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Lecture 6

MGT 300 Lecture 6: MG Chapter 6 Notes
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Department
Management
Course
MGT 300
Professor
Daniel Bachrach
Semester
Summer

Description
Management Chapter 6 Notes The Dynamics of Strategic Planning • Strategy ➢ Large-scale action plan that sets the direction for an organization • Strategic management ➢ Process that involves managers from all parts of the organization in the formulation and the implementation of strategies and strategic goals What Is An Effective Strategy? • Strategic positioning ➢ Attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company ➢ “Performing different activities from rivals, or performing similar activities in different way” 1. Strategy is the creation of a unique and valuable position ➢ Few needs, many customers – Jiffy Lube ➢ Broad needs, few customers – Wealth mgt ➢ Broad needs, many customers – Carmike Cinemas 2. Strategy requires trade-offs in competing 3. Strategy involves creating a “fit” (synergy) among activities ➢ Activities align and reinforce one another Example on Page 161 • Old strategy – sell a device • New strategy – sell a device, sell content, sell adds • Big company ways – ecosystem or walled garden of Apple, Amazon, AOL • Small company ways – conscience-based decisions, create emotional or personal connection, sympathy Why Strategic Management & Strategic Planning Are Important 1. Provide direction and momentum 2. Encourage new ideas 3. Develop a sustainable competitive advantage • Sustainable competitive advantage occurs when an organization can stay ahead in four areas: ➢ Being responsive to customers ➢ Innovation ➢ Quality ➢ Effectiveness The Strategic-Management Process 1. Establish the mission and the vision 2. Establish the grand strategy with environmental scanning 3. Formulate the strategic plans (using e.g. Porter) 4. Carry out the strategic plans 5. Maintain strategic control • Feedback: Revise actions, if necessary, based on feedback Assess the Current Reality • Current reality assessment ➢ To look at where the organization stands and see what is working and what could be different so as to maximize efficiency and effectiveness in achieving the organization’s mission ➢ Also called organizational assessment Formulate the Grand Strategy • Grand strategy ➢ Explains how the organization’s mission is to be accomplished Common Grand Strategies • Growth strategy ➢ Involves expansion – as in sales revenues, market share, number of employees, or number of customers • Stability ➢ Involves little or no significant change • Defensive ➢ Involves reduction in the organization’s efforts ➢ Retrenchment How Companies Can Implement Grand Strategies? • Growth strategy ➢ It can improve an existing product or service to attract more buyers ➢ It can increase its promotion and marketing efforts to try to expand its market share ➢ It can expand its operations, as in taking over distribution or manufacturing previously handled by someone else ➢ It can expand into new products or services ➢ It can acquire similar or complementary businesses ➢ It can merge with another company to form a larger company • Stability strategy ➢ It can go for a no-change strategy ➢ It can for a little-change strategy • Defensive strategy ➢ It can reduce costs, as by freezing, hiring, or tightening expenses ➢ It can sell off (liquidate) assets – land, buildings, inventories, and the like ➢ It can gradually phase out product lines or services ➢ It can divest part of its business, as in selling off entire divisions or subsidiaries ➢ It can declare bankruptcy ➢ It can attempt a turnaround – do some retrenching, with a view toward restoring profitability Grand Strategy • Strategy formulation ➢ Process of choosing among different strategies and altering them to best fit the organization’s needs • Strategy implementation ➢ Putting strategic plans into effect The Strategic Management Process • Strategic control ➢ Consists of monitoring the execution of strategy and making adjustments, if necessary Mission Statements and Vision Statements • Mission statements: Does your company’s mission statement answer these questions? 1. Who are our customers? 2. What are our major products or services? 3. In what geographical areas do we compete? 4. What is our basic technology? 5. What is our commitment to economic objectives? 6. What are our basic beliefs, values, aspirations, and philosophical priorities? 7. What are our major strengths and competitive advantages? 8. What are our public responsibilities, and what image do we wish to project? 9. What is our attitude toward our employees? • Vision statements: Does your company’s vision statement answer “yes” to these questions? 1. Is it appropriate for the organization and for the times? 2. Does it set standards of excellence and reflect high ideals? 3. Does it clar
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