1. CHAPTER 1 Basic Concepts of Strategic Management
CONCEPTS IN STRATEGIC MANAGEMENT & BUSINESS POLICY 12TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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2. New Challenges Electronic Commerce Globalization Sustainability
Basic Concepts of Strategic Management
New Challenges
Electronic Commerce
Use of the Internet to conduct business transactions and Social Networking to promote
Basis for competition on a more strategic level rather than traditional focus on product features and costs
Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national markets
Sustainability
Long-term viability
Focuses on the company, its employees, its neighborhood, and the world environment – not just the stockholders.
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3. Electronic Commerce -- Trends
Basic Concepts of Strategic Management
Electronic Commerce -- Trends
Forcing company transformation
Market access & branding changing – disintermediation of traditional distribution channels
Balance of power shift to consumer
Competition changing
Pace of business increasing
Internet purchasing beyond traditional boundaries
Knowledge key asset – source of competitive advantage
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4. Globalization -- Trends
Basic Concepts of Strategic Management
Globalization -- Trends
Old model: US only, grow large, move into ‘foreign’ markets
New model: early or immediate growth in global markets
Enablers:
Ubiquitous communications
Cheap transportation of people and goods (but energy costs rising)
Global culture
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5. Sustainability -- Trends
Basic Concepts of Strategic Management
Sustainability -- Trends
Longer-term view
Sustainable competitive advantage
Long-term needs of the business
Needs of the community
Ecological sensitivity
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6. Strategic Management Defined
Set of managerial decisions and actions that determines the long-run performance of a firm.
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7. Basic financial planning Forecast-based planning
Basic Concepts of Strategic Management
4 Phases of Strategic Management Implementation as Companies Grow in Complexity and Sophistication
Basic financial planning
Forecast-based planning
Externally-oriented planning
Strategic management
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8. Benefits of Strategic Planning Highly Rated by Companies Who Do It
Basic Concepts of Strategic Management
Benefits of Strategic Planning Highly Rated by Companies Who Do It
Clearer sense of strategic vision
Sharper focus on strategic importance
Improved understanding of changing environment
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9. Strategic Management Need not be a Formal Process in Smaller Companies
Basic Concepts of Strategic Management
Strategic Management Need not be a Formal Process in Smaller Companies
Where is the organization now? (not where do we wish it was)
If no changes are made, where will the organization be in 1,2,5 or 10 years?
What specific actions should management undertake?
What are the risks and payoffs?
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10. Basic Elements of the Strategic Management Process
Basic Concepts of Strategic Management
Basic Elements of the Strategic Management Process
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11. Environmental Scanning Defined
Monitoring, evaluation, and disseminating information from external and internal environments to key people in the firm
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12. Environmental Variables
Basic Concepts of Strategic Management
Environmental Variables
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13. Strengths – Weaknesses Opportunities – Threats
Environmental Scanning
SWOT Analysis
Strengths – Weaknesses
Opportunities – Threats
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14. Strategy Formulation
Developing long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses
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15. Purpose/reason for organization Promotes shared expectations
Strategy Formulation – How to Codify a Strategy
Mission Statement
Purpose/reason for organization
Promotes shared expectations
Communicates public image
Who we are; what we do; what we aspire to
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16. Organization “fit” with environment Theory of population ecology
Organizational Adaptation
Organization “fit” with environment
Theory of population ecology
Institution theory
Strategic choice perspective
Organizational learning theory
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17. Strategic flexibility
Organizational Adaptation
Strategic flexibility
Demands long-term commitment to development of critical resources
Demands firm become a learning organization
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18. Learning Organizations
An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights
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19. Systematic problem solving New approach experimentation
Learning Organizations
4 Chief Activities
Systematic problem solving
New approach experimentation
Learning from experiences
Intra-organization knowledge transfer
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20. Hierarchy of Strategy Basic Concepts of Strategic Management
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21. Corporate Goals/Objectives
Profitability (net profit)
Growth
Resource utilization (ROE, ROI)
Market leadership
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22. 3 Types of Strategy Corporate strategy Business strategy
Basic Concepts of Strategic Management
3 Types of Strategy
Corporate strategy
Business strategy
Functional strategy
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23. Corporate Strategy seeks one of these:
Basic Concepts of Strategic Management
Corporate Strategy seeks one of these:
Stability
Growth
Retrenchment
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24. Business Strategy Competitive strategies Cooperative strategies
Basic Concepts of Strategic Management
Business Strategy
Competitive strategies
Cooperative strategies
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25. Functional Strategy Technological leadership
Basic Concepts of Strategic Management
Functional Strategy
Technological leadership
Technological followership
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26. Strategic Decision-Making Process
Basic Concepts of Strategic Management
Strategic Decision-Making Process

27. Strategic Decisions Rare Consequential Directive
Strategic Decision Making
Strategic Decisions
Rare
Consequential
Directive
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28. Mintzberg’s Modes Entrepreneurial mode Adaptive mode Planning mode
Strategic Decision Making
Mintzberg’s Modes
Entrepreneurial mode
Adaptive mode
Planning mode
Logical incrementalism
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29. 5 Elements of Good Strategy
Hambrick and Fredrickson – Good Strategy
5 Elements of Good Strategy
Arenas
Vehicles
Differentiators
Staging
Economic logic
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