MGMT 680 Ch. 4 - The Strategic Management Process

What is the strategic management process?

A systematic and iterative approach to managing an organization's strategies at various levels (corporate, business, functional, and operational)

What is resource-based theory?

Suggests that a firm’s competitive advantage comes from its unique internal resources and capabilities

Explain contingency theory

Suggests that there is no single approach to managing an organization; effective strategic management depends on the specific circumstances and context

What is the mission?

• Mission statement defines an organization’s purpose, core activities, and target stakeholders

• Answers:

  • Who are we?

  • Why are we here?

  • What is our purpose?

What is the vision?

• Vision statement describes desired future state or aspirations

• Provides a sense of direction and purpose, aligning efforts towards long-term goals

• Answers:

  • Where are we going?

  • Where do we want to be in the future?

What are core values?

• Core values represent guiding principles and beliefs that define the organization’s culture and priorities

What are the 4 main stages of the strategic management process?

1. Analysis

2. Formulation

3. Implementation

4. Evaluation

Explain Stage 1: Analysis of the strategic management process

• Involves assessing the internal and external factors that shape the organization’s strategic options and opportunities

• Key activities:

  1. External analysis

  2. Internal analysis

  3. Stakeholder analysis

Explain the External Analysis component of Stage 1: Analysis

• Involves comprehensive analysis of the external environment to identify opportunities and threats

• May use tools like PESTEL analysis, Porter’s Five Forces, and industry benchmarking

Explain the Internal Analysis component of Stage 1: Analysis

• Conducting a SWOT analysis to evaluate internal strengths, weaknesses, resources, and capabilities

Explain the Stakeholder Analysis component of Stage 1: Analysis

• Involves understanding the needs, expectations, and preferences of key stakeholders when forming a strategy

• Must identify and prioritize stakeholders in every phase of the strategic decision-making process

Explain Stage 2: Formulation

Involves the firm developing a comprehensive strategic plan that outlines the organization's mission, vision, values, goals, and objectives, as well as the strategies and initiatives that will be needed to achieve them

What are the key activities in Stage 2: Formulation?

1. Setting objectives and goals

2. Identifying strategic options

3. Strategy selection and formulation

Explain the Setting Objectives and Goals component of Stage 2: Formulation

• Organizations must establish SMART objectives and goals that align with their missions, vision, and core values

• Objectives should provide a clear direction and serve as benchmarks for performance

Explain the Identifying Strategic Options component of Stage 2: Formulation

Involves exploring different strategic options to achieve the created objectives to capitalize strengths and mitigate weaknesses

Explain the Strategy Selection and Formulation component of Stage 2: Formulation

• Involves selecting the most appropriate strategy or combination of strategies to pursue the set objectives

• Requires careful consideration of risk tolerance, resource availability, the market, and organizational capabilities

Explain Stage 3: Implementation

• Involves translating strategic plans into specific actions and initiatives

• Requires aligning resources, structures, processes, and people

What are the key activities in Stage 3: Implementation?

1. Organizational alignment

2. Resource allocation

3. Structural changes

4. Process improvement

Explain the Organizational Alignment component of Stage 3: Implementation

• Involves strategically aligning all levels of the organizations

• Requires effectively communicating the strategic vision, goals, and expectations

Explain the Resource Allocation component of Stage 3: Implementation

Involves effectively allocating financial, human, and technological resources to support chosen strategic initiatives

Explain the Structural Changes component of Stage 3: Implementation

• Involves making structural changes within the organization to better align with the firm’s objectives

• Ex. restructuring business units, creating new teams

Explain the Process Improvement component of Stage 3: Implementation

• Improving existing processes, workflows, and operational activities

• Enhances efficiency, effectiveness, and operational agility

Explain Stage 4: Evaluation

Involves monitoring progress, measuring performance against objectives, and making adjustments

What are the key activities in Stage 4: Evaluation?

1. Performance measurement

2. Feedback and learning

3. Strategic agility

Explain the Performance Management component of Stage 4: Evaluation

• Involves measuring performance against short and long-term objectives to ensure alignment throughout the organization

• Ex. KPIs, collecting data, customer satisfaction levels

Explain the Feedback and Learning component of Stage 4: Evaluation

Gathering feedback from various stakeholders and identifying lessons learned to inform future decisions

Explain the Strategic Agility component of Stage 4: Evaluation

Being agile, adaptive, and have the ability to modify strategies in response to changing circumstances

What is the role of a firm’s mission in the strategic management process?

• Defines the organization’s purpose, core activities, and target stakeholders

• Answers:

  • Who are we?

  • Why are we here?

  • What is our purpose?

• Serves as the starting point for everything strategic

What is the purpose of a firm’s vision in the strategic management process?

• Describes the desired future state or aspirations of the organization

• Answers:

  • Where are we going?

  • Where do we want to be in the future?

• Guides strategic planning by providing a sense of direction and purpose

What is the purpose of a firm’s values in the strategic management process?

• Serve as the guiding principles and beliefs that define the organization’s culture, ethics, and priorities

• Embody the organization’s identity, character, and expected standards of behavior

• Reveals what is important to the organization

What are the critical functions that the mission, vision, and values serve in the strategic management process?

1. Strategic alignment

2. Inspiration and motivation

3. Decision-making

Explain the Strategic Alignment function of the mission, vision, and values in the strategic management process

• Mission, vision, and values provide a framework for aligning the organization’s activities and initiatives with overarching goals and objectives

• Ensure decisions are consistent with the organization’s purpose, aspirations, and core beliefs

Explain the Inspiration and Motivation function of the mission, vision, and values in the strategic management process

• Mission and vision statements should inspire and motivate internal and external stakeholders

• Values serve as guiding principles that inspire ethical behavior, foster belonging, and reinforce a sense of purpose

Explain the Decision-making function of the mission, vision, and values in the strategic management process

• Mission, vision, and values provide a clear framework for decision makers

• Help prioritize strategic initiatives, allocate resources, and guide the firm’s actions

What are some best practices in strategic mangement?

1. Alignment with mission and vision

2. Clear communication

3. Leadership and commitment

4. Engagement and collaboration

5. Continuous improvement

Explain the Alignment with Mission and Vision best practice of strategic management

• Ensures that organizational efforts are directed towards their common goals, it can foster unity among stakeholders, and it can provide a clear sense of purpose and direction

• Ensures coherence and consistency

• Ex. Patagonia

Explain the Clear Communication best practice of strategic management

• It facilitates understanding, alignment, and engagement among the firm’s stakeholders

• Ex. Slack

Explain the Leadership and Commitment best practice of strategic management

• It provides essential vision, direction, and support for organizational strategic initiatives; sets the tone for the organizational culture

• Johnson & Johnson

Explain the Engagement and Collaboration best practice of strategic management

• They foster inclusivity, transparency, and shared ownership of the firm’s strategic goals

• Ex. Adobe

Explain the Continuous Improvement best practice of strategic management

• It promotes agility, innovation, and adaptation to ever-changing industry and market dynamics

• Ensures an organization remains relevant, resilient, and proficient at delivering value

• Ex. Toyota