© Prentice Hall, 2002 End Show Strategic Management in Action Introducing the Concepts

© Prentice Hall, 2002 End Show Learning Objectives 1.Discuss why strategic management is important. 2.Define strategy and strategic management. 3.Describe the strategic management process. 4.Describe the three levels of organizational strategies. 5.Explain the historical evolution of strategic management. 6.Rebut misconceptions about strategy and strategic management. 7.Explain who’s involved with strategic management and their role in managing strategically.

© Prentice Hall, 2002 End Show W HY I S S TRATEGIC M ANAGEMENT I MPORTANT ? Strategic Management Gives everyone a role Makes a difference in performance levels Provides systematic approach to uncertainties Coordinates and focuses employees

© Prentice Hall, 2002 End Show W HAT I S S TRATEGIC M ANAGEMENT ? Strategy vs. Strategic Management

© Prentice Hall, 2002 End Show T he B asics of S trategy & S trategic M anagement Definition of Strategy A series of goal-directed decisions and actions matching an organization's skills and resources with the opportunities and threats in its environment

© Prentice Hall, 2002 End Show T he B asics of S trategy & S trategic M anagement Strategy Involves: Organization’s goals Goal-directed action Related decisions and actions Internal strengths External opportunities and threats

© Prentice Hall, 2002 End Show T he B asics of S trategy & S trategic M anagement Definition of Strategic Management Decisions and actions where organizations Analyze current situation Develop appropriate strategies Put strategies into action Evaluate, modify, or change strategies

© Prentice Hall, 2002 End Show T he B asics of S trategy & S trategic M anagement Strategic Management entails: Basic managerial functions Planning Organizing Implementing Controlling

© Prentice Hall, 2002 End Show Basic Activities of Strategic Management Figure 1-1 T he B asics of S trategy & S trategic M anagement Strategy Formulation Strategy Implementation Strategy Evaluation

© Prentice Hall, 2002 End Show T he B asics of S trategy & S trategic M anagement Strategic Management “Big picture” view of organization influenced by its external environment Four aspects that set apart Strategic Management Interdisciplinary External focus Internal focus Future direction

© Prentice Hall, 2002 End Show The Strategic Management Process Analyzing Current Situation Deciding on Strategies Putting Strategies in Action Evaluating and Changing Strategies Situation Analysis Strategy Formulation Strategy Implementation Strategy Evaluation Chapter 2 Chapter 3 Chapter 4 External Analysis Internal Analysis Organizational Context Chapter 5 Chapter 6 Chapter 7 FunctionalCompetitive Corporate Strategic Management in Action Figure 1-2

© Prentice Hall, 2002 End Show The Strategic Management Process Situation Analysis Scanning and evaluating context External environment Organizational environment

© Prentice Hall, 2002 End Show The Strategic Management Process Strategy Formulation Three organizational levels Functional strategies Competitive strategies Corporate strategies

© Prentice Hall, 2002 End Show The Strategic Management Process Strategy Implementation Process of putting strategies into action Strategy Evaluation Process of evaluating: How the strategy has been implemented Outcomes of the strategy

© Prentice Hall, 2002 End Show The Strategic Management Process Continuing Process of Strategic Management in Action Ongoing and continuous cycle of Strategy formulation Strategy implementation Strategy evaluation

© Prentice Hall, 2002 End Show Looking at Strategic Management’s Past Strategy’s Military Roots Battlefield strategies to gain an edge Exploit weak spots Academic Origins of Strategic Management Economic theory Early organizational studies

© Prentice Hall, 2002 End Show Looking at Strategic Management’s Past Strategic Planning & Strategic Management Emerge Before 1960 Not an area of study During the 1960s Strategy and Structure Corporate Strategy Business Policy: Text and Cases During the 1970s and 1980s Becomes distinct academic field Research focus on strategic decisions vs. performance

© Prentice Hall, 2002 End Show Misconceptions About Strategy and Strategic Management Misconceptions Strategy and strategic planning are dead Strategy is strictly for top management Strategy is about planning Strategy is stable and constant Strategic management outlines ultimate destination & route

© Prentice Hall, 2002 End Show W HO’S I NVOLVED WITH S TRATEGIC M ANAGEMENT ? The Role of the Board of Directors Elected representatives of the company’s stockholders Legally obligated to represent and protect stockholder’s interest The Role of Top Management Responsible for every decision and action of every employee Providing effective leadership Other Strategic Managers and Organizational Employees Implement— put the strategies into action and monitor performance Evaluate—do the actual evaluations and take necessary actions Open book management

© Prentice Hall, 2002 End Show The Role of the Board of Directors Table 1-2 Typical Board Responsibilities Review and approve strategic goals and plans Review and approve organization's financial standards and policies Ensure integrity of organization's financial controls and reporting systems Approve an organizational philosophy Monitor organizational performance and regularly review performance results Select, evaluate, and compensate top-level managers Develop management succession plans Review and approve capital allocations and expenditures Monitor relations with shareholders and other key stakeholders Other responsibilities may be assigned depending on the unique culture and needs of the organization

© Prentice Hall, 2002 End Show The Role of Top Management Top Management CEOChief Executive Officer COOChief Operating Officer CFOChief Financial Officer CIOChief Information Officer

© Prentice Hall, 2002 End Show The Role of Top Management Effective Strategic Leadership Exploiting and Maintaining Core Competencies Developing Human Capital Creating and Sustaining Strong Organizational Culture Emphasizing Ethical Decisions and Practices Establishing Appropriately Balanced Controls Determining Organizational Purpose or Vision Effective Strategic Leadership Involves Figure 1-5

© Prentice Hall, 2002 End Show Chapter One Questions