Strategic+management+2

Strategic ManagementStrategic ManagementBHRM 31124BHRM 31124

R.A.Ishanka ChathuraniLecturer (prob)Department of Human Resource ManagementFaculty of Commerce & Management StudiesUniversity of Kelaniya

Nature and Scope of Nature and Scope of Strategic Management Strategic Management Learning OutcomesDefine what is meant by strategic

managementUnderstand the dimensions of

strategic decisionUnderstand the benefits of

strategic management Explain how strategic priorities vary

by level; Corporate level, Business level and Operational level

What is Strategic What is Strategic Management?Management?

Strategic management understands the strategic management position of an organization, strategic choices for the future and turning strategy into action. (Johnson & Scholes,2008)

Strategic management is the term that is now preferred over earlier terms such as corporate planning and strategic planning

Cont…Cont… What is Strategic What is Strategic Management?Management?

Thus Strategic management is , an art and science of formulating, implementing and evaluating cross functional decisions that enable of an organization to achieve its objectives (Fred R.David,2006)

Dimensions of Strategic Dimensions of Strategic DecisionDecision

Strategic issues require Top-management support

Strategic issues involves allocation of large amount of resources

Strategic issues tend to have a significant impact on the long term prosperity of the firm

Strategic issues are future orientedStrategic issues have company-wide

consequencesStrategic issues necessitate considering

factors in the firm’s external environment

Benefits of Strategic Benefits of Strategic ManagementManagement

Strategic management allows an organization to be proactive than reactive in shaping its own future◦Financial Benefits

Improvements in sales Profitability Productivity

Non-Financial Benefits

It allows to identification, prioritization and exploitation of opportunities

It provide an objective view of management problems

Represent a framework for improved coordination and control of activities

Minimize the effect of adverse condition and changes Allows major decisions to better support established

objectives Allows more effective allocation of time and

resources to identified opportunities Allows fewer resources and less time to be devoted

to correcting erroneous and adhoc decisions Create a framework for internal communication

among personnel Helps integrate the behaiour of individuals into a

total effort

Guidelines for Effective Guidelines for Effective Strategic Management Strategic Management

Open mindednessResource boundTrade-off between different

objectives

Levels of Strategy in an Levels of Strategy in an OrganizationOrganization

Any level of the organization can have objectives and devise strategies to achieve them

According to Hofer and Schendle there are three levels of strategies, ◦Corporate level strategy, ◦Business level strategy and ◦Functional level strategy.

Cont…Cont… Levels of Strategy in an Levels of Strategy in an OrganizationOrganization

Corporate Level Strategy◦According to Johnson and Scholes

corporate level strategy is concerned with what types of business the organization is in

◦Corporate strategy is formulated by top management to oversee the interests and operations of organizations that contain more than one line of business.

Cont… Corporate level Cont… Corporate level strategystrategyVarious aspects of corporate

strategyCharacteristics Comments

Scope of activities Strategy and strategic management impact upon the whole

organization: all parts of the business operation should support

and further the strategic plan

Environment The organization counters threats and exploits opportunities in the

environment

Resources Strategy involves choices about allocating or obtaining corporate

resource now and in future

Values The value systems of people with power in the organization

influence its strategy

Timescale Corporate strategy has a long-term impact

Complexity Corporate strategy involves uncertainty about the future,

integrating the operations of the organization and change

Business Level Business Level Strategy Strategy Business level strategy has an

organization approaches a particular product market area

Business strategy can involve decisions such as whether to segment the market and specialize in particular profitable areas, or to compete by offering a wider range of products

Functional Level Functional Level Strategy/Operational Strategy/Operational Strategies Strategies

Functional strategies concerned with how the components part of an organization deliver effectively the corporate and business level strategies in terms of resources, processes and people

Cont…Cont…Functional area Comment

marketing Diversifying products and services pricing, promoting and distributing

them, in order to satisfy customer needs at a profit. Marketing and

corporate strategies are interrelated

Production Factory location, manufacturing techniques, outsourcing and so on

Finance Ensuring that the firm has enough financial resources to fund its other

strategies by identifying sources of finance and using them effectively

HRM Secure personnel of the right skills in the right quantity at the right time,

and to ensure that they have the right skills and values to promote the

firm’s overall goals

Information

systems

A firm’s information systems are becoming increasingly important, as an

item of expenditure, as administrative support and as a tool for competitive

strength. Not all information technology applications are strategic, and the

strategic value of IT will vary from case to case

Summery

The Challenges for The Challenges for Strategic Management Strategic Management

Preventing strategic driftStrategic drift is where strategies

progressively fall to address the strategic position of the organization and performance deteriorates

The need of understand and address contemporary issues

The benefit of viewing strategy in more than one way(strataegy lenses)

Strategic Management Strategic Management PositionPositionThe environmentStrategic capabilityExpectations and purposes

Strategic choicesStrategic choicesBusiness level strategyCorporate level and international Developmental directions and

methods

Strategy into actionStrategy into actionOrganizing EnablingManaging change

Strategic DriftStrategic Drift

Environment Change

Strategic change

Contemporary issues Contemporary issues InternationalizationE-commerceChanging purposesKnowledge and learning

Strategy LensesStrategy LensesStrategy as designStrategy as experienceStrategy as ideas