stretegic management process ch 1

7/29/2019 Stretegic Management Process Ch 1

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Stratgie Management

Process


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Strategic Management Concepts

Definition: Strategic management consists of theanalysis, decisions, and actions an organizationundertakes in order to create and sustain

competitive advantages.

Art & science offormulating, implementing, andevaluating, cross-functional decisions that

enable an organization to achieve its objectives


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Key Attributes of Strategic

Management

:Directs the organization toward overall goalsand objectives.

Involves the inclusion of multiple stakeholdersin decision making.

Needs to incorporate short-term and long-term perspectives.

Recognizes tradeoffs between efficiency andeffectiveness.


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Ch 1 -4

Strategic Management achieves a

firms success through integration

Management

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development


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Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Strategy Selection


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Issues in Strategy Formulation

New business opportunities

Allocation of resources

Expansion or diversification

International marketsMergers or joint ventures

Avoidance of hostile takeover


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Copyright 2007 Prentice Hall Ch 1 -7

Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation


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Strategy Evaluation

Final Stage of Strategic Management

Subject to future modificationTodays success no guarantee of future

success

New & different problemsComplacency leads to demise


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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 organizequantitative and qualitative

information under conditions of

uncertainty

Integrating Intuition andAnalysis


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Intuition is based on:Past experiences

JudgmentFeelings

Integrating Intuition andAnalysis

Intuition isuseful for decision making in:

Conditions of great uncertainty

Conditions with little precedent


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Organizations must monitor

eventsOn-going process

Internal and external eventsTimely changes

Adapting to Change


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Anything that a firm does especially

well compared to rival firms

Strategic Management is Gaining

and Maintaining Competitive

Advantage


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Ch 1 -14

Rate & magnitude of change increasingdramatically

Adapting to Change

E-commerce

Demographics

Technology


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Hall Ch 1 -15

What kind of business shouldwe become?

Are we in the right fields

Are there new competitors?

What strategies should wepursue?

How are our customerschanging?

Adapting to Change Key Strategic

Management Questions


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Ch 1 -16

StrategistsFirms

success/failure

Various Job Titles:

Chief Executive Officer (CEO)

Chief Strategy Officer (CSO)

President

Owner

Board ChairExecutive Director


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Ch 1 -17

Strengths & Weaknesses (Internal)

Key Terms

Typically located in functional areas of the firm

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Computer Information Systems


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Ch 1 -18

Assessing the Internal Environment

Key Terms

Strengths & Weaknesses

Internal Factors

Performance Metrics

Financial Ratios

Industry Averages

Survey Data


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Ch 1 -19

Mission-driven pursuit of specified results morethan one year out

Key Terms

Long-term Objectives


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Ch 1 -20

Long-term Objectives

Key Terms

Essential for ensuring the firms success

Provide direction

Aid in evaluation

Create synergy

Focus coordination

Basis for planning, motivating, and

controlling


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Ch 1 -21

Means by which long-term objectives areachieved

Key Terms

Strategies


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Ch 1 -22

Strategies

Key Terms

Some Examples

Geographic expansion Diversification

Acquisition

Market penetration

Retrenchment

Liquidation


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Example Strategies in Action


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Example Strategies in Action


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Ch 1 -25

1. Identify Existing --

Strategic Management Model

Vision

Mission

Objectives

Strategies


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Ch 1 -26

2. Audit external environment

3. Audit internal environment

4. Establish long-term objectives

5. Generate, evaluate & select strategies

6. Implement selected strategies

7. Measure & evaluate performance

Strategic Management Model


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Ch 1 -27

Benefits of Strategic

Management

1. Identification of Opportunities

2. Objective view of management problems

3. Improved coordination & control

4. Minimizes adverse conditions & changes

5. Decisions that better support objectives


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Benefits of Strategic Management

6. Effective allocation of time & resources

7. Internal communication among personnel

8. Integration of individual behaviors

9. Clarify individual responsibilities

10. Encourage forward thinking


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Ch 1 -29

Why Some Firms Do No

Strategic Planning

Waste of time

Too expensive

Laziness

Content with success

OverconfidencePrior bad experience

Fear of the unknown


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Vision

A vision statement is a vivid idealized description

of a desired outcome that inspires, energizes and

helps you create a mental picture of your target.It could be a vision of a part of your life, or the

outcome of a project or goal. Vision statements

are often confused with mission statements, but

they serve complementary purposes.

What do we want to become?


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Ch 2 -31

Comprehensive

Mission Statement

Key to strategic planning

Clear Business

Vision


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Vision --

Creates commonality of interests

Reduce daily monotony

Provides opportunity & challenge

Vision & Mission


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Ch 2 -33

Vision Statement Examples

-- U.S. Poultry & Egg Association

"McDonald's vision is to be the world's bestquick service restaurant experience. Being thebest means providing outstanding quality,service, cleanliness, and value, so that we

make every customer in every restaurantsmile.

The vision statement of Tata Motors Limited,India's largest automobile company, is to be

"best in the manner in which we operate, bestin the products we deliver, and best in ourvalue system and ethics."


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Mission Statements

Mission: Defines the fundamental

purpose of an organization or an

enterprise, succinctly describing why it

exists and what it does to achieve itsVision.

What is our business?


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Ch 2 -35

Mission Statements Example

Mcdonald -Being the best by providingoutstanding quality, service, cleanliness, andvalue, so that we make every customer in

every restaurant smile. Tata Motors-To become a world class

automotive engineering and productdevelopment centre, and enable Tata Motors

to become a world class automotivecompany.


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Ch 2 -36

Mission Statements

Enduring statement of purpose

Distinguishes one firm from another

Declares the firms reason for being

Reveal what an organization wants to be and whom itwants to serve

Essential for effectively establishing objectives and

formulating strategies


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Ch 2 -37

Importance of Mission

Mission

Resource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work

structure

Benefits from a strong mission


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Ch 2 -38

Effective Missions

Broad in scope

Generate strategic alternatives

Not overly specific

Reconciles interests among diverse stakeholders

Finely balanced between specificity & generality


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Effective Missions

Arouse positive feelings &

emotions

Motivate readers to action

Generate favorable impression of thefirm


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Ch 2 -40

Effective Missions

Reflect future growth

Provide criteria for strategy

selection

Basis for generating &

evaluating strategic options

Are dynamic in nature


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Ch 2 -41

Define what the organization is

Define what it aspires to be

Mission & Customer Orientation

Broad enough to allow for growth

Distinguishes firm from all others

Stated clearly understood by all


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Anticipates customer needs Identifies customer needs

Provides product/service to satisfy

needs

Mission & Customer Orientation

An Effective Mission Statement --


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Ch 2 -43

2x average return on shareholders equity

Positive relationship to company performance

30% higher return on certain financial measures

Vision & Mission

Research results are mixed, however, firms

with formal mission statements generally see

a:


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Ch 2 -44

Mission

Elements

CustomersMarkets

Employees

PublicImageSelf-Concept Philosophy

Survival

Growth

Profit

Products

Services

Technology


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Ch 2 -45

PepsiCo Mission

PepsiCos mission is to increase the value of ourshareholders investment. We do this through sales

growth, cost controls, and wise investment resources.

We believe our commercial success depends upon

offering quality and value to our consumers andcustomers; providing products that are safe, wholesome,

economically efficient and environmentally sound; and

providing a fair return to our investors while adhering to

the highest standards of integrity.


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Ben & Jerrys Mission

Ben & Jerrys mission is to make, distribute and sell the

finest quality all-natural ice cream and related productsin a wide variety of innovative flavors made fromVermont dairy products. To operate the Company on asound financial basis of profitable growth, increasing

value for our shareholders, and creating careeropportunities and financial rewards for our employees.To operate the Company in a way that actively recognizesthe central role that business plays in the structure ofsociety by initiating innovative ways to improve the

quality of life of a broad communitylocal, national andinternational.


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Mission Statement Evaluation Matrix

COMPONENTS

Organizat ion Customers

Products

Services Markets

Concern for

Survival ,

Growth ,

Prof i tabi l i ty Technology

PepsiCo Yes No No Yes No

Ben & Jerry's No Yes Yes Yes No


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Mission Statement Evaluation Matrix

COMPONENTS

Organizat ion Phi losophy Self-Concept Concern forPubl ic Image Concern forEmployees

PepsiCo Yes No No No

Ben & Jerry's No Yes Yes Yes


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Growth Accelarator

stretegic management process ch 1

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