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Session 2

The Strategic
Management
Model
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Learning Objectives

1. Understand the different levels of strategy:

corporate, business and functional
2. Describe a comprehensive model of strategic
decision making that will provide the
framework for our semester
3. Appreciate the importance of strategic
management as a process
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Three Levels of Strategy

• Corporate level: board of directors,
CEO & administration [Highest]
• Business level: business and corporate
managers [Middle]
• Functional level: Product, geographic,
and functional area managers [Lowest]
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Alternative Strategic Management
Structures
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Strategic Management Decisions:
Corporate Level Strategy
• Domain Definition: Where to Compete?
• Defines Scope of Firm
• In Which Industries Will We Compete?
• Must Be Reflected in Mission
• Choice of businesses, entry (diversification)
and exit (divestiture) decisions, resource
allocation/ priorities for growth
• Corporate Financial: Dividend Policies,
Sources of Long-term Financing
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Strategic Management Decisions:
Business Level Strategy
• Domain Navigation: How to Compete?
• Competitive Strategy
• Help bridge decisions at the corporate and
functional levels
• Less costly, risky, and potentially profitable
than corporate-level decisions
• More costly, risky, and potentially profitable
than functional-level decisions
• Include decisions on plant location, marketing
segmentation, and distribution
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Strategic Management Decisions:
Functional Level Strategy
• Implement the overall strategy formulated at
the corporate and business levels
• AKA Tactics
• Involve specific action-oriented and
operational issues
• Relatively short range (typically within the
coming year) and low risk
• Modest costs: depend upon available resources
• Relatively concrete and quantifiable
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Strategic Management Process

• Businesses vary in formulation and other
processes
• The basic components of the models used to
analyze strategic management are similar
• Strategic management is a process—a flow
of information through interrelated stages of
analysis toward the achievement of some
goal
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Phases of Strategic Management
Process

• Formulation
• Implementation
• Control
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Strategic Management Model

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Word (Acronym) of the Day

SWOT ANALYSIS

Strengths
Weaknesses
Opportunities
Threats
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Components of Strategic
Management Model
• Company Mission • Internal Analysis
• External Analysis • Strategic Analysis &
Choice
• Long-Term Objectives
• Generic & Grand
• Short-Term Objectives Strategies
• Policies Empowering • Functional Tactics
Action • Restructuring,
• Strategic Control & Reengineering &
Continuous Refocusing
Improvement