david_sm13_ppt_01
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david_sm13_ppt_01TRANSCRIPT
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Chapter 1 The Nature of Strategic Management
Strategic Management: Concepts & Cases13th EditionFred David
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Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Strategic Management Defined
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Purpose of Strategic ManagementTo exploit and create new and different opportunities for tomorrow
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In essence, the strategic plan is a companys game planStrategic Management
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3 Stages of the Strategic Management Process
Strategy formulation
Strategy implementation
Strategy evaluation
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Vision & MissionStrategy FormulationExternal Opportunities & ThreatsInternal Strengths & WeaknessesLong-Term ObjectivesAlternative StrategiesStrategy Selection
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Issues in Strategy FormulationBusinesses to enter Businesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint venturesAvoidance of hostile takeover
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Strategy ImplementationAnnual ObjectivesPoliciesEmployee MotivationResource Allocation
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Strategy Implementation StepsDeveloping a strategy-supportive cultureCreating an effective organizational structureRedirecting marketing effortsPreparing budgetsDeveloping and utilizing information systemsLinking employee compensation to organizational performance
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Issues in Strategy ImplementationAction Stage of Strategic Management
Mobilization of employees & managers
Most difficult stage
Interpersonal skills critical
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Strategy EvaluationInternal ReviewExternal ReviewPerformance MeasurementCorrective Action
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Peter Drucker: Think through the overall mission of a business. Ask the key question: What is our Business?
Prime Task of Strategic Management
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The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty
Integrating Intuition & Analysis
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Intuition is based on:Past experiencesJudgmentFeelings
Integrating Intuition & Analysis Intuition is useful for decision making in conditions of:Great uncertaintyLittle precedentHighly interrelated variablesSeveral plausible alternatives
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Involve management at all levelsIntuition & JudgmentInfluence all analysesIntegrating Intuition & Analysis
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Organizations should continually monitor internal and external events and trends so that timely changes can be made as neededAdapting to Change
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Key Terms in Strategic ManagementCompetitive advantageStrategistsVision and mission statementsExternal opportunities and threatsInternal strengths and weaknessesLong-term objectivesStrategiesAnnual objectivesPolicies
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Anything that a firm does especially well compared to rival firmsStrategic Management is Gaining and Maintaining Competitive Advantage
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1. Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources
Achieving Sustained Competitive Advantage 2. Effectively formulating, implementing, and evaluating strategies that capitalize on those factors
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Vision Statement What do we want to become?
Mission Statement What is our business?Vision and Mission Statements
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Analysis of TrendsEconomicSocialCulturalDemographic/EnvironmentalPolitical, Legal, GovernmentalTechnologicalCompetitorsExternal Opportunities and Threats
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Basic Tenet of Strategic ManagementExternal Opportunities and ThreatsStrategy Formulation Take advantage of External Opportunities Avoid/minimize impact ofExternal Threats
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Controllable activities performed especially well or poorly
Determined relative to competitorsInternal Strengths and Weaknesses
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Typically located in functional areas of the firm
ManagementMarketingFinance/AccountingProduction/OperationsResearch & DevelopmentManagement Information SystemsInternal Strengths and Weaknesses
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Assessing the Internal EnvironmentInternal Strengths and WeaknessesInternal FactorsPerformance MeasuresRatiosIndustry AveragesSurvey Data
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Specific results that an organization seeks to achieve in pursuing its basic mission
Long-term means more than one yearLong-Term Objectives
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Essential for ensuring the firms successProvide directionAid in evaluationCreate synergyReveal prioritiesFocus coordinationProvide basis for planning, organizing, motivating, and controlling
Long-Term Objectives
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Means by which long-term objectives are achievedStrategies
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ExamplesGeographic expansionDiversificationAcquisitionProduct developmentMarket penetrationRetrenchmentDivestitureLiquidationJoint venture
Strategies
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Table 1-1
Best Buy
Levi Strauss
New York Times Company
Sample Strategies
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Short-term milestones that firms must achieve to reach long-term objectivesAnnual Objectives
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Means by which annual objectives will be achievedPolicies
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Strategic Management ProcessDynamic & continuousMore formal in larger organizationsStrategic Management Model
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Strategic Management
Communication is a key to successful strategic management
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Benefits of Strategic Management
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Benefits of Strategic Management
Nonfinancial BenefitsEnhanced awareness of threatsImproved understanding of competitors strategiesIncreased employee productivityReduced resistance to changeClearer understanding of performance-reward relationshipEnhanced problem-prevention capabilities
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Why Some Firms Do No Strategic Planning
Lack of knowledge of strategic planningPoor reward structuresFire fightingWaste of timeToo expensiveLazinessContent with success
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Why Some Firms Do No Strategic Planning (continued)Fear of failureOverconfidencePrior bad experienceSelf-interestFear of the unknownHonest difference of opinionSuspicion
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Pitfalls in Strategic PlanningStrategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory
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Effective Strategic Planning is:A people process more than a paper processA learning processWords supported by numbersSimple and nonroutineVarying assignments, team membership, meeting formats, and planning calendarsChallenging assumptions underlying corporate strategy
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Effective Strategic Planning continuedWelcomes bad newsRequires open-mindedness and a spirit of inquiryIs not a bureaucratic mechanismIs not ritualistic or stiltedIs not too formal, predictable, or rigidDoes not contain jargon or arcane language
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Effective Strategic Planning continuedIs not a formal system for controlDoes not disregard qualitative informationIs not controlled by techniciansDoes not pursue too many strategies at onceContinually strengthens the good ethics is good business policy
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Comparing Business and Military StrategyStrategic planning started in the militarySimilarity Both business and military organizations must adapt to change and constantly improveDifference Business strategy assumes competitionMilitary strategy assumes conflict
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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