It is defined as the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a companys objectives.
It comprises of 9 critical tasks 1. Formulate the companys mission, including its purpose, philosophy, and goals. 2. Conduct an analysis that reflects companys internal conditions & capabilities. 3. Access the companys external environment. 4. Analyze the companys options by matching its resources with external environment. 5. Identify the most desirable options by evaluating each option with companys mission. 6. Select a set of long-term objectives that will achieve most desirable options. Strategic Management 7. Develop the annual objectives and short term strategies that are compatible with the long term objectives. 8. Implement the strategic choices by means of budgeted resource allocations. 9. Evaluate the success of the strategic process as an input for future decision making.
Evolution of Strategic Management:
According to 20 th century 2 different type systems have evolved.
a. Positioning systems (long range planning, strategic planning, strategic position management) which directs the firms thrust in the environment. b. Real time systems (strong signal issue management, weak signal issue management, surprise management) which responds one at a time to rapid and unpredicted environmental developments. The system can be grouped into 4 distinctive stages of evolution
a. Management by control of performance which was adequate when change was slow.
b. Management by extrapolation when change accelerated, but future could be predicted by extrapolation of past.
c. Management by anticipation when discontinuous began to appear but change, while rapid, was still slow enough to permit timely anticipation and response.
d. Management thorough flexible / rapid response which is currently emerging, under conditions in which many significant challenges develop too rapidly to permit timely anticipation. EVOLUTION HIERARCHY Strategy can be formulated on 3 different levels
a. Corporate level. b. Business level. c. Functional/Department level.
Corporate level:
It is fundamentally concerned with selection of businesses in which company should compete and with development and coordination of that portfolio of businesses.
It is concerned with
a. Reach defining the issues that are corporate responsibilities. These might include identifying the goals, types of businesses in which corporate should involved, way in which businesses should me integrated and managed.
b. Competitive contact defining where the corporate competition is to be localized.
c. Managing activities and business interrelationships corporate strategy seeks to develop synergies by sharing and coordinating staff and other resources. d. Management Practices corporates decides how business units are to be governed, through direct corporate intervention or through more/less autonomous government.
Business Level:
At this level strategic issues are less about coordination of operating units and more about developing and sustaining a competitive advantage for goods and services that are produced. At this level strategic formulation deals with
Positioning business against rivals.
Anticipating changes in demand and technologies and adjusting strategy to accommodate them.
Influencing nature of competition through strategic actions such as vertical integration and through political actions such as lobbying. Functional Level:
It is the level of operating divisions and departments. The strategic issues and this level are related to business processes and value chain.
Functional level strategies in marketing, finance, operations, HR and R&D involve the development and coordination of resources through which business unit level strategies can be executed efficiently and effectively.
In organization they are involved in higher level strategies by providing input into business level & corporate level strategy such as providing information on resources on which higher level strategies can be based.
Once it is developed the functional level translate it into discrete action plans that each department/division must accomplish for strategy to succeed. STRATEGY FORMULATION Strategy formulation is defined as the process of developing the strategy.
It is the process of establishing the organizations mission, objectives and choosing among alternative strategies.
Vision:
It presents a firms strategic intent designed to focus the energies and resources of the company on achieving a desirable future. It is sometimes developed to express the aspirations of the executive leadership.
Mission:
It is a unique purpose that sets a company apart from others of its type and identifies the scope of its operations in product market and technology terms. It is a statement, not of measurable targets but of attitude outlook and orientation. Business:
It is an economic activity in which goods & services are exchanged for one another or money on their perceived worth.
Every business requires some form of investment and sufficient number of customers to whom its output can be sold at profit on consistent basis.
Stakeholders:
A stakeholder is any individual or organization that is affected by the activities of a business. They may have direct or indirect interest in the business, and may be in contact with business on daily basis or may just occasionally.
Stakeholders are those who can be affected by the business and also can affect a business. BUSINESS & STAKEHOLDERS Company Internal Stake- Holders External Stake- Holders Employees Manager Owners Suppliers Customers Society Government Share Holders Creditors STAKE HOLDERS
Jaramogi Oginga Odinga University of Science and Technology, Kenya - BSC Computer Security & Forensics MSC IT Security & Audit, PHD IT Security & Audit