1. Strategic Management in Action Mary Coulter
4/15/2017
Strategic Management in Action Mary Coulter 1
Introducing the Concepts
This chapter introduces the basic concepts of strategy and strategic management. As indicated in the next slide, the chapters covers 4 important areas that helps students understand this discipline.
© Prentice-Hall 2005

2. Learning Outline Why is strategic management important?
4/15/2017
Learning Outline
Why is strategic management important?
Give four reasons why strategic management is important.
Discuss what studies have shown about the impact of strategic management on an organization’s performance.
What is strategic management?
Define strategy and strategic management.
Describe the strategic management process.
Describe the three levels of organizational strategies.
Explain the historical evolution of strategic management.
The learning objectives for this chapter are divided into the four sections indicated in the slide. In each section, various issues including definition of terms and current trends are described.
© Prentice-Hall 2005

3. Learning Outline (contd.)
4/15/2017
Learning Outline (contd.)
Who’s involved with strategic management?
Explain the role of the board of directors in strategic management.
Discuss how top managers can be effective leaders.
Describe the role of other managers and organizational employees in strategy.
Strategic management in today’s world
Discuss how globalization issues affect strategic management.
Explain the concept of corporate governance and how it’s impacting strategic management.
Describe the three different strategic approaches to e-business.
This slide identifies the last two of the four topics covered in the chapter.
© Prentice-Hall 2005

4. Why is Strategic Management Important?
4/15/2017
Why is Strategic Management Important?
It gives a role to everyone in an organization to manage strategically.
It helps the organization perform well.
It helps the organization to effectively cope with the uncertainties in the external and internal environment.
It helps to coordinate various functions and activities
It is important for students to know why the field of strategic management is vital to organizations and, more importantly, to them. Regardless of what their major is or where they hope to work (accounting firm, online retailer, etc.), the key assumption in this book is that everyone in an organization plays a role in managing strategically.
© Prentice-Hall 2005

5. Definition of Strategy
4/15/2017
Definition of Strategy
Goal-directed decisions and actions in which its capabilities and resources are matched with the opportunities and threats in its environment
It is important to focus on the key parts of this definition. First, strategy involves an organization’s goals. Second, it involves goal-directed actions – implementing the strategy. Finally, the organization’s strategies should be designed so they take into account its key internal strengths (capabilities and resources) and external opportunities and threats. This “matching” idea is important to the concept of strategy and strategic management. These concepts are emphasized in the next slide.
© Prentice-Hall 2005

6. Strategy involves Organization’s goals Goal-directed actions
4/15/2017
Strategy involves
Organization’s goals
Goal-directed actions
Matching key internal strengths with external opportunities and threats
The “matching” idea is frequently referred to throughout the book.
© Prentice-Hall 2005

7. Definition of Strategic Management
4/15/2017
Definition of Strategic Management
The process of analyzing the current situation, developing appropriate strategies, putting those strategies into action and evaluating, modifying, or changing those strategies as needed
This definition indicates that strategic management involves several activities. The next slide identifies them.
© Prentice-Hall 2005

8. Figure 1.1 Basic Activities of Strategic Management
4/15/2017
Figure 1.1 Basic Activities of Strategic Management
Situation Analysis
Strategy Formulation
Strategy Evaluation
Strategy Implementation
The arrows connecting the 4 basic activities indicate that the activities are inter-connected and iterative.
© Prentice-Hall 2005

9. Characteristics of Strategic Management
4/15/2017
Characteristics of Strategic Management
Interdisciplinary
Four aspects that set apart
Strategic Management
External focus
First, strategic management encompasses all the areas of an organization – i.e., it is interdisciplinary. Second, it is characterized by its emphasis on the interactions of the organization with its external environment. Third, its internal focus refers to the organization’s specific resources and capabilities. Finally, what distinguishes strategic management is that it concerns the future direction of the organization.
Internal focus
Future direction
© Prentice-Hall 2005

10. Figure 1.2 Strategic Management in Action
4/15/2017
Figure 1.2 Strategic Management in Action
Analyzing
Current
Situation
Deciding on
Strategies
Putting
Strategies
in Action
Evaluating and
Changing Strategies
Situation
Analysis
Strategy
Formulation
Strategy
Implementation
Strategy
Evaluation
Organizational
Context
External
Analysis
Chapter 2
This slide illustrates the strategic management process and indicates how each chapter fits into the process. This slide provides an overview of the textbook’s organization.
Functional
Competitive
Chapter 3
Chapter 5
Chapter 6
Internal
Analysis
Corporate
Chapter 4
Chapter 7
© Prentice-Hall 2005

11. The Strategic Management Process
4/15/2017
The Strategic Management Process
Situation Analysis entails scanning and evaluating
Organizational context
External environment
Organizational environment
Before deciding on an appropriate strategic direction or response, organizational employees need to analyze the current situation. Chapters 2,3, and 4 cover this topic.
© Prentice-Hall 2005

12. Figure 1.3 Levels of Strategies
4/15/2017
Figure 1.3 Levels of Strategies
Corporate
What direction are we going and what business(es) are we in or do we want to be in?
Competitive:
How are we going to compete in our chosen business(es)?
The typical approach to describing the strategies that are formulated is to look at them from three different organization levels – functional (or operational), competitive (or business unit), and corporate.
Functional
What resources and capabilities do we have to support the corporate and competitive strategies?
© Prentice-Hall 2005

13. The Strategic Management Process
4/15/2017
The Strategic Management Process
Strategy Implementation
Putting the organization’s various strategies into action
Strategy Evaluation
Evaluating how the strategy has been implemented as well as the outcomes of the strategy
It is not enough for an organization’s employees to develop or formulate great strategies – these strategies have to be implemented. The approaches to implementing the various strategies should be considered as the strategies are formulated.
An organization’s employees should monitor both the actual implementation of the strategy and the performance outcomes of strategies that have been implemented.
© Prentice-Hall 2005

14. The Strategic Management Process
4/15/2017
The Strategic Management Process
A continuous cycle of
Situation analysis
Strategy formulation
Strategy implementation
Strategy evaluation
It’s important to recognize that , even though we discuss the strategic management process by isolating each step individually in order to study it, in reality it’s a continuous cycle of situation analysis and strategy formulation, implementation, and evaluation.
© Prentice-Hall 2005

15. Looking at Strategic Management’s Past
4/15/2017
Looking at Strategic Management’s Past
Strategy’s Military Roots
Battlefield strategies to gain an edge on the enemy
Exploit enemy’s weak spots
Attack enemy where most vulnerable
Academic Origins of Strategic Management
Mainstream economic theory
Scientific management (Taylor)
Bureaucratic organizations (Weber)
Administrative functions/open systems (Barnard)
Looking at the history of strategic management helps us better understand how and why today’s managers are practicing strategic management in action and even perhaps get clues as to why organizational performance levels vary.
The concept of strategy can be seen in history in the decisions and actions used by military organizations.Many popular children’s games (Battleship, tic-tac-toe, and checkers) are based on military concepts and designed around the idea of a “strategy.”
Strategic management is a relatively young academic discipline. The fields of economics and organization theory provided the earliest academic bases.
© Prentice-Hall 2005

16. Looking at Strategic Management’s Past
4/15/2017
Looking at Strategic Management’s Past
The 1960s
Strategic management established as separate field, basic concepts established
The 1970s and 1980s
Process researchers (“how” strategy is formed)
Content researchers (“what” of a strategic decision)
During the 1960s, three classic books on strategy – Alfred Chandler’s Strategy and Structure, Igor Ansoff’s Corporate Strategy, and a Harvard textbook Business Policy: Text and Cases by Learned, Christensen, Andrews, and Guth – helped distinguish strategic management as a separate academic field and established many basis concepts.
© Prentice-Hall 2005

17. Who’s Involved with Strategic Management?
4/15/2017
Who’s Involved with Strategic Management?
Board of Directors
Elected representatives of stockholders
Play significant role in corporate governance
Top Management Team
Ultimately responsible for every decision and action of every organizational employee
Act as strategic leaders
Other Strategic Managers and Organizational Employees
Responsible for strategy implementation and evaluation
One of the major assumptions of this text is that all of an organization’s employees play an important role in strategic management. The only aspect that differs is the scope and range of the individual’s strategic decision making and action.
This slide identifies the scope and responsibility of three major groups in an organization.
© Prentice-Hall 2005

18. Table 1.1 Typical Board Responsibilities
4/15/2017
Table 1.1 Typical Board Responsibilities
Review and approve strategic goals and plans
Review and approve organization’s financial standards and policies
Ensure integrity of organization’s financial controls and reporting system
Approve an organizational philosophy
Monitor organizational performance and regularly review performance results
Select, evaluate, and compensate top-level managers
Develop management succession plans
Review and approve capital allocations and expenditures
Monitor relations with shareholders and other key stakeholders
Other responsibilities may be assigned depending on the unique culture and needs of the organization
Corporate governance has become an extremely important issue for today’s strategic managers. This slide lists the typical responsibilities of an organization’s board of directors.
© Prentice-Hall 2005

19. Figure 1.4 Board Involvement in the Strategic Management Process
4/15/2017
Figure 1.4 Board Involvement in the Strategic Management Process
APPROVING ROLE
INITIATING ROLE
(Highest level of board involvement)
(Lowest level of board involvement)
The role of the board in the firm’s strategy process was often viewed from two opposing perspectives as shown in the slide. In today’s organizations, we are seeing a shift in the board’s role from mere approval of strategic plans to initiating strategies as well as overseeing the implementation and evaluation of the strategies.
© Prentice-Hall 2005

20. Figure 1.5 Effective Strategic Leadership Involves
4/15/2017
Figure 1.5 Effective Strategic Leadership Involves
Determining
Organizational Purpose or Vision
Establishing
Appropriately
Balanced Controls
Exploiting and
Maintaining
Core Competencies
Effective
Strategic
Leadership
Emphasizing
Ethical Decisions
and Practices
Developing
Human
Capital
Strategic leadership is the ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the organization to initiate changes that will create a viable and valuable future for the organization. This slide identifies the 6 key dimensions of strategic leadership.
Creating and
Sustaining Strong
Organizational Culture
© Prentice-Hall 2005

21. Strategic Management in Today’s World
4/15/2017
Strategic Management in Today’s World
Three important issues affecting strategic management in today’s world
Globalization
Corporate governance
E-business
Managing strategically in today’s world isn’t easy. This slide identifies three important issues that impact strategic management in today’s world.
Globalization challenges come from openness and significant cultural differences.
In a world of Enron, Tyco, and Worldcom, corporate governance is a major issue. The next slides deals more specifically with this issue.
Today’s strategic decision makers function in an e-business world. Despite the implosion of many dot com businesses, e-business is here to stay and offers many strategic advantages.
© Prentice-Hall 2005

22. 4/15/2017
Corporate Governance
Corporate governance is the determination of the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad participants in organizations
Sarbanes-Oxley Act of 2002 – a U.S. federal law designed to protect investors by improving the accuracy and reliability of corporate disclosures
A significant part of the reform in corporate governance was the Sarbanes-Oxley Act of Two areas in which corporate governance reform was mandated by the Act are the role of boards of directors and financial reporting. Tables 1.2 and 1.3 are guidelines in these areas.
© Prentice-Hall 2005

23. Chapter One ?
Questions
© Prentice-Hall 2005