Basic Concepts of Strategic Management 47

Basic Concepts of Strategic Management 47

Figure 1–3 depicts key environmental variables. They may be general forces and trends within the natural or societal environments or specific factors that operate within an organization’s specific task environment—often called its industry. The analysis techniques available for the examination of these environmental variables are the focus of Chapter 4.

The internal environment of a corporation consists of variables (strengths and weak- nesses) that are within the organization itself and are within the short-run control of top management. These variables form the context in which work is done. They include the corporation’s structure, culture, capabilities, and resources. Key strengths form a set of core competencies that the corporation can use to gain competitive advantage. Although strategic management is fundamentally concerned with what constitutes an organiza- tion’s strengths, weaknesses, opportunities, and threats, the methods to analyze each has developed substantially in the past two decades. No longer do we simply list the SWOT variables and have employees try to populate the quadrants. Each of the four is rich with processes and techniques that will allow for a robust and sophisticated understanding of the company. This will be examined in detail beginning with Chapter 5 of the text.

FIGURE 1–2 Strategic Management Model

Societal Environment: General forces

Natural Environment: Resources and

climate

Task Environment:

Industry analysis

Structure: Chain of command

Culture: Beliefs, expectations,

values

Resources: Assets, skills, competencies,

knowledge

Activities needed to accomplish a plan Cost of the

programs

Sequence of steps needed to do the job

Reason for existence

What results to accomplish by when Plan to

achieve the mission & objectives Broad

guidelines for decision making

Reason for

Mission

Natural

Structure:

What l

Plan to hi h

h

Broad id li

e

Activities d d

h Cost of the

Sequence f

Internal

External

Programs

Budgets

Procedures

Performance

Objectives

Strategies

Policies

Actual results

Putting Strategy into Action

Strategy Implementation:

Developing Long-range Plans

Strategy Formulation:

Monitoring Performance

Evaluation and Control:

Feedback/Learning: Make corrections as needed

Gathering Information

Environmental Scanning:

SOURCE: T. L. Wheelen, “Strategic Management Model,” adapted from “Concepts of Management,” presented to Society for Advance- ment of Management (SAM), International Meeting, Richmond, VA, 1981. Kathryn E. Wheelen solely owns all of (Dr.) Thomas L. Wheelen’s copyright materials. Kathryn E. Wheelen requires written reprint permission for each book that this material is to be printed in. Copyright © 1981 by T. L. Wheelen and SAM. Copyright © 1982, 1985, 1988, and 2005 by T. L. Wheelen and J. D. Hunger. Revised 1989, 1995, 1998, 2000, 2005, 2009, and 2013. Reprinted by permission of the copyright holders.

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