Strategic Management

Strategic management
By GPS
WHAT IS MEANT BY A
CORPORATE STRATEGY?
Corporate strategy is a long

term plan of action for the
whole organization aimed at
achieving a particular
corporate objective.
Corporate
objective: to
increase return on
capital by 15 % in 3
Review success of years
strategy by assessing
whether the
corporate objective is
being achieved
Corporate Strategy : To
pursue market development
in to emerging market
economies. One new market
entered each year for 3 next
year
Divisional and
departmental
objectives: For eg.
Marketing dept: increase
market share in Asia by
5% for each of next 3 Years
INFLUENCE ON BUSINESS ACTIVITY
1. Objectives:
2. Resources available: A small business may not have the
finance or skill management required to develop a high
technology product
3. Competitive environment: Are competitors innovative?
Are they entering new market?
Are they cutting costs to be more competitive?
Business is likely to respond to each of this situation with a
different strategy of its own.
4. Strength of the business: Focusing on existing strength to
develop new strategy is likely to be more successful than trying
to develop new strengths
The hierarchy of strategy
Business
strategy
Functional
Strategy
Levels of Strategy
Strategies Description
Corporate strategy The overall strategy development for the whole corporation.
Example.
• Growth like Integrations
• Stability
• Retrenchment
Separate business divisions of a large corporation – product or
geographical market business units – must form strategies to
achieve and sustain competitive advantage. If successful, the
Business strategy corporate strategy is also likely to succeed.
• Increase marketing budget.
• Rebrand.
• Tap new and emerging markets.
These plans are limited to the department’s own functional

responsibilities such as:
Functional • product development strategies,
Strategies • marketing strategies and
• human resource strategies.
Strategy and Tactics
Strategic decisions, e.g. to develop new Tactical decisions, e.g. to sell a product in
markets abroad different sized packaging
long-term short- to medium-term

difficult to reverse once made – reversible, but there may still be costs
departments will have involved
committed resources to it
taken by directors and/or senior taken by less senior managers and
managers subordinates with delegated authority
cross-functional – will involve all major impact of tactical decisions is often only
departments of the business on one department
Business strategy or business tactics?
Strategic or
Business context Decision tactical – and
explanation
Multinational drinks switch from cans to plastic

company bottles
start selling non-food items, such

Supermarket business as clothes, for the first time
Steel-making company recruit production supervisors

internally, not externally
Holiday tour operator increase prices of holidays to a

popular destination
Major computer develop a range of advanced

manufacturer mobile (cell) phones with
Internet capability
Strategic management
The role of management when setting long-term
goals and implementing cross-functional decisions
that should enable a business to reach these goals
Key stages of Strategic management
Stages Benefits
Assessing the current position of the Helps in the process of making
company appropriate decisions- identifies
appropriate opportunities.
Setting the company’s mission, vision To give the business focus and direction
and objectives
Taking the appropriate strategic Effective decision making should
decision choose the best option for the business
Implementation: Allocating sufficient Integrating and co-ordinating
resources to put decisions into effect departments, allocating sufficient
resources
Evaluating the success of the decision Have the objective been met? If not
another decision may be necessary.
Structure follows strategy
New strategy is created
New administrative problems emerge
Economic performance declines
New appropriate structure is created
Profits return to its previous level

Organisational structure
Organisational structure is the internal,
formal framework of a business that
shows the way in which management is
organised and linked together and how
authority is passed through the
organisation.
Need for organisational structure
 Responsibility for decisions
the relationships between different people and
departments
in the business and who is their immediate ‘line’
manager
chain of command
 span of control
 channels of communication
 reporting channel
Types of Organisational structure
Hierarchical structure: A structure that is designed to
represent the various level of authority and to outline
the chain of command and channels of
communication.
Matrix structure: an organizational structure that
creates project teams with team members from
different functional areas.
Chief
executive
Directors
Middle
managers
Supervisors
Line workers
BT
SMC
SMC
Advantages and Disadvantages of Hierarchical structure
Advantages Disadvantages
 Reflects decision making  One way communication

 Clear chain of command  Few horizontal links between
 Shows levels of hierarchy departments
 Promotion path is clearly  Inflexible, resist to change
signposted • May encourage narrow departmental
 Flexible choice of divisions views
A Matrix organisational structure
A Matrix organisational structure
Advantages and disadvantages of matrix structure
Flexible ideal for  Less control from the top

innovative /creative ideas
Responds to change  Less obvious career
progression
Easier communication
 Less clear authority roles
Teamwork focused
 Possible conflicts of interest
Project rather than
department focused
Key principles of organizational structure
Chain of command: this is the route through which

authority is passed down an organisation – from the
chief executive and the board of directors.
Level of hierarchy: a stage of the organisational
structure at which the personnel on it have equal
status and authority.
Span of control: the number of subordinates
reporting directly to a manager
Narrow and wide span of control :
A narrow span of control refers to a
structure with few employees reporting to
the manager, while a
wide span of control refers to a structure

with many employees reporting to a
supervisor.
Wide span of control
Manager
Narrow span of control
Delegation: passing authority down the organisational
hierarchy
■ gives senior managers more if the task is not well defined
time to focus on important, or if inadequate training is given,
strategic roles then delegation is unlikely to
■ shows trust in subordinates and succeed
this can motivate and challenge
them ■ delegation will be unsuccessful if
insufficient authority (power) is
■ develops and trains staff for given to the subordinate who is
more senior positions performing the tasks
■ helps staff to achieve fulfillment ■ managers may only delegate the

through their work (self- boring jobs that they do not want
actualisation) to do – this will not be motivating
Centralisation : Keeping all the important
decision power with in the head office or the
center of the organisation.
Decentralisation: Decision making power

are passed down the organisation to
empower subordinates and regional /
product managers.
Advantages of Centralization and Decentralization
Centralisation Decentralization
• Rapid decision-making ■ More local decisions can be made
that reflect different conditions
■ Consistent policies throughout the
organisation. prevents any conflicts ■ More junior managers can be
between the divisions developed.
■ Senior managers take decisions in the ■ Positive effects on motivation.

interest of the whole business
■ Quicker and more flexible decision-
■ More economies of scale because of making in response to changes in
Central buying local market conditions.
■ Decision-making by experienced
Senior managers
Delayering: Removing of one or more levels of hierachy
from an organisatio structure
Reduces business costs. ● Could be one-off costs of making

managers redundant, e.g.
● Shortens the chain of command redundancy payments.
and should improve
communication through the ● Increased workloads for
organisation. managers who remain – this could
lead to overwork and stress.
● Increases spans of control and
opportunities for delegation. ● Fear that redundancies might be
used to cut costs could reduce the
● May increase workforce sense of security of the whole
motivation workforce – one of Maslow’s needs
Difference between Authority, Responsibility
and Accountability
Basics Authority Responsibility Accountability
Meaning Power to take Obligation to Answerable for

decision perform a task the output of
assigned task
Delegation Can be delegated Can not be fully Cannot be

delegated delegated
Arise from Arise from Arises from

origin formal position Delegation of responsibility
authority
Flow of downward upward upward

direction
Line managers: managers who have direct authority
overpeople, decisions and resources within the
hierarchy of an organisation.
Staff managers: Staff managers who as specialists

provide support, information and assistance to line
managers. They do not have line authority over others.
Factors influencing organisational structure
Technologi
cal change
Corporative Corporat
objectives e culture
Need for
Rationalisatio
n
factors
Style of
management
Size

Strategic Management

Uploaded by

Copyright:

Available Formats

Strategic Management

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Strategic Management

Uploaded by

Copyright:

Available Formats

Strategic management

Corporate strategy is a long

These plans are limited to the department’s own functional

long-term short- to medium-term

Multinational drinks switch from cans to plastic

start selling non-food items, such

Steel-making company recruit production supervisors

Holiday tour operator increase prices of holidays to a

Major computer develop a range of advanced

New administrative problems emerge

Economic performance declines

New appropriate structure is created

Profits return to its previous level

 Reflects decision making  One way communication

Flexible ideal for  Less control from the top

Chain of command: this is the route through which

wide span of control refers to a structure

■ helps staff to achieve fulfillment ■ managers may only delegate the

Decentralisation: Decision making power

■ Senior managers take decisions in the ■ Positive effects on motivation.

Reduces business costs. ● Could be one-off costs of making

Meaning Power to take Obligation to Answerable for

Delegation Can be delegated Can not be fully Cannot be

Arise from Arise from Arises from

Flow of downward upward upward

Staff managers: Staff managers who as specialists

You might also like