Strategic management and strategic management process.

Strategic management – a process of formulating and implementing strategies within an organization that determine the long-run performance of a corporation. It’s a process of identifying the organization’s mission, vision and objectives, developing and implementing policies and plans which are designed to achieve these objectives. Strategic management process begins when the executives evaluate their current position with respect to mission, goals, and strategies. Then, they scan the organization’s internal and external environments and identify strategic factors that might require change, they make SWOT analysis. Then the 3-rd stage is strategy formulation that include assessing the external environment and internal problems and integrating results into goals and strategy. The final stage in the strategic management process is implementation of the new strategy.

SWOT analysis Assessment of internal and external factors.

• Organizational strengths, weaknesses, opportunities, and threats

– Reports

– Budgets

– Financial ratios

– Employee Surveys

• External information about opportunities and threats

– Customers

– Government reports

– Professional journals

– Bankers

– Consultants

– Association meetings

Internal factors

External factors

37. Porter’s competitive strategies.

Porter suggests that a company can adopt one of three strategies after analyzing the forces.

38. Decision making, programmed vs. nonprogrammed decisions with examples.

Decision making is the process of identifying problems and opportunities and then resolving them.

Programmed Decisions – situations that occur often to enable rules. Examples: For example, in an emergency, most people automatically decide to call 9-1-1. Deciding to reorder office supplies.

Nonprogrammed – situations that are unique or poorly defined and unstructured. Examples:

An individual may make an unprogrammed decision when she visits a new restaurant, is unfamiliar with the menu and the menu is in a language she does not understand. In the business world, the makers of the earliest personal computers had to make unprogrammed decisions regarding the type of marketing to use to attract customers who possibly had never used a computer in the past. Fast-food companies also had to make an unprogrammed decision regarding consumer concerns about high fat contents and lack of healthy menu options.

39. Decision making steps

Decision making is the process of identifying problems and opportunities and then resolving them

1. Recognition of Decision Requirement – identify problem or opportunity

When a problem or opportunity is presented, decisions must be made

Problem – occurs when organizational accomplishment is less than established goals

Opportunity – when managers see potential accomplishment that exceeds specified current goals

2. Diagnosis and Analysis – analyze underlying causal factors. Managers must understand the situation— diagnosis Managers ask a series of questions:

1. What is the state of disequilibrium affecting us?

2. When did it occur?

3. Where did it occur?

4. How did it occur?

5. To whom did it occur?

6. What is the urgency of the problem?

7. What is the interconnectedness of events?

8. What result came from which activity?

3. Develop Alternatives – define feasible alternatives

· Generate possible alternative solutions

· For programmed decisions, feasible alternatives are easy to identify

· Nonprogrammed decisions, however require developing new courses of action

4. Selection of Desired Alternative – alternative with most desirable outcome

· Managers will choose the most promising of several alternative courses of action

· The selection should fit the goals and objectives

· The manager tries to select the choice with the least amount of risk and uncertainty

5. Implementation of Chosen Alternative – use of management persuasive abilities to execute

· Use managerial, administrative and persuasive abilities to ensure that the alternative is carried out

· Success depends on the managers ability to translate alternative into action

· Implementation requires communication, motivation, and leadership

6. Evaluation and Feedback – gather information about effectiveness

· How well was the alternative implemented?

· Was the alternative successful?

· Feedback is a continuous process

· Large problems may involve several alternatives in sequence

40. Personal decision styles. Level 2

Personal decision framework- How individuals personally proceed through the decision making process

Directive style – people who prefer simple, clear-cut solutions to problems

Analytic style – managers prefer complex solutions based on a lot of data

Conceptual style – managers like a broad amount of information

Behavioral style – managers with a deep concern for others

41. Types of participation groups.

There are 3 types of participation groups: interactive groups, nominal groups, and Delphi groups.

1. Interactive group – technique in which group members are brought together face-to-face and have a specific agenda and decision goals. A group leader states the problem and asks each member to express his opinion. Discussion is unorganized. Alternatives are generated and evaluated. Eventually, participants will vote and choose the best alternative.

2. nominal group – technique that was developed to ensure that every group participant has equal input in the decision-making process. Nominal group technique is used because some participants in interactive groups may talk more and dominate. This group technique includes:

· Each participants write down his ideas on a piece of paper, which represent suggestions for a suggestions for a solution of the particular problem;

· Each member writes his ideas on the board, no discussion occurs until every person’s ideas are written down;

· After all ideas have been presented, an open discussion starts with evaluation of ideas;

· After the discussion a secret ballot is taken in which each group member votes preferred solutions; the adopted decision is the one that receives the most votes.

3. Delphi group technique that involves the circulation of the questionnaires on the selected problem among participants. Unlike interactive and nominal groups, Delphi participants do not meet face-to-face - in fact, they never see one another. The process of sending out questionnaires continues until a consensus is reached.

Advantages	Disadvantages
1. Broader problem definition and analysis	1. Time-consuming, waste of resources if used for programmed decisions
2. More alternatives can be evaluated	2. Compromise solutions may satisfy no one
3. Discussion reduces uncertainty about alternatives	3. Groupthink reduces opinion diversity
^4- Participants of the decision ­making process tend to facilitate implementation	4. No clear focus for decision responsibility

42. Departmentalization and types of departmentalization. Level 3

Departmentalization basis for grouping positions into departments

Choices regarding chain of command

Five traditional approaches:

· Functional

· Divisional

· Matrix

Innovative approaches:

· Teams

· Virtual Networks

1.Functional - rouping into departments based on skills, expertise, work activities and resource use

• Departmentalized by organizational resources

– Accounting

– Human resources

– Engineering

– Manufacturing

2.Divisional - Departments are grouped based on outputs

– Product structure, program structure, self-contained unit structure

• Many large corporations have multiple divisions for different business lines

• Organizations may assign division responsibility by geographic region or customer group

3. Matrix departmentalization Combines aspects of both functional and divisional structures simultaneously

• Improves coordination and information sharing

• A key challenge is the dual lines of authority

– Employees report to two supervisors

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