bus policy chpter 1
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CHAPTER-01
BASIC CONCEPTS OFSTRATEGIC MANAGEMENT
(SM)
ALMA.SHAMEEM
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Learning Objectives
After st!"ing t#is c#a$ter% "& s#&'! be ab'e t& !& t#ef&''&ing
• Defne the term strategic management (SM• Descri!e the SM "r#cess.• E$"lain the nee% r integrating analysis an% intuiti#n in
strategic management.• E$"lain the !enefts #& strategic management.• E$"lain the im"acts #& 'l#!aliati#n an% E)c#mmerce #n SM.• Descri!e the the#ry #& learning #rganiati#n.• E$"lain the !asic m#%el #& SM.• Discuss the !asic m#%el #& SM* +he nature #& strategy
rmulati#n, im"lementati#n, an% ealuati#n actiities.• Descri!e the strategic %ecisi#n ma-ing m#%el.• Discuss h# a frm may achiee sustaine% c#m"etitie
a%antage.
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Strategic Manage*ent
• SM is that set #& managerial
%ecisi#ns an% acti#ns that%etermines the l#ng run "errmance#& a c#m"any.
• H# %#es a c#m"any !ec#mesuccess&ul an% stay success&ul
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+ P#ases in t#e Ev&'ti&n &f StrategicManage*ent ,+ T"$es &f Strategic
Manage*ent
1. asic fnancial "lanning 3 internal cus #n!u%geting (1 yr h#ri#n
2. 4#recast)!ase% "lanning 3 e$tra"#late thecurrent situati#n int# the &uture (/)5 yr h#ri#n
/. E$ternally)#riente% "lanning 3 "lanning%e"artment an%#r c#nsultants %eel#" a t#")%#n strategy ith n# l#er leel in#lement.
. Strategic management 3 in#les ari#us
%e"artments an% leels acr#ss the #rganiati#n.An #ng#ing "r#cess that inclu%esim"lementati#n, ealuati#n an% c#ntr#l issues.
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Bene-ts &f SM
6ey 7uesti#ns
8 9here is the #rganiati#n n#
8 :& n# changes are ma%e, here ill the#rganiati#n !e in 1, 2, 5 #r 10 years
8 9hat s"ecifc acti#ns sh#ul%management un%erta-e
8 9hat are the ris-s an% "ay#;s
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Benefits of SM
Why need Strategic Management?
• Clearer sense of strategic vision
• Sharper focus on strategic importance
• Improved understanding of changing
environment
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Bene-ts &f SMF&''&ing are t#e *aj&r bene-ts &f Strategic
*anage*ent• >r#actie in sha"ing frm?s &uture• :nitiate an% in@uence acti#ns• 4#rmulate !etter strategies (Systematic, l#gical, rati#nal
a""r#ach
Financia' bene-ts
• :m"r#e% "r#%uctiity• :m"r#e% sales• :m"r#e% "r#fta!ility
N&n.Financia' bene-ts• :ncrease% em"l#yee "r#%uctiity
• :m"r#e% un%erstan%ing #& c#m"etit#rs? strategies• 'reater aareness #& e$ternal threats• n%erstan%ing #& "errmance rear% relati#nshi"s• etter "r#!lem)a#i%ance• Lesser resistance t# change
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G'&ba'i/ati&n 0 E.C&**erceC#a''enges t& SM
• :m"act #& 'l#!aliati#n
– :nternati#naliati#n #& mar-ets C c#r"#rati#ns
– Mar-ets* gl#!al than nati#nal mar-ets
• :m"act #& Electr#nic #mmerce
– :nternet t# c#n%uct !usiness transacti#ns
– asis r c#m"etiti#n #n a m#re strategic leel ratherthan tra%iti#nal cus #n "r#%uct &eatures an% c#sts
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Theories of Organizational
Adaptation
>#"ulati#n Ec#l#gy s. :nstituti#nal +he#ry
(an?t hange (Mimic success&ul#rganiati#ns
Strategic h#ice >ers"ectie(Management %ecisi#ns hae at
least as much im"act as in%ustry &act#rs
Frganiati#nal Learning +he#ry
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Creating LearningOrgani/ati&n (LO)
• LF is s-ille% at creating, acGuiringan% trans&erring -n#le%ge an%m#%i&ying its !ehai#r t# re@ect ne
-n#le%ge an% insight.
• 1e" Activities – S#le "r#!lems systematically
– E$"eriment ith ne a""r#aches – Learn &r#m e$"erience
– +rans&er -n#le%ge thr#ugh#ut the #rganiati#n
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Basic Model of SM
• Four Basic Elements
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T#e ter* se! in $revi&s s'i!e are e2$'aine! #ere3
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43Envir&n*enta'Scanning
• M#nit#ring, ealuati#n, an%%isseminating inrmati#n &r#me$ternal an% internal enir#nments 3
t# -ey "e#"le in the frm
S5OT Ana'"sis
8 Strengths 3 9ea-nesses
8 F""#rtunities 3 +hreats
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43 Envir&n*enta' Scanning
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63 Strateg" F&r*'ati&n
• Development oflong-range plans for
eectivemanagement ofopportunities andthreats in light of
corporate strengthsand weaknesses
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63Strateg" F&r*'ati&n
7isi&n state*ent
• “Vision is the art of seeing thingsinvisible”
J#nathan Si&
Missi&n State*ent8 >ur"#sereas#n r #rganiati#n
8 >r#m#tes share% e$"ectati#ns8 #mmunicates "u!lic image
8 9h# e are hat e %# hat e as"ire t#
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63Strateg" F&r*'ati&n
C&r$&rate G&a's,Objectives 8& fr&* t#e Missi&n,7isi&nstate*ent
• >r#fta!ility (net "r#ft• 'r#th• Ies#urce utiliati#n (IFE, IF:
• Mar-et lea%ershi"
C&r$&rate G&a's,Objectives nee! t& be
• S"ecifc• Measura!le
• Acti#n #riente%• Iealistic• +iming is i%entife%
SMART Goals
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1B
63 Strateg" F&r*'ati&n
• Selecting Strateg , 9ierarc#" &fStrateg"
– Corporate strategy Sta!ility" #ro$th"
%etrenchment&
– Business strategy Competitive" Cooperative&
– Functional strategy 'echnological
(eadership" 'echnological Follo$ership&
• !efining Policies – #uidelines for decision ma)ing that lin)s formulation
to implementation
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:3 Strateg"I*$'e*entati&n
>r#cess !y hich strategies an%"#licies are "ut int# acti#n thr#ugh%eel#"ment #& "r#grams an%
"r#ce%ures July 2, 2015
Strateg"I*$'e*entati&n
Pr&gra*s
B!gets
Pr&ce!res
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:3 Strateg"I*$'e*entati&n
• >r#grams 3 single use "lans ("r#ects
• u%gets 3 c#sts ass#ciate% ith a"r#gram
• >r#ce%ures 3 system #& seGuentialste"s that %escri!e h# a "articulartas- #r #! is t# !e %#ne
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+3Eva'ati&n an! C&ntr&'
• >r#cess !y hich c#r"#rate actiitiesan% "errmance results are m#nit#re%s# that actual "errmance can !e
c#m"are% ith %esire% "errmance.
Fee!bac;,Learning Pr&cess
• Must g# !ac- t# reise #r c#rrect%ecisi#ns ma%e earlier.
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Triggering Events
• Ke EF
• E$ternal :nterenti#n
• +hreat #& change in #nershi"• >errmance 'a"
• Strategic in@ecti#n "#int (in%ustry
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Strategic
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Mint/berg=s M&!es &fStrategic lanning m#%e 3 systematic gathering an%analysis #& inrmati#n
8 L#gical incrementalism 3 interactie strategy%eel#"ment (>lanning N A%a"tie
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M&!e'
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Strategic
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E'e*ents &f G&&! Strateg"
1. Arenas 3 9here
1. Oehicles 3 H# t# get there
1. Di;erentiat#rs 3 H# t# in
1. Staging 3 S"ee% an% seGuence 3 tactics
1. Ec#n#mic l#gic 3 H# ill e gain a return
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1e" Reference
• ha"ter 01)J Dai% Hunger an% +h#mas L 9heelan, StrategicManagement an% usiness >#licy
(10th E%iti#n, A%%is#n 9esleyLingman :nc.
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+han- P#u
ha"ter I#un%u" an%Discussi#ns
July 2, 2015