lec-1.......ppt business management school

Management Sciences

1. STRATEGIC MANAGEMENT
ESSENTIALS

2. Art & science of formulating,
implementing, and evaluating, cross-
functional decisions that enable an
organization to achieve its objectives
Strategic Management –Defined

3. Strategic Management
In essence, the strategic plan is a company’s game plan

4. 3 STAGES OF THE STRATEGIC
MANAGEMENT PROCESS
•Strategy formulation
•Strategy implementation
•Strategy evaluation

5. Vision & Mission
Strategy Formulation
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

6. Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation

7. Strategy Evaluation
Internal Review
External Review
Performance Measurement
Corrective Action

8. INTEGRATING INTUITION AND
ANALYSIS
•Most organizations can benefit from strategic management,
which is based upon integrating intuition and analysis in
decision making
•Intuition is particularly useful for making decisions in
situations of great uncertainty or little precedent

9. ADAPTING TO CHANGE
•The second-largest bookstore chain in the United
States, Borders Group, declared bankruptcy in 2011
as the firm had not adapted well to changes in book
retailing from traditional bookstore shopping to
customers buying online, preferring digital books to
hard copies
•Borders was on the brink of financial collapse
before being acquired in July 2011 by Direct Brands

10. KEY TERMS IN STRATEGIC
MANAGEMENT
•Competitive advantage
•Strategists
•Vision and mission statements
•External opportunities and threats
•Internal strengths and weaknesses
•Long-term objectives
•Strategies
•Annual objectives
•Policies

11. Anything that a firm does especially well
compared to rival firms
Strategic Management is
Gaining and Maintaining
Competitive Advantage

12. Strategists
Gather Information
Analyze Information
Organize Information

13. Vision Statement –
What do we want to become?
Mission Statement –
What is our business?
Vision and Mission Statements

14. External Opportunities and Threats
Analysis of Trends
•Economic
•Social
•Cultural
•Demographic/Environmental
•Political, Legal, Governmental
•Technological
•Competitors

15. Basic Tenet of Strategic Management
External Opportunities and Threats
Strategy Formulation
Take advantage of
External Opportunities
Avoid/minimize impact of
External Threats

16. Controllable activities performed
especially well or poorly
Determined relative to competitors
Internal Strengths and Weaknesses

17. •Typically located in functional areas of the firm
•Management
•Marketing
•Finance/Accounting
•Production/Operations
•Research & Development
•Management Information Systems
Internal Strengths and Weaknesses

18. Assessing the Internal Environment
Internal Strengths and Weaknesses
Internal Factors
Performance Measures
Financial Ratios
Industry Averages
Survey Data

19. Specific results that an organization seeks
to achieve in pursuing its basic mission
Long-term means more than one year
Long-Term Objectives

20. Long-Term Objectives
•Essential for ensuring the firm’s success
•Provide direction
•Aid in evaluation
•Create synergy
•Reveal priorities
•Focus coordination
•Provide basis for planning, organizing,
motivating, and controlling

21. Means by which long-term objectives are
achieved
Strategies

22. Strategies
•Examples
•Geographic expansion
•Diversification
•Acquisition
•Product development
•Market penetration
•Retrenchment
•Divestiture
•Liquidation
•Joint venture

23. Short-term milestones that firms must
achieve to reach long-term objectives
Annual Objectives

24. Means by which annual objectives will be
achieved
Policies

26. BENEFITS OF STRATEGIC
MANAGEMENT
•Historically, the principal benefit of strategic
management has been to help organizations formulate
better strategies through the use of a more systematic,
logical, and rational approach to strategic choice

27. BENEFITS OF STRATEGIC
MANAGEMENT
•Communication is a key to successful strategic management
•Through dialogue and participation, managers and
employees become committed to supporting the
organization

28. BENEFITS TO A FIRM THAT DOES
STRATEGIC PLANNING

29. FINANCIAL BENEFITS
•Businesses using strategic-management
concepts show significant improvement in
sales, profitability, and productivity compared
to firms without systematic planning activities
•High-performing firms seem to make more
informed decisions with good anticipation of
both short- and long-term consequences

30. NONFINANCIAL BENEFITS
•It allows for identification, prioritization, and exploitation of
opportunities.
•It provides an objective view of management problems.
•It represents a framework for improved coordination and
control of activities.
•It minimizes the effects of adverse conditions and changes.

31. NONFINANCIAL BENEFITS
•It allows major decisions to better support established
objectives.
•It allows more effective allocation of time and resources
to identified opportunities.
•It allows fewer resources and less time to be devoted to
correcting erroneous or ad hoc decisions.
•It creates a framework for internal communication
among personnel.

32. WHY SOME FIRMS DO NO
STRATEGIC PLANNING
•Lack of knowledge in strategic planning
•Poor reward structures
•Firefighting
•Waste of time
•Too expensive
•Laziness
•Content with success

33. WHY SOME FIRMS DO NO
STRATEGIC PLANNING
•Fear of failure
•Overconfidence
•Prior bad experience
•Self-interest
•Fear of the unknown
•Honest difference of opinion
•Suspicion

34. PITFALLS IN STRATEGIC
PLANNING
•Using strategic planning to gain control over decisions and resources
•Doing strategic planning only to satisfy accreditation or regulatory
requirements
•Too hastily moving from mission development to strategy formulation
•Failing to communicate the plan to employees, who continue working
in the dark
•Top managers making many intuitive decisions that conflict with the
formal plan

35. PITFALLS IN STRATEGIC
PLANNING
•Top managers not actively supporting the strategic-planning
process
•Failing to use plans as a standard for measuring performance
•Delegating planning to a “planner” rather than involving all
managers
•Failing to involve key employees in all phases of planning
•Failing to create a collaborative climate supportive of change