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Strategic Operations Management

Erika S. Nicolas, MBA, REB
Strategic Management –Defined

Art & science of formulating,

implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve its
objectives

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In essence, the strategic plan is a
company’s game plan

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 3 Stages of the Strategic
Management Process

• Strategy formulation
• Strategy implementation
• Strategy evaluation

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 Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

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Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action

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Key Terms in Strategic Management
• Competitive advantage
• Strategists
• Vision and mission statements
• External opportunities and threats
• Internal strengths and weaknesses
• Long-term objectives
• Strategies
• Annual objectives
• Policies

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Strategic Management is gaining and
maintaining Competitive Advantage

Anything that a firm does especially

well compared to rival firms

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You cannot be everything to
everyone. If you decide to go
north, you cannot go south at the
same time.”

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Strategists

Gather Information

Analyze Information

Organize Information

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Vision and Mission
Statements

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External Opportunities and Threats

Analysis of Trends
– Economic
– Social
– Cultural
– Demographic/Environmental
– Political, Legal, Governmental
– Technological
– Competitors

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External Opportunities and Threats

Basic Tenet of Strategic Management

Take advantage of
External Opportunities

Strategy Formulation

Avoid/minimize impact of
External Threats

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Internal Strengths and Weaknesses

Controllable activities performed

especially well or poorly

Determined relative to
competitors

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Internal Strengths and Weaknesses

• Typically located in functional areas of the firm

– Management
– Marketing
– Finance/Accounting
– Production/Operations
– Research & Development
– Management Information Systems

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Internal Strengths and Weaknesses

Assessing the Internal Environment

Financial Ratios

Performance Measures
Internal Factors
Industry Averages

Survey Data

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 Long Term Objective

Specific results that an organization

seeks to achieve in pursuing its basic
mission

Long-term means more than one year

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Long-Term Objectives

• Essential for ensuring the firm’s success

– Provide direction
– Aid in evaluation
– Create synergy
– Reveal priorities
– Focus coordination
– Provide basis for planning, organizing,
motivating, and controlling

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Means by which long-term objectives
are achieved

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Strategies
• Examples
– Geographic expansion
– Diversification
– Acquisition
– Product development
– Market penetration
– Retrenchment
– Divestiture
– Liquidation
– Joint venture

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Annual Objectives

Short-term milestones that firms must

achieve to reach long-term objectives

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Policies

Means by which annual objectives will

be achieved

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Strategic Management Model

Strategic Management Process

–Dynamic & continuous
–More formal in larger
organizations

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Communication
is the key to
successful
strategic
management.

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Benefits of Strategic Management

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 Benefits of Strategic Management

• Nonfinancial Benefits
– Enhanced awareness of threats
– Improved understanding of competitors’
strategies
– Increased employee productivity
– Reduced resistance to change
– Clearer understanding of performance-reward
relationship
– Enhanced problem-prevention capabilities
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 Why Some Firms Do No Strategic
Planning

• Lack of knowledge of strategic planning

• Poor reward structures
• Fire fighting
• Waste of time
• Too expensive
• Laziness
• Content with success

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 Why Some Firms Do No Strategic
Planning (continued)
• Fear of failure
• Overconfidence
• Prior bad experience
• Self-interest
• Fear of the unknown
• Honest difference of opinion
• Suspicion

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QUESTIONS?
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1. Why firms don’t like strategic
planning? (choose and explain briefly)
2. What is strategic management?
3. Give one benefit and explain briefly.
4. What is the basic principle of strategic
management?
5. What is the key to successful Strategic
Management and why?

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