Strategic Management

Basic Concepts

Strategic Decisions
Strategic issues
Require top management decision
Require large amounts of resources
Affect firms long term prosperity
Are future oriented
Usually have multi-functional or multi-business
consequences
Require considering the firms external
environment

Formality
Formality refers to the degree to which
participation, responsibility, authority and
discretion in decision making are specified in
strategic management

Factors determining Formality

Size of organization
Predominant management styles
Complexity of its environment
Production process
Problems
Purpose of its planning system

Mintzbergs Modes of Strategic

Decision Making
Entrepreneurial Mode informal, intuitive
and limited approach to strategic
management associated with owner
managers of smaller firms
Planning Mode Strategic formality
associated with large firms that operate
under a comprehensive formal planning
system

Mintzbergs Modes of Strategic

Decision Making
Adaptive Mode Strategic formality
associated with medium-sized firms that
emphasize the incremental modification of
existing competitive approaches

Fourth Mode - Quinn

Logical Incrementalism Top management
has a reasonably clear idea of firms mission
and objectives; but in its development of
strategies it chooses to use an interactive
process, in which the firm probes the future,
experiments and learns from a series of partial
( incremental) commitments rather than
through global formulations of total strategies

Strategic Decision Making Process

Risk of Strategic Management

Time spent on strategy making may have
negative impact on operational
responsibilities
If strategy makers are not involved in its
implementation, they may shirk individual
responsibility
Managers must be trained to anticipate and
respond to the disappointment of
subordinates over unattained expectations

Strategic Management Model

Concepts
Long Term objectives Results that an
organization seeks to achieve over a multiyear period
Short Term objectives Desired results that
provide specific guidance for action during a
period of one year or less
Generic Strategies Fundamental
philosophical options for the design of
strategies
Grand Strategies The means by which
objectives are achieved

Concepts
Tactics Specific actions that need to be
undertaken to achieve short term objectives,
usually by functional areas
Functional Tactics Short-term, narrow scoped
plans that detail the means or activities that a
company will use to achieve short-term
objectives
Policies Pre determined decisions that
substitute for managerial discretion in repetitive
decision making

Concepts
Strategic Control Tracking a strategy as it is
being implemented, detecting problems or
changes in its underlying premises, and
making necessary adjustments
Continuous Improvement A form of strategic
control in which managers are encouraged to
be proactive in improving all operations of the
firm

Concepts
Process The flow of information through interrelated
stages of analysis toward the achievement of an aim
Stakeholders Influential people who are vitally
interested in the actions of the business
Feedback The analysis of post-implementation results
that can be used to enhance future decision making
Dynamic The term that characterizes the constantly
changing conditions that affect interrelated and
interdependent strategic activities