David sm13 ppt_01

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David sm13 ppt_01

  1. 1. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -1Chapter 1The Nature of Strategic ManagementStrategic Management:Concepts & Cases13thEditionFred David
  2. 2. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -2Art & science of formulating,implementing, and evaluating,cross-functional decisions thatenable an organization to achieve itsobjectivesStrategic Management –Defined
  3. 3. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -3Purpose of Strategic ManagementTo exploit and create new and differentopportunities for tomorrow
  4. 4. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -4Strategic ManagementIn essence, the strategic plan is acompany’s game plan
  5. 5. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -53 Stages of the StrategicManagement Process Strategy formulation Strategy implementation Strategy evaluation
  6. 6. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -6Vision & MissionStrategy FormulationExternal Opportunities & ThreatsInternal Strengths & WeaknessesLong-Term ObjectivesAlternative StrategiesStrategy Selection
  7. 7. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -7Issues in StrategyFormulationBusinesses to enterBusinesses to abandonAllocation of resourcesExpansion ordiversificationInternational marketsMergers or jointventuresAvoidance of hostiletakeoverBusinesses to enterBusinesses to abandonAllocation of resourcesExpansion ordiversificationInternational marketsMergers or jointventuresAvoidance of hostiletakeover
  8. 8. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -8Strategy ImplementationAnnual ObjectivesPoliciesEmployee MotivationResource Allocation
  9. 9. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -9Strategy Implementation Steps Developing a strategy-supportive culture Creating an effective organizational structure Redirecting marketing efforts Preparing budgets Developing and utilizing information systems Linking employee compensation toorganizational performance
  10. 10. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -10Issues in StrategyImplementationAction Stage of StrategicManagementMobilization ofemployees & managersMost difficult stageInterpersonal skillscriticalAction Stage of StrategicManagementMobilization ofemployees & managersMost difficult stageInterpersonal skillscritical
  11. 11. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -11Strategy EvaluationInternal ReviewExternal ReviewPerformance MeasurementCorrective Action
  12. 12. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -12Peter Drucker: Think through theoverall mission of a business. Askthe key question:“What is our Business?”Prime Task ofStrategic Management
  13. 13. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -13The strategic management processattempts to organize quantitative andqualitative information under conditions ofuncertaintyIntegrating Intuition & Analysis
  14. 14. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -14Intuition is based on: Past experiences Judgment FeelingsIntegrating Intuition & AnalysisIntuition is useful for decision making inconditions of: Great uncertainty Little precedent Highly interrelated variables Several plausible alternatives
  15. 15. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -15Involve management at all levelsIntuition & JudgmentInfluence all analysesIntegrating Intuition & Analysis
  16. 16. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -16Organizations should continuallymonitor internal and externalevents and trends so that timelychanges can be made as neededAdapting to Change
  17. 17. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -17Key Terms in Strategic Management Competitive advantage Strategists Vision and mission statements External opportunities and threats Internal strengths and weaknesses Long-term objectives Strategies Annual objectives Policies
  18. 18. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -18Anything that a firm does especiallywell compared to rival firmsStrategic Management isGaining and MaintainingCompetitive Advantage
  19. 19. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -191. Continually adapting to changes inexternal trends and events and internalcapabilities, competencies, and resourcesAchieving Sustained CompetitiveAdvantage2. Effectively formulating, implementing, andevaluating strategies that capitalize on thosefactors
  20. 20. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -20StrategistsGather InformationAnalyze InformationOrganize Information
  21. 21. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -21Vision Statement –What do we want to become?Mission Statement –What is our business?Vision and Mission Statements
  22. 22. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -22External Opportunities and ThreatsAnalysis of Trends Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors
  23. 23. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -23Basic Tenet of Strategic ManagementExternal Opportunities and ThreatsStrategy FormulationTake advantage ofExternal OpportunitiesTake advantage ofExternal OpportunitiesAvoid/minimize impact ofExternal ThreatsAvoid/minimize impact ofExternal Threats
  24. 24. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -24 Controllable activities performedespecially well or poorly Determined relative to competitorsInternal Strengths and Weaknesses
  25. 25. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -25 Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development Management Information SystemsInternal Strengths and Weaknesses
  26. 26. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -26Assessing the Internal EnvironmentInternal Strengths and WeaknessesInternal FactorsPerformance MeasuresRatiosIndustry AveragesSurvey Data
  27. 27. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -27 Specific results that an organizationseeks to achieve in pursuing its basicmission Long-term means more than one yearLong-Term Objectives
  28. 28. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -28Long-Term Objectives Essential for ensuring the firm’s success Provide direction Aid in evaluation Create synergy Reveal priorities Focus coordination Provide basis for planning, organizing,motivating, and controlling
  29. 29. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -29Means by which long-term objectivesare achievedStrategies
  30. 30. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -30Strategies Examples Geographic expansion Diversification Acquisition Product development Market penetration Retrenchment Divestiture Liquidation Joint venture
  31. 31. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -31Sample Strategies Table 1-1 Best Buy Levi Strauss New York Times Company
  32. 32. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -32Short-term milestones that firms mustachieve to reach long-term objectivesAnnual Objectives
  33. 33. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -33Means by which annual objectives willbe achievedPolicies
  34. 34. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -34
  35. 35. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -35 Strategic Management ProcessDynamic & continuousMore formal in largerorganizationsStrategic Management Model
  36. 36. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -36Strategic Management Communication is a key tosuccessful strategic management
  37. 37. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -37Benefits of Strategic Management
  38. 38. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -38Benefits of Strategic Management Nonfinancial Benefits Enhanced awareness of threats Improved understanding of competitors’ strategies Increased employee productivity Reduced resistance to change Clearer understanding of performance-rewardrelationship Enhanced problem-prevention capabilities
  39. 39. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -39Why Some Firms Do No StrategicPlanning Lack of knowledge of strategic planning Poor reward structures Fire fighting Waste of time Too expensive Laziness Content with success
  40. 40. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -40Why Some Firms Do No StrategicPlanning (continued) Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Honest difference of opinion Suspicion
  41. 41. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -41Pitfalls in Strategic PlanningStrategic planning is an involved, intricate,and complex process that takes anorganization into uncharted territory
  42. 42. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -42Effective Strategic Planning is: A people process more than a paper process A learning process Words supported by numbers Simple and nonroutine Varying assignments, team membership,meeting formats, and planning calendars Challenging assumptions underlyingcorporate strategy
  43. 43. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -43Effective Strategic Planningcontinued Welcomes bad news Requires open-mindedness and a spirit ofinquiry Is not a bureaucratic mechanism Is not ritualistic or stilted Is not too formal, predictable, or rigid Does not contain jargon or arcane language
  44. 44. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -44Effective Strategic Planningcontinued Is not a formal system for control Does not disregard qualitative information Is not controlled by “technicians” Does not pursue too many strategies at once Continually strengthens the “good ethics isgood business” policy
  45. 45. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -45Comparing Business and MilitaryStrategy Strategic planning started in the military Similarity Both business and military organizations mustadapt to change and constantly improve Difference Business strategy assumes competition Military strategy assumes conflict
  46. 46. Copyright © 2011 Pearson Education, Inc.Publishing as Prentice HallCh 1 -46All rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted, in any form or by any means, electronic,mechanical, photocopying, recording, or otherwise, without the prior writtenpermission of the publisher. Printed in the United States of America.

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