Nature of sm ppt


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Nature of sm ppt

  1. 1. Strategic Management The Nature of Strategic Management
  2. 2. The Nature of Strategic Management• A global perspective is a matter of survival for businesses.• The natural environment is an important strategic issue.
  3. 3. Comprehensive Strategic Management Model External Audit Chapter 3 Long-Term Generate, Implement Implement Measure &Vision Objectives Evaluate, Strategies: Strategies: Evaluate & Select Mgmt Issues Marketing, PerformanceMission Strategies Fin/Acct, R&D, CISChapter 2 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Internal Audit Chapter 4
  4. 4. Strategic Management Achieves Organizational SuccessProcess of Integrating: – management – marketing – finance/accounting – production/operations – research and development – computer information systems
  5. 5. Three-Stage ProcessStrategy Formulation Strategy Implementation Strategy Evaluation
  6. 6. Strategy Formulation Vision & Mission Opportunities & Threats Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection
  7. 7. Strategy FormulationIssues include: – What new businesses to enter – What businesses to abandon – How to allocate resources – Expand operations or diversify – Enter international markets – Avoidance of hostile takeover
  8. 8. Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation
  9. 9. Strategy ImplementationAction Stage of strategic management: – Most difficult stage – Mobilizing employees and managers – Interpersonal skills are critical – Consensus on pursuing goals
  10. 10. Strategy Evaluation Internal Review External Review Performance Measurement Corrective Action
  11. 11. Strategy EvaluationFinal stage of strategic management: – All strategies subject to future modification – Success today is no guarantee of success tomorrow – Success creates new and different problems
  12. 12. Prime Task of Strategic ManagementAccording to Peter Drucker… The prime task is to think through the overall mission of a business Ask the question: What is our Business?
  13. 13. Integrating Intuition and AnalysisThe strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty.
  14. 14. Integrating Intuition and AnalysisIntuition based on: – Past experiences – Judgment – Feelings
  15. 15. Integrating Intuition and AnalysisIntuition and judgment – Management at all levels – Analyses are influencedAnalytical thinking and intuitive thinking – Complement each other
  16. 16. Adaptation to ChangeOrganizations must monitor events – On-going process – Internal and external events – Timely changes
  17. 17. Adaptation to ChangeRate and magnitude of changes – Increasing dramatically • E-commerce • Demographics • Technology • Merger-mania
  18. 18. Adaptation to ChangeKey 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?
  19. 19. Key TermsStrategists – Most responsible for success or failure of an organization – Various job titles: • Chief executive officer • President • Owner • Chair of the Board • Executive Director • Entrepreneur
  20. 20. Key TermsVision Statement – What do we want to become?Mission Statement – What is our business?
  21. 21. Key TermsExternal 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
  22. 22. Key TermsExternal 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
  23. 23. Key TermsEnvironmental Scanning – Industry Analysis • Process of conducting research and gathering and assimilating external information
  24. 24. Key TermsInternal 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
  25. 25. Key TermsLong-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
  26. 26. Key TermsStrategies: – Means by which long-term objectives will be achieved. – May include: • Geographic expansion, diversification • Acquisition • Product development, market penetration • Retrenchment, divestiture • Liquidation, joint venture
  27. 27. Key TermsAnnual Objectives: – Short-term milestones that organizations must achieve to reach long-term objectives.
  28. 28. Key TermsPolicies: – Means by which annual objectives will be achieved.
  29. 29. Comprehensive Strategic Management Model External Audit Chapter 3 Long-Term Generate, Implement Implement Measure &Vision Objectives Evaluate, Strategies: Strategies: Evaluate & Select Mgmt Issues Marketing, PerformanceMission Strategies Fin/Acct, R&D, CISChapter 2 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Internal Audit Chapter 4
  30. 30. Strategic-Management ModelStrategic-Management Process –• Dynamic and Continuous• More formal in larger organizations
  31. 31. Strategic-Management Model1.Identify Organization’s existing: • Vision • Mission • Objectives • Strategies
  32. 32. Strategic-Management Model1. Perform External Audit2. Perform Internal Audit3. Establish long-term objectives4. Generate, evaluate, select strategies5. Implement strategies6. Measure and evaluate performance
  33. 33. Benefits of Strategic Management• Proactive in shaping organization’s future• Initiate and influence activities• Formulate better strategies – Systematic, logical, rational approach
  34. 34. Benefits of Strategic Management• Financial benefits – Improvement in sales – Improvement in profitability – Improvement in productivity
  35. 35. Benefits of Strategic Management• Non-Financial benefits – Enhanced awareness of xternal threats – Improved understanding of competitors’ strategies – Increased employee productivity – Reduced resistance to change – Understanding of performance-reward relationships – Enhances problem-prevention capabilities
  36. 36. Benefits of Strategic Management1. Identification of opportunities2. Objective view of management problems3. Improved coordination and control4. Minimizes adverse conditions and changes5. Decisions to better support objectives6. Effective allocation of time and resources7. Internal communication among personnel
  37. 37. Benefits of Strategic Management1. Integration of individual behaviors2. Clarifies individual responsibilities3. Encourages forward thinking4. Encourages favorable attitude toward change5. Discipline and formality to the management of the business
  38. 38. Why Some Firms Do No Strategic Planning• Poor reward structures• Waste of time• Too expensive• Laziness• Content with success
  39. 39. Why Some Firms Do No Strategic Planning (Cont’d)• Fear of failure• Overconfidence• Prior bad experience• Self-interest• Fear of the unknown• Suspicion
  40. 40. Business Ethics and Strategic ManagementBusiness ethics defined: – Principles of conduct within organizations that guide decision making and behavior.
  41. 41. Business Ethics and Strategic ManagementGood business ethics: – prerequisite for good strategic management
  42. 42. Business Ethics and Strategic ManagementCode of business ethics: – Provides basis on which policies can be devised to guide daily behavior and decisions at the workplace
  43. 43. Business Ethics & Strategic PlanningBusiness actions always unethical include: • Misleading advertising • Misleading labeling • Environmental harm • Poor product or service safety • Insider trading • Dumping flawed products on foreign markets
  44. 44. Nature of Global CompetitionCompanies conduct business across borders International or multinational corporations  Parent company  Host country• Strategy implementation more difficult Cultural differences  Norms, values, work ethics
  45. 45. Advantages of International Operations• Absorb excess capacity• Reduce unit costs• Spread economic risks over wider markets• Low-cost production facilities• Competition may be less intense• Reduced tariffs, lower taxes• Economies of scale
  46. 46. Disadvantages of International Operations• Different social, cultural demographic, legal forces may create difficult communication• Weaknesses of foreign competition may be underestimated• Barriers to communication and effective management of personnel• Complications from different monetary systems
  47. 47. THANK YOU