MGMT 386 Lecture Notes - Lecture 13: Strategic Planning, Strategic Management, Market Environment
STUDY
PLAY
Strategic Management
A set of managerial decisions and actions that determines the long-ru perforae of a fir →
Includes environmental scanning, strategy implementation, and evaluation and control.
Increasing risks of error, costly mistakes, and even economic ruin are causing today's professional
managers in all organizations
to take strategic management seriously in order to keep their companies competitive in an increasingly
volatile environment.
Phases of strategic management
Phase 1: Basic Financial Planning
Phase 2: Forecast Based Planning
Phase 3: Externally Oriented Planning
Phase 4: Strategic Management
Phase 1: Basic Financial Planning
) Managers initiate serious planning when they are requested to propose next years' budget. ) Projects
are proposed on the basis of very little analysis, with most information coming from within the firm. *)
The time horizon is usually one year.
Phase 2: Forecast Based Planning
*) As annual budgets become less useful at stimulating long term planning, managers attempt to
propose 5 years plan.
*) They now consider projects that may take more than one year. In addition to internal information,
managers gather any available environmental data and extrapolate current trends 5 years into the
future.
*) The time horizon is usually three to five years.
find more resources at oneclass.com
find more resources at oneclass.com
Phase 3: Externally Oriented Planning
*) Top Management takes control of the planning process by initiating strategic planning.
*) The company seeks to increase its responsiveness to changing markets and competition by thinking
strategically.
*) Planning is taken out of the hands of lower level managers and concentrated in a planning staff whose
task is to develop strategic plans for the corporation.
Phase 4: Strategic Management
*) Top Management realized that the best strategic plans are worthless without the input and
commitment of lower level managers
*) Top managers forms planning groups of managers and key employees at many levels from various
departments.
*) They develop and integrate a series of strategic plans aiming at achieving the company primary
objectives.
*) Strategic plans now detail the implementation, evaluation and control issues.
*) The sophisticated annual five years strategic plan is replaced with thinking at all levels of the
organization through out the year.
*) Although Top Management may still initiate the strategic planning process, the resulting strategies
may come from anywhere of the Organization.
*) Planning is typically interactive across levels and is no longer top down.
) People at all levels are now involved.
To be successful in the long-run, companies must not only be able to execute current activities to satisfy
an existing market
, but they must also adapt those activities to satisfy new and changing markets.
The attainment of an appropriate match, or "fit," between an organization's environment and its
strategy, structure, and processes
has positive effects on the organization's performance. Strategic planning becomes increasingly
important as the environment
becomes more unstable.
Benefits of Strategic Planning
1. Clearer sense of strategic vision for the firm.
find more resources at oneclass.com
find more resources at oneclass.com
2. Sharper focus on what is strategically important.
3. Improved understanding of a rapidly changing environment.
To be effective, however, strategic management need not always be a formal process. It can begin with
a few simple questions.
1. Where is the Organization now?
2. If no changes are made, where the Organization will be in one year? Two years? Five years? Ten
Years? Are the answers acceptable?
3. If the answers are not acceptable, what specific actions should management undertake? What are the
risks and payoffs involved?
Globalization
The itegrated iteralizatio of arkets ad orporatios → Copaies epadig all over the world
Global Issue
feature to learn how regional trade associations are forcing corporations to establish a manufacturing
presence wherever they wish to market goods or else face significant tariffs.
*) Products can more easily be sold and moved across national boundaries.
Environmental sustainability
Refers to the use of business practices to reduce a company's impact upon the natural and physical,
environment.
The effects of climate change on industries and companies throughout the world can be grouped into six
categories of risks:
Regulatory, supply chain, product & technology, litigation, reputational , and physical
Regulatory Risk
Risk that regulations will effect how the company operates
Supply Chain Risk
The likelihood of a disruption that would impact the ability of a company to continuously supply
products and services.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
A set of managerial decisions and actions that determines the long-ru(cid:374) perfor(cid:373)a(cid:374)(cid:272)e of a fir(cid:373) . Includes environmental scanning, strategy implementation, and evaluation and control. Increasing risks of error, costly mistakes, and even economic ruin are causing today"s professional managers in all organizations to take strategic management seriously in order to keep their companies competitive in an increasingly volatile environment. ) managers initiate serious planning when they are requested to propose next years" budget. ) Projects are proposed on the basis of very little analysis, with most information coming from within the firm. *) as annual budgets become less useful at stimulating long term planning, managers attempt to propose 5 years plan. *) they now consider projects that may take more than one year. In addition to internal information, managers gather any available environmental data and extrapolate current trends 5 years into the future. *) the time horizon is usually three to five years.
