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SOM497 – Business Policy & Strategy
CHAPTER 1CHAPTER 1: Basic Concepts of Strategic Management
STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER
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What is Strategic Management?
Managerial decisions & actions that determines the long-run performance of a business
4 Types of Strategic Management Basic financial planning (up to 1 year) Forecast-based planning (1 to 5 years) Externally-oriented planning Strategic management
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Why need Strategic Management?
Clearer sense of strategic vision
Sharper focus on strategic importance
Improved understanding of changing environment
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Globalization & E-Commerce
Globalization Internationalization of markets & corporations Markets: global than national markets
Electronic Commerce Internet to conduct business transactions Basis for competition on a more strategic level rather than
traditional focus on product features and costs
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Basic Elements of the Strategic Management Process
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SOM497 – Business Policy & Strategy
CHAPTER 2CHAPTER 2: Corporate Governance
STRATEGIC MANAGEMENT & BUSINESS POLICY 10TH EDITIONTHOMAS L. WHEELEN & J. DAVID HUNGER
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Corporate Governance
Determining the direction & performance of the corporation derived from the relationship among the Top management Shareholders Board of directors
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Board of Directors: Degree
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Board of Directors: Members
Inside directors “management directors”
Outside directors “non-management directors”
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Theories: Agency vs. Stewardship
Agency Objectives of owners/
shareholders & agents (top management) in conflict
Difficult for owners to verify agent performance
Stewardship Executives motivated to
act in best interest of the corporation than their own self-interests.
Over time, senior executives tend to view corporation as extension of selves
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Board of Directors
Codetermination Including corporation’s
employees on its board of directors
Interlocking Directorates CEOs/board members
from other firms to be members
Direct Interlocking
Indirect Interlocking
Direct Interlocking
Indirect Interlocking
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Sarbanes-Oxley Act
Congress passed act in 2002 to protect shareholders
Audit committees have to be independent of the firm
Establishes additional steps for whistle-blowing
Firms can’t grant “loans” to corporate officers
Picture Copyright: CNN Money
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Top Management – CEO
provide executive leadership & strategic vision manage strategic planning process
Transformational leaders
Successful CEO’s Strategic vision Passion for the company Strong communication charisma
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Case Study
How do I prepare, analyze and discuss case problems? Preparing for in-class discussion
1. Try first to get a quick sense of the whole case2. If this is a case requiring a decision, who is the key decision maker? 3. Reread the case for underlining or highlighting key facts and try to
identify the key problems4. What are the possible courses of action for the decision maker?
Discussion in class1. Be prepared to present your ideas with conviction, and to support them
with care 2. Do not wait too long to get involved in the discussion 3. If you want to raise an issue that is completely different from the one
the class is discussing, consider waiting until the class is ready to move to another issue.
4. Try to be alert to keep the class discussion moving toward constructive solutions to the case.
5. Don’t hesitate to admit you are confused, need clarification, or simply be wrong.
From: http://www.soc.ucsb.edu/projects/casemethod/guidelines.html
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Next Class
Case 17 (Kmart Corporation: Seeking Survival in a Changing Marketplace) in TEXT