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Key Concepts of Strategic Management
Key Concepts of Strategic Management
Key Concepts
Actions to
diversify the
Companys
revenue &
earnings by
entering into new
business
Actions to strengthen
competitive capabilities &
correct competitive
weaknesses
Actions &
approaches that
define how the
company manages,
research &
development,
production, sales &
marketing, finance &
other key activities
The Pattern of
Actions &
Business
Approaches that
define a
Companys
Strategy
Efforts to
pursue new
market
opportunities
& defend
against
threats to the
Companys
Actions to respond
changing market
conditions and
other external
circumstances
Actions to
form
Strategic
alliances &
collaborative
partnerships
Actions to
merge with or
acquire rival
companies.
Structure
Corporate
SBU
Strategy
Corporate Level
Corporate Office
SBU - A
SBU - B
SBU - C
Functional
Finance
Personnel
Marketing
Operations
Information
Business level
Functional Level
Corporate Strategy: The companywide game plan for managing a set of businesses.
The levels involved are CEO and other Senior Executives.
Business & Corporate Strategy
Business strategy, which refers to the aggregated operational strategies of single
business firm or that of an SBU in a diversified corporation, refers to the way in which a
firm competes in its chosen arenas.
Corporate strategy, then, refers to the overarching strategy of the diversified firm.
Such corporate strategy answers the questions of "in which businesses should we
compete?" and "how does being in one business add to the competitive advantage of
another portfolio firm, as well as the competitive advantage of the corporation as a
whole
Business Strategy for Strategic Business Units: One for each business, the
company has diversified into. Actions to build competitive capabilities and strengthen
market position. Executed by General Mangers, Plant Heads, Division heads of each
business with inputs from Corporate and Functional levels.
Many companies feel that a functional organizational structure is not an efficient way to
organize activities so they have re engineered according to processes or strategic
business units (called SBUs). A Strategic Business Unit is a semi-autonomous unit
within an organization. It is usually responsible for its own budgeting, new product
decisions, hiring decisions, and price setting. An SBU is treated as an internal profit
centre by corporate headquarters. Each SBU is responsible for developing its business
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strategies, strategies that must be in tune with broader corporate strategies
Functional Strategies
Functional strategies include Marketing Strategies, new product
development strategies, human resource strategies, financial strategies,
legal strategies, supply-chain strategies, and information technology
management strategies. The emphasis is on short and medium term plans
and is limited to the domain of each departments functional responsibility
and is executed by Functional heads. Each functional department attempts
to do its part in meeting overall corporate objectives, and hence to some
extent their strategies are derived from broader Corporate & Business
strategies.
Operational Strategy
The lowest level of strategy is operational strategy. At this level, detailing
is done to add completeness to Business & Functional Strategies. It is very
narrow in focus and deals with day-to-day operational activities such as
scheduling criteria. It must operate within a budget but is not at liberty to
adjust or create that budget. Operational level strategy was encouraged by
Peter Drucker in his theory of Management By Objectives (MBO).
Operational level strategies are informed to business level strategies which,
in turn, are informed to corporate level strategies. These strategies are
executed by Brand Managers, Operating Managers, Plant managers.
Important activities like Advertising, Web site operations, distributions are
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involved at this level.
Formulation
of
Strategies
Implementation
of
Strategies
Strategic Control
Strategic
Evaluation
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Formulation of Strategies:
External Environment Survey. SWOT Analysis.
Internal Appraisal of the firm.
Setting Corporate Objectives.
Formulating the Corporate objectives.
Formulating the Corporate strategies.
Exercising Strategic Choice.
Preparing a Strategic Plan.
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