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85 views

SM Chapter 1

Uploaded by

CHONG WEN XIN BG20110306
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 24

Strategic

Management
Essentials

Chapter One

Copyright ©2017 Pearson Education, Limited 1-1


Learning Objectives

1. Describe the strategic-management process.


2. Discuss the three stages of strategy
formulation, implementation, and evaluation
activities.
3. Explain the need for integrating analysis and
intuition in strategic management.
4. Define and give examples of key terms in
strategic management.

Copyright ©2017 Pearson Education, Limited 1-2


Learning Objectives (cont.)

5. Illustrate the comprehensive strategic-


management model.
6. Describe the benefits of engaging in strategic
management.
7. Explain why some firms do no strategic planning.
8. Describe the pitfalls in actually doing strategic
planning.
9. Discuss the connection between business and
military strategy.

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Defining Strategic Management
Strategic Management 

 The art and science of formulating, implementing, and evaluating


cross-functional decisions that enable an organization to achieve its
objectives.

 Strategic management is used synonymously with the


term strategic planning in this course.

 A strategic plan is a company’s game plan.

 A strategic plan results from tough managerial choices among


numerous good alternatives, and it signals commitment to specific
markets, policies, procedures, and operations.

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Stages of Strategic Management

Strategy
Strategy Strategy
formulatio
implementation evaluation
n

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Stages of Strategic Management

Strategy Formulation 
 Developing a vision and mission 
 Identifying an organization’s external opportunities and
threats
 Determining internal strengths and weaknesses
 Establishing long-term objectives
 Generating alternative strategies
 Choosing particular strategies to pursue

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Strategy Formulation Decisions

 What new businesses to enter 


 What businesses to abandon
 Whether to expand operations or diversify
 Whether to enter international markets
 Whether to merge or form a joint venture
 How to avoid a hostile takeover

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Stages of Strategic Management

Strategy Implementation 

 Requires a firm to establish annual objectives, devise


policies, motivate employees, and allocate resources
so that formulated strategies can be executed.

 Often called the action stage

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Stages of Strategic Management

Strategy Evaluation
Determining which strategies are not working
well.
Three fundamental activities:
Reviewing external and internal factors that are
the bases for current strategies.
Measuring performance.
Taking corrective actions.

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Key Terms in Strategic Management

Competitive Advantage
 Any activity a firm does especially well compared to
activities done by rival firms, 
or
 Any resource a firm possesses that rival firms desire.

 A firm must strive to achieve sustained competitive


advantage.

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Key Terms in Strategic Management

Strategists
 Individuals most responsible for the success or failure
of an organization.
 Help an organization gather, analyze, and organize
information.

Vision and Mission Statements


 A vision statement answers the question “What do we
want to become?”
 A mission statement answers the question “What is our
business?”
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Key Terms in Strategic Management

External Opportunities and Threats


 Economic, social, cultural, demographic,
environmental, political, legal, governmental,
technological, and competitive trends and events that
could significantly benefit or harm an organization.

Internal Strengths and Internal Weaknesses 


 An organization’s controllable activities that are
performed especially well or poorly.
 Determined relative to competitors.

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Key Terms in Strategic Management
Long-Term Objectives 
 Specific results that an organization seeks to achieve in
pursuing its basic mission.
 More than one year.
 Challenging, measurable, consistent, reasonable, and clear.

Strategies 
 The means by which long-term objectives will be achieved.

 Geographic expansion, diversification, acquisition,


product development, market penetration, retrenchement,
divestiture, liquidation, and joint ventures. 

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Key Terms in Strategic Management

Annual objectives 
 short-term milestones that organizations must achieve
to reach long-term objectives.
 Established at the corporate, divisional, and functional
levels in a large organization.

Policies
 The means by which annual objectives will be
achieved.

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The Strategic-Management Model

Where are we now?

Where do we want to go?

How are we going to get there?

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Comprehensive Strategic-Management
Model

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Benefits of Strategic Management

 Strategic management allows an organization to


be more proactive than reactive in shaping its
own future.

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Financial Benefits
Businesses using strategic-management
concepts show significant improvement in
sales, profitability, and productivity compared
to firms without systematic planning activities.

High-performing firms tend to do systematic


planning to prepare for future fluctuations in
their external and internal environments.

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Nonfinancial Benefits
Enhanced awareness of external threats.
Improved understanding of competitors’ 
strategies.
Increased employee productivity.
Reduced resistance to change.
Clearer understanding of performance–
reward relationships.

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Why Some Firms Do No Strategic Planning

 No formal training in strategic management.


 No understanding of or appreciation for the
benefits of planning.
 No monetary rewards for doing planning.
 No punishment for not planning.
 Too busy “firefighting” (resolving internal crises)
to plan ahead.
 View planning as a waste of time, since no
product/service is made.

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Why Some Firms Do No Strategic Planning

 Laziness; effective planning takes time and effort; time is


money.
 Content with current success; failure to realize that
success today is no guarantee for success tomorrow;
even Apple Inc. is an example.
 Overconfident.
 Prior bad experience with strategic planning done
sometime/somewhere.

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Pitfalls in Strategic Planning

 Using strategic planning to gain control over decisions and


resources.
 Doing strategic planning only to satisfy accreditation or regulatory
requirements.
 Too hastily moving from mission development to strategy
formulation.
 Failing to communicate the plan to employees.
 Top managers making many intuitive decisions that conflict with the
formal plan.
 Top managers not actively supporting the strategic-planning
process.
 Failing to use plans as a standard for measuring performance.

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Pitfalls in Strategic Planning
 Delegating planning to a “planner” rather than involving
all managers.
 Failing to involve key employees in all phases of
planning.
 Failing to create a collaborative climate supportive of
change.
 Viewing planning as unnecessary or unimportant.
 Becoming so engrossed in current problems that
insufficient or no planning is done.
 Being so formal in planning that flexibility and creativity
are stifled.

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How to Gain and Sustain
Competitive Advantage

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