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Lesson 1 - Intro to STRAMA

Introduction to Strategic Management

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30 views

Lesson 1 - Intro to STRAMA

Introduction to Strategic Management

Uploaded by

eileen.santos7465
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter 1

The Nature of Strategic Management

Strategic Management:
Concepts & Cases
13th Edition
Fred David

Copyright © 2011 Pearson Education, Inc. Ch 1 -1


Publishing as Prentice Hall
Strategic Management –Defined

Art & science of formulating,


implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve its
objectives

Copyright © 2011 Pearson Education, Inc. Ch 1 -2


Publishing as Prentice Hall
Strategic Management

In essence, the strategic plan is a


company’s game plan
3 Stages of the Strategic
Management Process

 Strategy formulation

 Strategy implementation

 Strategy evaluation
Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection
Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation
Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action
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
Strategic Management is
Gaining and Maintaining
Competitive Advantage

Anything that a firm does especially


well compared to rival firms
Strategists

Gather Information

Analyze Information

Organize Information
Vision and Mission Statements

Vision Statement –
What do we want to become?

Mission Statement –
What is our business?
External Opportunities and Threats

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

Basic Tenet of Strategic Management

Take
Takeadvantage
advantageof
of
External
ExternalOpportunities
Opportunities
Strategy Formulation

Avoid/minimize
Avoid/minimizeimpact
impactof
of
External
ExternalThreats
Threats
Internal Strengths and Weaknesses

 Controllable
activities performed
especially well or poorly

 Determined relative to competitors


Internal Strengths and Weaknesses
 Typically located in functional areas of the firm

 Management
 Marketing

 Finance/Accounting

 Production/Operations

 Research & Development

 Management Information Systems


Internal Strengths and Weaknesses

Assessing the Internal Environment

Financial Ratios

Performance Measures
Internal Factors
Industry Averages

Survey Data
Long-Term Objectives

 Specific results that an organization


seeks to achieve in pursuing its basic
mission

 Long-term means more than one year

Copyright © 2011 Pearson Education, Inc. Ch 1 -17


Publishing as Prentice Hall
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


Strategies

Means by which long-term objectives


are achieved
Strategies
 Examples
 Geographic expansion

 Diversification

 Acquisition

 Product development

 Market penetration

 Retrenchment

 Divestiture

 Liquidation

 Joint venture
Annual Objectives

Short-term milestones that firms must


achieve to reach long-term objectives
Policies

Means by which annual objectives will


be achieved
Copyright © 2011 Pearson Education, Inc. Ch 1 -23
Publishing as Prentice Hall
Strategic Management Model

 StrategicManagement Process
 Dynamic & continuous

 More formal in larger

organizations
Strategic Management

 Communication is a key to
successful strategic management
Benefits of Strategic Management
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
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
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

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