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Strategic management: The set of decisions and actions that result in formulation and implementation of plans designed to achieve a companys objectives
Nine Critical Tasks of Strategic Management -- Tasks 1-5: Formulate the companys mission Conduct an internal analysis Assess the external environment competitive and general contexts Analyze the companys options by matching its resources with the external env Identify the most desirable options in light of the mission
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Select a set of long-term objectives and grand strategies that will achieve the most desirable options Develop annual objectives and short-term strategies that are compatible with long-term objectives and grand strategies Implement the strategic choices Evaluate the success of the strategic process for future decision making
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What is Strategy?
Large-scale, future-oriented plan Used to interact within competitive environment to achieve company goals Provides a framework for managerial decisions Reflects a companys awareness of the main elements of competition
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Corporate level: board of directors, CEO & administration [Highest] Business level: business and corporate managers [Middle] Functional level: Product, geographic, and functional area managers [Lowest]
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Characteristics of Strategic Management Decisions: Corporate Often carry greater risk, cost, and profit potential Greater need for flexibility Longer time horizons Choice of businesses, dividend policies, sources of long-term financing, and priorities for growth
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Implement the overall strategy formulated at the corporate and business levels Involve action-oriented and operational issues Relatively short range and low risk Modest costs: depend upon available resources Relatively concrete and quantifiable
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Help bridge decisions at the corporate and functional levels Less costly, risky, and potentially profitable than corporate-level decisions More costly, risky, and potentially profitable than functional-level decisions Include decisions on plant location, marketing segmentation, and distribution
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Formality is the degree to which participation, responsibility, authority, and discretion in decisionmaking are specified in strategic management
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Entrepreneurial Mode most small firms Planning Mode most large firms Adaptive Mode most medium size firms
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Strategy Makers
Ideal strategic team includes decision makers from all three levels Top managers must give final approval Strategic decisions coincide with managers responsibilities
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Managers time away from other responsibilities Unrealistic expectations promised by strategy formulators Possible disappointment of participating subordinates if goal is not reached
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