Group 1 Presentation: Strategic Management in Action By Mary Coulter Group Members: Mark Beal, Adrienne Collins, Jessica Drummond, Mike Sanchez, Mario Santos, Spencer Thomas, Alec Wegmann

Chp.1 Introducing the concepts of Strategic Management Why it is important What it is Who’s involved Impacting factors

Why is Strategic Management Important? Individual Importance: Everyone in an organization is somehow involved in strategic management Understanding strategic decisions will enable you to do you job well, have your work valued, and be rewarded for your work

Why is Strategic Management Important? Two of the most fundamental business questions relate back to strategy: why firms succeed or fail why firms have varying levels of performance Organizations that use strategic management tend to have higher levels of performance or profits

Why is Strategic Management Important? Situations are continually changing internally and externally; being able to adapt to these situations and achieve expected performance is challenging Strategic management helps coordinate activities from various levels and departments; creating a more efficient organization

Example: The importance of strategic management during the current recession Managers noticed that consumers no longer wanted to buy pens or paper in bulk. So the company created displays to sell individual sharpies and small packs of paper, which proved successful.

Strategic Management can be found in almost every sector of any given business Some Examples: Texas Tech’s head coaching decisions. Blockbuster’s attempts to compete with Netflix. Or Disney’s ever continuing global expansions tactics.

Why do similar companies differ in success? Because of their strategy/strategic management. Wal-Mart and Kmart both founded in 1962. Wal-Mart: The world’s largest and most successful retailer. Kmart: The largest retailer to seek Chp.11 bankruptcy.

Strategizing “Outside the Box” 3M has all employees take an hour of each work day to brainstorm new product ideas. The Post-it note was one of the products that resulted

Four Characteristics of Strategic Management 1. Interdisciplinary –all areas of the business are involved. 2. External Focus – involves the interactions of the company with the economy, competitors, customers, etc.

Four Characteristics of Strategic Management 3. Internal Focus – assessing the organization’s resources and capabilities. Such as all-star employees. 4. Future Direction – Companies must make projections about their future position to create a successful strategy.

The Strategic Management Process A process that implies sequential and interrelated activities leading to some outcome. These activities include: Situation Analysis Strategy Formulation Strategy Implementation Strategy Evaluation

Situation Analysis – Analyzing the Current Situation Scanning and evaluating: The current organizational context – The economy, the role of stakeholders, the dynamics of change, the role of the organizational culture and mission External environment – competitors, economy, customers, trends And organizational environment – resources, distinctive capabilities, core competencies

Strategy Formulation Developing and choosing appropriate strategies as guided by the results of situation analysis. 3 Main Types of Strategies: 1. Functional Strategies 2. Competitive Strategies 3. Corporate Strategies

1. Functional Strategies Using functional areas, resources and capabilities to support the corporate and competitive strategies.

Most common functional areas: Production-Operations (Manufacturing) Marketing Research and Development Human resources Financial Accounting Information Systems Technology and Support

Functional Areas Academics Student Services (health, housing, and hospitality) Financial Services Facilities Management Athletics Alumni Relations

2. Competitive Strategies Goal-directed plans and actions that are concerned with how an organization competes in a specific business or industry. The competitive strategies and advantages an organization currently has or wants to develop.

Competitive Strategy Abercrombie and Fitch has strategies to compete with: American Eagle Outfitters Gap J. Crew Other specialty clothing retailers.

3. Corporate Strategies What business(es) to be in and what to do with those businesses.

Corporate Strategy Competes with a portfolio of more than 3,000 beverages. Coca-Cola Products A - Z

Strategy Implementation Putting the various strategies into action. It is not enough to just formulate a great strategy, it must be implemented.

Strategy Evaluation Involves evaluating both the outcomes of the strategies and how they have been implemented. If the evaluation determines that the strategic goals are not being met, then the strategy may need to be modified.

Looking at Strategic Management’s Past The history of strategic management helps us better understand how and why today’s managers implement strategic management. The history ranges from great military battles to current research.

Strategy’s Military Roots Strategy can be seen in historical decisions and actions used by military organizations. Blitzkrieg – a lighting swift attack by mobile forces, named after the German WWII strategy.

Academic Origins of Strategic Management As a field of study, strategic management is relatively young. Most of its theoretical foundation comes from economics and organization studies.

Strategic Planning and Strategic Management Emerge 1960’s - One correct way to manage in all situations was replaced by contingency approaches. 1970’s and 1980’s - Researchers tried to understand and describe strategic management.

Who’s Involved with Strategic Management? Employees at all organizational levels play a role in developing, implementing, and changing strategy. The Board of Directors Top Management Other Managers and Organizational Employees AC

The Board of Directors The Board of Directors is an elected group that represents a company’s shareholders. Responsibilities: Review and approve strategic goals and plans. Review and approve the organization’s financial standards and policies. Select, evaluate, and compensate top-level managers. Etc. AC

Home Depot’s Board Company shareholders were vocal about the unhappiness with the previous CEO’s pay and performance. Bonnie G. Hill, the longest-serving director on Home Depot’s board, met with stockholders and listened to their complaints. The Board of Directors decided to link the pay of current CEO Frank Blake to the company’s performance. AC

The Role of Top Management An organization’s top manager is typically the chief executive officer (CEO). The CEO’s top management team usually includes: COO CFO CIO Other executive or senior managers. AC

Strategic Leadership The ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the organization to initiate changes that will create a valuable future for the organization. Samsung Electronics-Changing its Leadership Team after financial scandal in 2008. AC

Strategic Leadership Determining Organizations POV Establishing Balanced Controls Maintaining Core Competencies Effective Strategic Leadership Emphasizing Ethical Decisions Developing Human Capital Creating Strong Organizational Culture

Determining Organization’s Purpose/Vision Reason for existence Bill Ford and the creation of the Ford U Car Ford’s vision is to respect their past accomplishments but lead the way in the future. MB

Exploiting and Maintaining Core Competencies Value adding to the company Wal-Mart and the recession MB

Developing Human Capital Retention Intellectual Capital MB

Creating and Sustaining a Strong Organizational Culture Best Buy CEO Brian Dunn Focus on ‘the team’ and ‘local growth’ Proven itself in this recession MB

Emphasizing Ethical Decisions Keeps the company in a positive PR position Johnson & Johnson Credo MB

Establishing Appropriately Balanced Controls Curb the actions of the company in the direction of the objective Two Types Financial (accounting based and typically short-term) Strategic (exchanging information) A balance of the two is required MB

Other Managers and Organizational Employees Strategic Responsibilities Implementation Actually doing the job and completing the objective. Evaluation Lower levels of the organization hierarchy tend to do this: this is when the processes to complete the objective are evaluated to see their effectiveness. iPhone, Dev Center, and Forum MB

Three Factors Impacting Strategic Management Globalization Corporate Governance E-Business

Global Economy & Globalization Benefits Economic Social Challenges Current state of economy Openness Interdependence between trading nations Mario

Challenges of Openness Open to the good and bad Breaks down geographic barriers between countries Increased sensitivity to political and cultural differences? Interdependence of trading countries Domino effect World Trade Organization World Bank Group International Monetary Fund (IMF)

Challenge of Cultural & Political Differences Cultural differences Religion, beliefs, traditions, etc… Ex. Nike and the Muslim culture Must be sensitive to cultural and political differences Awareness of how decisions & actions will be viewed by ALL Adjust to diverse views Negative views of capitalism

Corporate Governance Observes how a company uses its resources Protects stakeholders’ interest Sarbanes-Oxley Act Enron, Tyco, Worldcom Billions of dollars lost in 18 months Changed Role of Board of Directors Independent group that looked out for the interest of stockholders “The Business Roundtable” Improved Financial Reporting More disclosure and transparency of financial statements

Management in E-Business E-Business – information and communication technologies that support activities of a business Cisco: Teleconferencing E-Commerce – retailing side of E- Business

Three Approaches to E-Business Enhanced – provides a new medium of doing business; does not replace traditional ways of doing business Wal-Mart.com Enable – helps perform business functions better, but not to sell anything LeviStrauss.com Internet Retail – utilizing the resource of the internet to reach customers TheMountainHideaway.com

Bill's Corporate Strategy