Lesson 3 challenges of strategic management

In this lesson you learned about the the challenges of strategic management. You learned that internationalization, e-commerce, knowledge and learning all present unique challenges to strategic management. You also learned that executing strategy is an operationally-driven activity.

1. Strategy and Strategic Management: An overview Global Business Consultants & Partners Training Courses Copyright 2020 Global Business Consultants

2. Chapter 4 . Strategy Development Lesson 3: Challenges of Strategic Management

3. “A winning strategy must fit the enterprise’s external and internal situation, build sustainable competitive advantage, and improve company performance and be based on awareness of the lens through which it is perceived.” Global Business Consultants “A Successful Strategy Copyright 2020 Global Business Consultants

4. Challenges of strategic management Prevent strategic drift. Progressive failure to address strategic position. Deterioration of performance results. Understand and address contemporary issues. Internationalization. E-Commerce. Changing purposes. Knowledge and learning. Don’t slacken off after strategy design. You have to implement the strategy.

5. Challenges of strategic management Prevent Strategic Drift. The term strategic drift is used to describe a sense of cognitive inactivity in the ability to meet the original objectives of an organization. The symptoms of strategic drift are: A homogeneous mind set at managerial and board levels; preservation of the status quo; lack of focus on the external environment; and decline in performance.

6. Challenges of strategic management Prevent Strategic Drift. The causes of strategic drift are found in mental mapping and organizational culture. When strategists develop cognitive assumptions, they are often limited by intuitive thinking. The strategic decisions made within an organization are framed by: Culture , which in turn develops around the: organizational structure hierarchy, routines, internal controls, symbols, and shared narratives.

7. Challenges of strategic management Prevent Strategic Drift. There are three main approaches of avoiding drift: Developing an early warning system. Developing strategic resilience. Encouraging organizational flexibility. When to implement strategic change versus when to leave it alone is a tactical dilemma for boards and top management .

8. Challenges of strategic management Prevent Strategic Drift. The following activities will help prevent the wearing out of an organization’s strategy and provide a constant check on the compatibility of internal strategy making and external variables. Encourage diverse perspectives. Encourage diversity in managerial culture, skills, and perspectives to avoid the buildup of a homogeneous mind set. Champion innovation. Reward and incentivize initiatives that bring about positive change in the organization’s processes and discourage managerial behavior that is intolerant of innovation.

9. Challenges of strategic management Prevent Strategic Drift. Promote an external focus . Encourage a focus on the external environment of evolving technology, consumption patterns, and industry competition. This can be done through a coordinated flow of information for decision makers and influencers within the organization. Industry benchmarking and market research can be used to challenge prevailing assumptions on the best way to enact strategy. Benchmarking at the level of the products, processes, and markets would bring to light new trends and practices. Data collection should include environmental indicators such as economic variables, sector growth, and weak signals of new ideas, products, inventions, and innovations that have not yet become trends, but are likely to have an impact on the company in the future.

10. Challenges of strategic management Prevent Strategic Drift. Monitor performance in terms of both market and financial indicators. A decline in market share is a clear signal that the company strategy is misaligned with external realities and not cognizant of the opportunities for growth.

11. Challenges of strategic management Understand and address contemporary issues. There are many important commercial reasons for small to medium sized companies to expand beyond their home market, however the many challenges in internationalization . People. Hiring local talent who can create the right brand and culture is important, as is understanding cultural diversity.

12. Challenges of strategic management Understand and address contemporary issues. Cultural Nuances. Knowledge that prepares a business for new territory must be part of the decision to enter that market. Money Efficiency. Finding a bank that offers services in multiple countries or regions can be a challenge for companies with revenues in the millions rather than billions.

13. Challenges of strategic management Understand and address contemporary issues. Progress. Rapidly changing consumer behavior, coupled with the variables of infrastructure, culture, regulatory and political regimes and economic development, make unpredictability the norm. Factor in limited talent pools, fragmented distribution systems and security concerns and the unknown variables grow. Risky Ventures. Companies with international ambitions must also take account of factors like currency volatility. Borrowing in local currency and managing working capital effectively can help reduce the impact of currency fluctuations.

14. Challenges of strategic management Understand and address contemporary issues. E-commerce problems significantly hinder the business or threaten its very existence. Problem #1: Online Identity Verification. Problem #2: Competitor Analysis. Problem #3: Customer Loyalty. Problem #4: Product Return and Refund Policies. Problem #5: Price and Shipping. Problem #6: Retailers and Manufacturers. Problem #7: Data Security.

15. Challenges of strategic management Understand and address contemporary issues. Addressing social needs or changing purposes is no longer merely about protecting a company’s reputation and license to operate. It is core to a company’s future business performance and competitive advantage. Firms that generate value for society also generate value for shareholders. We call achieving this win-win by “creating shared value”.

16. Challenges of strategic management Understand and address contemporary issues. Company learning enables companies to transform individual knowledge into organizational knowledge that maintains and enhance its competitive advantage. Companies struggle to implement practical approaches to learning due to the lack of concrete prescriptions. Most companies depend on systematic approaches to gain the ability for systematic learning.

17. Challenges of strategic management Don’t slacken off after strategy design. Once business owners and managers have decided on a strategy, the emphasis turns into converting it into actions and good results. Putting the strategy into place and getting the company to execute it well call for different sets of managerial skills. Executing strategy is an operations-driven activity revolving around the management of people and business process.

18. Challenges of strategic management Don’t slacken off after strategy design. Successful strategy execution depends on doing a good job of working with and through others, including: Building and strengthening completive capabilities. Creating an appropriate organisational culture. Allocating resources. Instituting strategy-supportive policies, processes and systems. Motivating and rewarding people. Instilling a discipline of getting things done.

19. Good Strategy + Good Strategy Execution = Business Survival & Growth Sam Lee Mohan | GBC

20. Congratulations! You’ve completed lesson . Recap: In this lesson you learned about the the challenges of strategic management . You learned that internationalization, e-commerce, knowledge and learning all present unique challenges to strategic management. You also learned that executing strategy is an operationally-driven activity. Awesome work! Now click Complete and then Next for Lesson 4.