior to shipment of the first product. Production could then start thirty days before shipping begins. Raw materials, for instance, may require that orders are placed at least two weeks before production is to start. Thus, functional strategies have a shorter time orientation than either business-level or corporate-level strategies. Accountability is also easiest to establish with functional strategies because results of actions occur sooner and are more easily attributed to the function than is possible at other levels of strategy. Lower-level managers are most directly involved with the implementation of functional strategies.
Strategies for an organization may be categorized by the level of the organization addressed by the strategy. Corporate-level strategies involve top management and address issues of concern to the entire organization. Business-level strategies deal with major business units or divisions of the corporate portfolio. Business-level strategies are generally developed by upper and middle-level managers and are intended to help the organization achieve its corporate strategies. Functional strategies address problems commonly faced by lower-level managers and deal with strategies for the major organizational functions (e.g., marketing, finance, production) considered relevant for achieving the business strategies and supporting the corporate-level strategy. Market definition is thus the domain of corporate-level strategy, market navigation the domain of business-level strategy, and support of business and corporate-level strategy by individual, but integrated, functional level strategie
FUNCTIONAL LEVEL STRATEGIES
superior efficiency
superior quality
superior customer responsiveness
superior innovation
EFFICIENCY
two factors determine a firm s profit rate
the value customers place on firm offering
the costs of producing & delivering those offerings
difference between costs of inputs and value of output
productivity measures output per employee
superior value creation
either enjoy the lowest cost structure in the indusry
4sS: scale, scope, specialization, & speed
other advantages?
or create the most valuable product in eyes of customers
the gap between perceived value and costs of production
QUALITY
quality products are goods & services that are reliable
do well what they are designed to do
quality can result in
o greater efficiency
o productivity
o brand-name value
o customer loyalty
o higher retained value
SUPERIOR CUSTOMER RESPONSIVENESS
quality of firm offerings plus superior customer response time
ability to develop new offerings
ability to customize existing offerings to ever smaller customer segments (while main- taining efficiency & quality)
INNOVATION
anything new and novel in the way companies operate
product & process innovations
advances in product design, form factor, mfg, distrib & mktg processes, management systems, organizational structures, coop&collaborate
DURABILITY OF COMPETITIVE ADVANTAGES
extent to which superior efficiency, quality, customer satisfaction & innovation may be copied and duplicated
barriers to imitation
capability to imitate
o absorptive capacity
industry dynamism
COMPETITIVE ADVANTAGES
are organizational
usually depend on continuous improvement & learning organizational flexibility & adaptability are key to long term success