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Session 1


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Session 1

  1. 1. Ch1 Strategic ManagementStrategic Management W P GamageW P Gamage
  2. 2. Ch1 Sustained Competitive AdvantageSustained Competitive Advantage Above-Average ReturnsAbove-Average Returns Returns in excess of what an investor expects toReturns in excess of what an investor expects to earn from other investments with similar riskearn from other investments with similar risk Occurs when a firm develops a strategy thatOccurs when a firm develops a strategy that competitors are not simultaneously implementingcompetitors are not simultaneously implementing Provides benefits which current and potentialProvides benefits which current and potential competitors are unable to duplicatecompetitors are unable to duplicate Strategic CompetitivenessStrategic Competitiveness Achieved when a firm successfully formulatesAchieved when a firm successfully formulates and implements a value-creating strategyand implements a value-creating strategy
  3. 3. Ch1 which are required for firms to achieve:which are required for firms to achieve: Above-Average ReturnsAbove-Average Returns Strategic CompetitivenessStrategic Competitiveness Sustained Competitive AdvantageSustained Competitive Advantage The Strategic Management ProcessThe Strategic Management Process Involves the full set of:Involves the full set of: ActionsActionsCommitmentsCommitments DecisionsDecisions
  4. 4. Ch1 DEFINITIONS OF STRATEGIC MANAGEMENT • Strategic management is a process that combines three major interrelated activities • Strategy analysis • Strategy formulation • Strategy implementation Gregory G Dess and Alex Miller
  5. 5. Ch1 • Strategic management is the process by which and organization establishes its objectives formulates actions designed to achieve these objectives in the desired timescales, implements the actions and assesses progress and results. • Arthur A Thompson
  6. 6. Ch1 • Strategic management can be defined as the art and science of formulating implementing and evaluating cross- functional decisions that enable an organization to achieve its objectives. • Fred R David
  7. 7. Ch1 • Strategic management is the set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation, strategy evaluation and control.
  8. 8. Ch1 As a whole, the core of the strategic management • Understanding the organization’s s/w relative to any competition • Evaluating current and potential o/t to the organization • Understanding of the relative power an influences of various stakeholders • Identifying and evaluating suitable changes • Concentrating the element of management
  9. 9. Ch1 Stages of sm • Strategic management process consists of three stages • Strategy formulation • Strategy implementation • Strategy evaluation and control
  10. 10. Ch1- The StrategicThe Strategic ManagementManagement ProcessProcess The StrategicThe Strategic ManagementManagement ProcessProcessInternal Environment External Environment Strategic Intent Strategic Mission Strategy Formulation Strategy Implementation Objective setting Competitive Dynamics Corporate-Level Strategy International Strategy functional StrategiesBusiness level strategy Action plan Structure & Control Strategic Leadership motivation & Innovation Strategic Inputs Feedback Strategic Outcomes StrategicStrategic ActionsActions Strategic Evaluation and Control of Returns
  11. 11. Ch1- Why sm is important • SM is aimed toward achieving corporate goals • SM considers a broad range of stakeholders • SM entails multiple time horizons • SM is concerned with both efficiency and effectiveness • Environment is dynamic and volatile
  12. 12. Ch1- Historical development of strategic management • Phase 1 • Type of plan Basic financial plan (budgeting, control) • Effectiveness of Operational control Formal planning Annual budgeting Functional focus • Value system Meet budget
  13. 13. Ch1- • Phase II • Forecast based planning • Effective planning for future • Planning for growth • Multi-year forecast • Static allocation of resources • Predictive future
  14. 14. Ch1- • Phase III • External oriented planning • Environmental analysis • Necessary response to market competition • Competitive assessment • Dynamic allocation of resources • Think strategically
  15. 15. Ch1- • Phase IV • Strategic planning • Organization of all resources to create competitive advantage • Strategically chosen planning framework • Create flexible planning process • Supportive value system and climate • Create future