research paper- Cathay Pacific airways

HTM 590 Dr. Aday

Chapter 1: Strategic Management

Lecture Objectives

Describe the key elements in the strategic management process.

Discuss the three different perspectives or approaches used in understanding strategy.

Explain the difference between strategic thinking and strategic planning.

Definition of Strategic Management §Strategic management is a process through which: ◦ Organizations analyze and learn from their internal and external environments,

◦ Establish strategic direction, ◦ Create strategies that are intended to move the organization in that direction, and

◦ Implement those strategies

•All in an effort to satisfy key stakeholders

Stakeholders • Groups or individuals who can significantly affect or are significantly affected by an organization’s activities.

Internal Stakeholders •Nature of Relationship

• Contractual

•Physical Location • Predominantly inside organization structure, sometimes geographically diverse.

•Motivation to Perform • Regular payments, retention, bonuses, common purpose, persuasion

•Direct Control • Schedules, plans, sometimes direct supervision

External Stakeholders •Nature of Relationship

• Contractual, legal or informal

•Physical Location • Predominantly outside organizational structure; sometimes included

•Motivation to Perform • Regular payments, retention, incentives, bonuses, common purpose, persuasion

•Direct Control • Schedules, plans, less often direct supervision

Three Perspectives of Strategic Management •Traditional

•Resource-based

•Stakeholder View

Traditional Perspective •Origin

• Economics, other business disciplines, and consulting firms

•View of Firm • An economic entity

•Approach to Strategy Formulation • Situation analysis of internal and external environments leading to formulation of mission and strategies

•Source of Competitive Advantage • Best adapting the organization to its environment by taking advantage of strengths and opportunities and overcoming weaknesses and threats

Traditional Strategic Management Process

Strategic Direction (mission & goals)

Strategy Formulation (take advantage of

strengths/overcome weaknesses & threats)

Strategy Implementation (development &

execution of implementation plans)

Situation Analysis (external environment)

Traditional Perspective •Deterministic View

• Environmental determinism (the best strategy is determined by the environment)

• Firms should adapt to the environment

• Strategy is deliberate (intended)

Traditional Perspective •Enactment View

• Enactment (firms can influence their environments)

• A firm should pursue actions to make the environment more hospitable

• Strategy emerges from a stream of decisions as firms learn

Resource-based View •Origin

• Economics, other business disciplines, and consulting firms •View of Firm

• An economic entity •Approach to Strategy Formulation

• Situation analysis of internal and external environments leading to formulation of mission and strategies

•Source of Competitive Advantage • Best adapting the organization to its environment by taking advantage of strengths and opportunities and overcoming weaknesses and threats

Stakeholder View •Origin

• Business ethics and social responsibility

•View of Firm • A network of relationships among the firm and its stakeholders

•Approach to Strategy Formulation • Analysis of the economic power, political influence, rights and demands of various stakeholders

•Source of Competitive Advantage • Superior linkages with stakeholders leading to trust, goodwill, reduced uncertainty, improved business dealings and ultimately higher firm performance

An Organization as a Bundle of Resources

Organizational Knowledge

and Learning

General Organizational Resources

•Firm Reputation •Brand Names and Patents

•Contracts •Stakeholder Relationships

Physical Resources •Plants and Equipment

•Organizational Locations •Access to Raw Materials

Human Resources •Skills, Background and

Training of Managers and Employees

•Organization Structure

Financial Resources •Internal and External Sources of Financing •Financial Strength

A Typical Stakeholder Map

The Organization Owners/Board of Directors

Managers Employees

Financial Intermediaries

Government Agencies and Administrators

Local Communities

Competitors

Suppliers Customers

Activist Groups

Unions The Media

The Strategic Management Process

Establish Strategic Direction

(Ch. 3)

Formulate Strategies Business-Unit (Ch. 5)

Corporate-Level (Ch. 6)

Implement Strategies & Establish Controls

(Ch. 7)

Analyze the Environment, Stakeholders and

Organizational Resources (Chs. 2 & 4)

Strategy Formulation in a Multi-business Organization

Entire Corporation (Corporate Level: Domain Definition)

Business 2 (Business Level:

Domain Direction/Navigation)

Business 1 (Business Level:

Domain Direction/Navigation)

Marketing Finance Operations Research Human Resources (Functional Level: Implementation and Execution)

Strategic Thinking •Industry revolutionaries invent new business concepts

•Strategic thinking runs parallel to both innovation and entrepreneurship

Elements of Strategic Thinking •Intent Focused

• Managerial vision of where the firm is going

•Comprehensive • Envisions the firm as a part of a larger system of value creation.

•Opportunistic • Seize unanticipated opportunities

•Long-term Oriented • Several years into the future

•Built on Past and Present •Hypothesis Driven

• Creative ideas are then critically evaluated. Takes risks

Strategic Planning • An analytical process aimed at carrying out strategies that have already been identified. •Resulting in the creation of a plan

Strategic Planning Process vs. Strategic Thinking

•The strategic planning process is often rigid and unimaginative, with detailed instructions pertaining to every aspect of the process

•Strategic thinking leads to creative solutions and new ideas

•The best firms use both!