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8/7/2019 Summary of Strategic Management
1/11
F
REDR.
DAVID
2011
ST
RATEGICMANAGEMENT
SUMMARYOF STRATEGICMANAGEMENTSCONCEPT (THE BOOK OF
FREDR.DAVID)
REQUIRED FOR MID-TERM EXAM OF STRATEGIC MANAGEMENT
FARA LAYNDS LAMBORGHINI
0910233039
FACULTY OF ECONOMICSANDBUSINESSUB
MALANG,APRIL 2011
8/7/2019 Summary of Strategic Management
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
SUMMARY OF STRATEGIC MANAGEMENT
(ONLY THE CONCEPTS)
FRED R. DAVID
1. Identify Existing vision, mission,objectives,strategies2. Auditexternalenvironment3. Auditinternalenvironment4. Establishlong-term objectives5. Generate,evaluate,andselectstrategies6. Implementselectedstrategies7.
Measure & evaluate performance
THENATURE OF STRATEGIC MANAGEMENT
Strategic managementcanbe definedas Art & science offormulating, implementing,and
evaluating,cross-functionaldecisions thatenable anorganization toachieve itsobjectives.
Inessence,thestrategic planisacompanysgame plan. Allfirmshavestrategy,evenifitis
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8/7/2019 Summary of Strategic Management
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
6. Long-term Objectives is mission-driven pursuit of specified results more than oneyearout.
7. Strategies include geographic expansion, diversification, ac uisition, mar etpenetration,retrenchment,li uidation,andjoint venture.
8. Annual Objectives is short-term milestones that firms must achieve to attain long-term objectives.
9. Policies meansby whichannualobjectives willbeachieved
THE BUSINESS VISION AND MISSION
MISSION COMPONENT
CHARACTERISTICS OF MISSION STATEMENT
1. Broadinscope2. Lessthan 250 wordsinlength3. Inspiring4. Identifythe utilityoffirm product5. Revealthatthefirm issociallyresponsible6. Revealthatthefirm isenvironmentresponsible7. Includeninecomponents mentionedabove8. Enduring
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
THEEXTERNAL ASSESSMENT
PORTERSFIVEFORCEMODELOFCOMPETITIONS
Increasingturbulencein mar etsandindustriesaroundthe world meanstheexternalaudithas
becomeanexplicitand vital partofthestrategic management process. Thischapterprovides
a framewor for collecting and evaluating economic, social, cultural, demographic,
environmental, political, governmental, legal, technological, and competitive information.
Firmsthatdonot mobilizeandempowertheirmanagersandemployeestoidentify, monitor,
forecast,andevaluate keyexternalforces mayfailtoanticipatetoemergingopportunitiesandthreats and, conse uently, may pursue ineffective strategies, miss opportunities, and invite
organizationaldemise. Firmsnottakingadvantageofthe internetaretechnologicallyfalling
behind.
A major responsibility ofstrategists is toensure development ofan effective external-audit
system. This includes using information technology to devise a competitive intelligence
system that works. The external audit approach describe in this chapter can be used
effectivelyby any size or type of organization. Typically, the external audit process is
informalinsmallfirms,buttheneedto understand keytrendsandeventsisnolessimportant
forthesefirms. The EFE Matrix and Portes Five Forces Modelcanhelp strategistsevaluate
the market and industry,but these tools mustbe accompaniedby good intuitivejudgment.
Multinationalfirmsespeciallyneedasystematicandeffectiveexternalauditsystembecause
externalforcesamongforeigncountries varysogreatly.
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
THE INTERNAL ASSESSMENT
Management, marketing, finance/accounting, production/operations, research and
development, and management information systems represent the core operations of most
business. A strategic management audit of a firms internal operations is a vital toorganizational health. Many companies still prefer tobejudged solely on theirbottom line
performance. However, an increasing number of successful organizations are using the
internalaudittogaincompetitiveadvantagesoverrivalfirms.
Systematic methodologies for performing strength-weakness assessments are not well
developed inthestrategic management literature,but itisclearthatstrategists must identify
andevaluate internalstrengthsand weaknesses inorder toeffectively formulateandchoose
among alternative strategies. The EFE Matrix,Competitive Profile Matrix, IFE Matrix and
clearstatementsofvisionsand mission providethebasicinformationneededtosuccessfully
formulate competitive strategies. The process ofperforming an internal audit represents an
opportunity for managers and employees throughout the organization to participate in
determining the future of the firm. Involvement in the process can energize andmobilize
managersandemployees.
STRATEGIES IN ACTION
The main appeal of any managerial approach is the
expectation that it will enhance organizational performance.
This is especially true of strategic management. Through
involvement strategic management activities, managers and
employees achieve abetterunderstanding of an organizations priorities and operations.
Strategic management allows organizations tobe efficient,but more important; it allows
8/7/2019 Summary of Strategic Management
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
them tobe effective. Although strategic management does not guarantee organizational
success, the process allows proactive rather than reactive decision making. Strategic
management may represent a radical change in philosophy for some organizations, so
strategists mustbe train toanticipate and constructively respond to questionsand issuesastheyarise. The 16 strategiesdiscussedinthischaptercanrepresentanewbeginningformany
firms,especially ifmanagersand employees in theorganization understandandsupport the
planforaction.
STRATEGY ANALYSIS AND CHOICE
Theessenceofstrategyformulationisanassessmentofwhetheranorganizationisdoingthe
right thingsandhow itcanbe moreeffective in what itdoes. Everyorganizationshouldbe
wary ofbecoming a prisoner of its own strategy,because even thebest strategiesbecome
obsolete sooner or later. Regular reappraisal of strategy helps management avoid
complacency. Objectivesandstrategiesshouldbeconsciouslydevelopedandcoordinatedand
shouldnot merelyevolveoutofday-to-dayoperatingdecisions.
An organization with no sense of direction and no coherent strategy precipitates its own
demise. When organization does not know where it wants to go, it usually ends up some
place it does not want to be. Every organization needs to consciously establish and
communicateclearobjectivesandstrategies.
Modern strategy formulation tools and concepts are describe in this chapter and integrated
into practicalthreestageframework. ToolssuchastheSWOT Matrix,SPACE Matrix,BCG
Matrix,IE Matrix,and QSPM cansignificantlyenhancethe qualityofstrategicdecisions,but
theyshouldneverbe useddictatethechoiceofstrategies. Behavioral,cultural,and political
aspects of strategy generation and selection are always important to consider and manage.
Because of increase legal pressure from outside groups,boards of directorsareassuming a
moreactiveroleinstrategyanalysisandchoice. Thisisa positivetrendfororganization.
IMPLEMENTINGSTRATEGIES: MANAGEMENT ANDOPERATIONS ISSUES
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FARA LAYNDSLAMBORGHINI
0910233039 | INTERNATIONAL PROGRAMACCOUNTING DEPARTMENT
FACULTYOFECONOMICS | UNIVERSITYOFBRAWIJAYA
STRATEGYREVIEW EVALUATION AND CONTROL
Thischapterpresentsastrategyevaluation frameworkthatcan facilitateaccomplishmentof
annual and long term objectives. Effective strategy evaluation allows an organization to
capitalize on internal strengths as they develop, to exploit external opportunities as they
emerge, torecognizeanddefendagainst threats,and to mitigate internal weaknessesbefore
theybecomedetrimental.
Strategists in successful organizations take the time to formulate, implement, and then
evaluatestrategiesdeliberatelyandsystematically. Goodstrategists move theirorganization
forward with purposeanddirection,continuallyevaluatingandimprovingthefirmsexternaland internalstrategic positions. Strategyevaluationallowsanorganization toshape itsown
futureratherthanallowing ittobeconstantlyshapedbyremoteforcesthathave littleorno
vestedinterestinthe well-beingoftheenterprise.
Although not a guarantee for success,strategic management allows organizations to make
effective long term decisions, to execute those decisions efficiently,and to take corrective
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FARA LAYNDS LAMBORGHINI
INTERNATIONAL PROGRAMACCOUNTINGDEPARTMENT
FACULTYOF ECONOMICS UNIVERSITYOF BRAWIJAYA
actionsasneeded toensuresuccess. Computernetworksand the internet help tocoordinate
strategic management activitiesand toensure that decisionsarebasedongood information.
CONCLUSION
All firms have strategy, even it s informal, unstructured, and sporadic. The strategic
management processbecoming more widely usedby almost all firms. The process of
empowering managersandemployeeshasalmost limitlessbenefit.
Thestrategies management process itselfconsistsof:
1. Strategy formulation (identifies existing vision, mission, objectives,strategies; audit
external environment,audit internal environment,establish long-term objectives)
2. Strategy implementation (generates, evaluate, and select strategies and implement
selectedstrategies)
3. Strategyevaluation (measure & evaluate performance)
Success inbusiness increasingly depends upon offering products and services that are
competitiveona worldbasis,not just ona localbasis. Global marketshavebecomeareality
inallbut the most remoteareasofthe world. Peopleororgani ation that planahead is much
more likely tobecome what they want tobecome than those that dont planat all.