1 Should we import? Should we import? Will NAFTA affect our firm? Will NAFTA affect our firm? Should we export? Should we export? Should I learn a foreign language? Should I learn a foreign language? Global Considerations Impact Virtually All Strategic Decisions ©1999 Prentice Hall

2 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? Should we set up a Web site? Should we set up a Web site? Information Technology Has Become A Vital Strategic Management Tool ©1999 Prentice Hall

3 Should we recycle? Should we recycle? Will Congress pass tougher laws? Will Congress pass tougher laws? Should we burn low-sulfur coal? Should we burn low-sulfur coal? Is our firm environmentally friendly? Is our firm environmentally friendly? Preserving the Natural Environment is an Important Strategic Issue ©1999 Prentice Hall

4 The Stages and Activities in the Strategic Management Process StagesActivities Strategy formulation Strategy evaluation Strategy implementation Conduct research Establish annual objectives Review internal and external factors Integrate intuition with analysis Devise policies Measure performance Make decisions Allocate resources Take corrective action ©1999 Prentice Hall

5 The Basis for Good Strategic Decisions Intuition + Analysis Effective Strategic Decisions ©1999 Prentice Hall

6 Ten Key External Forces Economic Social Cultural Demographic Environmental Political Legal Governmental Technological Competitive ©1999 Prentice Hall

7 Fourteen Key Internal Forces Management Marketing Distribution Production/ Operations Production/ Operations Research & Development Purchasing Manufacturing ©1999 Prentice Hall

8 Key Internal Forces (cont.) Finance/Accounting Packaging Computer Information Systems Vendor Relations Promotion Human Resource Management Employee/ Manager Relations ©1999 Prentice Hall

9 Business Mission Strategy Formulation External Opportunities and Threats Internal Strengths and Weaknesses Keys to Formulating Strategies ©1999 Prentice Hall

10 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 ©1999 Prentice Hall

11 Benefits of Strategic Management - Improved Communication - Increased Understanding - Enhanced Commitment - Greater Productivity - More Effective Strategies - Higher Productivity - Allow Firm to Influence, Initiate, and Anticipate - Be Proactive Rather Than Reactive ©1999 Prentice Hall

12 The Communications Benefits of Engaging In Strategic Management Managers from all functional areas listen and discuss their views in strategic management meetings. This interaction yields learning, appreciation, and understanding among managers who otherwise do not communicate with each other ©1999 Prentice Hall