Contemporary Management

IT Sligo
Seán Conlan

L8 Strategic Management
Learning Outcomes:

• Ability to define and describe what is Strategic Management

• Knowledge of the 8 step Strategic Management Process with particular emphasis
on the ability to use a SWOT analysis
• Describe 3 types of organisational strategies (Growth, Stability & Retrenchment
and be able to compare and contrast their applications
• Describe the Boston Consulting Group Matrix for corporate product portfolio
analysis; ability to classify products to the areas in the matrix

Strategic Management
Strategic Management(Medium to long term)

Set of managerial decisions & actions that determines the long term
performance of an organisation

Involves all of the functions of management

Examples of organisations with good strategic management? Others?

Apple,Google,Ryanair.Bank, bad.

Important
Underpins all decisions by managers
Companies with formal strategic management systems have higher
financial returns than those without
Relevant to all types of organisations; to respond to all environments
The Eight Step Strategic Management Process

Summary
1 - Identify Current Mission, Objectives and Strategy
2, 3, 4, 5 SWOT Analysis
6 Formulate Strategies
7 Implement Strategies
8 Review Strategies
 Contemporary Management
IT Sligo
Seán Conlan
1 Current Mission Objectives & Strategies
Mission - What is our reason for being in business?
Identify scope of producers /services
See Components of a Mission Statement
Goals are foundation of planning; knowing current strategies & goals
provides basis for review of possible change

2 Analyse the (External) Environment

External environment defines management’s options
Examples - Competition, legislation; refer also to previous notes
Managers need good grasp of emerging trends and likely impacts

3 Identify Opportunities & Threats

Opportunities: positive trends to be exploited
Threats: negative trends

4 Analyse the Organisation's resources & capabilities

Look inside
Competencies, skills, human resources
Innovation Capabilities
Financial Capabilities
Customer loyalty/satisfaction
If unique -' core competencies': major value creating skills - competitive
weapons

5 Identify Strengths & Weaknesses

Strengths - Activities the organisation does exceptionally well
Weaknesses - Activities not done well or resources not possessed
Review culture - organisation's personality - (strong/weak/risk averse etc) -
refer to previous notes
Does organisation possess a 'Strategically focused culture'?
In light of SWOT, re-evaluate current mission & goals; does mission require
changing; are changes needed in the overall sense of direction?

6 Formulating Strategies
 Contemporary Management
IT Sligo
Seán Conlan
Follow the decision making process(Lesson 6?)
Needed for Corporate, Business and Functional levels
Need to develop and assess strategic alternatives and then select options
Strategies selected need to support/complement each other& capitalise on
strengths/environmental opportunities
Best - Seek Advantage over rivals

7 Implementing strategies
Need optimum Strategy - Structure relationship
Strategy- Competency relationship; right people, right teams
Effective Leadership
Motivated people

8 Evaluating Results(Reflection)
How effective
Make adjustments
Control step (will do it in more depth later)
Types of Organisational Strategies

Corporate Level

Business Level

Functional Level
Corporate Grand Strategies

1 Growth
Increase/grow level of operations (sales, employees, market share...)
Direct Expansion (also called Concentration): growth through its own
operations (sales/production capacity/workforce)
Vertical Integration: control inputs (Backward Integration) i.e. become own
supplier or control outputs (Forward Integration) or both
Horizontal Integration (combine with others in same industry i.e.
competitors)
Diversification: Related - grow by merging or acquiring in different but
related industries; Unrelated - different and unrelated industry

2 Stability
 Contemporary Management
IT Sligo
Seán Conlan
Absence of significant change
Examples: Same clients, same products/services, maintain market share,
sustaining the return on investment
When: Performance satisfactory and environment stable - no reason to
change
Very rare in organizations except very small - and then linked to personal
goals

3 Retrenchment (dig in)

Address organisational weaknesses causing performance decline
Stabilise operations revitalise organisational resources and capabilities
Corporate Portfolio Analysis

Manage/analyse a number of businesses (portfolio)

Simple way to judge allocation of resources

2x2 Matrix can be used - First type Boston Consulting Group (BCG)
See document: methods_bcgmatrix.html

Milk Cash Cows, limit investment in them

Use cash from cows to invest in stars and question marks with best
potential

Key decisions are around the question marks - closely analyse, & either
turn into stars or sell off

Dogs - sell off or liquidate