1. 1-1 Basic Concepts of Strategic Management Globalization Internationalization of markets and corporations Global (worldwide) markets rather than national markets Electronic Commerce Use of the Internet to conduct business transactions Basis for competition on a more strategic level rather than traditional focus on product features and costs

2. 1-2 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

3. 1-3 Basic Concepts of Strategic Management Electronic Commerce -- Trends Pace of business increasing Internet purchasing beyond traditional boundaries Knowledge key asset – source of competitive advantage

4. 1-4 Strategic Management Defined Set of managerial decisions and actions that determines the long-run performance of a firm.

5. 1-5 Basic Concepts of Strategic Management 4 Phases of Strategic Management 1.Basic financial planning 2.Forecast-based planning 3.Externally-oriented planning 4.Strategic management

6. 1-6 Basic Concepts of Strategic Management Highly Rated Benefits Clearer sense of strategic vision Sharper focus on strategic importance Improved understanding of changing environment

7. 1-7 Basic Concepts of Strategic Management Not Always a Formal Process Where is the organization now? (not where do we hope it is) 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?

8. 1-8 Basic Concepts of Strategic Management Basic Elements of the Strategic Management Process

9. 1-9 Environmental Scanning Defined Monitoring, evaluation, and disseminating information from external and internal environments –to key people in the firm SWOT Analysis

10. 1-10 Basic Concepts of Strategic Management Environmental Variables

11. 1-11 Environmental Scanning SWOT Analysis Strengths – Weaknesses Opportunities - Threats

12. 1-12 Strategy Formulation Development of long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses

13. 1-13 Strategy Formulation Mission Statement Purpose/reason for organization Promotes shared expectations Communicates public image Who we are; what we do; what we aspire to

14. 1-14 Organizational Adaptation Strategic flexibility Demands long-term commitment to development of critical resources Demands firm become a learning organization

15. 1-15 Learning Organizations An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights

16. 1-16 Learning Organizations 4 Chief Activities Systematic problem solving New approach experimentation Learning from experiences Intra-organization knowledge transfer

17. 1-17 Basic Concepts of Strategic Management Hierarchy of Strategy

18. 1-18 Goals & Objectives Corporate Goals/Objectives –Profitability (net profit) –Growth –Resource utilization (ROE – return on equity, ROI – return on investment) –Market leadership

19. 1-19 Basic Concepts of Strategic Management 3 Types of Strategy –Corporate strategy –Business strategy –Functional strategy

20. 1-20 Basic Concepts of Strategic Management Corporate Strategy –Stability –Growth –Retrenchment (cutting back to reduce expenses)

21. 1-21 Basic Concepts of Strategic Management Business Strategy –Competitive strategies –Cooperative strategies

22. 1-22 Basic Concepts of Strategic Management Functional Strategy –Technological leadership –Technological followership

23. 1-23 Basic Concepts of Strategic Management Strategic Decision-Making Process

24. 1-24 Strategic Decision Making Strategic Decisions –Rare – Strategic decisions are unusual and typically have no precedent to follow –Consequential – Strategic decisions commit substantial resources and demand a great deal of commitment from people at all levels –Directive – Strategic decisions set precedents for lesser decisions and future actions throughout an organization

25. 1-25 Hambrick and Fredrickson – Good Strategy 5 Elements of Good Strategy 1.Arenas – Where will we be active? 2.Vehicles – How will we get there? 3.Differentiators – How will we win in the marketplace? 4.Staging – What will be our speed and sequence of moves? 5.Economic logic – How will we obtain our returns?