Presentation is loading. Please wait.

Presentation is loading. Please wait.

Module 1 The Nature of Strategic Management

Similar presentations

Presentation on theme: "Module 1 The Nature of Strategic Management"— Presentation transcript:

1 Module 1 The Nature of Strategic Management

2 Strategic Management –Defined
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

3 Purpose of Strategic Management
To exploit and create new and different opportunities for tomorrow

4 Strategic Management In essence, the strategic plan is a company’s game plan

5 3 Stages of the Strategic Management Process
Strategy formulation Strategy implementation Strategy evaluation

6 Strategy Formulation Vision & Mission External Opportunities & Threats
Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection

7 Issues in Strategy Formulation
Businesses to enter Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover

8 Strategy Implementation
Annual Objectives Policies Employee Motivation Resource Allocation

9 Strategy Implementation Steps
Developing a strategy-supportive culture Creating an effective organizational structure Redirecting marketing efforts Preparing budgets Developing and utilizing information systems Linking employee compensation to organizational performance

10 Issues in Strategy Implementation
Action Stage of Strategic Management Mobilization of employees & managers Most difficult stage Interpersonal skills critical

11 Performance Measurement
Strategy Evaluation Internal Review External Review Performance Measurement Corrective Action

12 Prime Task of Strategic Management
Peter Drucker: Think through the overall mission of a business. Ask the key question: “What is our Business?”

13 Integrating Intuition & Analysis
The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty

14 Integrating Intuition & Analysis
Intuition is based on: Past experiences Judgment Feelings Intuition is useful for decision making in conditions of: Great uncertainty Little precedent Highly interrelated variables Several plausible alternatives

15 Involve management at all levels Influence all analyses
Integrating Intuition & Analysis Intuition & Judgment Involve management at all levels Influence all analyses

16 Adapting to Change Organizations should continually monitor internal and external events and trends so that timely changes can be made as needed

17 Key Terms in Strategic Management
Competitive advantage Strategists Vision and mission statements External opportunities and threats Internal strengths and weaknesses Long-term objectives Strategies Annual objectives Policies

18 Anything that a firm does especially well compared to rival firms
Strategic Management is Gaining and Maintaining Competitive Advantage Anything that a firm does especially well compared to rival firms

19 Achieving Sustained Competitive Advantage
1. Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources 2. Effectively formulating, implementing, and evaluating strategies that capitalize on those factors

20 Strategists Gather Information Analyze Information
Organize Information

21 Vision and Mission Statements
Vision Statement – What do we want to become? Mission Statement – What is our business?

22 External Opportunities and Threats
Analysis of Trends Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors

23 External Opportunities
External Opportunities and Threats Basic Tenet of Strategic Management Take advantage of External Opportunities Strategy Formulation Avoid/minimize impact of External Threats

24 Internal Strengths and Weaknesses
Controllable activities performed especially well or poorly Determined relative to competitors

25 Internal Strengths and Weaknesses
Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development Management Information Systems

26 Internal Strengths and Weaknesses
Assessing the Internal Environment Ratios Internal Factors Performance Measures Industry Averages Survey Data

27 Long-Term Objectives Specific results that an organization seeks to achieve in pursuing its basic mission Long-term means more than one year

28 Long-Term Objectives Essential for ensuring the firm’s success
Provide direction Aid in evaluation Create synergy Reveal priorities Focus coordination Provide basis for planning, organizing, motivating, and controlling

29 Strategies Means by which long-term objectives are achieved

30 Strategies Examples Geographic expansion Diversification Acquisition
Product development Market penetration Retrenchment Divestiture Liquidation Joint venture

31 Sample Strategies Table 1-1 Best Buy Levi Strauss
New York Times Company

32 Annual Objectives Short-term milestones that firms must achieve to reach long-term objectives

33 Policies Means by which annual objectives will be achieved


35 Strategic Management Model
Strategic Management Process Dynamic & continuous More formal in larger organizations

36 Strategic Management Communication is a key to successful strategic management

37 Benefits of Strategic Management

38 Benefits of Strategic Management
Nonfinancial Benefits Enhanced awareness of threats Improved understanding of competitors’ strategies Increased employee productivity Reduced resistance to change Clearer understanding of performance-reward relationship Enhanced problem-prevention capabilities

39 Why Some Firms Do No Strategic Planning
Lack of knowledge of strategic planning Poor reward structures Fire fighting Waste of time Too expensive Laziness Content with success

40 Why Some Firms Do No Strategic Planning (continued)
Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Honest difference of opinion Suspicion

41 Pitfalls in Strategic Planning
Strategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory

42 Effective Strategic Planning is:
A people process more than a paper process A learning process Words supported by numbers Simple and nonroutine Varying assignments, team membership, meeting formats, and planning calendars Challenging assumptions underlying corporate strategy

43 Effective Strategic Planning continued
Welcomes bad news Requires open-mindedness and a spirit of inquiry Is not a bureaucratic mechanism Is not ritualistic or stilted Is not too formal, predictable, or rigid Does not contain jargon or arcane language

44 Effective Strategic Planning continued
Is not a formal system for control Does not disregard qualitative information Is not controlled by “technicians” Does not pursue too many strategies at once Continually strengthens the “good ethics is good business” policy

45 Comparing Business and Military Strategy
Strategic planning started in the military Similarity Both business and military organizations must adapt to change and constantly improve Difference Business strategy assumes competition Military strategy assumes conflict

Download ppt "Module 1 The Nature of Strategic Management"

Similar presentations

Ads by Google