Strategic management involves analyzing a firm's internal and external environment to make decisions and take actions to create and sustain competitive advantage over the long term. It encompasses the entire organization and its stakeholders. The three major steps are strategy analysis, formulation of decisions, and implementation of actions. Strategic management ensures consistency among a firm's goal hierarchy including its vision, mission, and objectives.

1. Strategic management Creating competitive advantage

2. Who cares? Why should anyone care about the strategic direction of firms? Understand direction of your company, competitors, other companies

3. Who cares? Integration and coordination Across time and across organization Assess the organization’s performance and adjust to a changing environment

4. Two perspectives of organizational leadership: Do managers matter? Romantic (or internal): Organizational leader as key force in determining organizational success or failure Success creates CEO superheroes Failure creates CEO scapegoats

5. Two perspectives of organizational leadership External factors: changes in external factors Shifts in customer tastes, preferences International competition Rising material costs Price erosion External conditions determine contexts in which organizational leaders create or lose organizational value

6. Strategic management process

7. Strategic management Analyses, decisions, and actions for creating and sustaining competitive advantage

8. Analysis Analysis of strategic inputs Internal and external environment Strategic goals: vision, mission, objectives

9. Decisions Two broad decisions of strategic management Industries in which to compete How to compete in those industries Encompasses both domestic and international operations

10. Actions Resource allocation: where to focus resources Organizational design: how to group people and tasks

11. Competitive advantage Some firms outperform others over a long period Competitive advantage with respect to the marketplace Meeting present and future demand Doing so in ways that customers regard as unique and valuable and that competitors find difficult to im itate or substitute

12. 4 key attributes of strategic management Directed at overall organizational goals Includes multiple stakeholders Incorporates short-term and long-term perspectives Recognizes trade-offs between effectiveness and efficiency

13. Three major steps of the strategic management processes Strategy analysis Strategy formulation (decisions) Strategy implementation (actions)

14. Strategy analysis Understanding conditions in external environment Opportunities for creating value Threats to competitive advantage Understand firm strengths and weaknesses Activities in value chain (click on the link) Firm’s resource base

15. Strategy formulation (decisions) Competing in specific product markets Cost leadership or differentiation Maintain advantage through different stages of industry life cycle Business portfolio Choosing the business(es) in which to compete Creating synergies among businesses

16. International strategy Modes of entry Creating and sustaining competitive advantage internationally

17. Strategy implementation (actions) Corporate governance Organizational design

18. Corporate governance Systems that ensure managers operate in shareholders’ interests Internal control: Primary participants Shareholders Strategic managers Board of directors External control: financial markets, regulators, press

19. Organizational stakeholders Capital markets Owners (shareholders) Lenders Product markets Suppliers (goods, services, capital, labor) Customers Community Organization: Employees and managers

20. Corporate social responsibility Firm as citizen Customers evaluate both a firm’s products/services and its practices in producing those products Business involves environmental and social considerations in addition to economic ones Social innovation: society’s needs may create business opportunities

21. Organizational design Structures consistent with strategy Organizational forms

22. Key drivers of strategy Globalization: flow of goods, services, capital, people, information, knowledge across borders Technology: new knowledge about products and production and distribution Intellectual capital: human knowledge as source of competitive advantage

23. Coherence in strategic direction Goal hierarchy Vision: destination driven by passion Mission Statement purpose and basis of competition Communicates to stakeholders Value-focused Objectives: yardstick for measuring goal attainment Each must be consistent with one another

24. Summary Strategic management Firm direction for creating and sustaining competitive advantage Encompasses entire organization and its internal and external participants Three major steps: analysis, decisions, actions

25. Summary (cont’d) Forms of external control Corporate governance systems Stakeholders Key drivers of strategy: globalization, technology, intellectual capital Consistency among goal hierarchy