Importance of Strategic Management

Strategic management is important to organizations for several reasons. For one thing, the process helps organizations identify and develop a competitive advantage,which is a significant edge over the competition in dealing with competitive forces. For example, Dis­ney has been able to gain a competitive advantage in the family enter­tainment industry by creating amusement parks, movies, and products based on the renowned Disney characters.

Another reason for the importance of strategic management is that it provides a sense of direction so that organization members know where to expend their efforts. Without a strategic plan, manag­ers throughout the organization may concentrate on day-to-day activi­ties only to find that a competitor has maneuvered itself into a favor­able competitive position by taking a more comprehensive, long-term view of strategic directions. For example, the Rayovac Corporation, a battery and flashlight maker based in Madison, Wisconsin, had fallen behind competitors in the early 1980s because of its aging product line, outdated packaging, and slowness in entering the market for alka­line batteries (which became the industry standard). Since that time, a new chairman and vice-chairman, the husband-and-wife team of Thomas and Judith Pyle, have rejuvenated the company partially through a variety of innovative new products.

Yet another reason for the importance of strategic management is that it can help highlight the need for innovation and provide an organized approach for encouraging new ideas related to strategies. For instance, Disney has a special procedure for handling major innovations, whereby new ideas and accompanying financial considerations are forwarded to the strategic planning group, which evaluates them for compatibility with the firm's overall strategy. In addition, the process can be used to involve managers at various levels in planning, thus making it more likely that the managers will understand the resulting plans and be committed to their implementa­tion.

TEXT 3: MANAGERIAL KNOWLEDGE, SKILLS AND PERFORMANCE

For managers to develop work agendas, act out roles, and engage in planning, organizing, leading, and controlling, they need a sound knowledge base and key management skills.

Knowledge Base

Although managers often switch companies and work in different industries, they are apt to run into difficulties if they don't have a rea­sonably extensive knowledge base relevant to their particular manage­rial job. A knowledge base can include information about an industry and its technology, company policies and practices, company goals and plans, company culture, the personalities of key organization members, and important and customers.

Key Management Skills

In addition to having a knowledge base, managers need three key types of skills to carry out the various functions of management. A skill is the ability to engage in a set of behaviors that are functionally related to one another and that lead to a desired performance level in a given area. For managers, the three key skill types are technical, hu­man, and conceptual.

Technical Skills. Technical skillsare skills that reflect both an understanding of and a proficiency in a specialized field. For example, a manager may have technical skills in a specialized field such as ac­counting, finance, engineering, manufacturing, or computer science.

Human Skills. Human skillsare skills associated with a man­ager's ability to work well with other both as a member of a group and as a leader who gets things done through other. Managers with effec­tive human skills typically are particularly adept at communicating with other and motivating them to develop themselves and perform well in pursuit of organizational goals.

Conceptual Skills. Conceptual skillsare skills related to the ability to visualize the organization as a whole discern interrelation­ships among organizational parts, and understand how the organiza­tion fits into the wider context of the industry, community, and world. Managers need to recognize these various elements and understand the complex relationships among them so that they can take actions that advance the goals of the organization. Conceptual skills, coupled with technical skills, human skills, and a knowledge base, are impor­tant ingredients in organizational performance.

Performance

What constitutes high performance in an organization? Perform­ance actually is made up of two important dimensions: effectiveness and efficiency.

Effectiveness. Effectivenessis the ability to choose appropriate goals and achieve them. Effectiveness, then, has two parts. First, goals must be appropriate. Second, goals must be reached.

Efficiency.In contrast, efficiencyis the ability to make the best use of available resources in the process of achieving goals. In the case of Nordstrom, the store enjoys the highest sales per.

In essence, organization need to exhibit both effectiveness (doing the right things) and efficiency (doing things right) in order to be good performers.

TEXT 4: MANAGERAL JOB TYPES

Managerial jobs do vary somewhat on the basis of two important dimensions. One is vertical dimension, focusing on different hierar­chical levels in the organization. The other is a horizontal dimension, addressing variations according to the area for which managers have major responsibility.