Fred R. David Prentice Hall Ch. 1-1 Chapter 1 Chapter 1 The Nature of The Nature of Strategic Management Strategic Management Strategic Management: Concepts and Cases. 9 th edition Fred R. David PowerPoint Slides by Anthony F. Chelte Western New England College
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Fred R. DavidPrentice Hall
Ch. 1-1
Chapter 1Chapter 1The Nature of Strategic The Nature of Strategic
ManagementManagementStrategic Management:
Concepts and Cases. 9th edition
Fred R. David
PowerPoint Slides by
Anthony F. Chelte
Western New England College
Fred R. DavidPrentice Hall
Ch. 1-2
The Nature of Strategic The Nature of Strategic ManagementManagement
• A global perspective is a matter of survival for businesses.
• E-commerce is a vital strategic management tool.
• The natural environment is an important strategic issue.
Process of Integrating:– management– marketing– finance/accounting– production/operations– research and development– computer information systems
Fred R. DavidPrentice Hall
Ch. 1-4
Three-Stage ProcessThree-Stage Process
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Fred R. DavidPrentice Hall
Ch. 1-5
Strategy Formulation
Vision & Mission
Alternative Strategies
Long-Term Objectives
Strengths & Weaknesses
Opportunities & Threats
Strategy Selection
Fred R. DavidPrentice Hall
Ch. 1-6
Strategy FormulationStrategy Formulation
Issues include:– What new businesses to enter– What businesses to abandon– How to allocate resources– Expand operations or diversify– Enter international markets– Merge or form joint venture– Avoidance of hostile takeover
Fred R. DavidPrentice Hall
Ch. 1-7
Strategy Implementation
Employee Motivation
Policies
Annual Objectives
Resource Allocation
Fred R. DavidPrentice Hall
Ch. 1-8
Strategy ImplementationStrategy Implementation
Action Stage of strategic management:– Most difficult stage – Mobilizing employees and managers– Interpersonal skills are critical– Consensus on pursuing goals
Fred R. DavidPrentice Hall
Ch. 1-9
Strategy Evaluation
Performance Measurement
External Review
Internal Review
Corrective Action
Fred R. DavidPrentice Hall
Ch. 1-10
Strategy EvaluationStrategy Evaluation
Final stage of strategic management:– All strategies subject to future modification – Success today is no guarantee of success
tomorrow– Success creates new and different problems– Complacency leads to demise
Fred R. DavidPrentice Hall
Ch. 1-11
Prime Task of Strategic Prime Task of Strategic ManagementManagement
According to Peter Drucker…
The prime task is to think through the overall mission of a business
Ask the question:
What is our Business?
Fred R. DavidPrentice Hall
Ch. 1-12
Integrating Intuition and AnalysisIntegrating Intuition and Analysis
The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty.
Fred R. DavidPrentice Hall
Ch. 1-13
Integrating Intuition and AnalysisIntegrating Intuition and Analysis
Intuition based on:– Past experiences
– Judgment
– Feelings
Useful for decision making– Conditions of great uncertainty
– Conditions with little precedent
Fred R. DavidPrentice Hall
Ch. 1-14
Integrating Intuition and AnalysisIntegrating Intuition and Analysis
Intuition and judgment– Management at all levels
– Analyses are influenced
Analytical thinking and intuitive thinking– Complement each other
Fred R. DavidPrentice Hall
Ch. 1-15
Adaptation to ChangeAdaptation to Change
Organizations must monitor events– On-going process
– Internal and external events
– Timely changes
Fred R. DavidPrentice Hall
Ch. 1-16
Adaptation to ChangeAdaptation to Change
Rate and magnitude of changes– Increasing dramatically
Key strategic-management questions:– What kind of business should we become?– Are we in the right fields?– Should we reshape our business?– What new competitors are entering our
industry?– What strategies should we pursue?– How are our customers changing?
Fred R. DavidPrentice Hall
Ch. 1-18
Key TermsKey Terms
Strategists– Most responsible for success or failure of an
organization– Various job titles:
• Chief executive officer• President• Owner• Chair of the Board• Executive Director• Entrepreneur
Fred R. DavidPrentice Hall
Ch. 1-19
Key TermsKey Terms
Vision Statement– What do we want to become?
Mission Statement– What is our business?
Fred R. DavidPrentice Hall
Ch. 1-20
Key TermsKey Terms
External Opportunities and Threats– Significantly benefit or harm the organization in the
future.
– Include the following trends:• Economic• Social• Cultural• Demographic Environmental• Political, legal, governmental• Technological• Competitive trends
Fred R. DavidPrentice Hall
Ch. 1-21
Key TermsKey Terms
External Opportunities and Threats– Largely beyond the control of a single
organization.
– Basic tenet of strategic management• Strategy formulation to:
– Take advantage of external opportunities– Avoid or reduce impact of external threats
Fred R. DavidPrentice Hall
Ch. 1-22
Key TermsKey Terms
Environmental Scanning
– Industry Analysis• Process of conducting research and
gathering and assimilating external information
Fred R. DavidPrentice Hall
Ch. 1-23
Key TermsKey Terms
Internal Strengths and Weaknesses– Controllable activities performed especially
well or poorly.
– Arise in functional areas of the business:• Management• Marketing• Finance/accounting• Production/operations• Research & development• Computer Information Systems
Fred R. DavidPrentice Hall
Ch. 1-24
Key TermsKey Terms
Determining Internal Factors:
– Financial ratios
– Measuring performance
– Industry averages
– Survey data
Fred R. DavidPrentice Hall
Ch. 1-25
Key TermsKey Terms
Long-term objectives:
– Mission-driven pursuit of specific results more than one-year out.
– Essential for organizational success• State direction• Aid in evaluation• Create synergy• Focus coordination• Basis for planning, motivating and controlling
Fred R. DavidPrentice Hall
Ch. 1-26
Key TermsKey Terms
Strategies:– Means by which long-term objectives will be