Overview of Strategic Management Concepts Overview of Strategic Management Concepts

Three Themes Global Considerations Impact Virtually All Strategic Decisions Information Technology Has Become a Vital Strategic Management Tool Preserving the Natural Environment is an Important Strategic Issue

Should we import? Should we import? Will NAFTA affect our firm? Will NAFTA affect our firm? Should we export? Should we export? Which foreign languages should I learn? Which foreign languages should I learn? Global Considerations Impact Virtually All Strategic Decisions

Should we outsource MIS? Should we outsource MIS? Should we buy our sales staff laptops? Should we buy our sales staff laptops? Should we upgrade our PCs? Should we upgrade our PCs? What functions shall we include on our Web site? What functions shall we include on our Web site? Information Technology Has Become A Vital Strategic Management Tool

How can we recycle? How can we recycle? Will Congress pass tougher laws? Will Congress pass tougher laws? How can our waste be reduced? How can our waste be reduced? Is our firm environmentally friendly? Is our firm environmentally friendly? Preserving the Natural Environment is an Important Strategic Issue

The Definition of Strategic Management The Art and Science of Formulating, Implementing, and Evaluating Cross-Functional Decisions That Enable an Organization to Achieve Its Objectives

The Basis for Good Strategic Decisions Intuition + Analysis Effective Strategic Decisions

Ten Key External Forces Economic Social Cultural Demographic Environmental Political Legal Governmental Technological Competitive

Economic Forces: Examples of Variables To Be Monitored Level of Disposable Income Interest Rates Inflation Rates Unemployment Trends Value of the Dollar Abroad Tax Rates Budget Deficits Stock Market Trends Economic Conditions Abroad

Economic Forces: Examples of Variables To Be Monitored Level of Disposable Income Interest Rates Inflation Rates Unemployment Trends Value of the Dollar Abroad Tax Rates Budget Deficits Stock Market Trends Economic Conditions Abroad

Social, Cultural, Demographic, and Environmental Forces: Examples of Variables to be Monitored Per Capita Income Levels of Disposable Income Population Changes By Race, Age, & Area Attitudes Towards Leisure Time Average Level of Education Attitudes Towards Customer Service Regional Changes in Tastes and Preferences Rising Consciousness for the Natural Environment

Political, Governmental, & Legal Forces: Examples of Variables to be Monitored Government Regulations and Deregulation Special Tariffs Environmental Protection Laws U.S. - Foreign Country Relationships Import-Export Regulations World Oil, Currency, and Labor Markets The Rise of Democracies Worldwide Local, State, National, and Foreign Elections

Who are our competitors? Who are our competitors? Where are our competitors located? Where are our competitors located? What are Competitors’ Strengths? What are Competitors’ Strengths? What are Competitors’ Objectives? What are Competitors’ Objectives? How Vulnerable are we to our Competitors’ Strategies? How Vulnerable are we to our Competitors’ Strategies? What are Competitors’ Weaknesses? What are Competitors’ Weaknesses? Key Questions About Competitors

Fourteen Key Internal Forces Management Marketing Distribution Production/ Operations Production/ Operations Research & Development Purchasing Manufacturing

Key Internal Forces (cont.) Finance/Accounting Packaging Computer Information Systems Employee/ Manager Relations Human Resource Management Vendor Relations Promotion

Business Mission Strategy Formulation External Opportunities and Threats Internal Strengths and Weaknesses Keys to Formulating Strategies

A Comprehensive Strategic Management Model Develop Mission Statement Develop Mission Statement Establish Long- term Objectives Establish Long- term Objectives Generate, Evaluate, and Select Strategies Generate, Evaluate, and Select Strategies Establish Policies and Annual Objectives Establish Policies and Annual Objectives Allocate Resources Allocate Resources Measure and Evaluate Performance Measure and Evaluate Performance Perform External Audit Perform External Audit Perform Internal Audit Perform Internal Audit Feedback Strategy FormulationStrategy ImplementationStrategy Evaluation

Benefits of Strategic Management - Improved Communication - Increased Understanding - Enhanced Commitment - Greater Productivity - More Effective Strategies - Less Waste - Allow Firm to Influence, Initiate, and Anticipate - Be Proactive Rather Than Reactive