- Defined strategy based on goals set by upper management (profitability, maximize shareholder value, to assess risk and many stakeholder approach).
- Companies develop strategies to match the core competencies with industry opportunities.
- Kenneth R. Andrews proposed the basic concept of strategy development with a SWOT analysis (Strength, Weakness, Opportunity & Threat). Advantages and weaknesses are evaluated based on internal conditions, in order to anticipate opportunities and threats existing in the environment.
- Corporate strategy is a strategy related to the right place (should be) to compete and how to compete in a particular industry.
- Produce corporate strategy decisions on business to be added or maintained or stressed or reduced attention or didivestasi.
- In corporate strategy, companies are classified into three categories (based on the level of connectedness and its level of diversification), ie companies with a single industry, companies associated with the diversification and companies with unrelated diversification.
- Companies with a single industry using its core competencies and compete only in one industry. Therefore this type of company has a high level of relevance.
- Firms with related diversification requires synergy among business units in terms of the ability to share common resources and general competence.
- Companies with unrelated diversification synergies associated with each operating business unit. Often referred to as a conglomerate and has a high level of diversification.
- Core competence is the ability that is used by companies to achieve higher performance and add significant business value.
BUSINESS UNIT STRATEGY
- Business unit requires the right strategy, especially if the higher level of diversification.
- Business unit's strategy can be developed with some models (BCG, industry analysis and competitive advantage generic).
- Model Boston Consulting Group (BCG) offers 4 mission device that is build, hold, harvest and divest. BCG will be increasingly monitored by the learning curve.
- Analysis carried out with due regard to industry competitors in the industry, customers, suppliers, substitutes and new entrants. The stronger the fifth element, then the profitability is likely to lower and vice versa.
- Generic competitive advantage to offer low-cost strategy (low cost) or differentiation (differentiation) or cost-cum differentation. This model was developed by Porter, supported the value chain analysis.
STRATEGIC PLANNING
- Strategic Plan is a formal plan that includes specific ways to implement strategies to achieve corporate objectives.
- Strategic planning is the process of deciding which programs will be implemented by the company and the approximate amount of resources will be allocated to each program during the next few years. Or a brief strategic planning is the process of deciding the strategic plan.
- Strategic planning consists of programming (programe setting process) and budgeting (budget preparation process to support the program).
- Strategic planning is the responsibility of upper management and middle managers of a corporate and business unit.
- The manager will be assisted by several staff wrote it ensures that a predetermined plan to be implemented.
- Therefore, top management style will also influence the shape and implementation of strategic planning.
Useful for strategic planning:
- Framework for budget development.
- Management development tool in the implementation of the strategy with the right process.
- Mechanism that forces management to think the problems longer term.
- Tools to align managers with corporate strategy because they have to disclose to the individual manager.
Limitations of strategic planning:
- Strategic planning is only a form filling activities.
- Strategic planning is a bureaucratic exercise.
- Strategic planning it be done without strategic thinking.
