BUS608: Ethical and Strategic Management

4a. Apply the steps in the strategic management process, including strategic analysis, strategic formulation, strategic implementation, and strategic evaluation and control

• Why is internal analysis an important first step in designing and implementing a strategy?
• When companies formulate strategies, what role do financial resources play in that decision?
• In order to effectively execute a strategy, what elements should be used to support the strategy?

As you've learned so far in this course, the strategic management process involves various steps. The first step is determining the strategic objectives and performing internal and external analysis. Using this information, organizations develop their strategy based on what they've learned about their internal and external environments. Next, they execute the chosen strategy, ensuring they provide training to employees, and have the proper organizational structure to implement the strategy. Finally, the last step is to evaluate the strategy and compare the original goals and strategy to the results.

Figure 9: The basic steps of the strategic management process

Remember that analysis, decision-making, and action occur throughout every step and process.

To review, see Stages and Types of Strategy.

4b. Explain how resource allocation, such as time and financial capital, is fundamental to business strategy implementation

• How do companies review their financial resources to make strategic decisions?
• What elements of budgeting for strategic planning are key to a successful plan?
• What non-tangible resources are likely needed to implement a strategy in any industry?

Resource allocation in strategy involves how you will leverage tangible and intangible resources to execute your strategy. Tangible resources include things like buildings, facilities, and equipment. Intangible resources include patents, logos, branding, and other assets that can not be seen, touched, or felt. All of these elements help an organization support its strategy.

In terms of financial needs, organizations analyze several types of budgets to meet their strategic goals. The planned operating budget helps to plan future earnings and project them in an income statement. The budget shows the management's operating plans for the coming periods, allows managers to formalize financial needs in quantitative terms, and helps them anticipate results. The upside to this type of financial tracking is that it allows managers to take action to remedy issues if they see they aren't meeting financial goals.

Budgeting must include top management support, participation from all involved in the initial goal setting, communication of results, flexibility, and follow-up.

Other types of resource planning include planning for marketing strategies, implementing human resource management strategies that can reinforce and support the strategic direction, and operational resources, such as the supply chain necessary to develop and sustain your strategy. Without understanding the resources needed, strategies may not be successful.

To review, see Business Resource Analysis: New Story, Budgeting and Budgeting Processes, and High Performance through HR Management.

4c. Explain how factors such as entrepreneurial orientation and learning organizations constitute a business' culture

• What are some ways companies can encourage an entrepreneurial culture?
• What is a learning organization, and how does this relate to strategy?
• What are the other important organizational cultural elements that should be leveraged to support the organization's strategy?

Several factors are important to note to have a culture that embraces entrepreneurial culture. In doing so, many companies find this helps them support their strategy. Autonomy is one such factor. This relates to whether or not people in your organization can develop an idea and see it through to completion. Innovativeness is another way companies continually meet the needs of customers. Companies must also be proactive by anticipating and acting on future needs rather than reacting to events as they unfold.

A learning organization is focused on people continually expanding their capacity to create the results they and the company desires. In this culture, people are encouraged to develop new thinking patterns. Companies create this kind of culture by focusing on systems thinking, mental models, building a shared vision, personal mastery, and team learning.

Other important cultural elements include rewarding ethical behaviors, using methods to motivate people to do their part in implementing the strategy, and empowering your people.

To review, see The Value of Thinking and Acting Entrepreneurially, Growing a Learning Organization, Managerial Responses to Motivation, and Reward Systems in Organizations.

4d. Determine which measurement techniques and evaluation criteria would be most appropriate for a given business and ethics strategy

• How do you set SMART goals for a company strategy?
• How might a company measure customer satisfaction?
• Is the number of sales always a good performance measure for an organization?

The final step in the strategic planning process is to monitor and evaluate the success of your strategy. When companies do this, they can see where they've been and make changes to get where they want to be. This final aspect of strategy involves setting tactical and operational plans and developing performance measures for each.

When setting each of your plans to measure strategy, you should make sure your goals are SMART, that is, specific, measurable, attainable, realistic, and have a time frame attached to them. When the goals meet this SMART framework, they are much easier to measure.

Many companies use financial measures to determine if they've met their goals, but other measures can be used too. For example, companies may use measures such as sales, return on investment, market penetration, customer satisfaction, and amount of innovations. Figure 10 shows examples of corporate objectives and how the means of achieving them might be evaluated. Figure 11 illustrates ROI as the means to measure goals.

Three Different Actions to Support a Differentiation Strategy and Ways to Measure Results
Strategic Plan	Tactical Plan	Operational Plan	Performance Measure
Product differentiation	Innovation	Hire three engineers to develop new products.	Number of new products launched
Product differentiation	Increase customer satisfaction	Improve customer service with hiring and training programs for customer service associates.	Customer complaints per 10,000 products sold
Product differentiation	Quality improvement	Reduce defective products by improving manufacturing process accuracy.	Defect rate per 10,000 units produced

Figure 10: Example of evaluating the results of corporate activities.

Figure 11: Analysis of ROI to measure goals

To review, see Measuring and Evaluating Strategic Performance and Market-Driven Performance Factors.

Unit 4 Vocabulary

Be sure you understand these terms as you study for the final exam. Try to think of the reason why each term is included.

• autonomy
• learning organization
• resource allocation