ppt on startegic mgmt

Chapter 1 The Nature of Strategic Management :Copyright 2007 Prentice Hall Ch 1 -1 Chapter 1 The Nature of Strategic Management Strategic Management: Concepts & Cases 11th Edition Fred David


Themes in the Text :Copyright 2007 Prentice Hall Ch 1 -2 Themes in the Text Global Considerations – impact virtually all strategic decisions E-commerce – vital strategic management tool Natural environment – important strategic issue


Slide 3 :Copyright 2007 Prentice Hall Ch 1 -3 Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Strategic Management – Defined


Slide 4 :Copyright 2007 Prentice Hall Ch 1 -4 Strategic Management In essence, the strategic plan is a company’s game plan


Slide 5 :Copyright 2007 Prentice Hall Ch 1 -5 Strategic Management achieves a firm’s success through integration –– Management MIS Production/Operations Finance/Accounting Marketing Research & Development


Slide 6 :Copyright 2007 Prentice Hall Ch 1 -6 Vision & Mission Strategy Formulation External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection


Slide 7 :Copyright 2007 Prentice Hall Ch 1 -7 Issues in Strategy Formulation New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover


Slide 8 :Copyright 2007 Prentice Hall Ch 1 -8 Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation


Slide 9 :Copyright 2007 Prentice Hall Ch 1 -9 Strategy Implementation Action Stage of Strategic Management – Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit


Slide 10 :Copyright 2007 Prentice Hall Ch 1 -10 Strategy Evaluation Internal Review External Review Performance Metrics Corrective Actions


Slide 11 :Copyright 2007 Prentice Hall Ch 1 -11 Strategy Evaluation Final Stage of Strategic Management Subject to future modification Today’s success no guarantee of future success New & different problems Complacency leads to demise


Slide 12 :Copyright 2007 Prentice Hall Ch 1 -12 Peter Drucker: -- Think through the overall mission of a business. Ask the key question: “What is our Business?” Prime Task of Strategic Management


Slide 13 :Copyright 2007 Prentice Hall Ch 1 -13 The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty Integrating Intuition and Analysis


Slide 14 :Copyright 2007 Prentice Hall Ch 1 -14 Intuition is based on: Past experiences Judgment Feelings Integrating Intuition and Analysis Intuition is useful for decision making in: Conditions of great uncertainty Conditions with little precedent


Slide 15 :Copyright 2007 Prentice Hall Ch 1 -15 Involve Management at all levels Intuition & Judgment Influence all Analyses Integrating Intuition & Analysis


Slide 16 :Copyright 2007 Prentice Hall Ch 1 -16 Analytical Thinking Integrating Intuition & Analysis Intuitive Thinking


Slide 17 :Copyright 2007 Prentice Hall Ch 1 -17 Organizations must monitor events On-going process Internal and external events Timely changes Adapting to Change


Slide 18 :Copyright 2007 Prentice Hall Ch 1 -18 “Anything that a firm does especially well compared to rival firms” Strategic Management is Gaining and Maintaining Competitive Advantage


Slide 19 :Copyright 2007 Prentice Hall Ch 1 -19 1. Adapting to change in external trends, internal capabilities and resources Achieving Sustained Competitive Advantage 2. Effectively formulating, implementing & evaluating strategies


Slide 20 :Copyright 2007 Prentice Hall Ch 1 -20


Slide 21 :Copyright 2007 Prentice Hall Ch 1 -21 Rate & magnitude of change increasing dramatically Adapting to Change E-commerce Demographics Technology


Slide 22 :Copyright 2007 Prentice Hall Ch 1 -22 Effective Adaptation Adapting to Change Requires long-term focus


Slide 23 :Copyright 2007 Prentice Hall Ch 1 -23 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? Adapting to Change – Key Strategic Management Questions


Key Terms :Copyright 2007 Prentice Hall Ch 1 -24 Key Terms Various Job Titles: Chief Executive Officer (CEO) Chief Strategy Officer (CSO) President Owner Board Chair Executive Director Strategists – Firm’s success/failure


Slide 25 :Copyright 2007 Prentice Hall Ch 1 -25 Vision Statement – What do we want to become? Mission Statement – What is our business? Key Terms


Slide 26 :Copyright 2007 Prentice Hall Ch 1 -26 Largely beyond the control of a single organization Key Terms Opportunities and Threats (External)


Slide 27 :Copyright 2007 Prentice Hall Ch 1 -27 Opportunities & Threats (External) Key Terms Analysis of Trends: Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors


Slide 28 :Copyright 2007 Prentice Hall Ch 1 -28 Process of conducting research and gathering and assimilating external information Key Terms Opportunities & Threats Environmental Scanning (Industry Analysis)


Slide 29 :Copyright 2007 Prentice Hall Ch 1 -29 Basic Tenet of Strategic Management Key Terms Opportunities & Threats Strategy Formulation Take advantage of External Opportunities Avoid/minimize impact of External Threats


Slide 30 :Copyright 2007 Prentice Hall Ch 1 -30 Controllable activities performed especially well or poorly Key Terms Strengths & Weaknesses (Internal)


Slide 31 :Copyright 2007 Prentice Hall Ch 1 -31 Strengths & Weaknesses (Internal) Key Terms Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development Computer Information Systems


Slide 32 :Copyright 2007 Prentice Hall Ch 1 -32 Assessing the Internal Environment Key Terms Strengths & Weaknesses Internal Factors Performance Metrics Financial Ratios Industry Averages Survey Data


Slide 33 :Copyright 2007 Prentice Hall Ch 1 -33 Mission-driven pursuit of specified results more than one year out Key Terms Long-term Objectives


Slide 34 :Copyright 2007 Prentice Hall Ch 1 -34 Long-term Objectives Key Terms Essential for ensuring the firm’s success Provide direction Aid in evaluation Create synergy Focus coordination Basis for planning, motivating, and controlling


Slide 35 :Copyright 2007 Prentice Hall Ch 1 -35 Means by which long-term objectives are achieved Key Terms Strategies


Slide 36 :Copyright 2007 Prentice Hall Ch 1 -36 Strategies Key Terms Some Examples Geographic expansion Diversification Acquisition Market penetration Retrenchment Liquidation Joint venture


Slide 37 :Copyright 2007 Prentice Hall Ch 1 -37 Short-term milestones that firms must achieve to attain long-term objectives Key Terms Annual Objectives


Slide 38 :Copyright 2007 Prentice Hall Ch 1 -38 Means by which annual objectives will be achieved Key Terms Policies


Example Strategies in Action in 2005 :Copyright 2007 Prentice Hall Ch 1 -39 Example Strategies in Action in 2005


Example Strategies in Action in 2005 :Copyright 2007 Prentice Hall Ch 1 -40 Example Strategies in Action in 2005


Comprehensive strategic management model :Copyright 2007 Prentice Hall Ch 1 -41 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies Chapter 6 Implement Strategies: Mgmt Issues Chapter 7 Implement Strategies: Marketing, Fin/Acct, R&D, CIS Chapter 8 Measure & Evaluate Performance Chapter 9 Vision & Mission Chapter 2 Comprehensive strategic management model


Slide 42 :Copyright 2007 Prentice Hall Ch 1 -42 Dynamic & Continuous More formal in larger organizations Strategic Management Model Strategic Management Process


Slide 43 :Copyright 2007 Prentice Hall Ch 1 -43 1. Identify Existing -- Strategic Management Model Vision Mission Objectives Strategies


Slide 44 :Copyright 2007 Prentice Hall Ch 1 -44 Audit external environment Audit internal environment Establish long-term objectives Generate, evaluate & select strategies Implement selected strategies Measure & evaluate performance Strategic Management Model


Slide 45 :Copyright 2007 Prentice Hall Ch 1 -45 Benefits of Strategic Management Proactive in shaping firm’s future Initiate and influence firm’s activities Formulate better strategies Systematic, logical, rational


Slide 46 :Copyright 2007 Prentice Hall Ch 1 -46 Benefits of Strategic Management Financial Benefits Improvement in sales Improvement in profitability Productivity improvement


Slide 47 :Copyright 2007 Prentice Hall Ch 1 -47 Benefits of Strategic Management Non-Financial Benefits Improved understanding of competitors strategies Enhanced awareness of threats Reduced resistance to change Enhanced problem-prevention capabilities


Slide 48 :Copyright 2007 Prentice Hall Ch 1 -48 Benefits of Strategic Management (Greenley) Identification of Opportunities Objective view of management problems Improved coordination & control Minimizes adverse conditions & changes Decisions that better support objectives


Slide 49 :Copyright 2007 Prentice Hall Ch 1 -49 Benefits of Strategic Management (Greenley – cont’d) Effective allocation of time & resources Internal communication among personnel Integration of individual behaviors Clarify individual responsibilities Encourage forward thinking


Slide 50 :Copyright 2007 Prentice Hall Ch 1 -50 Benefits of Strategic Management (Greenley – cont’d) Encourages favorable attitude toward change Provides discipline and formality to the management of the business


Slide 51 :Copyright 2007 Prentice Hall Ch 1 -51 Why Some Firms Do No Strategic Planning Poor reward structures Fire-fighting Waste of time Too expensive Laziness Content with success


Slide 52 :Copyright 2007 Prentice Hall Ch 1 -52 Why Some Firms Do No Strategic Planning Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Suspicion


Slide 53 :Copyright 2007 Prentice Hall Ch 1 -53 Principles of conduct within organizations that guide decision making and behavior Business Ethics & Strategic Management Business Ethics defined –


Slide 54 :Copyright 2007 Prentice Hall Ch 1 -54 Prerequisite for good strategic management Business Ethics & Strategic Management Good business ethics –


Slide 55 :Copyright 2007 Prentice Hall Ch 1 -55 Provides basis on which policies can be devised to guide daily behavior and decisions in the workplace Business Ethics & Strategic Management Code of business ethics –


Slide 56 :Copyright 2007 Prentice Hall Ch 1 -56 Misleading advertising Misleading labeling Harm to the environment Insider trading Dumping flawed products on foreign markets Poor product or service safety Padding expense accounts Business Ethics & Strategic Management Business practices always considered unethical –


Slide 57 :Copyright 2007 Prentice Hall Ch 1 -57 ISO 9000 focuses on quality control > 1.5 million companies incorporate ISO Natural Environment Perspective ISO used to gain strategic advantage


Slide 58 :Copyright 2007 Prentice Hall Ch 1 -58 Voluntary standards ISO 14001 standard for Environmental Management System Firms minimize harmful effects on environment Natural Environment Perspective ISO 14000 standards


Slide 59 :Copyright 2007 Prentice Hall Ch 1 -59 Parent company Host country The Nature of Global Competition International/multinational corporations


Slide 60 :Copyright 2007 Prentice Hall Ch 1 -60 Cultural differences Norms Values Work ethic The Nature of Global Competition Strategy implementation may be difficult


Slide 61 :Copyright 2007 Prentice Hall Ch 1 -61 Advantages of International Operations Absorb excess capacity Reduce unit costs Spread risk over wider markets Low-cost production facilities


Slide 62 :Copyright 2007 Prentice Hall Ch 1 -62 Advantages of International Operations (cont’d) Less intense competition Lower taxes Economies of scale


Slide 63 :Copyright 2007 Prentice Hall Ch 1 -63 Disadvantages of International Operations Difficult communications Underestimate foreign competition Cultural barriers to effective management Complications arising from currency differences