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Chapter 1

Strategic management is defined as the art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives. It involves strategy formulation, implementation, and evaluation. Key aspects of strategic management include vision and mission statements, analyzing external opportunities and threats as well as internal strengths and weaknesses, and developing long-term objectives and strategies.

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10 views

Chapter 1

Strategic management is defined as the art and science of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives. It involves strategy formulation, implementation, and evaluation. Key aspects of strategic management include vision and mission statements, analyzing external opportunities and threats as well as internal strengths and weaknesses, and developing long-term objectives and strategies.

Uploaded by

Anonymous jTY4ExM
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Strategic Management –Defined

Art & science of formulating,


implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives
Strategic Management

In essence, the strategic plan is a company’s


game plan
 Strategy formulation

 Strategy implementation

 Strategy evaluation
Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection
Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation
Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action
 Competitive advantage
 Strategists
 Vision and mission statements
 External opportunities and threats
 Internal strengths and weaknesses
 Long-term objectives
 Strategies
 Annual objectives
 Policies
Strategic Management is Gaining and
Maintaining Competitive Advantage

Anything that a firm does especially well


compared to rival firms
Strategists

Gather Information

Analyze Information

Organize Information
Vision and Mission Statements

Vision Statement –
What do we want to become?

Mission Statement –
What is our business?
External Opportunities and Threats

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

Basic Tenet of Strategic


Management
Take advantage of
External Opportunities

Strategy Formulation

Avoid/minimize impact of
External Threats
Internal Strengths and Weaknesses

 Controllableactivities performed
especially well or poorly

 Determined relative to competitors


Internal Strengths and Weaknesses

 Typically located in functional areas of the


firm

◦ Management
◦ Marketing
◦ Finance/Accounting
◦ Production/Operations
◦ Research & Development
◦ Management Information Systems
Internal Strengths and Weaknesses

Assessing the Internal Environment

Financial Ratios

Performance Measures
Internal Factors
Industry Averages

Survey Data
Long-Term Objectives

 Specificresults that an organization


seeks to achieve in pursuing its basic
mission

 Long-term means more than one year


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,
leading, and controlling
Strategies

Means by which long-term objectives


are achieved
Strategies
 Examples
◦ Geographic expansion
◦ Diversification
◦ Acquisition
◦ Product development
◦ Market penetration
◦ Retrenchment
◦ Divestiture
◦ Liquidation
◦ Joint venture
Annual Objectives

Short-term milestones that firms


must achieve to reach long-term
objectives
Policies

Means by which annual objectives


will be achieved
Strategic Management Model

 StrategicManagement Process
◦ Dynamic & continuous
◦ More formal in larger organizations
 Communication is a key to
successful strategic management
Benefits of Strategic Management
 Nonfinancial Benefits
◦ Enhanced awareness of threats
◦ Improved understanding of competitors’ strategies
◦ Increased employee productivity
◦ Reduced resistance to change
◦ Clearer understanding of performance-reward
relationship
◦ Enhanced problem-prevention capabilities
 Lack of knowledge of strategic planning
 Poor reward structures
 Fire fighting
 Waste of time
 Too expensive
 Laziness
 Content with success

(continued)
 Fear of failure
 Overconfidence
 Prior bad experience
 Self-interest
 Fear of the unknown
 Honest difference of opinion
 Suspicion

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