Chapter 1 Strategic Management

  • Strategy: the formulation of organizational missions, goals, objectives, and action plans for achievement that explicitly recognize the competition and the impact of outside environmental forces
  • Strategic Planning: the systemic determination of goals and the plans to achieve them
  • Strategic Intent: a tangible corporate goal; a point of view about the competitive positions a company hopes to build over a decade
  • Strategy Formulation: the entire process of conceptualizating the mission of an organization, identifying the strategy, and developing long-range performance goals (Belcourt & McBey)

Henry Mintzeberg's 5 P's of Strategy:
  1. Plan: An intended course of action a firm has selected to deal with a situation.
  2. Purpose (also sometimes refered to as 'Pattern'): A consistent stream of actions that sometimes are the result of a deliberate plan and sometimes the result of emergent actions based on reactions to environmental changes or shifting of assumptions.
  3. Ploy: A specific manoeuvre at the tactical level with a short time horizon.
  4. Position: The location of an organization relative to its competitors and other environmental factors.
  5. Perspective: The gestalt or personality of the organization.
(Belcourt and McBey).

Click here for more on Mintzerbeg's 5 P's of strategy

Wikipedia entry on Henry Mintzberg

Emergent Strategy: the plan that changes incrementally due to environmental changes (Belcourt and McBey). More information on emergent strategy.
Harvard Business Review Paper on Mastering Emergent Strategies.

Strategic Types:

Corporate Strategies: organizational-level decisions that focus on long-term survival (Belcourt and McBey).

Grouped within Corporate Strategies are:

  • Restructuring Strategies- options include:
    • Turnaround strategy: an attempt to increase the viability of an organization.
    • Divestiture: the sale of a division or part of an organization.
    • Liquidation: the termination of a business and the sale of its assets.
    • Bankruptcy: a formal procedure in which an appointed trustee in bankruptcy takes possession of a business's assets and disposes of them in an orderly fashion.
    • In the book page 9 it states that liquidation is the least attractive alternative, I am not sure I agree with this. In a liquidation yes the plant closes however there is still a chance that the employees may receive their pay up to and including the closure of the plant. In a bankruptcy the chance of this is much lower. If they can't pay their creditors then chances are they cannot pay their staff.

Example: RIM's Q2 Performance Poor, Plans Layoff Sept 16 2011, As per the report, the company is planning a(nother) layoff to streamline operations across the organization. BusinessInsider reporter Dan Frommer wrote that “RIM's turnaround is going slower than expected, and product delays are leading to low device shipments and revenue.” Financial reports indicate that last quarter RIM shipped 13.2 million BlackBerries, below expectations.

  • Growth Strategies- growth can be achieved in several ways:
    • Incremental: obtained by expanding the client base, increasing products/services, changing distribution networks, using technology.
    • International: seeking new customers or markets internationally. (Example: RIM finds fertile ground in Asia, Wall Street Journal, September 11, 2011).
    • Mergers and Acquistions: Merger - two organizations combine resources and become one. Acquisition - is the purchase of one company by another.
  • Stability Strategies:These are maintenance strategies where companies do not wish to see their companies grow and so their strategic HRM practices remain constant. These can be called status quo, neutral, or do-nothing strategies.

Business strategy: Plans to build a competitive focus in one line of business.

The Strategic Planning Process Steps:
  1. Establish the mission, vision, and values:
    • Vision statement: a clear and compelling goal that serves to unite an organization's efforts
    • Mission statement: an articulation of a view of realistic, credible, and attractive future for the organization. (Examples of Mission Statementsfrom Forune 500 Companies).
    • Values: the basic beliefs that govern individual and group behaviour in an organization.
    • The book discusses the formulation of missions, goals and objectives. We are going through this process within my own workplace. In trying to write the Corporate Strategy we quickly realized we first had to see what our mission and goals were and what objectives needed to be accomplished before we could get to the next step. We needed to understand where the business was going or where we wanted it to go. By doing this we could then work on the different strategies to get there.
      • The articulation of values serves these important purposes:
        • Conveys a sense of identity for employees
        • Generates employee committment to something greater than themselves
        • Adds to the stability of the organization as a social system
        • Serves as a frame of reference for employees to use to make sense of organizational activities and to use as a guide for appropriate behaviour
  2. Develop objectives:
    • Objectives are an expression, in measurable terms of what an organization intends to achieve
    • Goals can be hard or soft
      • Hard goals always include numbers, usually relative to performance last year or to competition. They are action oriented and specific such as: to decrease expenses in 2012 by 5%.
      • Soft goals usually define the targets for the social conduct of the business, and may not always be quantifiable. They may include ethical and environmental responsibility, providing a working environment free of discrimination, or opportunities for professional development.
  3. Analyze the external environment: Organizations must be aware of changes in the external market. Changes can include socio-cultural factors, laws and regulations, technological advances and demographics. The external scan can assist with making reactive or proactive changes. An effective tool to monitor capabilities and deficiencies is a SWOT analysis, which measures the Strengths, Weaknesses, Opportunities and Threats.
  4. Determine the competitive position:
    • Organizations must create a value proposition: a statement of fundamental benefits of the products or services being offered in the marketplace.
  5. Identify the competitive advantage
  • Competitive advantage can be defined as the charateristics of a firm that enable it to earn higher rates of profits than its competitors.
- a competitive advantage can be achieved by utilizing the company's resources which are:
  • Tangible Assets - the organization assets that have substance and can be consumed.
  • Intangible Assets - the organizational assets that are not concrete, such as reputation, and goodwill.
  • Capabilities - the collective skills, abilities and expertise of an organization.
  1. Implement the strategy
  2. Evaluate the performance
The text notes Michael Porter for "making a major contribution to the field of strategic management by grouping the ways organizations can compete into five generic competitive strategies:
1. Low-cost provider strategy
2. Broad differentiation strategy
3. Best-cost provider strategy
4. Focused or market niche strategy based on lower cost
5. Focused or market niche strategy based on differentiation

Errors in Strategic Planning
  • Relegating the process to official planners and not involving executives and managers.
  • Failing to use the plan as the guide in making decisions and evaluating performance.
  • Failing to align incentives and other HR policies to the achievement of strategy.DOD's Failure Due to Poor Planning
Belcourt and McBey).
Belcourt and McBey).