1. Module 1 The Nature of Strategic Management

2. Strategic Management –Defined
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

3. Purpose of Strategic Management
To exploit and create new and different opportunities for tomorrow

4. Strategic Management
In essence, the strategic plan is a company’s game plan

5. 3 Stages of the Strategic Management Process
Strategy formulation
Strategy implementation
Strategy evaluation

6. Strategy Formulation Vision & Mission External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

7. Issues in Strategy Formulation
Businesses to enter
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile takeover

8. Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation

9. Strategy Implementation Steps
Developing a strategy-supportive culture
Creating an effective organizational structure
Redirecting marketing efforts
Preparing budgets
Developing and utilizing information systems
Linking employee compensation to organizational performance

10. Issues in Strategy Implementation
Action Stage of Strategic Management
Mobilization of employees & managers
Most difficult stage
Interpersonal skills critical

11. Performance Measurement
Strategy Evaluation
Internal Review
External Review
Performance Measurement
Corrective Action

12. Prime Task of Strategic Management
Peter Drucker: Think through the overall mission of a business. Ask the key question:
“What is our Business?”

13. Integrating Intuition & Analysis
The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty

14. Integrating Intuition & Analysis
Intuition is based on:
Past experiences
Judgment
Feelings
Intuition is useful for decision making in conditions of:
Great uncertainty
Little precedent
Highly interrelated variables
Several plausible alternatives

15. Involve management at all levels Influence all analyses
Integrating Intuition & Analysis
Intuition & Judgment
Involve management at all levels
Influence all analyses

16. Adapting to Change
Organizations should continually monitor internal and external events and trends so that timely changes can be made as needed

17. Key Terms in Strategic Management
Competitive advantage
Strategists
Vision and mission statements
External opportunities and threats
Internal strengths and weaknesses
Long-term objectives
Strategies
Annual objectives
Policies

18. Anything that a firm does especially well compared to rival firms
Strategic Management is Gaining and Maintaining Competitive Advantage
Anything that a firm does especially well compared to rival firms

19. Achieving Sustained Competitive Advantage
1. Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources
2. Effectively formulating, implementing, and evaluating strategies that capitalize on those factors

20. Strategists Gather Information Analyze Information
Organize Information

21. Vision and Mission Statements
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?

22. External Opportunities and Threats
Analysis of Trends
Economic
Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
Technological
Competitors

23. External Opportunities
External Opportunities and Threats
Basic Tenet of Strategic Management
Take advantage of
External Opportunities
Strategy Formulation
Avoid/minimize impact of
External Threats

24. Internal Strengths and Weaknesses
Controllable activities performed especially well or poorly
Determined relative to competitors

25. Internal Strengths and Weaknesses
Typically located in functional areas of the firm
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
Management Information Systems

26. Internal Strengths and Weaknesses
Assessing the Internal Environment
Ratios
Internal Factors
Performance Measures
Industry Averages
Survey Data

27. Long-Term Objectives
Specific results that an organization seeks to achieve in pursuing its basic mission
Long-term means more than one year

28. Long-Term Objectives Essential for ensuring the firm’s success
Provide direction
Aid in evaluation
Create synergy
Reveal priorities
Focus coordination
Provide basis for planning, organizing, motivating, and controlling

29. Strategies
Means by which long-term objectives are achieved

30. Strategies Examples Geographic expansion Diversification Acquisition
Product development
Market penetration
Retrenchment
Divestiture
Liquidation
Joint venture

31. Sample Strategies Table 1-1 Best Buy Levi Strauss
New York Times Company

32. Annual Objectives
Short-term milestones that firms must achieve to reach long-term objectives

33. Policies
Means by which annual objectives will be achieved

35. Strategic Management Model
Strategic Management Process
Dynamic & continuous
More formal in larger organizations

36. Strategic Management
Communication is a key to successful strategic management

37. Benefits of Strategic Management

38. Benefits of Strategic Management
Nonfinancial Benefits
Enhanced awareness of threats
Improved understanding of competitors’ strategies
Increased employee productivity
Reduced resistance to change
Clearer understanding of performance-reward relationship
Enhanced problem-prevention capabilities

39. Why Some Firms Do No Strategic Planning
Lack of knowledge of strategic planning
Poor reward structures
Fire fighting
Waste of time
Too expensive
Laziness
Content with success

40. Why Some Firms Do No Strategic Planning (continued)
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Honest difference of opinion
Suspicion

41. Pitfalls in Strategic Planning
Strategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory

42. Effective Strategic Planning is:
A people process more than a paper process
A learning process
Words supported by numbers
Simple and nonroutine
Varying assignments, team membership, meeting formats, and planning calendars
Challenging assumptions underlying corporate strategy

43. Effective Strategic Planning continued
Welcomes bad news
Requires open-mindedness and a spirit of inquiry
Is not a bureaucratic mechanism
Is not ritualistic or stilted
Is not too formal, predictable, or rigid
Does not contain jargon or arcane language

44. Effective Strategic Planning continued
Is not a formal system for control
Does not disregard qualitative information
Is not controlled by “technicians”
Does not pursue too many strategies at once
Continually strengthens the “good ethics is good business” policy

45. Comparing Business and Military Strategy
Strategic planning started in the military
Similarity
Both business and military organizations must adapt to change and constantly improve
Difference
Business strategy assumes competition
Military strategy assumes conflict