Strategic management
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Strategic management

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Strategic Management, business strategy

Strategic Management, business strategy

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  • 1. Chapter 1The Nature of Strategic Management Presented By: Jatin Vaid Ch 1 -1
  • 2. Strategic Management –Defined Art & science of formulating, implementing, and evaluating, cross- functional decisions that enable an organization to achieve its objectives Ch 1 -2
  • 3. Strategic Management In essence, the strategic plan is a company’s game plan. Ch 1 -3
  • 4. Strategic managementachieves a firm’s successthrough integration –– Management Marketing Finance/Accounting Production/Operations Research & Development MIS Ch 1 -4
  • 5. Strategy Formulation Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection Ch 1 -5
  • 6. Issues in StrategyFormulation New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover Ch 1 -6
  • 7. Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation Ch 1 -7
  • 8. StrategyImplementation Action Stage of Strategic Management Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit Ch 1 -8
  • 9. Strategy Evaluation Internal Review External Review Performance Metrics Corrective Actions Ch 1 -9
  • 10. StrategyEvaluation Final Stage of Strategic Management Subject to future modification Today’s success no guarantee of future success New & different problems Complacency leads to demise Ch 1- 10
  • 11. Prime Task ofStrategic Management Peter Drucker: Think through the overall mission of a business. Ask the key question: “What is our Business?” Ch 1- 11
  • 12. Integrating Intuition &Analysis The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty. Ch 1- 12
  • 13. Integrating Intuition &Analysis Intuition is based on: ◦ Past experiences ◦ Judgment ◦ Feelings Intuition is useful for decision making in:  Conditions of great uncertainty  Conditions with little precedent Ch 1- 13
  • 14. Integrating Intuition &Analysis Intuition & Judgment Involve management at all levels Influence all analyses Ch 1- 14
  • 15. Integrating Intuition &Analysis Analytical Thinking Intuitive Thinking Ch 1- 15
  • 16. Adapting to Change Organizations must monitor events  Ongoing process  Internal and external events  Timely changes Ch 1- 16
  • 17. Strategic Management isGaining and MaintainingCompetitive Advantage “Anything that a firm does especially well compared to rival firms” Ch 1- 17
  • 18. Achieving SustainedCompetitive Advantage 1. Adapting to change in external trends, internal capabilities, and resources 2. Effectively formulating, implementing, and evaluating strategies Ch 1- 18
  • 19. Adapting to Change Rate & magnitude of change increasing dramatically E-commerce Demographics Technology Ch 1- 19
  • 20. Adapting to Change Effective Adaptation Requires long-term focus Ch 1- 20
  • 21. Adapting to Change – KeyStrategic ManagementQuestions  What kind of business should we become?  Are we in the right fields?  Are there new competitors?  What strategies should we pursue?  How are our customers changing? Ch 1 -21
  • 22. Key TermsStrategists – Firm’s success/failure Various Job Titles: •Chief Executive Officer (CEO) •Chief Strategy Officer (CSO) •President •Owner •Board Chair •Executive Director Ch 1- 22
  • 23. Key Terms Vision Statement – What do we want to become? Mission Statement – What is our business? Ch 1 -23
  • 24. Key TermsOpportunities & Threats (External)  Largelybeyond the control of a single organization Ch 1 -24
  • 25. Key Terms Opportunities & Threats (External)Analysis of Trends: • Economic • Social • Cultural • Demographic/Environmental • Political, Legal, Governmental • Technological • Competitors Ch 1 -25
  • 26. Key TermsOpportunities & ThreatsEnvironmental Scanning (Industry Analysis) ◦ Process of conducting research and gathering and assimilating external information Ch 1 -26
  • 27. Key TermsOpportunities & ThreatsBasic Tenet of Strategic Management Take advantage of External Opportunities Strategy Formulation Avoid/minimize impact of External Threats Ch 1 -27
  • 28. Key TermsStrengths & Weaknesses (Internal)  Controllable activities performed especially well or poorly Ch 1 -28
  • 29. Key Terms Strengths & Weaknesses (Internal)Typically located in functional areas of the firm • Management • Marketing • Finance/Accounting • Production/Operations • Research & Development • Computer Information Systems Ch 1 -29
  • 30. Key TermsStrengths & WeaknessesAssessing the Internal Environment Financial Ratios Performance Metrics Internal Factors Industry Averages Survey Data Ch 1 -30
  • 31. Key TermsLong-term Objectives  Mission-driven pursuit of specified results more than one year out Ch 1 -31
  • 32. Key Terms Long-term ObjectivesEssential for ensuring the firm’s success • Provide direction • Aid in evaluation • Create synergy • Focus coordination • Basis for planning, motivating, and controlling Ch 1 -32
  • 33. Key TermsStrategies  Means by which long-term objectives are achieved Ch 1 -33
  • 34. Key Terms Strategies Some Examples • Geographic expansion • Diversification • Acquisition • Market penetration • Retrenchment • Liquidation • Joint venture Ch 1 -34
  • 35. Key TermsAnnual Objectives  Short-term milestones that firms must achieve to attain long-term objectives Ch 1 -35
  • 36. Key TermsPolicies  Means by which annual objectives will be achieved Ch 1 -36
  • 37. Figure 1.1 Comprehensive Strategic-Management Model External Audit Generate, Implement Measure & Long-Term Implement Evaluate, Strategies: EvaluateVision Objectives Strategies: Performance Select Mgmt Issues & Marketing,Mission Strategies Fin/Acct, R&D, CIS Internal Audit Ch 1- 37
  • 38. Strategic Management ModelStrategic Management Process  Dynamic & continuous  More formal in larger organizations Ch 1 -38
  • 39. Strategic Management Model 1. Identify Existing • Vision • Mission • Objectives • Strategies Ch 1 -39
  • 40. Strategic Management Model 1. Audit external environment 2. Audit internal environment 3. Establish long-term objectives 4. Generate, evaluate, and select strategies 5. Implement selected strategies 6. Measure & evaluate performance Ch 1 -40
  • 41. Benefits of StrategicManagement• Proactive in shaping firm’s future• Initiate and influence firm’s activities• Formulate better strategies •Systematic, logical, rational Ch 1 -41
  • 42. Benefits of StrategicManagementFinancial Benefits • Improvement in sales • Improvement in profitability • Productivity improvement Ch 1- 42
  • 43. Benefits of StrategicManagementNonfinancial Benefits• Improved understanding of competitors’ strategies• Enhanced awareness of threats• Reduced resistance to change• Enhanced problem-prevention capabilities Ch 1- 43
  • 44. Benefits of StrategicManagement (Greenley)1. Identification of opportunities2. Objective view of management problems3. Improved coordination & control4. Minimizes adverse conditions & changes5. Decisions that better support objectives Ch 1 -44
  • 45. Benefits of StrategicManagement (Greenley – cont’d)1. Effective allocation of time & resources2. Internal communication among personnel3. Integration of individual behaviors4. Clarify individual responsibilities5. Encourage forward thinking Ch 1 -45
  • 46. Benefits of StrategicManagement (Greenley – cont’d) 11. Encourages favorable attitude toward change 12. Provides discipline and formality to the management of the business Ch 1 -46
  • 47. Why Some Firms Do NoStrategic PlanningPoor reward structuresFire-fightingWaste of timeToo expensiveLazinessContent with success Ch 1 -47
  • 48. Why Some Firms Do NoStrategic PlanningFear of failureOverconfidencePrior bad experienceSelf-interestFear of the unknownSuspicion Ch 1 -48
  • 49. Business Ethics & StrategicManagementBusiness ethics defined –  Principlesof conduct within organizations that guide decision making and behavior Ch 1 -49
  • 50. Business Ethics & StrategicManagementGood business ethics –  Prerequisite for good strategic management Ch 1 -50
  • 51. Business Ethics & StrategicManagementCode of business ethics –  Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace Ch 1 -51
  • 52. Business Ethics & StrategicManagementBusiness practices always considered unethical –  Misleading advertising  Misleading labeling  Harm to the environment  Insider trading  Dumping flawed products on foreign markets  Poor product or service safety  Padding expense accounts Ch 1 -52
  • 53. Thank You!jatinvaid@gmail.com Ch 1- 53