strategic management: concepts

In 1977, Abraham Zaleznik distinguished leaders from managers. Material cannot be underestimated. Relationship of internal and external environment: Self-service at the gas pump rather than with help from an attendant; Retail internet orders input by the customer rather than a retail clerk, such as online book sales; Mass-produced ready-to-assemble furniture transported by the customer; People can continuously expand their capacity to learn and be productive. [6] The discipline draws from earlier thinking and texts on 'strategy' dating back thousands of years. In 1989 Richard Lester and the researchers at the MIT Industrial Performance Center identified seven best practices and concluded that firms must accelerate the shift away from the mass production of low cost standardized products. thereby reducing costs. Shared vision – The vision of where we want to be in the future is discussed and communicated to all. Enter your mobile number or email address below and we'll send you a link to download the free Kindle App. Over time, the customer became the driving force behind all strategic business decisions. In 1993, J. Moore used a similar metaphor. Your recently viewed items and featured recommendations, Select the department you want to search in. Porter claimed that a company must only choose one of the three or risk that the business would waste precious resources. Goal Setting . Various monitoring and feedback mechanisms may also be established, such as regular meetings between divisional and corporate management to control implementation. It involves multiple agents interacting in such a way that a glimpse of structure may appear. He wrote that good strategy has an underlying structure called a kernel. Complexity is not quite so unpredictable. All ships of any kind bound for Cuba from whatever nation or port will, if found to contain cargoes of offensive weapons, be turned back.". In five forces analysis he identified the forces that shape the industry structure or environment. TWO DIFFERENT BOOKS, THIS ONE DOES NOT INCLUDE CASES, this book doesn't include cases! Restructuring: The corporate office acquires then actively intervenes in a business where it detects potential, often by replacing management and implementing a new business strategy. Examples include online auction sites, internet dating services, and internet book sellers. Companies can maximize their profitability by competing in industries with favorable structure. Environmental analysis includes the: Strategic decisions are based on insight from the environmental assessment and are responses to strategic questions about how the organization will compete, such as: The answers to these and many other strategic questions result in the organization's strategy and a series of specific short-term and long-term goals or objectives and related measures. Porter wrote in 1980 that strategy target either cost leadership, differentiation, or focus. Mintzberg, Henry “Crafting Strategy”, Harvard Business Review, July/August 1987. In 1969, Peter Drucker coined the phrase Age of Discontinuity to describe the way change disrupts lives. [121] For example, Encarta demolished Encyclopædia Britannica (whose sales have plummeted 80% since their peak of $650 million in 1990) before it was in turn, eclipsed by collaborative encyclopedias like Wikipedia. Mental models – We need to explore our personal mental models to understand the subtle effect they have on our behaviour. II. [1][2][3][4] Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Among the numerous early contributors, the most influential were Peter Drucker, Philip Selznick, Alfred Chandler, Igor Ansoff,[25] and Bruce Henderson. Formulation ends with a series of goals or objectives and measures for the organization to pursue. Several techniques enabled the practical use of positioning theory. This allowed society to assimilate the change before the next change arrived. In 1989, Dudley Lynch and Paul L. Kordis published Strategy of the Dolphin: Scoring a Win in a Chaotic World. Companies continued to diversify as conglomerates until the 1980s, when deregulation and a less restrictive antitrust environment led to the view that a portfolio of operating divisions in different industries was worth more as many independent companies, leading to the breakup of many conglomerates. Elcock, Howard, "Strategic Management," in Farnham, D. and S. Horton (eds. Management consultants Tom Peters and Robert H. Waterman had used the term in their 1982 book In Search of Excellence: Lessons From America's Best-Run Companies. The terms pertinent to it are "feeling", "judgement", "sense", "proportion", "balance", "appropriateness". "[6], Interorganizational relationships allow independent organizations to get access to resources or to enter new markets. [15], Running the day-to-day operations of the business is often referred to as "operations management" or specific terms for key departments or functions, such as "logistics management" or "marketing management," which take over once strategic management decisions are implemented.[15]. "[109], In 1973, Mintzberg found that senior managers typically deal with unpredictable situations so they strategize in ad hoc, flexible, dynamic, and implicit ways. It is typically caused by discontinuities (or exogenous shocks) in the business environment. [84] He claimed that strategy is partially deliberate and partially unplanned. To get the free app, enter your mobile phone number. Porter modified Chandler's dictum about structure following strategy by introducing a second level of structure: while organizational structure follows strategy, it in turn follows industry structure.[21]. For other uses, see. Strategic Management: Concepts and Cases. He also popularized the concept of the BHAG (Big Hairy Audacious Goal). "[13] Strategies are established to set direction, focus effort, define or clarify the organization, and provide consistency or guidance in response to the environment. The music industry was similarly disrupted. (See Crossing the Chasm). The initial conclusion of the study was unambiguous: the greater a company's market share, the greater their rate of profit. Great birthday gift! [6] Strategic management is not static in nature; the models often[quantify] include a feedback loop to monitor execution and to inform the next round of planning. Each unit generally runs autonomously, with limited interference from the corporate center provided goals are met. The prevailing concept in strategy up to the 1950s was to create a product of high technical quality. Zuboff also detected a new basis for managerial authority, based on knowledge (also predicted by Drucker) which she called "participative management".[123]. The Strategy Book: How to think and act strategically to deliver outstanding result... Own Your Culture: How to Define, Embed and Manage your Company Culture. Mulcaster, W.R. "Three Strategic Frameworks," Business Strategy Series, Vol 10, No 1, pp 68–75, 2009. This effectively turned the product into a service. This bar-code number lets you verify that you're getting exactly the right version or edition of a book. You are introduced to strategic management concepts which are expanded on in the Global Strategy and Leadership subject. (eds.). Updated with latest federal tax changes. Gronroos, C. “From marketing mix to relationship marketing: towards a paradigm shift in marketing”. He recommended eight areas where objectives should be set, such as market standing, innovation, productivity, physical and financial resources, worker performance and attitude, profitability, manager performance and development, and public responsibility. Mintzberg, H. Ahlstrand, B. and Lampel, J. Hamel, G. & Prahalad, C.K. He wrote, "The job breeds adaptive information-manipulators who prefer the live concrete situation. Strategy should be seen as laying out the general path rather than precise steps. Closer relationships with customers and suppliers, Diagnosis: "This Government, as promised, has maintained the closest surveillance of the Soviet military buildup on the island of Cuba. Reviewed in the United States on December 4, 2016. These items are shipped from and sold by different sellers. Management Concepts is the leader in workforce and individual professional development, with numerous courses that have helped thousands earn and maintain their certifications, as well as begin their careers. Gary Hamel and C. K. Prahalad described the idea of core competency in 1990, the idea that each organization has some capability in which it excels and that the business should focus on opportunities in that area, letting others go or outsourcing them. This framework helped companies decide where to invest their resources (i.e., in their high market share, high growth businesses) and which businesses to divest (i.e., low market share, low growth businesses. (There will usually be only a small number of approaches that will not only be technically and administratively possible, but also satisfactory to the full range of organizational stakeholders.) The fallacy of the production orientation was also referred to as marketing myopia in an article of the same name by Levitt.[35]. [26], By the 1960s, the capstone business policy course at the Harvard Business School included the concept of matching the distinctive competence of a company (its internal strengths and weaknesses) with its environment (external opportunities and threats) in the context of its objectives. If you're interested in expanding your business abroad this book is really good, as well as, with helping develop new strategies and analyzing businesses. This marketing concept, in the decades since its introduction, has been reformulated and repackaged under names including market orientation, customer orientation, customer intimacy, customer focus, customer-driven and market focus. He mentioned four concepts of corporate strategy each of which suggest a certain type of portfolio and a certain role for the corporate office; the latter three can be used together:[38], Building on Porter's ideas, Michael Goold, Andrew Campbell and Marcus Alexander developed the concept of "parenting advantage" to be applied at the corporate level, as a parallel to the concept of "competitive advantage" applied at the business level. Author Phillip Evans said in 2014 that "Henderson's central idea was what you might call the Napoleonic idea of concentrating mass against weakness, of overwhelming the enemy. Strategic management involves the related concepts of strategic planning and strategic thinking. He also wrote: "The two basic types of competitive advantage [differentiation and lower cost] combined with the scope of activities for which a firm seeks to achieve them lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation and focus. In 2017, he received the Career Achievement Award for Distinguished Educator from the Academy of Management. If successful a firm can create a bandwagon effect in which the momentum builds and its product becomes a de facto standard. The concept of the corporation as a portfolio of business units, with each plotted graphically based on its market share (a measure of its competitive position relative to its peers) and industry growth rate (a measure of industry attractiveness), was summarized in the growth–share matrix developed by the Boston Consulting Group around 1970. IBM said that it is needed in all aspects of leadership, including strategic thinking and planning. Ships from and sold by All American Textbooks. He continued that a valid theory of the business has four specifications: 1) assumptions about the environment, mission, and core competencies must fit reality; 2) the assumptions in all three areas have to fit one another; 3) the theory of the business must be known and understood throughout the organization; and 4) the theory of the business has to be tested constantly. Slywotzky, A., Morrison, D., Moser, T., Mundt, K., and Quella, J. Christensen, Clayton "The Innovator's Dilemma," Harvard Business School Press, Boston, 1997. Henry Ford famously said of the Model T car: "Any customer can have a car painted any color that he wants, so long as it is black. The six schools are entrepreneurial, visionary, cognitive, learning/adaptive/emergent, negotiation, corporate culture and business environment. They spent most of their days visiting employees, customers, and suppliers. In Search of Excellence: Lessons From America's Best-Run Companies, A Simple Approach to Strategic Management A_Simple_Approach_to_Strategic_Management A Simple Approach to Strategic Management, "Competition and Business Strategy in Historical Perspective", Henry Mintzberg-The Fall and Rise of Strategic Planning-Harvard Business Review-January 1994, Leadership in Administration: A Sociological Interpretation, The Economist-Strategic Planning-March 2009, Theodore Levitt-Marketing Myopia-HBR-1960, BCG Perspectives-The Experience Curve Reviewed-Parts 1-5-1974, Corporate Strategy: The Quest for Parenting Advantage, Harvard Business Review-Michael Porter-From Competitive Advantage to Corporate Strategy-May 1987, Michael Porter-What is Strategy?-Harvard Business Review-November 1996, "Clearing a Path Through the Forest: A Meta-Review of Interorganizational Relationships", "Using Equity Participation to Support Exchange: Evidence from the Biotechnology Industry", "Do formal contracts and relational governance function as substitutes or complements? [37], Michael Porter also addressed the issue of the appropriate level of diversification. Reviewed in the United States on April 20, 2017. [74] He illustrated how social and technical phenomena had shorter lifespans with each generation, and he questioned society's ability to cope with the resulting turmoil and accompanying anxiety. These reflect an increased focus on cost, competition and customers. The corporation shifts resources among the units and monitors the performance of each business unit and its leaders. Such an organization is an organic entity capable of learning (he called it a "learning organization") and capable of creating its own processes, goals, and persona.[132]. Further, the experience curve provided a basis for the retail sale of business ideas, helping drive the management consulting He described leaders as visionaries who inspire, while managers care about process. Dr. Hitt received his Ph.D. from the University of Colorado. These forces affect the organization's ability to raise its prices as well as the costs of inputs (such as raw materials) for its processes. How can the firm grow, through both its base business and new business? Adaptive strategy: In this model, the organization's goals and activities are primarily concerned with adaptation to the environment, analogous to a biological organism. If you created a product that worked well and was durable, it was assumed you would have no difficulty profiting. "The Strategy of the Dolphin" was developed to give guidance as to when to use aggressive strategies and when to use passive strategies. [68], In 1990, Peter Senge, who had collaborated with Arie de Geus at Dutch Shell, popularized de Geus' notion of the "learning organization".

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