Abbasian, Phd Ch 1 -1 Chapter 1 The Nature of Strategic Management Strategic Management: Concepts & Cases 13 th Edition Fred David

Ch 1 -2 Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Strategic Management –Defined Abbasian, Phd

Ch 1 -3 Purpose of Strategic Management To exploit and create new and different opportunities for tomorrow Abbasian, Phd

Ch 1 -4 Strategic Management In essence, the strategic plan is a company’s game plan Abbasian, Phd

Ch Stages of the Strategic Management Process Strategy formulation Strategy implementation Strategy evaluation Abbasian, Phd

Ch 1 -6 Vision & Mission Strategy Formulation External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection Abbasian, Phd

Ch 1 -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 Businesses to enter Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover Abbasian, Phd

Ch 1 -8 Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation Abbasian, Phd

Ch 1 -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 Abbasian, Phd

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Issues in Strategy Implementation Action Stage of Strategic Management Mobilization of employees & managers Most difficult stage Interpersonal skills critical Action Stage of Strategic Management Mobilization of employees & managers Most difficult stage Interpersonal skills critical

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Strategy Evaluation Internal Review External Review Performance Measurement Corrective Action

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch Peter Drucker: Think through the overall mission of a business. Ask the key question: “What is our Business?” Prime Task of Strategic Management

Ch The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty Integrating Intuition & Analysis Abbasian, Phd

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

Ch Involve management at all levels Intuition & Judgment Influence all analyses Integrating Intuition & Analysis Abbasian, Phd

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

Ch 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 Abbasian, Phd

Ch Anything that a firm does especially well compared to rival firms Strategic Management is Gaining and Maintaining Competitive Advantage Abbasian, Phd

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

Ch Strategists Gather Information Analyze Information Organize Information Abbasian, Phd

Ch Vision Statement – What do we want to become? Mission Statement – What is our business? Vision and Mission Statements Abbasian, Phd

Ch External Opportunities and Threats Analysis of Trends  Economic  Social  Cultural  Demographic/Environmental  Political, Legal, Governmental  Technological  Competitors Abbasian, Phd

Ch Basic Tenet of Strategic Management External Opportunities and Threats Strategy Formulation Take advantage of External Opportunities Take advantage of External Opportunities Avoid/minimize impact of External Threats Avoid/minimize impact of External Threats Abbasian, Phd

Ch  Controllable activities performed especially well or poorly  Determined relative to competitors Internal Strengths and Weaknesses Abbasian, Phd

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

Ch Assessing the Internal Environment Internal Strengths and Weaknesses Internal Factors Performance Measures Ratios Industry Averages Survey Data Abbasian, Phd

Ch  Specific results that an organization seeks to achieve in pursuing its basic mission  Long-term means more than one year Long-Term Objectives Abbasian, Phd

Ch 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 Abbasian, Phd

Ch Means by which long-term objectives are achieved Strategies Abbasian, Phd

Ch Strategies Examples  Geographic expansion  Diversification  Acquisition  Product development  Market penetration  Retrenchment  Divestiture  Liquidation  Joint venture Abbasian, Phd

Ch Short-term milestones that firms must achieve to reach long-term objectives Annual Objectives Abbasian, Phd

Ch Means by which annual objectives will be achieved Policies Abbasian, Phd

Ch Abbasian, Phd

Ch  Strategic Management Process  Dynamic & continuous  More formal in larger organizations Strategic Management Model Abbasian, Phd

Ch Strategic Management Communication is a key to successful strategic management Abbasian, Phd

Ch Benefits of Strategic Management Abbasian, Phd

Ch 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 Abbasian, Phd

Ch 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 Abbasian, Phd

Ch 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 Abbasian, Phd

Ch 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 Abbasian, Phd