Nature of Strategic Management

Strategic Management-Concepts & Cases,Fred R David,12th edtn Strategy Means by which long-term objectives are achieved Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Purpose-To exploit and create new and different opportunities for tomorrow In essence, the strategic plan is a company’s game plan Strategic Management-Concepts & Cases,Fred R David,12th edtn

Stages of strategic management Process Strategy formulation Strategy implementation Strategy evaluation Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategy Formulation Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn 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 Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation Strategic Management-Concepts & Cases,Fred R David,12th edtn

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 Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Issues in Strategy Implementation Action Stage of Strategic Management Mobilization of employees & managers Most difficult stage Interpersonal skills critical Strategic Management-Concepts & Cases,Fred R David,12th edtn

Performance Measurement Strategy Evaluation Internal Review External Review Performance Measurement Corrective Action Strategic Management-Concepts & Cases,Fred R David,12th edtn

Key Terms in Strategic Management Competitive advantage Strategists Vision and mission statements External opportunities and threats Internal strengths and weaknesses Long-term objectives Strategies Strategic Management-Concepts & Cases,Fred R David,12th edtn

Competitive Advantage Strategic Management is Gaining and Maintaining Competitive Advantage Anything that a firm does especially well compared to rival firms Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn 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 Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Strategists Gather Information Analyze Information Organize Information Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Vision and Mission Statements Vision Statement – What do we want to become? Mission Statement – What is our business? Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn External Opportunities and Threats Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors ….That could significantly benefit or harm an organization in the future Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Basic Tenet of Strategic Management:- Take advantage of External Opportunities Avoid/minimize impact of External Threats Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Internal Strengths and Weaknesses Controllable activities performed especially well or poorly Strength and weakness are determined relative to competitors Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Internal Strengths and Weaknesses Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development Management Information Systems Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Long-Term Objectives Specific results that an organization seeks to achieve in pursuing its basic mission Long-term means more than one year Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Strategies Means by which long-term objectives are achieved Strategic Management-Concepts & Cases,Fred R David,12th edtn

Strategic Management-Concepts & Cases,Fred R David,12th edtn Strategies Examples Geographic expansion Diversification Acquisition Product development Market penetration Retrenchment Divestiture Liquidation Joint venture Strategic Management-Concepts & Cases,Fred R David,12th edtn