ch01 concepts of strategic mgt and bus policy

7/31/2019 Ch01 Concepts of Strategic Mgt and Bus Policy

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Prentice Hall, 2002

Chapter 1Wheelen/Hunger

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Chapter 1

Basic Concepts of

Strategic Management

PowerPoint Slides

Anthony F. Chelte

Western New England College


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Defined:

Set of managerial decisions and

actions that determines the long-

run performance of a firm.


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Business Policy

Defined:

General management orientation

that looks inward for properly

integrating the firms functionalactivities.


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Four Phases of


Basic financial planning

Forecast-based planning

Externally-oriented planning(strategic)

Strategic management


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Highly Rated Benefits:

Clearer sense of strategic vision for the firm

Sharper focus on what is strategicallyimportant

Improved understanding of a rapidlychanging environment


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Not always a formal process:

Where is the organization now? (Not where do wehope it is!)

If no changes are made, where will theorganization be in 1 year, 2 years, 5 years, 10years?

What specific actions should managementundertake? What are the risks and payoffsinvolved?


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Challenges to

Strategic ManagementGlobalization

Internationalization of markets andcorporations

Global (worldwide) markets rather than nationalmarkets

Electronic Commerce Use of the 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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Global Issues

European Union(EU)

Economic integration of 15 member countries

North American Free Trade Agreement(NAFTA)

Improved trade among 3 member countries

Mercosur

Free-trade area among Argentina, Brazil,Uruguay, and Paraguay

Association of South East Asian Nations(ASEAN)

Attempting to link members into a borderlesseconomic zone


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E-Commerce

7 Trends:

Internet forcing companies to transformthemselves

Market access and branding are changing,causing disintermediation of traditionaldistribution channels

Balance of power shifting to the consumer

Competition is changing


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7 Trends (continued)

Pace of business increasing drastically

Internet purchasing corporations out oftheir traditional boundaries

Knowledge becoming a key asset andsource of competitive advantage


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Organizational Adaptation

How organizations obtain fit within their environment:

Theory of population ecology

Institution theory

Strategic choice perspective

Organizational learning theory


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Adaptation to Changing

Environmental Conditions

Strategic flexibility:

Demands a long-term commitment to the developmentand nurturing of critical resources

Demands that the firm become a learning organization


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Learning Organizations

Defined:

An organization skilled at creating,acquiring, and transferringknowledge and at modifying its

behavior to reflect new knowledgeand insights.


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Evaluationand Control

and Control

Strategic Management Model

StrategyFormulation

StrategyImplementation

Mission

Objectives

Strategies

Policies

Feedback/Learning

Environmental

Scanning

Societal

Environment

General Forces

TaskEnvironment

Industry Analysis

Structure

Chain of Command

Resources

Assets, Skills

Competencies,

Knowledge

Culture

Beliefs, Expectations,

Values

Reason for

existence

What resultsto

accomplish

by when Plan toachieve the

mission &

objectives Broad

guidelines fordecisionmaking

Programs

Activities

needed to

accomplisha plan

Budgets

Cost of the

programs Procedures

Sequence

of stepsneeded todo the job

Processto monitor

performance

and takecorrective

action

Performance

External

Internal

Evaluationand Control


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Basic Model of


Four Basic Elements


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Environmental Scanning

Defined:

The monitoring, evaluating, anddisseminating of information fromthe external and internalenvironments to key people withinthe firm.


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Identify strategic factors

SWOT Analysis Strengths, Weaknesses

Opportunities, Threats

Internal Environment Strengths & Weaknesses

Within the organization but not subject to short-run

control of management

External Environment Opportunities & Threats

External to the organization but not subject to short-

run control of management


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Strategy Formulation

Defined:

Development of long-range plans forthe effective management ofenvironmental opportunities and

threats in light of corporate strengthsand weaknesses.


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Mission Statement Purpose or reason for the

organizations existence Promotes shared expectations among

employees

Communicates public image important

to stakeholders Who we are, what we do, what wed like

to become


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Maytag Corporation

Mission Statement

To improve the quality of home lifeby designing, building, marketing,

and servicing the best appliances inthe world.


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Objectives

The end results of planned activity

What is to be accomplished

Time in which to accomplish it Quantified when possible


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Goals vs. Objectives

A goal is an open-ended statement ofwhat one wants to accomplish with noquantification of what is to be achieved

and no time criteria for completion.


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Goals & Objectives

Corporate goals and objectives include:

Profitability (net profits)

Growth (increase in total assets, etc.)

Utilization of resources (ROE or ROI)

Market leadership (market share)


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Strategies

Defined:

A strategy of a corporation forms a

comprehensive master plan statinghow the corporation will achieve itsmission and objectives. It maximizes

competitive advantage andminimizes competitive disadvantage.


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Strategies

3 Types of Strategy

Corporate strategy

Business strategy

Functional strategy


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Strategies

Corporate Strategy

Stability

Growth

Retrenchment


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Strategies

Business Strategy

Competitive strategies

Cooperative strategies


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Strategies

Functional Strategy

Technological leadership

Technological followership

ch01 concepts of strategic mgt and bus policy

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