L2: STRATEGIC MANAGEMENT PROCESS

• Setting objectives

• Making basic planning forecasts

• Reviewing alternative courses of action

• Evaluating which options are best

• Choosing and implementing your plan

give the five steps in the Basic Management Process

Hierarchy of Goals

views the goals from the top of the firm down to frontline employees as a chain

Policies

broad guidelines delineating how employees should act

Procedures

spell out what to do in a specific situation

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

Strategy

this refers to the course of action

Strategic Management

process of identifying and executing the strategic plan by matching company’s capabilities with the demands of the environment

TRUE

TRUE OR FALSE:

A strategic plan contains strategies to reach the end goal.

Strategies

These will be executed in strategic management

1. Define the company’s current business

2. Perform external and internal “audits”

3. Formulate a new direction

4. Translate the mission into strategic goals

5. Formulate strategies to achieve strategic goals

6. Implement the strategies

7. Evaluate performance

these seven (7) steps are the strategic management process:

TRUE

TRUE OR FALSE:

The process goes from specific to broad: strategy ⇒ strategic goals ⇒ mission statement

1. Define the company’s current business

These questions are asked in this part of Strategic Management Process:

“What products are they selling?”

“How are they being sold?”

“How do the products differ from other competitors?”

2. Perform external and internal “audits”

What step in Strategic Management Process studies both the firm’s environment and the internal strengths and weaknesses?

Environmental scan worksheet

This method of auditing includes economic, competitive, and political trends; has information on the company’s environment (external)

SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

This method if auditing analyzes the Strengths and Weaknesses (internal) & Opportunities and Threats (external)

PEST Analysis (Political, Economic, Social, Technological)

This method of auditing analyzes all external factors

Political

Economic

Social

Technological

What does PEST in PEST Analysis stands for?

3. Formulate a new direction

This step in Strategic Management Process identifies the essence of business and asks the question “What should our business be?”

Vision Statement

general statement of the firm’s intended direction; what the company wants to become

FALSE

Vision Statement is FUTURE-oriented.

Vision Statement is present-oriented.

Mission Statement

States what the company’s main tasks are today.

TRUE

TRUE OR FALSE:

Mission Statement is present-oriented.

4. Translate the mission into strategic goals

This step in Strategic Management Process lay out goals in accordance with the broad mission statement task; it asks the question “What would the mission statement mean for each department?”

5. Formulate strategies to achieve strategic goals

This step in Strategic Management Process makes specific courses of action in order to achieve strategic goals

6. Implement the strategies

This step in Strategic Management Process puts plans into action

7. Evaluate performance

This step in Strategic Management Process assesses the progress of their strategic decisions

TRUE

TRUE OR FALSE:

If the strategies don’t work out as planned, re-strategize

Corporate Strategy

This strategy identifies portfolio of businesses that, in total, comprise the company and how these businesses relate to each other; manages multiple business units

Concentration Strategy

This strategy focuses on single-business or one product line in one market

Market Penetration

attempt to capture more of an existing market with an existing product offering.

Product development

attempt to capture more of an existing market with a new product offering

Market development

attempt to capture a new market with an existing product offering

Diversification Strategy

This strategy expands to new markets by adding new product lines

Concentric Diversification

This type of Diversification Strategy occurs when a company expands its business by adding new products or services that are closely related to its existing offerings.

Unrelated (Conglomerate) Diversification

This type of Diversification Strategy occurs when a company expands into unrelated businesses or industries that have little to no connection to its existing operations.

Related Diversification

This type of Diversification Strategy occurs when a company expands into areas that are similar to its existing operations

Vertical Integration Strategy

This strategy refers to expansion by producing its own raw materials or by directly selling their products.

Backward Integration

This type of Vertical Integration Strategy refers to acquiring the raw materials of their products

Forward Integration

This type of Vertical Integration Strategy refers to directly selling their products (ex. opening their own retail stores)

Geographic Expansion

This strategy refers to entering new territorial markets.

Competitive Strategy

This 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

• Cost leadership

• Differentiation

• Focus

What are the three (3) standard competitive strategies?

Cost leadership

This standard competitive strategy refers to becoming the low-cost leader in the industry, having the lowest price

Differentiation

This standard competitive strategy seeks to be unique along dimensions valued by buyers, innovation

Focus

This standard competitive strategy prioritizes market niche, targeting specific markets (often minorities)

Functional Strategy

This strategy refers to 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

FALSE

Strategic Human Resource Management is DYNAMIC, not static

TRUE OR FALSE:

Strategic Human Resource Management is static, not changing

Strategy Map

This tool summarizes the role of each department in achieving the company’s strategic goals

Strategy Map

This tool clarifies employees’ “line of sight” by visually linking efforts with company’s ultimate goals

HR Scorecard

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

“balanced scorecard” planning approach

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

HR Scorecard

a specific evaluation standard for activities in the strategic map

Digital Dashboards

desktop graphs and charts showing how the company is doing on all metrics from the HR scorecard

Digital Dashboards

specific measurement of performance in one activity in the strategy map according to the metrics set in the HR scorecard

HR Audit

analysis of the completeness, efficiency, and effectiveness of HR functions

HR Audit

generally involves using a checklist to review functions and ensuring adherence to federal law and company policies

HR metrics

Managers use these to assess company performance and compare them with otherfirms

validated tests; extensive training

These steps ensure that high performance systems are illustrated:

hiring based on _____

providing _____ for employees

employee involvement; self-management

High-performance work systems aspire to encourage _______ and _____

Employee Engagement

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

TRUE

TRUE OR FALSE:

engaged employees = high connectivity with work tasks = more effort to accomplish task-related goals

supportive supervision

Managers can improve employee engagement through _____