Strategic Management
Process
Strategic Management Process
• Remember, the first step is Strategy Formulation
The Strategic Management Process
• The second step is strategic implementation. This is where we divide up
our resources and put strategies into action.
Strategy Formulation – Creating Strategies
Identify and
analyze current:
-Mission
-Objectives
-Strategies
Analyze internal and
external environments:
-Organizational
resources and capabilities
(strengths and
weaknesses)
-Industry and external
environment
(opportunities and
threats)
Revise mission
and objectives,
select new
strategies:
-Corporate
-Business
-Functional
Strategy Implementation – Putting Strategies into
action
Implement strategies:
-Corporate
governance
-Management systems
and practices
-Strategic leadership
Evaluate results:
-Strategic control
-Renew strategic
management process
Five Strategic Management Task Summary
• 1. Identify organizational mission and objectives
Ask: “What business are we in? Where do we want to go?”
• 2. Assess current performance compared to mission and objectives
Ask: “How well are we currently doing?
• 3. Create strategic plans to accomplish purpose and objectives
Ask: “How can we get where we really want to be?”
• 4. Implement the strategic plans.
Ask: “Has everything been done that needs to be done?”
• 5. Evaluate results; change strategic plans and/or implementation processes as
necessary.
Ask: “Are things working out as planned? What can be improved?”
Analysis of Mission, Values, and Objectives
• This is the first step of the strategic management process. You have to look
at all three of these things.
• The mission is the reason for the organization to exist in society. “What
kind of difference does the company want to make? What do they want to
be known for?
• These should be clear. Think about the ones you came up with.
• Starbucks aims to be “the premier purveyor of the finest coffee in the world
while maintaining our uncompromising principles as we grow”
Good Mission Statements
• They identify the domain that the organization wants to operate in. This
includes:
-The customers it intends to serve, the products/services it intends to
provide, and the location it wants to operate in.
-Should also communicate the philosophy that the company wants to work
with.
• Think of the stakeholders. A good test of the mission is how well it serves
the stakeholders.
Communities
Employees
We are committed to being caring and
supportive corporate citizens within the
worldwide communities in which we
operate.
We respect the individuality of each
employee…creativity and productivity
are encouraged, valued, and rewarded
Mission
Shareholders
We are dedicated
to…performing in a manner
that will enhance returns on
investments.
Customers
We are committed to
providing superior value in
our products and services
Suppliers
We think of our suppliers as
partners who share our goal
of…highest quality
Mission Statements
• Patagonia – “Build the best product, cause no unnecessary harm, use
business to inspire and implement solutions to the environmental crisis.
• Ikea – “Our vision is to create a better everyday life for the many people.
Our business idea supports this vision by offering a wide range of welldesigned, functional home furnishing products at prices so low that as many
people as possible will be able to afford them.”
• Enron – “Respect, Integrity, Communication, and Excellence.”
• Mission Statement Generator
Core Values
• Remember values?
• Strategic Management Processes have to think about values.
• Organizational Culture (we will talk about in a future unit) but it is the
value system within a company.
• These things guide behaviour of the company.
PAUSE
•What type of organizational
culture fits you?
Objectives
• Operating objectives are specific results that organizations try to
accomplish.
• These are shorter-term targets that organizations want to achieve.
Performance can be measured against these. (A lot easier than measuring
against mission statements)
• They are:
Objectives
• Profitability – Producing at a net profit in business.
• Market share – Gaining and holding a specific market share
• Human talent – Recruiting and maintaining a high-quality
workforce.
• Financial health – Acquiring capital; earning positive returns.
Objectives
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Cost efficiency – Using resources well to operate at low cost.
Product quality – Producing high-quality goods or services.
Innovation – Developing new products and/or processes
Social responsibility – Making a positive contribution to society
Analysis of Organizational Resources and
Capabilities
• To do this, we need to do SWOT analyses. Strengths, Weaknesses,
Opportunities, and Threats.
• We must identify core competencies. These are strengths that the
organization has or does very well, compared to their competitors. Usually,
they are:
-rare, expensive to copy, non-substitutable.
-sources of competitive advantage.
SW…OT Analysis
• Strengths and Weaknesses are part of internal assessment.
• Strengths…what are some that a company could have?
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Manufacturing efficiency?
Skilled workforce?
Good market share?
Strong financing?
Superior Reputation?
SW…OT Analysis
• Weaknesses…what are some that the company could have?
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Outdated facilities?
Inadequate R & D
Obsolete technologies?
Weak management?
Past planning failures?
SW…OT Analysis
• Opportunities and Threats are part of external analysis.
• Opportunities…what are some that a company
could have?
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Possible new markets?
Strong economy?
Weak market rivals?
Emerging technologies?
Growth of existing market?
Today’s News
$4.5 billion in food sales
$14.5 billion in food sales
SW…OT Analysis
• Threats…what are some that a company could have?
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New competitors?
Shortage of resources?
Changing market tastes?
New regulations?
Substitute products?
Michael Porter’s Five Forces Model
• Graduated from Princeton and Harvard
Business School. He is the Chair of the Harvard
Business School’s program that deals with new
CEOs for large companies.
• He believes that the “external environment” is
the most important thing to consider, because it
has a big impact on competition.
Michael Porter’s Five Forces Model
New Entrants
Threat of potential new
competitors
Suppliers
Industry Competition
Customers
Bargaining power of suppliers
Rivalry among competing firms
Bargaining power of buyers
Substitute Products
Threat of substitute products or
services
Michael Porter’s Five Forces Model
• We have to have a good understanding of the environment.
• If there is intense rivalry with competitors, there are a lot of threats of new
entrants, or substitute products and buyers and suppliers are powerful, we are
in an unattractive industry.
• If there is less competition, few threats, and suppliers and buyers do not
have a lot of power to bargain, we are in an attractive industry.