Chapter 1: Introducing the Concepts Strategy Management in Action By: Mary Coulter Team 1 MGT 4380 – 003 Patrick Morales, William Turner, Becky Alvarado, Christopher Mathis, Jared Stowe

Chapter 1 Contents 1.1 – Why strategic management is important 1.2 – What strategic management is 1.3 – Who’s involved with strategic management 1.4 – Three important factors impacting strategic management today

American Apparel Founded in 1987 Largest U.S. based clothing manufacturer Headquarters in Los Angeles, CA Started as strictly wholesale. Now have 260+ retail operations worldwide

Why is Strategic Management Important? Assumption: EVERYONE in an organization plays a role in managing strategically

4 reasons strategic management is important 1. Allows you to be effective in your position and have your work valued and recognized 2. Strategic management makes a difference in how well an organization performs - The bottom line, profits, etc.

4 reasons strategic management is important 3. Organizations face continually changing situations both externally and internally. 4. The various divisions, departments, and work activities of the company need to be coordinated and focused on achieving the organization’s goals.

Strategic Management Definitions Strategy Strategic Management Process

Organizational Strategies Corporate Competitive Functional

American Apparel: Strategy at Work Vertically integrated company Controls both production and distribution of its product Leverages art, design and technology

Strategy In Action You must think of how a strategy is to be implemented while it is being formulated If the strategy doesn’t meet specific goals or expectations it isn’t effective Strategic management usually deals with adjustments to current strategies already in place

Strategic Management’s Past Rooted in the historical decision’s made by leaders of military organizations Figuring out what your opponent is doing and taking actions based on that information Literature from the 1960’s created modern views and the academic discipline of Strategic Management

American Apparel: Environmental Strategy Low-impact dyeing Reduces 70% of chemical waste Cleaner Cotton Campaign Buys cotton from farmers who use reduce chemical use in cultivation Renewable Energy 15% of power at the manufacturing plant is drawn from solar panels

Who’s Involved in Strategic Management? People in all organizational levels play a role in developing, implementing, and changing strategy. The difference lies with the scope of each individual’s strategic actions For example, the bank teller is more concerned with functional strategies while the Vice-President of commercial loans is more concerned with corporate strategies

Who’s Involved in Strategic Management? Three main groups playing key roles in the strategic management process: Board of Directors Top Managers Other managers and organizational employees

Strategy at the Top The board of directors is an elected group that represents a company’s shareholders It is empowered to act on the shareholders’ behalf in overseeing the management of the company and plays a significant role in corporate governance Initiates strategies and oversees implementation

Strategy at the Top An organization’s top manager is typically the chief executive officer (CEO) Traditionally, the role of the CEO is that of a chief strategist, structural architect, and visionary leader Strategic leadership is a common quality among top CEO’s

Managers and Strategy Managers and employees in other levels of the organization are primarily tasked with implementation Top managers create the vision and middle managers put the strategies into action They are in the best position to evaluate whether the strategies are effective, providing valuable input.

American Apparel: Corporate Structure American Apparel is a publicly traded company that is governed by a board of directors, top managers, and lower-level managers Every organizational level has some degree of influence on the overall strategy They differ in that they have a strong sense of corporate responsibility

Globalization and The Global Economy Challenges and advantages to doing global business Organizations to promote international business American Apparel’s international business

Corporate Governance The Sarbanes-Oxley Act Role of the Board of Directors Financial Reporting

E-Business What is E-commerce? E-Business Strategies E-Business Enhanced Organization E-Business Enabled Organization Total E-Business Organization

American Apparel: E-commerce website

Conclusion No matter where you are in an organization, you will need to be apart of strategic management - Understanding the process and planning is critical to success