The Concept of Strategy and Strategic Management

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THE CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT
G. Tyge Payne, PhD

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Strategic Management
Strategy: The unifying theme that gives coherence and direction to the decisions of an organization Strategic Management: Consisting of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. Or, the Strategic Management Process is: The full set of commitments, decisions, and actions required for a firm to create value and earn aboveaverage returns. (Hitt, Hoskinson, & Ireland, 2004, p. 4)
Strategic Management basically seeks to answer the question:

How and why do some firms outperform others?
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Other Definitions of Strategy
Oxford Dictionary: The art of war, especially
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– BCG developed the “experience curve” and portfolio analysis concepts. – McKinsey & Company’s development of SBUs and the nine-block matrix. – Mintzberg’s “Deliberate, Emergent & Realized Strategies” – Porter’s Generic Strategies 6

The Evolution of Strategic Management
1950s
DOMINANT THEME

1960s-early 70s Corporate planning

Mid-70s-mid-80s Positioning

Late 80s –1990s Competitive advantage

2000s Strategic innovation

Budgetary planning & control Financial control

MAIN ISSUES

Planning growth &diversification

Selecting sectors/markets. Positioning for leadership Industry analysis Segmentation Experience curve Portfolio analysis

Focusing on sources of competitive advantage

Reconciling size with flexibility & agility

KEY CONCEPTS & TOOLS

Capital budgeting. Financial planning

Forecasting. Corporate planning. Synergy

Resources & Cooperative capabilities. strategy. Shareholder Complexity. value. Owning E-commerce. standards. — Knowledge Management— Alliances & networks Self -organiz ation & virtual organization 7

MANAGEMENT IMPLICATIONS

Coordination & control by Budgeting systems

Corporate planning depts. created. Rise of corporate planning

Diversification. Restructuring. Global strategies. Reengineering. Matrix structures Refocusing. Outsourcing.

Ansoff’s Product / Mission Matrix*
Present Product Present Mission Market Penetration New Product Product
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