Strategic Management

Strategic Management Definition

Strategic management is a field that

• deals with the major intended and emergent initiatives taken by general managers on behalf of owners,
• involving utilization of resources, to enhance the performance of firms in their external environments.

It entails specifying:

• the organization's mission, vision and objectives,
• developing policies and plans,
• often in terms of projects and programs
• implementation of them

Questions

• What is a Strategic Plan?
• What is a Market Size?
• Do you need to stick to a strategic plan?
• Why do we you need a Strategic Plan?
• How long should be a Strategic Plan?
• Have you ever seen a Strategic Plan?
• Who should see a Strategic Plan?
• How the processes of writing a strategic plan look like?
• What levels of strategy do you know?

Ultimate Goal

• Utilitarianism
• After Life

Vision and missions of organizations

1. Obliterate Poverty (i.e. World without poverty) (vision)
   1. System of direct subsidies for poor
   2. System of effective education
   3. Eugenics
   4. ...
2. Prevent War (i.e. World without war) (vision)
   1. Global totalitarian state
   2. Change human brain so people cannot fight
   3. Design other alternative political system...
3. Eliminate Waste (World where people do not waste their time but do really needed stuff)
   1. Streamline education process
   2. Invest in assets (machines, computers, infrastructure)
   3. ...

Strategic Management

Quiz

1. What is a goal of strategic management?
2. What are two major parts of strategic management?
3. What is a handset market in the US?

Strategic Plan Elements

Strategic Planning as a Process

• Strategic planing might be considered a process.
• It means that it is not done at once for immediate implementation - in fact, it is a process requiring cyclical revisions.

Strategic Planning and Science Fiction

Commonalities

• try to predict the future
• assume sound and solid scientific foundation
• analyse how the technological, political and culturual changes are going to affect people's life

Differences

• SP aims at achieving a specific goal

http://www.firstpost.com/world/intel-sponsored-sci-fi-searches-for-the-future-63180.html

Strategic Planning

"Strategic planning consists of the process of defining objectives and developing strategies to reach those objectives. "

• Strategic means to operate on the grand scale and to take in 'the big picture' (as oppose to tactical)

Strategic Plan Audience and Motivation

Investors (Should I invest)

• Venture Capital
• Share Holders
• Banks

CFO (Budgeting)

• Where should we allocate our resources?

Employees (Focus)

• Should we do that at all?
• What should we do first?

Auditors (Control)

• How can we check whether management is effective or not?

Strategy Levels

• Corporate Strategy (What should we do as a group?)
• Business Unit Strategy (versus Funcional)
• Regional Strategies
• Operational Strategy

Business Unit Strategy Example

• "A Strategic Business Unit is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU."
• Focus on competitive strategy (i.e. how to achieve competitive advantage in its market)
• E.g.
  • Price strategy
  • Product positioning
  • Advertising
  • Customer service
  • High level business process like sales, marketing, etc...
• Answer the question "how can we achieve our goal?"

Regional Strategy Example

Operational Strategy

• "Concerned with how the component parts of the organisation deliver effectively the corporate - and business-level strategies in terms of resources, processes and people".
• Focuses on optimization of business processes
• E.g. which suppliers to use, where to locate the outlines, etc...

Two approaches to Strategic Planning

	Old School	New School
Order of Steps	Strategic Analysis Vision Goals Financial Plan	Vision Strategic Analysis Goals Financial Plan
Profit Criteria	"We do not start unless we see we can make money..."	"We will figure out how to make money later..."
For whom	Traditional industries like Energy, Cars, Planes, etc... Usually used for existing conglomerates Used when shareholders are demanding concrete plan E.g. GE, IBM, Shell ...	High-techs/creative industries New Companies (YouTube, Facbook, Google, etc...) Usually no need to argue with shareholders
	Limited Resources Known Markets Best use of the organization's assets Good for well established known companies	A bit like a Business Plan Markets which may not exist yet Focusing on "to be" state rather than "as is" Usually assumes that the company will make no profit for first couple of years (like Amazon, YouTube, etc...)

Strategic Analysis

Environment Analysis	Industry and Market analysis	Company analysis

== How a Strategic Plan looks Strategic Plan usually is made of a lot of documents

• Descriptive (Vision, mission, values)
• Analytic
  • Opinions
  • Market Analysis
  • Company Analysis
• Executive
  • Goals and Strategics
  • Scorecards
• Financial
  • Investor Prospectus
  • Financial Analysis
  • Budgets
• Operational
  • Business Process Diagrams
  • Business Architecture

When should I update my strategic plan?

• Mission and Vision should be relatively constant, revised every year or couple of years
• Values should be revised a couple of times a year
• Market and Company Analyses (monthly)
• Executive and Financial (daily)

Toys (AKA Tools)