Strategic Management Slides 1

8/3/2019 Strategic Management Slides 1

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Ch 1 -1

Chapter 1The Nature of Strategic Management


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Ch 1 -3

Art & science offormulating,

implementing, andevaluating,cross-functional decisions that

enable an organization to achieve its

objectives

Strategic ManagementDefined


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Ch 1 -4

Strategic Management

In essence, the strategic planis acompanys game plan


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Ch 1 -5

Strategic Managementachieves a firms success

through integration

Management

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development


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Ch 1 -6

Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection


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Ch 1 -7

Issues in StrategyFormulation

New businessopportunities

Businesses to abandonAllocation of resources

Expansion ordiversificationInternational markets

Mergers or joint venturesAvoidance of hostiletakeover


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Ch 1 -8

Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation


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Ch 1 -9

StrategyImplementation

Action Stage of StrategicManagement

Most difficult stage

Mobilization ofemployees & managers

Interpersonal skillscriticalConsensus on goal

pursuit


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Ch 1 -10

Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions


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Ch 1 -11

StrategyEvaluation

Final Stage of StrategicManagement

Subject to futuremodificationTodays success no

guarantee of future successNew & different problemsComplacency leads todemise


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Ch 1 -12

Peter Drucker: --Think through the

overall mission of a business. Askthe key question: What is ourBusiness?

Prime Task ofStrategic Management


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Ch 1 -14

Intuition is based on: Past experiences

Judgment

Feelings

Integrating IntuitionandAnalysis

Intuition isuseful for decision making in: Conditions of great uncertainty

Conditions with little precedent


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Ch 1 -15

Involve Management at all levels

Intuition & Judgment

Influence all Analyses

Integrating Intuition&Analysis


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Ch 1 -16

Analytical Thinking

Integrating Intuition&Analysis

Intuitive Thinking


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Ch 1 -17

Organizations must monitor

events On-going process

Internal and external events

Timely changes

Adapting to Change


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Ch 1 -18

Anything that a firm does especially

well compared to rival firms

Strategic Management isGaining and Maintaining

Competitive Advantage


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Ch 1 -20


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Ch 1 -21

Rate & magnitude of changeincreasing dramatically

Adapting to Change

E-commerce

Demographics

Technology


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Ch 1 -22

Effective Adaptation

Adapting to Change

Requires long-term focus


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Ch 1 -23

What kind of business shouldwe become?

Are we in the right fields Are there new competitors? What strategies should we

pursue?

How are our customerschanging?

Adapting to Change KeyStrategic Management

Questions


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Ch 1 -24

Key Terms

Various Job Titles:

Chief Executive Officer (CEO)Chief Financial Officer (CFO)Chief Strategy Officer (CSO)PresidentOwnerBoard ChairExecutive Director

StrategistsFirms success/failure


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Ch 1 -25

Vision StatementWhat do we want to become?

Mission StatementWhat is our business?

Key Terms


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INTEL

Vision:

Getting to a billion

connected computers

worldwide, millions of

servers, and trillions of

dollars of e-commerce

Mission

is being the building

block supplier to theInternet economy

and making efforts

to make the Internetmore useful

Ch 1 -26


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Ch 1 -27

Largely beyond the control of a singleorganization

Key Terms

Opportunities and Threats (External)


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Ch 1 -29

Process of conducting research andgathering and assimilating externalinformation

Key TermsOpportunities & Threats

Environmental Scanning (Industry Analysis)


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Ch 1 -30

Basic Tenet of Strategic Management

Key TermsOpportunities & Threats

Strategy Formulation

Take advantage ofExternal Opportunities

Avoid/minimize impact ofExternal Threats


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Ch 1 -31

Controllable activities performed especiallywell or poorly

Key Terms

Strengths & Weaknesses (Internal)


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Ch 1 -32

Strengths & Weaknesses (Internal)

Key Terms

Typically located in functional areas of the firm

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Computer Information Systems


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Ch 1 -33

Assessing the Internal Environment

Key TermsStrengths & Weaknesses

Internal Factors

Performance Metrics

Financial Ratios

Industry Averages

Survey Data


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Ch 1 -34

Mission-driven pursuit of specified resultsmore than one year out

Key Terms

Long-term Objectives


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Ch 1 -35

Long-term Objectives

Key Terms

Essential for ensuring the firms success

Provide direction

Aid in evaluation

Create synergy

Focus coordination

Basis for planning, motivating, andcontrolling


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Ch 1 -36

Means by which long-term objectives areachieved

Key Terms

Strategies


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Ch 1 -37

Strategies

Key Terms

Some Examples

Geographic expansion

Diversification

Acquisition

Market penetration

Retrenchment

Liquidation

Joint venture


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Ch 1 -39

Means by which annual objectives will beachieved

Key Terms

Policies


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Ch 1 -40

Example Strategies in Action in 2005


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Ch 1 -41

Example Strategies in Action in 2005


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Ch 1 -42

ExternalAudit

Chapter 3

InternalAudit

Chapter 4

Long-TermObjectives

Chapter 5

Generate,Evaluate,

SelectStrategies

Chapter 6

ImplementStrategies:

Mgmt Issues

Chapter 7

ImplementStrategies:

Marketing,Fin/Acct,R&D, CIS

Chapter 8

Measure &Evaluate

Performance

Chapter 9

Vision&

Mission

Chapter 2

Comprehensive strategic management model


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Ch 1 -44

1. Identify Existing --

Strategic Management Model

Vision

Mission Objectives

Strategies


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Ch 1 -45

2. Audit external environment3. Audit internal environment4. Establish long-term objectives5. Generate, evaluate & select

strategies6. Implement selected strategies

7. Measure & evaluate performance

Strategic Management Model


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Ch 1 -46

Benefits of StrategicManagement

Proactive in shaping firms future

Initiate and influence firms activities Formulate better strategies

Systematic, logical, rational


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Ch 1 -47


Financial Benefits

Improvement in sales

Improvement in profitability

Productivity improvement


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Ch 1 -48


Non-Financial Benefits

Improved understanding of competitors strategies

Enhanced awareness of threats

Reduced resistance to change

Enhanced problem-prevention capabilities


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Ch 1 -49

Benefits of StrategicManagement (Greenley)

1. Identification of Opportunities

2. Objective view of management problems

3. Improved coordination & control

4. Minimizes adverse conditions & changes

5. Decisions that better support objectives


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Ch 1 -50

Benefits of StrategicManagement (Greenleycontd)

6. Effective allocation of time & resources

7. Internal communication among personnel

8. Integration of individual behaviors

9. Clarify individual responsibilities

10. Encourage forward thinking


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Ch 1 -52

Why Some Firms Do NoStrategic Planning

Poor reward structures

Fire-fighting

Waste of time

Too expensive

LazinessContent with success


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Ch 1 -53

Why Some Firms Do NoStrategic Planning

Fear of failure

Overconfidence

Prior bad experience

Self-interest

Fear of the unknownSuspicion


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Ch 1 -54

Principles of conduct within organizationsthat guide decision making and behavior

Business Ethics & StrategicManagement

Business Ethics defined


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Ch 1 -56

Provides basis on which policies can bedevised to guide daily behavior anddecisions in the workplace


Code of business ethics


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Ch 1 -57

Misleading advertising Misleading labeling Harm to the environment Insider trading

Dumping flawed products on foreign markets Poor product or service safety Padding expense accounts


Business practices always considered unethical


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Ch 1 -58

Parent company Host country

The Nature of GlobalCompetition

International/multinational corporations


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Ch 1 -59

Cultural differences Norms

Values

Work ethic

The Nature of GlobalCompetition

Strategy implementation may be difficult


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Ch 1 -60

Advantages of InternationalOperations

Absorb excess capacity

Reduce unit costsSpread risk over wider markets

Low-cost production facilities


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Ch 1 -61

Advantages of InternationalOperations (contd)

Less intense competition

Lower taxes

Economies of scale


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Ch 1 62

Disadvantages of InternationalOperations

Difficult communications

Underestimate foreign competition

Cultural barriers to effective management

Complications arising from currencydifferences

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Strategic Management Slides 1

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