Strategic management process

What is SMP????The strategic management process is a way for businesses to build strategies that help the company respond quickly to new challenges. This dynamic process helps organizations find new and more efficient ways to do business

A five-component approach to promote successful organizational performance

1. Vision formulation which leads to the statement of the

Mission.

2. The mission is then converted into performance Objectives3. To achieve objectives you develop Strategies4. Strategy Implementation5. Evaluation of performance

1.The vision formulation which leads to the statement of the Mission

what is business?what will be the business?it established long-term directionit needs to use simple terminologyit needs to be inspirational buy inEntrepreneurialrecognition of threats & opportunities

Three Components of the mission statement

the needs to be served by the companythe targeted customer grouphow the company will provide the product/service

2. The mission is then converted into performance objectives

measurable statementsspecified performancespecified timeshort-range objectiveslong-range objectivestop-down rather than bottom-up

Two types of performance yardsticks

Financial objectiveStrategic objective

3. To achieve objectives you develop Strategiesaction stepsthe concepts of unified and consistent strategiesthe moves and approaches used to achieve objectivesDynamiccontinual review and refinementadjust to internal and external forces

Levels of strategiesCorporate game plan for a diversified companyBusiness game plan for single businessFunctional strategy initiatives of one part of a businessOperating initiatives of key operating units

Factors affecting strategies society forces political and regulatory forces citizenship considerations the industry and competitive conditions opportunities and threats organizational strengths and weaknesses ethical considerations personal managerial ambitions company culture

Strategy making stylesMaster Strategist self- explanatoryDelegate-to-Others bottom-upCollaborative middle approachChampion bottom up with manager interest

4.Strategy Implementation making it happen structuring an organization Budgeting Motivating creating reward structures creating work environment information & reporting systems

5. Evaluation of performancereview processadjust missionadjust objectivesadjust strategiesinitiate corrective measures

Generic strategy

Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage.

The generic strategies are: 1. Cost leadership 2. Differentiation 3. Focus.1. Cost Leadership. The low cost leader in any market gains competitive advantage from being able to produce at the lowest cost. 2. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin.3. Focus or Niche strategy.The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable.

The danger of being 'stuck in the middle.'

Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then fail to achieve them, that your organization gets stuck in the middle without a competitive advantage.

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