Foundations of Strategic Management: Concepts and Approaches

COURSE : STRATEGY MANAGEMENT AND POLICY LECTURER : MALVIN PAGE SEMESTER/SESSION : 1 st SEMESTER, 2021/2022 SESSION PREPARED BY : LAVINIA CONNELLY STUDENT ID : 5009258132 LECTURE NOTES • BASIC CONCEPTS OF BUSINESS POLICY/ STRATEGY MANAGEMENT Strategic management is a series of managerial actions that determine the company's performance in the long term. Strategic management includes environmental monitoring, strategy formulation, (strategic planning or long- term planning), strategy implementation, and evaluation and control. environmental threats by looking at the strengths and weaknesses of the company. Originally called business policy, strategic management includes long-term planning and strategy. Business policy, on the other hand, is generally management oriented and tends to look inward and place greater emphasis on proper integration of the many functional activities within the firm. Business policy focuses more on the efficient use of company assets. Thus, business policy places more emphasis on formulating general directions that can be used to better achieve the company's mission and goals. Strategic management as a field of science combines business policy with environmental and strategic pressures. Therefore, the term strategic management usually replaces the term business policy as a field name. Understanding Strategy and Strategic Management Strategies are structured basically to form a 'response' to relevant external changes of an organization. Of course, these external changes will be answered by taking into account the internal capabilities of an organization. To what extent can an organization take advantage of opportunities and minimize threats from outside to obtain maximum benefits by utilizing the advantages the organization has at this time. The inability or indifference to see changes in the external environment will shock an organization, so that strategy is useful for maintaining, maintaining, improving the performance and competitive

advantage of an organization (Pearce and Robinson, 1996). Some research results reveal that organizations that have a clear/formal strategy outperform their performance compared to organizations without a clear/unformulated strategy. Thune and House (1970) studied the performance of 36 sample pharmaceutical companies in the USA, food companies, chemical, steel, oil and machine factories. By using 5 (five) performance measures namely 'sales, return on equity, return on capital, stock prices', and 'earnings per share' it is evident that the performance of companies that use well-formulated strategies in strategic planning is superior to companies without informal planning. Keniehl Ohmae (Wahyudi, 1996) compared three kinds of thinking processes, namely mechanical, intuitive and strategic thinking. From the three it can be concluded that thinking strategically will produce solutions that are more creative and different in form than just thinking mechanically and intuitively. The more creative you are in solving problems, the lower the error rate that may arise in the future and this will make a profit for the decision maker. Strategic thinking requires several stages, namely: a) Problem identification, At this early stage, it is expected to be able to identify problems by looking at the symptoms that exist. b) Grouping of problems, At this stage, we are expected to be able to group problems according to their nature so that they are easy to solve. c) Abstraction process, At this stage, we are expected to be able to analyze problems by looking for the factors that cause them. Therefore, then we are required to be more careful to be able to develop a solution method. d) Determination of methods/means of solving and At this stage, we are expected to be able to determine the most appropriate method for solving the problem. e) Planning for implementation. At this final stage, we are required to be able to apply the established method. There are many definitions of strategy, as stated by Steiner and Miner (1977) stating that 'strategy is the forging of company mission, setting objectives for the organization in light of external and internal forces, formulating specific policies and strategies to achieve objectives, and assuring their-'proper implementation so that the basic purposes and objectives of the organization will be achieved'. Pearce and Robinson (1994) define strategy as 'comprehensive, general plan of major actions through which a firm intends to achieve its long term objectives in a dynamic environment. 14 basic approaches (generic strategies) can be identified : concentration, market development, product development, innovation, horizontal integration, vertical integration,

joint venture, strategic alliances, consort/a, concentric diversification, conglomerate diversification, turnaround, divesture and liquidation. According to Stephanie K Marrus, as quoted by Sukristono (1995), strategy is defined as a process of determining the top leaders' plans that focus on the long-term goals of the organization, accompanied by the preparation of a method or effort on how to achieve these goals. In addition to the general definitions of strategy, there is also a more specific one, Hamei" and Prahalad (1995), which raises core competencies as important. They both define a strategy whose translation is as follows: "Strategy is an incremental action (always increase) and continuously, and is carried out based on the point of view of what customers expect in the future. Thus, strategy almost always starts from what can happen and not from what happened. the speed of new market innovations and changes in consumer patterns require core competencies. Companies need to look for core competencies in the business they do." Furthermore, the notion of strategic management according to Fred R. David is the art and science of formulating, implementing, and evaluating cross-functional decisions that enable organizations to achieve goals. Meanwhile, according to Michael A. Hitt & R. Duane Ireland & Robert E.Hoslisson (1997) is a process to assist organizations in identifying what they want to achieve, and how they should achieve valuable results.The magnitude of the role of strategic management is being recognized more and more today than ever before.In a global economy that allows the free movement of goods and services among various countries, companies are constantly challenged to be more competitive.Many of these companies that have increased the level of competition offer products to consumers with higher value, and this often results in profits above the average.Definition of strategic management according to Michael Polter is something that makes the company as a whole more than its parts, thus there is an element of synergy in it, and according to H. Igor Ansoff is a logical analysis of how companies can adapt to the environment in the form of threats and opportunities in various activities. . Another understanding of strategic management is a series of decisions and actions that result in the formulation (formulation) and implementation (implementation) of plans designed to achieve company goals. Strategic management is the art and science of formulating, implementing, and evaluating cross-functional decisions that can enable a company to achieve its goals. Strategic management is the process of setting organizational goals, developing policies and planning to achieve these goals, and allocating resources to implement policies and plan to achieve organizational goals. Strategic

management combines activities from various functional parts of a business to achieve organizational goals (Wikipedia). Strategic Management is a management process to realize the vision and mission of the organization, maintain organizational relations with the environment, especially the interests of Stakeholders, select strategies, implement strategies and control strategies to ensure that mission and organizational goals can be achieved. Based on some of the definitions above, Strategic Management is defined as an art and science of formulating, implementing and evaluating decisions between functions (crassfunctional) that enable an organization to achieve its goals. Strategic management focuses on integrating management, marketing, finance/accounting, production / operations, research and development, computer information systems to achieve organizational success.