Core Concepts of Strategic Management and Control
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Strategic Planning Fundamentals
A clear vision is characterized by:
- A) Being coherent.
- B) Being shared with all staff.
The vision has two components:
- Purpose: Directed inwards to discover the organization's identity and current state.
- Mission: With a more external orientation, defining the company's form and future actions.
The Purpose represents the values and beliefs that contribute to permanent organizational setup and shape the character of the company.
The Mission provides general descriptions of the products the company wants to manufacture and market, and the needs it seeks to address, through the deployment of the resources it possesses or can acquire.
A Goal is an objective quantitative measure, expressed in absolute terms, guiding action. Goals should be easily measurable, objective, and clear.
Elements of Strategy Creation
In the process of creating the strategy, the following elements should be taken into account:
- Scope
- Deployment of Resources
- Competitive Advantage
- Synergy
Organizational Resources
Tangible resources: Include assets and fixed assets.
Intangible resources: Include patents, trade secrets, brand, and reputation.
Resources possess competitive advantage potential if they exhibit four attributes:
- Valuable
- Rare
- Inimitable
- Irreplaceable
External Factors Influencing Strategy
Factors affecting the development of a strategy include:
- Opportunities and threats in the environment.
- The strengths and weaknesses of the company.
- Company history.
- The personality, values, and ambitions of managers.
- Interest groups (stakeholders).
- The culture of the company.
Value Chain Activities
Primary Activities:
- Inbound logistics
- Production (Operations)
- Marketing and sales
- Product service
Support Activities:
- Procurement
- Technology development
- Human resource management
- Infrastructure management
Operational Plans
Operational plans are categorized as: recurring and nonrecurring.
SWOT Analysis and Environmental Assessment
The external environment is analyzed at two levels: the general environment and the specific or competitive environment.
General Environment Layers
The general environment consists of six layers:
- Demographic (Population)
- Sociocultural
- Political-legal
- Technological
- Economic
- Global
Porter's Five Forces of Competition
The five forces defining the competitive environment are:
- Potential competitors (Threat of New Entrants)
- Rivals (Intensity of Rivalry)
- Substitute products (Threat of Substitutes)
- Suppliers (Bargaining Power of Suppliers)
- Buyers (Bargaining Power of Buyers)
Levels of Organizational Strategy
Strategy is typically structured in a three-level hierarchy:
- Corporate level
- Business level
- Functional level
Strategic Control Mechanisms
Control is defined as a process that directs the actions of individuals towards achieving the objectives of the organization. It allows managers to ensure compliance with the strategies and plans they design.
Concurrent Control
Concurrent control monitors ongoing staff activities to ensure performance standards are met. This involves assessing current activities and utilizing performance standards, rules, and guidelines to direct employee work and conduct.
Feedback Control
Feedback control (also known as output control or post-action control) focuses on results, particularly the quality of a final product or service.