Strategic Management Theory & Cases: An Integrated Approach 13th Edition by Charles test bank
79. List the steps involved in the formal strategic planning process.
ANSWER:
The formal strategic planning process has five main steps:
1. Select the corporate mission and major corporate goals.
2. Analyze the organization’s external competitive environment to identify opportunities and threats.
3. Analyze the organization’s internal operating environment to identify the organization’s strengths and weaknesses.
4. Select strategies that build on the organization’s strengths and correct its weaknesses in order to take advantage of external opportunities and counter external threats. These strategies should be consistent with the mission and major goals of the organization. They should be congruent and constitute a viable business model.
5. Implement the strategies.
80. Explain the formal strategic planning process. Name each step in the process and describe the specific activities included in each step and the relationship between the steps.
ANSWER:
The first component of the strategic management process is crafting the organization's mission statement, which provides the framework—or context—within which strategies are formulated. A mission statement has four main components: a statement of the organization's reason for existence—normally referred to as the mission; a statement of some desired future state, usually referred to as the vision; a statement of the key values to which the organization is committed; and a statement of major goals.
The second component of the strategic management process is an analysis of the organization's external operating environment. The essential purpose of the external analysis is to identify strategic opportunities and threats within the organization's operating environment that will affect how it pursues its mission. Three interrelated environments should be examined when undertaking an external analysis: the industry environment in which the company operates, the country or national environment, and the wider socioeconomic or macroenvironment.
Internal analysis, the third component of the strategic planning process, focuses on reviewing the capabilities and competencies of a company to identify its strengths and weaknesses.
The next component of strategic thinking requires the generation of a series of strategic alternatives, or choices of future strategies to pursue, given the company's internal strengths and weaknesses and its external opportunities and threats. The comparison of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. The central purpose is to identify the strategies to exploit external opportunities, counter threats, build on and protect company strengths, and eradicate weaknesses. The strategies identified through a SWOT analysis should be congruent with each other. Thus, functional-level strategies should be consistent with, or support, the company's business-level and global strategies. Moreover, corporate-level strategies should support business-level strategies.
Once managers have chosen a set of congruent strategies to achieve a competitive advantage and increase performance, those strategies must be implemented. Strategy implementation involves taking actions at the functional, business, and corporate levels to execute a strategic plan.
81. Identify and discuss the criticisms of the traditional strategic planning process and why it is useful to view strategy as an emergent process.
ANSWER:
The traditional planning process is viewed as a rational, highly structured process that is orchestrated by top management. This view of the strategy process has been criticized for a number of reasons.
First, the world is uncertain, complex, and full of ambiguity, and it is an environment in which small chance events can have a large and unpredictable impact on outcomes; thus, plans can become obsolete in a short amount of time. In such circumstances, even the most carefully thought-out strategic plans are prone to being rendered useless by rapid and unforeseen change. In an unpredictable world, being able to respond quickly to changing circumstances, and to alter the strategies of the organization, accordingly, is paramount.
A second criticism of the traditional approach is that too much importance is attached to the role of top management. An alternative view is that managers deep within an organization can—and often do—exert a profound influence over the strategic direction of the firm. The traditional model does not allow for the important strategic role that lower-level managers can play.
The third criticism of the traditional model is that it does not address serendipity—the stumbling across good outcomes unexpectedly. Because serendipitous discoveries or events can yield profitable opportunities, companies must be able to pursue them, even if they are inconsistent with the current strategic plan.