Strategic Management Process

Five Steps in the Basic Management Process

• Setting objectives

• Making basic planning forecasts

• Reviewing alternative courses of action

• Evaluating which options are best

• Choosing and implementing your plan

Hierarchy of Goals

Views goals from the top of the firm down to frontline employees as a chain. The company president sets a long-term goal, then the vice president sets their own goal according to the initial goal set, and so on and so forth down the line of employees until even their subordinates have their own goals in line with the top goal

Policies

broad guidelines delineating how employees should act

Procedures

spells out what to do in a specific situationS

Strategic Plan

company’s overall plan for matching its internal strengths and weaknesses with the external opportunities and threats in order to maintain a competitive position basically asks what are we now as a business and where do we want to be.

Strategy

process of identifying and executing the strategic plan by matching company’s capabilities with the demands of the environment, it’s a plan to reach the end goal and will be executed in strategic management

SMP, Step 1: Defining Company’s Current Business

SMP, Step 2: External and Internal Audits

Studies the firm’s environmental and internal strengths and weaknesses

• Environmental Scan Worksheet

  • Economic, competitive, and political trends

  • Information on company’s environment (external)

• SWOT Analysis

  • Strengths and Weaknesses (internal)

  • Opportunities and Threats (external)

• PEST Analysis

  • All external factors

SMP, Step 3: Formulate a new direction

What should our business be? What’s the essence of the business?

• Vision Statement

  • Intended direction of the firm, future oriented

• Mission Statement

  • What the company’s main tasks are today, present oriented

SMP, Step 4: Translate the mission into strategic goals

What would the mission statement mean for each department? Lays goals in accordance with the broad mission statement task

SMP, Step 5: Formulates strategies to achieve strategic goals

Having specific courses of action in order to achieve strategic goals

SMP, Step 6: Implement the strategies

Putting plans into action

SMP, Step 7: Evaluating Performance

Assessment of the progress of their strategic decisions, if it doesn’t work out as planned, re-strategize.

Strategic Management Process

The company should first define what their business is currently. They then branch into identifying stregnths and weaknesses (internal) and general company environment (external). Given this data, the company should formulate a NEW direction by identifying what they want to become (vision) and what they should do in order to be what the want to become (mission). Given the mission, it is divided into smaller goals (strategic goals). These smaller goals are further broken down into specific tasks (strategies). After the goals and tasks have been laid out, the strategies will then be executed and eventually evaluated. Repeat step 5 if strategic goals are not met.

Specific to broad: Strategy > Strategic Goals > Mission Statement

Corporate Strategy

identifies portfolio of businesses that, in total, comprise the company and how these businesses relate to each other

Concentration Strategy

Single business, one product line in one marketD

Diversification Strategy

Expansion by adding new product lines, like Apple introducing self-driving cars.

Vertal Integration Strategy

Expansion by producing its own raw materials or by selling their products directly, like Apple stores being established.

Geographic Expansion

Enters news territorial markets, like Jollibee in the UAE or USA.

Consolidation Strategy

Reduces company size by merging with other business units or companies into a single, larger organization, operation efficiency, eliminating competition, and getting access to new markets, like Disney acquiring Marvel and Fox.

Competitive Strategy

identifies how to build and strengthen the business’ competitive position in the marketplace, how one company competes with another company

Competitive Advantage

factors that allow a company to differentiate its product or service from those of its competitors to increase market share, what makes the company better than other companies.

3 Standard Competitive Strategies: Cost Leadership

becoming the low-cost leader in the industry, pricesD

3 Standard Competitive Strategies: Differentiation

seeks to be unique along dimensions valued by buyers; innovationF

3 Standard Competitive Strategies: Focus

market niche, targeting specific markets (often minorities)

Functional Strategy

what each department must do to help the business accomplish its strategic goals

Strategic Human Resource Management

formulating and executing human resource policies and practices that produce employee competencies and behaviors the company need to achieve its goals.

Dynamic, Not Static

Means that HR managers should identify where each HR activity is now and where it should be to support strategic goals, how to transform HR activities in order to align with and support the company goals.

SHRM: Process

Identify the company’s strategic goals, determines the employee competencies and behaviors required to achieve the goal, produce HR policies and practices to produce said competencies and behaviors

SHRM: Strategy Map

summarizes the role of each department in achieving the company’s strategic goals, clarifies employees line of sight by visually linking efforts with company’s ultimate goals

SHRM: HR Scoreboard

process for assigning financial and non financial goals or metrics to the strategy map chain of activities required for achieving company strategic goals.

SHRM: Balanced Scorecard Planning Approach

balances hard data (finances) with soft data (customer satisfaction to measure overall performance

SHRM: Digital Dashboards

Desktop graphs and charts showing how the company is doing all metrics form the HR scorecard, specific measurement of performance in one activity in the strategy map according to the metrics set in the HR scorecard

Human Resource Metrics

quantitative gauge of a human resource management activityB

Benchmarking

compare the results of high-performing companies to current companies to understand what makes them better

Strategy-Based Metrics

measures the activities that contribute to achieving a company’s strategic goals, measure of internal performance as opposed to comparison with other companies

HR Audit

analysis of the completeness, efficiency, and effectiveness of HR functions, generally involves using a checklist to review functions and ensuring adherence to federal law and company policies

High Performance Work Systems

• set of HRM policies and practices that produce superior employee performance

• managers use HR metrics to assess company performance and compare with other firms

• the steps in ensuring high-performance systems must be illustrated, can be in the form of hiring based on validated tests and extensive training for employees

  • high performance work systems aspire to encourage employee involvement and self-management, they aim to nurture a motivated workforce

Employee Engagement

• being psychologically involved in, connected to, and committed to getting one’s jobs done

• engaged employees means higher connectivity with work tasks which means more effort to accomplish task-related goals

• managers can improve employee engagement through supportive supervision, make sure employees are involved.