Transcript
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Ch. 1-1
Strategic ManagementConcepts & Cases
Fred R. DavidChapter 1:
The Nature of Strategic
Management
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Ch. 1-2
Organizing Themes
Global considerations impact virtually all
strategic decisions. E-commerce has become a vital
strategic management tool.
The natural environment has becomean important strategic issue.
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Ch. 1-3
Strategic Management Defined
Art and science of formulating,implementing, and evaluating cross-functional decisions that enable anorganization to achieve its objectives.
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Ch. 1-4
Strategic Management Club
Visit and join the club on-line:
www.strategyclub.com
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Ch. 1-5
Terminology
Strategic Management
Synonymous with
Strategic Planning
Strategic management
Used more often in academia
Strategic planning
Used more often in the business world
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Ch. 1-6
Terminology
Strategic managementRefers to:
Strategy formulation Strategy implementation
Strategy evaluation
Strategic planningRefers to:
Strategy formulation
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Ch. 1-7
Brief History
1950s
Term strategic planning originates
1960s 1970s
Strategic planning very popular
Widely viewed as panacea for problems
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Ch. 1-8
Brief History
1980sStrategic planning cast aside
Planning models did not yield higher returns
1990s2000
Revival of strategic planning Widely practiced in business world
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Ch. 1-9
Strategic-Management ProcessThree Stages
Strategy Formulation
Strategy Implementation
Strategy Evaluation
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Ch. 1-10
Strategy Formulation
Vision & Mission
Alternative Strategies
Long-Term Objectives
Strengths & Weaknesses
Opportunities & Threats
Strategy Selection
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Ch. 1-11
Strategy Implementation
Motivate Employees
Policies
Annual Objectives
Resource Allocation
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Ch. 1-12
Strategy Evaluation
Corrective Action
Measure Performance
Review
External & Internal
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Ch. 1-13
Key Strategic Management Terms(Contd)
1. Strategists
2. Vision statements
3. Mission statements
4. External opportunities and threats
5. Internal strengths and weaknesses
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Ch. 1-14
Key Strategic Management Terms
(Contd)
6. Long-term objectives7. Strategies
8. Annual objectives
9. Policies
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Ch. 1-15
Strategic Management Terms
(Contd)Strategists
Usually found in high levels of management(CEO)
Help organization gather, analyze, andorganize information
Track industry and competitive trends
Develop forecasting model
Evaluate corporate and divisional performance
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Ch. 1-16
Vision Statements
Answers the question: What do we want tobecome?
First step in strategic planning
Oftentimes a single sentence
Our vision is to take care of your vision.
(Stokes Eye Clinic, Florence, South Carolina)
Strategic Management Terms
(Contd)
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Ch. 1-17
External Opportunities & Threats
Largely beyond the control of a single organization
EconomicSocial
Cultural
DemographicEnvironmental
Strategic Management Terms
(Contd)
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Ch. 1-18
External Opportunities & Threats (contd)
PoliticalGovernmental
Technological
Competitive trends & events
Strategic Management Terms
(Contd)
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Ch. 1-19
Internal Strengths & Weaknesses
Controllable activities that are performedwell or poorly relative to competitors
Based on functional analysis of activities inthe firms:
Management Marketing
Finance/accounting
Strategic Management Terms
(Contd)
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Ch. 1-20
Internal Strengths & Weaknesses(Contd)
Based on functional analysis of activities inthe firms:
Production/operations
Research and development
Computer information systems
Organizations strive to pursue strategiesthat capitalize on strengths and improveweaknesses
Strategic Management Terms
(Contd)
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Ch. 1-21
Long-Term Objectives
Results to be achieved in pursuing theorganizations mission. Time frame is beyond oneyear.
State direction
Aid in evaluation
Create synergy
Reveal prioritiesFocus coordination
Provide basis for effective management
Strategic Management Terms
(Contd)
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Ch. 1-22
Strategies Potential actions that require top
management decisions and large amounts
of firms resourcesMechanisms by which long-term objectives arerealized
Geographic expansion
DiversificationAcquisition
Product development
Strategic Management Terms
(Contd)
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Ch. 1-23
Strategies (contd)
Mechanisms by which long-term objectives arerealized
Market penetration
Retrenchment
Divestiture
Liquidation
Joint venture
Strategic Management Terms
(Contd)
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Ch. 1-24
Annual Objectives
Short-term milestones necessary to
achieve long-term objectives.
Represent the basis for allocating resources
Established at corporate, divisional, andfunctional levels
Strategic Management Terms
(Contd)
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Annual Objectives (contd)
Stated in terms of accomplishments for:management
marketing
finance/accounting
production/operations
research and development
information systems accomplishments
Strategic Management Terms
(Contd)
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Policies
Important in strategy implementation as themeans by which annual objectives will be achieved
Guide to decision making and address repetitivesituations
Established at corporate, divisional, or functional levels
Allow consistency & coordination within and betweenorganizational departments
Strategic Management Terms
(Contd)
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Ch. 1-27
Comprehensive Strategic Management Model
Vision&
MissionStatements
Chapter 2
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
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Ch. 1-28
Proactive vs. ReactiveInitiate and influence activities
Helps shape firms own future Principal BenefitFormulate better strategies
Systematic, logical, and rational approach
CommunicationKey to successful strategic management
Benefits of Strategic
Management
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Financial BenefitsMore profitable and successful
Improvements in sales, profitability, andproductivity
High-Performing Firms Systematic planning
Fluctuations in external and internal environments
Benefits of Strategic
Management (Contd)
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Poor reward structures
Fire-fighting
Waste of time Too expensive
Laziness
Content with success
Why Some Firms Do No
Strategic Planning
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Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
Why Some Firms Do No
Strategic Planning (Contd)
f
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Using to gain control over decisions &resources
Doing only to satisfy regulatory requirements
Moving hastily from mission to strategyformulation
Failing to communicate to employees
Intuitive decisions that conflict with formalplan
Top management not supportive of process
Pitfalls to Avoid in StrategicPlanning
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Failing to use as standard for performancemeasurement
Delegating to a planner vs. involvement ofmanagers
Failing to involve key personnel
Failing to create collaborative environment Formality that stifles creativity and flexibility
Pitfalls to Avoid in StrategicPlanning (Contd)
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Defined:
Principles of conduct within organizationsthat guide decision making and behavior
Good business ethics is a prerequisitefor good strategic management
Good ethics is just good business!
Business Ethics & Strategic
Planning
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Strategists responsible for high ethicalprinciples
All strategic processes have ethicalramifications
Formal codes of ethics are in place formany businesses
Internet privacy emerging as ethicalissue of immense proportions
Business Ethics & Strategic
Planning (Contd)
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Business actions alwaysunethical include:
Misleading advertising
Misleading labeling
Environmental harm
Poor product or service safety
Padding expense accounts Insider trading
Dumping flawed products on foreign markets
Business Ethics & Strategic
Planning (Contd)
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Nature of Global Competition
Companies conduct business acrossborders
International or multinational corporations Parent company
Host country
Strategy implementation more difficultCultural differences
Norms, values, work ethics
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Advantages of InternationalOperations
Absorb excess capacity
Reduce unit costs Low-cost production facilities
Lower labor costs
Competition less intense
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Advantages of InternationalOperations (Contd)
Reduced tariffs, lower taxes
Favorable political climate
Economies of scale
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Communication difficulties between parent andsubsidiaries
Based on cultural, political, social, language,demographic, and competitive forces
Foreign-based competitors
Strengths underestimated Weaknesses overestimated
Disadvantages of InternationalOperations
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Key Terms & Concepts
Annual objectives Business ethics
Code of ethics
E-commerce
Empowerment
Environmental scanning
External opportunities
External threats
Internal strengths Internal weaknesses
Intuition
Long-term objectives
Mission statements
Policies
Strategic management
Strategic-managementmodel
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Key Terms & Concepts (Contd)
Strategic-managementprocess
Strategies
Strategists
Strategy evaluation
Strategy formulation
Strategyimplementation
Lobbying
Vision statement Vision
Host country
International firms
Long-range planning
Multinationalcorporation
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