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Principles of Management

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Principles of Management ­ MGT503
VU
Lesson 9.26
STRATEGIC MANAGEMENT - 2
THE STRATEGIC MANAGEMENT PROCESS
The strategic management process is an eight-step process that encompasses strategic planning,
implementation, and evaluation.
A.
The first step is identifying the organization's current mission, objectives, and strategies.
1.
Every organization needs a mission, which defines the purpose of the organization. What is the
organization's reason for being in business?
2.
It's also important to identify the organization's current objectives and strategies, as well.
B.
Step 2 is analyzing the external environment. It's important to analyze the environment because, to
a large degree, it defines management's strategic options.
1.
A successful strategy is one that aligns well with the environment.
2.
This step is complete when managers have an accurate grasp of what is taking place in the external
environment and are aware of important trends that might affect the organization.
C.
The third step is identifying opportunities and threats. After analyzing the external environment,
managers need to assess what opportunities to exploit and what threats to avoid.
1.
Opportunities are positive external environmental factors.
2.
Threats are negative external environmental factors.
D.
Step 4 is analyzing the organization's resources. In this internal analysis, managers are looking at the
organization's specific assets, skills, and work activities.
1.
Managers look for core competencies, which are an organization's major value-creating skills,
capabilities, and resources that determine its competitive advantage.
2.
This step forces managers to realize that every organization, no matter how large or powerful, is
constrained in some way by its resources and skills.
E.
Step 5 is identifying strengths and weaknesses. The analysis in step 4 should lead to a clear
assessment of the organization's internal resources.
1.
Strengths are those activities the firm does well or the unique resources it controls.
2.
Weaknesses are those activities the firm doesn't do well or the resources it needs but doesn't
possess.
3.
One area that's often overlooked in this step is an analysis of the organization's culture and its
strengths and weaknesses.
a.
Remember that culture is the organization's personality.
b.
The strength of the culture is a result of how much employees understand and support the shared
values.
c.
A strong culture should make it easy for managers to convey to employees the organization's
distinctive competencies. However, the strong culture will make it more difficult to change, if
needed.
d.
Strategic choices will also be influenced by the culture's tolerance of risk and innovation and how
performance is rewarded.
e.
The culture can also promote or hinder an organization's strategic actions.
4.
The merging of steps 3 and 5 results in a SWOT analysis, which is an analysis of an organization's
strengths, weaknesses, opportunities, and threats. It brings together the internal and external
analyses in order to identify a strategic niche the organization might exploit.
5.
In light of the SWOT analysis, managers need to reevaluate the organization's current mission and
objectives.
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Principles of Management ­ MGT503
VU
F.
Step 6 is formulating strategies. Strategies need to be established for the corporate, business, and
functional levels of the organization. In formulating strategies, managers hope to give the
organization a competitive advantage.
G.
The next step is implementing strategies. The strategies must now be put into action. Strategies are
only as good as their implementation.
H. The eighth (and final) step in the strategic management process is evaluating results. Managers
must evaluate the results to determine how effective their strategies have been and what
corrections are necessary.
The role of competitive analysis in strategy formulation
Before an effective strategy to gain a competitive advantage can be formulated, the organization's
competitive situation needs to be carefully analyzed.
A.
A SWOT ANALYSIS is one method for doing so. The SWOT analysis involves assessing
organization strengths (S) and weaknesses (W), as well as environmental opportunities (O)
and threats (T).
Strengths and weaknesses apply to internal characteristics.
1.
a.
A strength is an internal characteristic that has the potential of improving
the organization's competitive situation.
A weakness is an internal characteristic that leaves the organization
b.
potentially vulnerable to strategic moves by competitors.
2.
Opportunities and threats are found in the external environment.
An opportunity is an environmental condition that offers significant
a.
prospects for improving an organization's situation relative to
competitors.
b.
A threat is an environmental condition that offers significant prospects
for undermining an organization's competitive situation.
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Table of Contents:
  1. HISTORICAL OVERVIEW OF MANAGEMENT:The Egyptian Pyramid, Great China Wall
  2. MANAGEMENT AND MANAGERS:Why Study Management?
  3. MANAGERIAL ROLES IN ORGANIZATIONS:Informational roles, Decisional roles
  4. MANAGERIAL FUNCTIONS I.E. POLCA:Management Process, Mistakes Managers Make
  5. MANAGERIAL LEVELS AND SKILLS:Middle-level managers, Top managers
  6. MANAGEMENT IDEAS: YESTERDAY AND TODAY, Anthropology, Economics
  7. CLASSICAL VIEW OF MANAGEMENT:Scientific management
  8. ADMINISTRATIVE VIEW OF MANAGEMENT:Division of work, Authority
  9. BEHAVIORAL THEORIES OF MANAGEMENT:The Hawthorne Studies
  10. QUANTITATIVE, CONTEMPORARY AND EMERGING VIEWS OF MANAGEMENT
  11. SYSTEMíS VIEW OF MANAGEMENT AND ORGANIZATION:Managing Systems
  12. ANALYZING ORGANIZATIONAL ENVIRONMENT AND UNDERSTANDING ORGANIZATIONAL CULTURE
  13. 21ST CENTURY MANAGEMENT TRENDS:Organizational social Responsibility
  14. UNDERSTANDING GLOBAL ENVIRONMENT WTO AND SAARC
  15. DECISION MAKING AND DECISION TAKING
  16. RATIONAL DECISION MAKING:Models of Decision Making
  17. NATURE AND TYPES OF MANAGERIAL DECISIONS:Decision-Making Styles
  18. NON RATIONAL DECISION MAKING:Group Decision making
  19. GROUP DECISION MAKING AND CREATIVITY:Delphi Method, Scenario Analysis
  20. PLANNING AND DECISION AIDS-I:Methods of Forecasting, Benchmarking
  21. PLANNING AND DECISION AIDS-II:Budgeting, Scheduling, Project Management
  22. PLANNING: FUNCTIONS & BENEFITS:HOW DO MANAGERS PLAN?
  23. PLANNING PROCESS AND GOAL LEVELS:Types of Plans
  24. MANAGEMENT BY OBJECTIVE (MBO):Developing Plans
  25. STRATEGIC MANAGEMENT -1:THE IMPORTANCE OF STRATEGIC MANAGEMENT
  26. STRATEGIC MANAGEMENT - 2:THE STRATEGIC MANAGEMENT PROCESS
  27. LEVELS OF STRATEGIES, PORTERíS MODEL AND STRATEGY DEVELOPMENT (BCG) AND IMPLEMENTATION
  28. ENTREPRENEURSHIP MANAGEMENT:Why Is Entrepreneurship Important?
  29. ORGANIZING
  30. JOB DESIGN/SPECIALIZATION AND DEPARTMENTALIZATION
  31. SPAN OF COMMAND, CENTRALIZATION VS DE-CENTRALIZATION AND LINE VS STAFF AUTHORITY
  32. ORGANIZATIONAL DESIGN AND ORGANIC VS MECHANISTIC VS VIRTUAL STRUCTURES
  33. LEADING AND LEADERSHIP MOTIVATING SELF AND OTHERS
  34. MASLOWíS NEEDS THEORY AND ITS ANALYSIS
  35. OTHER NEED AND COGNITIVE THEORIES OF MOTIVATION
  36. EXPECTANCY, GOAL SETTING AND RE-ENFORCEMENT THEORIES
  37. MOTIVATING KNOWLEDGE PROFESSIONALS LEADERSHIP TRAIT THEORIES
  38. BEHAVIORAL AND SITUATIONAL MODELS OF LEADERSHIP
  39. STRATEGIC LEADERSHIP MODELS
  40. UNDERSTANDING GROUP DYNAMICS IN ORGANIZATIONS
  41. GROUP CONCEPTS, STAGES OF GROUP DEVELOPMENT AND TEAM EFFECTIVENESS
  42. UNDERSTANDING MANAGERIAL COMMUNICATION
  43. COMMUNICATION NETWORKS AND CHANNELS EFFECT OF ICT ON MANAGERIAL COMMUNICATION
  44. CONTROLLING AS A MANAGEMENT FUNCTION:The control process
  45. CONTROLLING ORGANIZATIONAL PERFORMANCE THROUGH PRODUCTIVITY AND QUALITY