Chapter 8- mngt 215.docx - Chapter 8 Strategic Management...

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Chapter 8: Strategic Management LO. 1: Strategic management What is strategic management? It is considered to be a key to excellence. It’s what managers do to develop an organization’s strategies. It is an important task that involves all the basic management functions – planning, organizing, leading and controlling. What are an organization’s strategies? They are the plans for how the organization will do whatever it is in business to do, how it will compete successfully and how it will attract and satisfy its customers in order to achieve its goals. Business model: How a company is going to make money. The business model focuses on two factors: Whether the customers will value what the company is offering and whether the company can make any money doing that (example: Dell selling computer online rather than through computer retailers, and it was successful) Why is strategic management important? It helps develop and exploit every aspect of the business we are currently operating. Strategic management can make a difference in how well an organization performs Positive relationship between strategic management and performance. Another reason is that managers in orgs of all types and sizes face continually changing situations. In this case, strategic management helps managers examine relevant factors and decide what actions to take. Finally, it is important because organizations are complex and diverse. In this sense, strategic management helps each part of the org. to work towards achieving the organization’s goals (example: Zain). Strategic management is used by both profit and non-profit organizations. Strategic management in Arab organizations: - Formal strategic planning exists but is rather limited (organizations lean on intuitive and reactive plans, and use strategic plans when associated with foreign companies) - Lack of confidence in the impact of formal strategic planning (since Arabs are short-termed as already seen, long-term strategic planning is not given a large importance) - The trend for formal strategic planning is on the rise (However, organizations are moving towards implementing strategic management systems, influenced by Western models) LO. 2: The strategic management process The strategic management process is a 6-steps process that encompasses strategy planning, implementation and evaluation. Step 1: Identifying the organization’s current mission, goals and strategies Mission: a statement of the org’s purpose; it forces the managers to identify what the organization is in business to do. It should basically include customers, markets, concern for survival, growth and profitability, philosophy of the company, concern
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for public image, products or services, technology, self-concept and concern for employees.
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