1. Chapter 1 The Nature of Strategic Management

2. Learning Objectives
Explain the concept of strategic management
Describe how strategic decisions differ from other decisions that managers make
Describe the comprehensive model of strategic decision making
Appreciate the importance of strategic management process

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

4. Strategic Management Critical Task
Formulate the company’s mission, including broad statements about its philosophy, and goals
Conduct an analysis that reflects the company’s internal conditions and capabilities
Assess the company’s external environment, including both the competitive and the general contextual factors
Analyze the company’s options by matching its resources with the external environment

5. Identify the most desirable options by evaluating each option in light of the company's mission
Select a set of long-term objectives and grand strategies that will achieve the most desirable options
7. Develop annual objective and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies

6. 8. Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward system is emphasized 9. Evaluate the success of the strategic process as an input for future decision making.

7. Expectations for the Course: You Will…
Struggle with figuring out what to do
Be prepared to participate in planning for your own firms
Study real business situation

8. Why is strategic management important?
Gives everyone a role
Makes a difference in performance levels
Provides systematic approach to uncertainties
Coordinates and focuses employees

9. The Strategic Management Process
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10. Strategic Leadership and the Strategic Management Process
Effective Strategic Leadership
Shapes the
Formulation of
Strategic Intent
Strategic Mission
and
Influence
Successful Strategic Actions
Formulation of Strategies
Implementation of Strategies
Yields
Strategic Competitiveness
Above-average Returns

11. Strategic Leadership Requires the managerial ability to:
Anticipate and envision
Maintain flexibility
Empower others to create strategic change as necessary
Strategic leadership is:
Multi-functional work that involves working through others
Consideration of the entire enterprise rather than just a sub-unit
A managerial frame of reference

12. Strategic Leadership (cont’d)
Effective strategic leaders:
Manage the firm’s operations effectively
Sustain a high performance over time
Make better decisions than their competitors
Make candid, courageous, pragmatic decisions
Understand how their decisions affect the internal systems in use by the firm
Solicit feedback from peers, superiors and employees about their decisions and visions

13. Managers as an Organizational Resource
Managers often use their discretion when making strategic decisions and implementing strategies
Factors affecting the amount of decision-making discretion include:
External environmental sources
Characteristics of the organization
Characteristics of the manager

14. Factors Affecting Managerial Discretion
External Environment
External Environment
Industry structure
Rate of market growth
Number and type of competitors
Nature and degree of political/legal constraints
Degree to which products can be differentiated
Managerial Discretion

15. Factors Affecting Managerial Discretion
External Environment
Characteristics of the Organization
Characteristics of the Organization
Size
Age
Culture
Availability of resources
Patterns of interaction among employees
Managerial Discretion

16. Factors Affecting Managerial Discretion
External Environment
Characteristics of the Organization
Characteristics of the Manager
Tolerance for ambiguity
Commitment to the firm and its desired strategic outcomes
Interpersonal skills
Aspiration level
Degree of self-confidence
Managerial Discretion
Characteristics of the Manager

17. Top Management Teams
Composed of the key managers who are responsible for selecting and implementing the firm’s strategies
A heterogeneous top management team:
Has varied expertise and knowledge
Can draw on multiple perspectives
Will evaluate alternative strategies
Builds consensus

18. Important Definitions
Strategic Management Process
The full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns.

19. Steps in Strategic Management Process
Step 1: Identifying the organization's current mission, objectives, and strategies
Mission: the firm’s reason for being
Who we are,
What we do, and
Where we are now
Goals: the foundation for further planning
Measurable performance targets
Step 2: Conducting an external analysis
The environmental scanning of specific and general environments
Focuses on identifying opportunities and threats

20. Strategic Management Process (cont’d)
Step 3: Conducting an internal analysis
Assessing organizational resources, capabilities, activities and culture:
Strengths (core competencies) create value for the customer and strengthen the competitive position of the firm.
Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.
Steps 2 and 3 combined are called a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats)

21. Strategic Management Process (cont’d)
Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in the organization that provide relative advantage over competitors
Match organizational strengths to environmental opportunities
Correct weaknesses and guard against threats

22. Strategic Management Process (cont’d)
Step 5: Implementing strategies
Implementation: effectively fitting organizational structure and activities to the environment
Effective strategy implementation requires an organizational structure matched to its requirements.
Step 6: Evaluating results
How effective have strategies been?
What adjustments, if any, are necessary?

23. Levels of strategy

24. Adapting to Change – Key Strategic Management Questions
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?

25. What do we want to become?
Key Terms
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?

26. Opportunities & Threats (External)
Key Terms
Opportunities & Threats (External)
Analysis of Trends:
Economic
Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
Technological
Competitors

27. Strengths & Weaknesses (Internal)
Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
Computer Information Systems

28. Key Terms
Strategies
Means by which long-term objectives are achieved

29. Comprehensive strategic management model
External
Audit
Chapter 3
Vision
&
Mission
Chapter 2
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
Internal
Audit
Chapter 4