SMP Lecture 1

Strategic management
- Set of decision and action
- Results into formulation and implementation of plan to achieve co obj
9 critical tasks of SM
- Formulate co mission
- Internal analysis
- Assess external env
- Analyse co option (by matching resources with external env)
- Identify most desirable option
- Set LT objectives
- Set annual obj and ST strategies
- Evaluate success of strategic process for future d/m

Dimension of strategic decision

1. Require top management decision
- Affect several area of firm operation
- Only top manager has power to authorize resource allocation

2. Require large amount of firm resource

- People, physical asset, money
- Commit the firm to action over extended period

3. Affect LT prosperity
- Commit the firm for long time, typically 5 years, impacts last much longer
- Once committed itself to strategy, its image and competitive adv usually tied to that
strategy

4. Future oriented
- Based on what manager forecast rather than what they know
- Emphasize development of solid projections that enable firm to seek most promising
strategic option
- Firm will succeed only if it take proactive stance toward change

5. Have multifunctional or multi-business consequences

- Complex implication for most area of firm
- Decision about customer mix, competitive emphasis, org structure involve num of SBU

6. Consider firm’s external env

- All biz exist in open system
- Affect and are affected by external condition that largely beyond their control
- Successful positioning require them to look beyond operation and consider what relevant
others are likely to do (competitors, customer, supplier, creditor, gov, labour
Corporate level
- BoD, CEO, Admin officer
- Responsible for financial performance, non-financial goals
- Develop LT plans

Business level
- Business manager, corp. manager
- Translate statement of direction and intent generated by corp level  concrete biz obj
and strategies for SBU
- Determine how firm will compete in selected product-market arena

Functional level
- Product, geo, functional area manager
- Implement strategic plan
- Develop annual obj and ST strategies
- efficiency and effectiveness of production and marketing system, customer service
quality, success of P&S in increasing firm’s mkt share

corporate level business level functional level

greater risk, cost, profit bridge decision at corp and low risk, modest
potential functional level cost(depend avai resources),
relatively concrete and
quantifiable

greater need for flexibility less costly, risky, potentially implement strategy
profitable than corp level formulated at corporate and
decision but more than business level
functional level

longer time horizon include decision on plant short range

location, mkt segmentation,
distribution
Formality

- degree of participation, responsibility, authority, discretion in d/m are specified in

strategic management

Forces/ factors/ reason determining formality :

- org size
- complexity of env
- production process
- problem in firm
- firm development stage

3 modes of formality

1. entrepreneurial mode
- owner-manager of smaller firms
- under control of single individual
-