Lecture 3, Strategic Management
Lecture 3, Strategic Management
Lecture 3, Strategic Management
Strategic
Management
LEARNING OBJECTIVES OF THIS
CHAPTER
After studying this unit, you will be able to understand:
1. Strategic Management
2. Models of Strategy
3. Contrasting the Two Approaches
4. The Process of Strategic Management
5. Corporate Strategy
6. Business Unit Strategies
7. Benefits of a Strategic Approach to HR
1. STRATEGIC MANAGEMENT
1. STRATEGIC MANAGEMENT
In the field of management,
strategic management involves the formulation and
implementation of the major goals and initiatives
taken by an organization's top management on behalf of
owners, based on consideration of resources and an
assessment of the internal and external environments
in which the organization operates.
Strategic management is the management of an
organization’s resources to achieve its goals and objectives.
Strategic management involves setting objectives, analyzing the
competitive environment, analyzing the internal organization,
evaluating strategies, and ensuring that management rolls out
the strategies across the organization.
1. STRATEGIC MANAGEMENT
Strategic management is the continuous planning, monitoring,
analysis and assessment of all that is necessary for an
organization to meet its goals and objectives.
Strategic management typically involves:
Analyzing internal and external strengths and weaknesses.
Formulating action plans.
Executing action plans.
Evaluating to what degree action plans have been
successful and making changes when desired results are not
being produced.
2. MODELS OF STRATEGY
Models of
Strategy
Industrial Resource-
Organization Based View
(I/O) Model (RBV)
2.1. INDUSTRIAL ORGANIZATION
External environment is primary determinant of
organizational strategy rather than internal decisions
of managers
Environment presents threats & opportunities
All competing organizations control or have equal access to
resources
Resources are highly mobile between firms
Organizational success is achieved by
Offering goods & services at lower costs than competitors
Differentiating products to bring premium prices
2.2. RESOURCE-BASED VIEW (RBV)
RBV is an approach to achieving competitive advantage. Organizations
should look inside the company to find the sources of competitive
advantage instead of looking at competitive environment for it.
An organization’s resources & capabilities, not external
environmental conditions, should be basis for strategic
decisions
Competitive advantage is gained through acquisition & value of
organizational resources
Organizations can identify, locate & acquire key valuable
resources
Resources are not highly mobile across organizations & once
acquired are retained
Valuable resources are costly to imitate & non-substitutable
3. CONTRASTING THE TWO
APPROACHES
Research provides support for both positions
What drives strategy?
•I/O: External considerations
•RBV: Internal considerations
I/O: Strategy drives resource acquisition
RBV: Strategy determined by resources
4. THE PROCESS OF STRATEGIC
MANAGEMENT
1. Mission statement
2. Environmental analysis
3. Organizational self-assessment
4. Establishing goals & objectives
5. Setting Strategy
4. THE PROCESS OF STRATEGIC
MANAGEMENT
4.1. MISSION STATEMENT
A vision statement focuses on tomorrow and what an
organization wants to ultimately become. A mission
statement focuses on today and what an organization
does to achieve it. Both are vital in directing goals.