Chapter 6
Strategic Management
Strategy – large scale action plan that sets the direction for an organization
Strategic management – process that involve all managers from all parts of the organization
Why is Strategic Management important ?
- Providing Direction and movement
- Encouraging new idea
- Developing a sustainable advantage
Effective Strategy
Strategic Positioning
- Attempts to achieve sustainable competitive advantage
- Performing different activities from rivals
1. Strategy is the creation of unique and valuable position
2. Strategy requires trade – offs in competing
3. Strategy create fit among activities
The Strategic Management Process
1. Establish the Mission & Vision
2. Establish the Grand Strategy
3. Formulate Strategy Plans
4. Carry out the Strategy Plans
5. Maintain the Strategic Control : Feedback Loop
Competitive Intelligence (CI) – Gaining Information about competitor’s activities.
SWOT Analysis
- Strengths
- Weaknesses
- Opportunities
- Threats
Forecasting : Predicting the Future
- Trend Analysis – hypothetical extension of past series of events into the future
- Contigency Planning – creation of alternative hypothetical ( scenario planning and scenario
analysis)
Porter’s Five Force Model
- Threats of New Entrants
- Bargaining Power of Buyers
- Rivalry among Competitors
- Threats of Substitute
- Products
- Bargain power of suppliers
Porter’s Four Competitive Strategies
1. Cost – leadership (Wide Market)
2. Differentiation (Wide Market)
3. Cost – focus (Narrow Market)
4. Focused – differentiation (Narrow Market)
Chapter 8
Organizational Culture, Structure & Design
Organizational Culture
Shared beliefs and values (also called Corporate Culture)
Organizational Structure
Formal system of task and relationship
Culture Plus Structure
- Vision
- Strategy
- Culture
- Structure & Internal practices
- Collective attitudes & behaviors
- Achievement of goals
How Employees learn Culture
Symbols - object ,act ,quality or event that conveys meaning to others.
Stories – narratives based on true events.
Heroes – A person whose embody the values of organization.
Rites and Rituals – Activities and ceremonies that express and reinforce the values of the organization.
Culture for Enhancing Economic Performance : Three Perspective
1 ) The Strength Perspective
Success results when culture fits has a strong culture.
2 ) The Fit Perspective
Success results when culture fits with the firm’s business context.
3 ) The Adaptive Perspective
Success results when culture helps the firm adapt.
Organization chart : 2 kinds of information
1 ) The vertical hierarchy of authority
2 ) The horizontal specialization
Common Elements of Organizations :
Four proposed by Edgar Schein
1 ) Common Purpose
2 ) Coordinated Effort
3 ) Division of Labor (or division of work)
4 ) Hierarchy of Authority
Three that most Authorities agree on
5 ) Span of Control
6 ) Authority, Responsibility & Delegation
7 ) Centralization Versus Decentralization of Authority
Span of Control or Span of Management – refers to the number of people
reporting directly to given manager
Narrow (or Tall) Span of control – limited number of people reporting
Wide (or Flat) Span of control – several people reporting
Authority, Responsibility and Delegation
- Authority – the rights inherent in a managerial position to make decisions give orders
- Responsibility – The obligation you have to perform the tasks assigned to you
- Delegation – process of assigning managerial authority and responsibility to manager and
employees lower in the hierarchy
Line and Staff Position
Line Position ( Solid lines ) – line managers
Staff Position ( dotted line ) – staff persons
Centralization VS Decentralization of Authority
Centralization – important decisions are made by top level managers
Decentralization – important decisions are made by middle and supervisory level managers
Basic types of Organizational Structures
1) Simple Structure (for small firm)
2) Functional Structure (people with smilar occupational specialties are put together in groups)
3) Divisional Structure
- Product division
- Customer division
- Geographic division
4) Matrix Structure
5) Team Based Structure
6) Network Structure
7) Modular Structure