Copyright © 2005 Pearson Education Canada Inc. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-1 Chapter 1 Basic Concepts of Strategic Management

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-2 Copyright © 2005 Pearson Educaton Canada Inc. Learning Objectives From the techniques presented in this chapter you should be able to: 1. Understand the benefits of strategic thinking to a variety of organizations 2. Identify how globalization and electronic commerce have influenced strategic management

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-3 Copyright © 2005 Pearson Educaton Canada Inc. Learning Objectives cont. 3. Recognize the importance of strategic flexibility and organizational learning in today’s highly competitive environment 4. Define the four elements of strategic management 5. Know some common triggering events that act as stimuli for strategic change

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-4 Copyright © 2005 Pearson Educaton Canada Inc. Strategic Management Defined Set of managerial decisions and actions that determines the long-run performance of a firm.

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-5 Copyright © 2005 Pearson Educaton Canada Inc. Four Phases of Strategic Management Basic financial planning Forecast-based planning Externally-oriented planning (strategic) Strategic management

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-6 Copyright © 2005 Pearson Educaton Canada Inc. Challenges to Strategic Management Globalization  Internationalization of markets and corporations Global (worldwide) markets rather than national markets Electronic Commerce  Use of the Internet to conduct business transactions Basis for competition on a more strategic level rather than traditional focus on product features and costs

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-7 Copyright © 2005 Pearson Educaton Canada Inc. E-Commerce – 7 Trends 1. Internet forcing companies to transform themselves 2. Market access and branding are changing, causing disintermediation of traditional distribution channels 3. Balance of power shifting to the consumer 4. Competition is changing 5. Pace of business increasing drastically 6. Internet pushing organizations out of their traditional boundaries 7. Knowledge becoming a key asset and source of competitive advantage

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-8 Copyright © 2005 Pearson Educaton Canada Inc. Global Issues European Union (EU)  Economic integration of 15 member countries North American Free Trade Agreement (NAFTA)  Improved trade among 3 member countries Mercosur  Free-trade area among Argentina, Brazil, Uruguay, and Paraguay Association of South East Asian Nations (ASEAN)  Attempting to link members into a borderless economic zone

Evaluation and Control Strategy Formulation Strategy Implementation Mission Objectives Strategies Policies Feedback/Learning Environmental Scanning Societal Environment General Forces Task Environment Industry Analysis Structure Chain of Command Resources Assets, Skills Competencies, Knowledge Culture Beliefs, Expectations, Values Reason for existence What results to accomplish by when Plan to achieve the mission & objectives Broad guidelines for decision making Programs Activities needed to accomplish a plan Budgets Cost of the programs Procedures Sequence of steps needed to do the job Process to monitor performance and take corrective action Performance External Internal Evaluation and Control Strategic Management Model

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-10 Copyright © 2005 Pearson Educaton Canada Inc. Initiation of Strategy – Some examples Triggering event New CEO External intervention Threat of change in ownership Performance gap Stimulus for change in strategy

Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 1-11 Copyright © 2005 Pearson Educaton Canada Inc. Strategic Decision Making Strategic Decisions  Rare  Consequential  Directive