Part 1 introduction to strategic management

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Chapter 1: Strategic Management


An important key to the long-term prosperity of any organization is high-quality strategic thinking –the ability to look ahead, understand a dynamic environment, and effectively position one's organization or subunit for continued success in changing times. CEO Glass is thinkingstrategically as he positions Wal-Mart in new markets to help meet the retailing challenges of the decade. He is also thinking strategically when he decides to use technology to maximum advantage. And he is thinking strategically by spending time each week talking to customers and employees, and learning what is really happening where it really counts-in the stores. In each of these ways, strategicthinking is the outgrowth of proper attention to the essentials of "strategic planning" and "strategic management".

1-1. Definition of strategy

The word strategy came from the Greek word strategos, which means “a general”. At that time, strategy literally, meant the art and science of directing military forces. Today, the term strategy is used in business to describe how an organizationintends to achieve its objectives and mission. Most organizations have several options for accomplishing their objectives and mission. Strategy is concerned with deciding which option is going to be used. Strategy includes the determination and evaluation of alternative paths to achieve an organization’s objectives and mission and, eventually, a choice of the alternative that is to be adopted.The term strategy implies long-range and broad-based considerations. It implies change and uncertainty because managers are often dealing with concepts and ideas that are novel or untried, but may in the near future be commonplace. Strategy also implies an organizational responsibility to contribute to society. In this era of increased international competition, many managers are preoccupiedwith revitalizing their firms to make them more productive and more profitable. Managers at multinationals have to deal with international competition and a variety of global associations with their firms and nations. Other managers are simply grappling with how to survive.

A strategy is a comprehensive plan of action that sets critical direction for an organization and guides the allocationof its resources. It is an action focus that represents a "best guess" regarding what must be done to ensure long-run prosperity for the organization or one of its subsystems. At Wal-Mart this seems deceptively simple: Find out what customers need, then provide for them at the lowest prices and with better service. In practice, the choice of strategy is a complex and even risky task. Any strategydefines the direction in which an organization intends to move in a competitive situation. It is a choice made by decision makers that specifies how they plan to match the organization's strengths and weaknesses with opportunities and threats in the environment. Whereas good strategies thus become competitive weapons, poor ones are great disadvantages.

1-2. The strategist

Performing theactivities associated with business strategy planning is a major responsibility.

First, someone must assume the responsibility to develop a plan to complete the strategy activities, the plan must be initiated, dates set, deadlines established, and the process must be monitored to ensure that the deadlines are met.

Second, basic assumptions about forecasts, economic indicators,technology, and general industry competitiveness must be agreed on and communicated to the functional areas. Procedures must be developed to assure uniformity in the development of the plan. Responsibility for undertaking fundamental studies and valuation of special matters necessary to strategic planning must be assumed.

Third, the functional areas must actively participate by providing basic...
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