concepts of strategic management
Post on 17-Aug-2014
73.443 Views
Preview:
DESCRIPTION
TRANSCRIPT
Concepts of Strategic ManagementFred R. David
Prentice-Hall, Inc.Sixth Edition
Chapter 1
The Nature of Strategic Management
Three Themes in the Text
• Global Considerations Impact Virtually All Strategic Decisions
• Information Technology Has Become a Vital Strategic Management Tool
• Preserving the Natural Environment is an Important Strategic Issue
Chapter Objectives
• Describe the strategic management process• Explain the need for integrating analysis and
intuition in strategic management• Define and give examples of key terms in strategic
management• Discuss the nature of strategy formulation,
implementation, and evaluation activities• Describe the benefits of good strategic management• Explain why good ethics is good business in
strategic management
Should weimport?
Will NAFTA affect our firm?
Should weexport?
Should I learn a foreign
language?
Global Considerations Impact Virtually All Strategic Decisions
Should we outsource MIS?
Should we buyour sales staff
laptops?
Should we upgrade our
PCs?
Should we setup a Web site?
Information Technology Has Become A Vital Strategic Management Tool
Should werecycle?
Will Congresspass tougher
laws?
Should weburn low-sulfur
coal?
Is our firmenvironmentally
friendly?
Preserving the Natural Environment is an Important
Strategic Issue
The Definition of Strategic Management
The Art and Science of Formulating, Implementing, and
Evaluating Cross-Functional Decisions That Enable an
Organization to Achieve It’s Objectives
The Stages and Activities in the Strategic Management Process
Stages Activities
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
The Basis for Good Strategic Decisions
Intuition + Analysis
Effective Strategic Decisions
Global PerspectiveThe World’s Largest Companies
The World’s Ten Largest Companies in Rank Order Based on 1994 Revenues
1. Mitsubishi 6. Marubeni
2. Mitsui 7. Ford Motor
3. Itochu 8. Exxon
4. Sumitomo 9. Nissho Iwai
5. General Motors 10. Royal Dutch/Shell Group
Conveys strong sense of vision 75% 98%Links compensation to performance 66% 91%Communicates frequently with employees 59% 89%Emphasizes ethics 74% 85%Plans for management succession 56% 85%Communicates frequently with customers 41% 78%Reassigns or terminates 34% 71%Rewards loyalty 39% 44%Makes all major decisions 39% 21%Behaves conservatively 32% 13%
What Traits CEOs Have Now - And Will Need in the Year 2000
Personal Behaviors Now Year 2000
Strategy formulation 68% 78%Human resource management 41% 53%International economics and politics 10% 19%Science and technology 11% 15%Computer literacy 3% 7%Marketing and sales 50% 48%Negotiation 34% 24%Accounting and finance 33% 24%Handling media and public speaking 16% 13%Production 21% 9%
What Traits CEOs Have Now - And Will Need in the Year 2000 (cont.)
Knowledge and Skills Now Year 2000
Ten Key External Forces
Economic
Social
Cultural
Demographic Environmental
Political
Legal
Governmental
Technological
Competitive
Fourteen Key Internal ForcesManagement
Marketing
Distribution
Production/
OperationsResearch & Development
Purchasing
Manufacturing
Key Internal Forces (cont.)
Finance/Accounting
Packaging
Computer Information
Systems
Employee/Manager Relations
Human Resource
Management
Vendor Relations
Promotion
Business Mission
Strategy Formulation
External Opportunities and Threats
Internal Strengths and Weaknesses
Keys to Formulating Strategies
A Comprehensive Strategic Management Model
DevelopMission
Statement
Establish Long-term
Objectives
Generate,Evaluate,
andSelect
Strategies
Establish Policies and
AnnualObjectives
AllocateResources
Measureand
EvaluatePerformance
PerformExternal
Audit
PerformInternalAudit
Feedback
Strategy Formulation Strategy Implementation Strategy Evaluation
Forces Influencing Design of Strategic Management Systems
Toward more formality and more details
Toward less formality and fewer details
Management StylesPolicy makerDemocratic-permissiveAuthoritarianDay-to-day operational thinkerIntuitive thinkerExperienced in planningInexperienced in planning
OrganizationSmall one-plant companiesLarge companies
Forces Influencing Design of Strategic Management Systems
Toward more formality and more details
Toward less formality and fewer detailsComplexity of
EnvironmentStable environmentTurbulent environmentLittle competitionMany markets and customersSingle market and customerCompetition severe
Forces Influencing Design of Strategic Management Systems
Toward more formality and more details
Toward less formality and fewer details
Complexity of Production Process
Long production lead timesShort production lead timesCapital intensiveLabor intensiveIntegrated manufacturing processesSimple manufacturing processesHigh technologyLow technologyMarket reaction time for newproduct is shortMarket reaction time is long
Forces Influencing Design of Strategic Management Systems
Toward more formality and more details
Toward less formality and fewer detailsNature of Problems
Facing new, complex, tough problems having long-range aspects
Facing tough short-range problems
Purpose of Planning System
Coordinate division activities
Train managers
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
How to Create an Ethical Culture
• Develop a Code of Business Ethics• Ask All Managers and Employers to Sign
the Code• Offer Business Ethics Workshops• Include Ethics Factors in Performance
Appraisal Instruments• Link Compensation to Ethical Behavior
How to Create an Ethical Culture (cont.)
• Encourage Whistle Blowing• Encourage Good Business Ethics
Behavior• Publicize Good Business Ethics Behavior• Reward Good Business Ethics Behavior• Set a Good Example
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
top related