Strategic Management & Strategic Planning
Instead of behaving like large unwieldy bureaucracies, they have been nimbly leap-frogging smaller competitors with technical or market innovations, in true entrepreneurial style. They have been executing what appear to be well thought-out business strategies coherently, consistently, and often with surprising speed. Repeatedly, they have been winning market shares away from more traditionally managed competitors.
Is it the result of their substantial investments in strategic planning, which appear to have produced something like a quantum jump in the sophistication of their strategic planning processes?
What is strategy? And why do we care about it?
If so, what lessons can be drawn from the steps they have taken and the experience they have gained? To explore these questions, we embarked on a systematic examination of the relation between formal planning and strategic performance across a broad spectrum of companies see the sidebar. We looked for common patterns in the development of planning systems over time. In particular, we examined their evolution in those giant companies where formal planning and strategic decision making appeared to be most closely and effectively interwoven.
For two years, we and our colleagues studied the development of formal planning systems in companies, mainly industrial goods manufacturers client and nonclient in seven countries. The concept of strategic management described in this article differs somewhat from that of H. Igor Ansoff, who invented and popularized the term. Igor Ansoff, Roger P. Declerch, and Robert L. Our findings indicate that formal strategic planning does indeed evolve along similar lines in different companies, albeit at varying rates of progress.
Strategic Management - Meaning and Important Concepts
This progression can be segmented into four sequential phases, each marked by clear advances over its predecessor in terms of explicit formulation of issues and alternatives, quality of preparatory staff work, readiness of top management to participate in and guide the strategic decision process, and effectiveness of implementation see the Exhibit. The four-phase model evolution we shall be describing has already proved useful in evaluating corporate planning systems and processes and for indicating ways of improving their effectiveness.
In this article, we describe each of the four phases, with special emphasis on Phase IV, the stage we have chosen to call strategic management. In order to highlight the differences between the four stages, each will be sketched in somewhat bold strokes. Obviously, not all the companies in our sample fit the pattern precisely, but the generalizations are broadly applicable to all.
Most companies trace the origins of a formal planning system to the annual budgeting process where everything is reduced to a financial problem. Procedures develop to forecast revenue, costs, and capital needs and to identify limits for expense budgets on an annual basis. Information systems report on functional performance as compared with budgetary targets. Companies in Phase I often display powerful business strategies, but they are rarely formalized.
Instead, they exist.
Based on their knowledge of their own cost structure, can they estimate what the impact of a product or marketing change will be on their plants, their distribution system, or their sales force? If so, and if they do not plan for the business to grow beyond traditional limits, they may not need to set up an expensive planning apparatus.
The complexities of most large enterprises, however, demand more explicit documentation of the implicitly understood strategies of Phase I. The number of products and markets served, the degree of technological sophistication required, and the complex economic systems involved far exceed the intellectual grasp of any one manager. The shoe usually pinches first in financial planning. As treasurers struggle to estimate capital needs and trade off alternative financing plans, they and their staffs extrapolate past trends and try to foresee the future impact of political, economic, and social forces.
Thus begins a second phase, forecast-based planning. Most long-range or strategic planning today is a Phase II system. At first, this planning differs from annual budgeting only in the length of its time frame. Very soon, however, the real world frustrates planners by perversely varying from their forecasts. In response, planners typically reach for more advanced forecasting tools, including trend analysis and regression models and, eventually, computer simulation models. They achieve some improvement, but not enough.
Sooner or later plans based on predictive models fail to signal major environmental shifts that not only appear obvious after the fact, but also have a great and usually negative impact on corporate fortunes. Nevertheless, Phase II improves the effectiveness of strategic decision making.
It forces management to confront the long-term implications of decisions and to give thought to the potential business impact of discernible current trends, well before the effects are visible in current income statements. The issues that forecast-based plans address—e. One of the most fruitful by-products of Phase II is effective resource allocation. Under the pressure of long-term resource constraints, planners learn how to set up a circulatory flow of capital and other resources among business units.
This course prepares you to think strategically in an age when companies like Apple, Google, and Microsoft have become more valuable in market cap terms than companies like Exxon. Today, business value and competitive advantage arise more often from consumer perceptions of what is "cool" than from physical assets or economies of scale. In this course -- the first of a three-course specialization tailored specifically for the age of creativity and innovation -- you will gear up for the challenges of strategy formulation and implementation in a 21st century business.
After taking the course, you'll be able to: - Explain why "doing" strategy is considered "the high point of managerial activity" Mintzberg ; - Recognize and avoid the old, tired ideas about strategy that are still out there, so you can adopt fresher, better ideas; - Point out how doing strategy has changed because of advancing technology and globalization; - Prepare for the Capstone Project for the Strategic Management and Innovation Specialization.
Strategic Management - Meaning and Important Concepts
What is strategy? And why do we care about it? In this module, you'll encounter examples of strategy in action that demonstrate what people mean when they talk about strategy. After completion of the module, you'll be able to: Describe examples of strategy in action; Recognize "strategic situations"; Explain the difference between strategy as "position" and strategy as "capability" and why that matters.
The Evolution of Strategy Past Progress, Past Mistakes -Historically, strategy consulting and strategic planning have been big business.
Companies have spent a lot over the years on sophisticated, high-brow "strategic" consulting. For a long time, consultants were the strategy "high-priests" of business. Until it all fell apart. Many past approaches have now fallen into disfavor, having risen spectacularly and failed even more spectacularly. Indeed, the history of business strategy making could be called a "March of Folly" historian Barbara Tuchman uses this expression to describe a tendency in human history to repeat the same mistakes, again and again. This module explores what the past can teach us, how we might avoid repeating past mistakes.
What Are the Steps in Strategic Planning & Management?
Changing World, Changing Strategies -In the past several decades, a lot has changed in the world. Many more people and nations China, India, Russia, etc have joined the global market economy. The number of Internet users has skyrocketed and continues dramatically upward. Shipping traffic between countries has multiplied and also continues to grow. All this world change has changed the strategy situation of most companies in a big way.
It means, for example, that companies in advanced economies have to compete against rivals that have structural cost advantages, because they operate in lower cost parts of the world. The set of journals have been ranked according to their SJR and divided into four equal groups, four quartiles. Q1 green comprises the quarter of the journals with the highest values, Q2 yellow the second highest values, Q3 orange the third highest values and Q4 red the lowest values. The SJR is a size-independent prestige indicator that ranks journals by their 'average prestige per article'. It is based on the idea that 'all citations are not created equal'.
SJR is a measure of scientific influence of journals that accounts for both the number of citations received by a journal and the importance or prestige of the journals where such citations come from It measures the scientific influence of the average article in a journal, it expresses how central to the global scientific discussion an average article of the journal is.
This indicator counts the number of citations received by documents from a journal and divides them by the total number of documents published in that journal. The chart shows the evolution of the average number of times documents published in a journal in the past two, three and four years have been cited in the current year. Evolution of the total number of citations and journal's self-citations received by a journal's published documents during the three previous years.
Journal Self-citation is defined as the number of citation from a journal citing article to articles published by the same journal.
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