summary of strategic management

8/7/2019 Summary of Strategic Management

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F

REDR.

DAVID

2011

ST

RATEGICMANAGEMENT

SUMMARYOF STRATEGICMANAGEMENTSCONCEPT (THE BOOK OF

FREDR.DAVID)

REQUIRED FOR MID-TERM EXAM OF STRATEGIC MANAGEMENT

FARA LAYNDS LAMBORGHINI

0910233039

FACULTY OF ECONOMICSANDBUSINESSUB

MALANG,APRIL 2011


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FARA LAYNDSLAMBORGHINI

0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT

FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA

SUMMARY OF STRATEGIC MANAGEMENT

(ONLY THE CONCEPTS)

FRED R. DAVID

1. Identify Existing vision, mission,objectives,strategies2. Auditexternalenvironment3. Auditinternalenvironment4. Establishlong-term objectives5. Generate,evaluate,andselectstrategies6. Implementselectedstrategies7.

Measure & evaluate performance

THENATURE OF STRATEGIC MANAGEMENT

Strategic managementcanbe definedas Art & science offormulating, implementing,and

evaluating,cross-functionaldecisions thatenable anorganization toachieve itsobjectives.

Inessence,thestrategic planisacompanysgame plan. Allfirmshavestrategy,evenifitis


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6. Long-term Objectives is mission-driven pursuit of specified results more than oneyearout.

7. Strategies include geographic expansion, diversification, ac uisition, mar etpenetration,retrenchment,li uidation,andjoint venture.

8. Annual Objectives is short-term milestones that firms must achieve to attain long-term objectives.

9. Policies meansby whichannualobjectives willbeachieved

THE BUSINESS VISION AND MISSION

MISSION COMPONENT

CHARACTERISTICS OF MISSION STATEMENT

1. Broadinscope2. Lessthan 250 wordsinlength3. Inspiring4. Identifythe utilityoffirm product5. Revealthatthefirm issociallyresponsible6. Revealthatthefirm isenvironmentresponsible7. Includeninecomponents mentionedabove8. Enduring


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THEEXTERNAL ASSESSMENT

PORTERSFIVEFORCEMODELOFCOMPETITIONS

Increasingturbulencein mar etsandindustriesaroundthe world meanstheexternalaudithas

becomeanexplicitand vital partofthestrategic management process. Thischapterprovides

a framewor for collecting and evaluating economic, social, cultural, demographic,

environmental, political, governmental, legal, technological, and competitive information.

Firmsthatdonot mobilizeandempowertheirmanagersandemployeestoidentify, monitor,

forecast,andevaluate keyexternalforces mayfailtoanticipatetoemergingopportunitiesandthreats and, conse uently, may pursue ineffective strategies, miss opportunities, and invite

organizationaldemise. Firmsnottakingadvantageofthe internetaretechnologicallyfalling

behind.

A major responsibility ofstrategists is toensure development ofan effective external-audit

system. This includes using information technology to devise a competitive intelligence

system that works. The external audit approach describe in this chapter can be used

effectivelyby any size or type of organization. Typically, the external audit process is

informalinsmallfirms,buttheneedto understand keytrendsandeventsisnolessimportant

forthesefirms. The EFE Matrix and Portes Five Forces Modelcanhelp strategistsevaluate

the market and industry,but these tools mustbe accompaniedby good intuitivejudgment.

Multinationalfirmsespeciallyneedasystematicandeffectiveexternalauditsystembecause

externalforcesamongforeigncountries varysogreatly.


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THE INTERNAL ASSESSMENT

Management, marketing, finance/accounting, production/operations, research and

development, and management information systems represent the core operations of most

business. A strategic management audit of a firms internal operations is a vital toorganizational health. Many companies still prefer tobejudged solely on theirbottom line

performance. However, an increasing number of successful organizations are using the

internalaudittogaincompetitiveadvantagesoverrivalfirms.

Systematic methodologies for performing strength-weakness assessments are not well

developed inthestrategic management literature,but itisclearthatstrategists must identify

andevaluate internalstrengthsand weaknesses inorder toeffectively formulateandchoose

among alternative strategies. The EFE Matrix,Competitive Profile Matrix, IFE Matrix and

clearstatementsofvisionsand mission providethebasicinformationneededtosuccessfully

formulate competitive strategies. The process ofperforming an internal audit represents an

opportunity for managers and employees throughout the organization to participate in

determining the future of the firm. Involvement in the process can energize andmobilize

managersandemployees.

STRATEGIES IN ACTION

The main appeal of any managerial approach is the

expectation that it will enhance organizational performance.

This is especially true of strategic management. Through

involvement strategic management activities, managers and

employees achieve abetterunderstanding of an organizations priorities and operations.

Strategic management allows organizations tobe efficient,but more important; it allows


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them tobe effective. Although strategic management does not guarantee organizational

success, the process allows proactive rather than reactive decision making. Strategic

management may represent a radical change in philosophy for some organizations, so

strategists mustbe train toanticipate and constructively respond to questionsand issuesastheyarise. The 16 strategiesdiscussedinthischaptercanrepresentanewbeginningformany

firms,especially ifmanagersand employees in theorganization understandandsupport the

planforaction.

STRATEGY ANALYSIS AND CHOICE

Theessenceofstrategyformulationisanassessmentofwhetheranorganizationisdoingthe

right thingsandhow itcanbe moreeffective in what itdoes. Everyorganizationshouldbe

wary ofbecoming a prisoner of its own strategy,because even thebest strategiesbecome

obsolete sooner or later. Regular reappraisal of strategy helps management avoid

complacency. Objectivesandstrategiesshouldbeconsciouslydevelopedandcoordinatedand

shouldnot merelyevolveoutofday-to-dayoperatingdecisions.

An organization with no sense of direction and no coherent strategy precipitates its own

demise. When organization does not know where it wants to go, it usually ends up some

place it does not want to be. Every organization needs to consciously establish and

communicateclearobjectivesandstrategies.

Modern strategy formulation tools and concepts are describe in this chapter and integrated

into practicalthreestageframework. ToolssuchastheSWOT Matrix,SPACE Matrix,BCG

Matrix,IE Matrix,and QSPM cansignificantlyenhancethe qualityofstrategicdecisions,but

theyshouldneverbe useddictatethechoiceofstrategies. Behavioral,cultural,and political

aspects of strategy generation and selection are always important to consider and manage.

Because of increase legal pressure from outside groups,boards of directorsareassuming a

moreactiveroleinstrategyanalysisandchoice. Thisisa positivetrendfororganization.

IMPLEMENTINGSTRATEGIES: MANAGEMENT ANDOPERATIONS ISSUES


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STRATEGYREVIEW EVALUATION AND CONTROL

Thischapterpresentsastrategyevaluation frameworkthatcan facilitateaccomplishmentof

annual and long term objectives. Effective strategy evaluation allows an organization to

capitalize on internal strengths as they develop, to exploit external opportunities as they

emerge, torecognizeanddefendagainst threats,and to mitigate internal weaknessesbefore

theybecomedetrimental.

Strategists in successful organizations take the time to formulate, implement, and then

evaluatestrategiesdeliberatelyandsystematically. Goodstrategists move theirorganization

forward with purposeanddirection,continuallyevaluatingandimprovingthefirmsexternaland internalstrategic positions. Strategyevaluationallowsanorganization toshape itsown

futureratherthanallowing ittobeconstantlyshapedbyremoteforcesthathave littleorno

vestedinterestinthe well-beingoftheenterprise.

Although not a guarantee for success,strategic management allows organizations to make

effective long term decisions, to execute those decisions efficiently,and to take corrective


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FARA LAYNDS LAMBORGHINI

INTERNATIONAL PROGRAMACCOUNTINGDEPARTMENT

FACULTYOF ECONOMICS UNIVERSITYOF BRAWIJAYA

actionsasneeded toensuresuccess. Computernetworksand the internet help tocoordinate

strategic management activitiesand toensure that decisionsarebasedongood information.

CONCLUSION

All firms have strategy, even it s informal, unstructured, and sporadic. The strategic

management processbecoming more widely usedby almost all firms. The process of

empowering managersandemployeeshasalmost limitlessbenefit.

Thestrategies management process itselfconsistsof:

1. Strategy formulation (identifies existing vision, mission, objectives,strategies; audit

external environment,audit internal environment,establish long-term objectives)

2. Strategy implementation (generates, evaluate, and select strategies and implement

selectedstrategies)

3. Strategyevaluation (measure & evaluate performance)

Success inbusiness increasingly depends upon offering products and services that are

competitiveona worldbasis,not just ona localbasis. Global marketshavebecomeareality

inallbut the most remoteareasofthe world. Peopleororgani ation that planahead is much

more likely tobecome what they want tobecome than those that dont planat all.

summary of strategic management

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