04. Implementation of Strategic Management
Rev: Mar, 2014
Euiho (David) Suh, Ph.D.
POSTECH Strategic Management of Information and Technology Laboratory
(POSMIT: http://posmit.postech.ac.kr)
Dept. of Industrial & Management Engineering
POSTECH
Contents
1
Introduction of Strategic Management
2
Strategic Management Process
3
1)
Understand Company Mission
2)
Analyze External Environment
3)
Analyze Internal Environment
4)
Set Long Term Objectives
5)
Craft the Strategy
6)
Implement the Strategy
7)
Evaluate the Strategy
Case Study
Strategic Management Process
■ Strategic Management Process
2
2. Strategic Management Process
1
Understand
Company Mission
3
Analyze
External Environment
Analyze
Internal Environment
Internal
4
5
6
Industry
Set
Long term Objectives
Craft the Strategy
Implement
the Strategy
Feedback
7 Evaluate & Control
the Strategy
Today’s Coverage
3
Setting Strategic (Long Term) Objectives
■ Characteristics of Long Term Objectives
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Acceptable to managers
Adaptable to extraordinary changes in the environment
Clearly measurable against specified criterion
Understandable
■ Generic Groups of Long Term Objectives
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Product/Market scope
Profitability
Competitive edge
Financial specifications, expenditures, net worth, etc.
Innovation and technology
Employee Development/Productivity
Sources of, and Deployment of resources
Synergy
Risk
Legitimacy (Satisfaction of Resources)
Ideological leadership
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2. Strategic Management Process
4) Set Long Term Objectives
2. Strategic Management Process
Crafting Corporate Level Strategy
5) Craft the Strategy
■ Objectives
– Maintaining corporate-wide consistency of direction of the total company
toward long range
– Leveraging resources for long range goals
– Reducing financial risk by building a balanced portfolio of businesses
with a balanced portfolio of advantages
– Investing in core competencies for the businesses
(usually called Strategic Business Units or SBUs)
■ Process
– Choose Generic Corporate Level Strategies
• Feasible corporate level strategies
• Choose final generic strategy option
– Choose Specific corporate level strategy, guide by final generic strategy to yield
5
Choose Generic Corporate Level Strategies (1/2)
2. Strategic Management Process
5) Craft the Strategy
■ Generic Strategy
– A group of corporate level strategies that are first determined so that the decision maker is
guided toward making an appropriate specific strategy
■ List of generic strategies
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Concentration
Concentric diversification
Conglomerate diversification
Vertical backward integration
Forward integration
Joint ventures
Divestiture
Turnaround/Restructuring
Bankruptcy
Liquidation
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Choose Generic Corporate Level Strategies (2/2)
2. Strategic Management Process
5) Craft the Strategy
■ Feasible Corporate Generic Strategies
Rapid Market Growth
1. Reformation of
concentration
2. Horizontal integration
3. Divestiture
4. Liquidation
1. Concentration
2. Vertical Integration
3. Concentric Diversification
Specialty
Shop
Group
Supermarket
Group
Drug
Store
Group
Weak
Competitive
Position
1. Turnaround or retrenchment 1. Concentric Diversification
2. Concentric diversification
2. Conglomerate
Diversification
3. Conglomerate
Diversification
3. Joint Ventures
4. Divestiture
5. Liquidation
Slow Market Growth
7
Strong
Competitive
Position
2. Strategic Management Process
Implementing The Strategy (1/2)
6) Implement the Strategy
■ Implementing with structure
– Communicating the strategy to the organization to prepare every employee with an
understanding of what will follow and the things in general that must be done
– Prepare and disseminate a list of major annual objectives for the organization
– Establish policies and procedures for actions
– Prepare an organization structure that matches the new strategy
– Install best practices for each department based on the value chain and benchmarks
■ Implementing with organizational leadership
– Staff the organization with committed leaders capable of driving implementation
– Avoid resistance to change through employee development and communication with
employees
– Tie rewards and communication with employees
– Develop a strategy-supporting culture
■ Implementing with concern for laws, environmental, and social concerns
– Implementation must be carried out with concern for factors
that may not always be spelled out
– But must represent good citizenship
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2. Strategic Management Process
Implementing The Strategy (2/2)
6) Implement the Strategy
■ Implementing with the functional components of strategy
– Marketing: product policies, distribution policies, ethics, customer relations, pricing policies
– Production/operations: equipment, layout, method of delivery of services, work methods,
production planning, quality control, outsourcing
– R&D/design: estimating the time for new product development, quality and cost balance in
design, continuing education of creative workers, outsourcing of design work
– Accounting/finance: increasing labor costs, increasing sales expense, economic value added,
taxes, exchange rate between U. S. and other currencies, transfer pricing
– Human Resource Management: assignment of people to new projects, salary and bonus
payments, promotions and dismissals, major human errors, recruitment and selection
– Corporate information and communication systems: management information system,
personal communications, mass communications, communicating policies
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2. Strategic Management Process
Strategy Evaluation
7) Evaluate the Strategy
■ Quantitative Criteria
– Overall financial performance such as ROI, ROE, profit margin, market share, earning per share
– Time of implantation vs. planned time
– Increase in productivity, quality, number of employees, etc.
■ Qualitative Criteria
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Is the strategy internally consistent?
Is the strategy consistent with the environment?
Is the strategy appropriate in view of the available resources?
Does the strategy involve an acceptable degree of risk?
Does the strategy have an appropriate time framework?
Is the strategy workable?
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HBR Case Study
3. Case Study
■ Strategic Sourcing: A Framework and a Case Study [Sislian and Satir, 2000]
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Reference
■ Euiho Suh, “Strategic management 1 (PPT Slide)”, POSMIT Lab.
(POSTECH Strategic Management of Information and Technology Laboratory)
■ Euiho Suh, “Strategic management 2 (PPT Slide)”, POSMIT Lab.
(POSTECH Strategic Management of Information and Technology Laboratory)
■ O’Brien & Marakas, “Introduction to Information Systems – Sixteenth Edition”,
McGraw – Hill, Chapter 2
■ Cathy A. Enz. “Hospitality Strategic Management: Concepts and Cases“, WILEY,
Chapter 1
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