Download slides for Ch 1

1

SOM497 – Business Policy & Strategy

CHAPTER 1CHAPTER 1: Basic Concepts of Strategic Management

STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER

2

What is Strategic Management?

Managerial decisions & actions that determines the long-run performance of a business

4 Types of Strategic Management Basic financial planning (up to 1 year) Forecast-based planning (1 to 5 years) Externally-oriented planning Strategic management

3

Why need Strategic Management?

Clearer sense of strategic vision

Sharper focus on strategic importance

Improved understanding of changing environment

4

Globalization & E-Commerce

Globalization Internationalization of markets & corporations Markets: global than national markets

Electronic Commerce Internet to conduct business transactions Basis for competition on a more strategic level rather than

traditional focus on product features and costs

5

Basic Elements of the Strategic Management Process

6

SOM497 – Business Policy & Strategy

CHAPTER 2CHAPTER 2: Corporate Governance

STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER

7

Corporate Governance

Determining the direction & performance of the corporation derived from the relationship among the Top management Shareholders Board of directors

8

Board of Directors: Degree

9

Board of Directors: Members

Inside directors “management directors”

Outside directors “non-management directors”

10

Theories: Agency vs. Stewardship

Agency Objectives of owners/

shareholders & agents (top management) in conflict

Difficult for owners to verify agent performance

Stewardship Executives motivated to

act in best interest of the corporation than their own self-interests.

Over time, senior executives tend to view corporation as extension of selves

11

Board of Directors

Codetermination Including corporation’s

employees on its board of directors

Interlocking Directorates CEOs/board members

from other firms to be members

Direct Interlocking

Indirect Interlocking

Direct Interlocking

Indirect Interlocking

12

Sarbanes-Oxley Act

Congress passed act in 2002 to protect shareholders

Audit committees have to be independent of the firm

Establishes additional steps for whistle-blowing

Firms can’t grant “loans” to corporate officers

Picture Copyright: CNN Money

13

Top Management – CEO

provide executive leadership & strategic vision manage strategic planning process

Transformational leaders

Successful CEO’s Strategic vision Passion for the company Strong communication charisma

14

Case Study

How do I prepare, analyze and discuss case problems? Preparing for in-class discussion

1. Try first to get a quick sense of the whole case2. If this is a case requiring a decision, who is the key decision maker? 3. Reread the case for underlining or highlighting key facts and try to

identify the key problems4. What are the possible courses of action for the decision maker?

Discussion in class1. Be prepared to present your ideas with conviction, and to support them

with care 2. Do not wait too long to get involved in the discussion 3. If you want to raise an issue that is completely different from the one

the class is discussing, consider waiting until the class is ready to move to another issue.

4. Try to be alert to keep the class discussion moving toward constructive solutions to the case.

5. Don’t hesitate to admit you are confused, need clarification, or simply be wrong.

From: http://www.soc.ucsb.edu/projects/casemethod/guidelines.html

15

Next Class

Case 17 (Kmart Corporation: Seeking Survival in a Changing Marketplace) in TEXT