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Ch 1 -1

Chapter 1

The Nature of Strategic Management

Strategic Management:Concepts & Cases

13th Edition

Fred David

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Ch 1 -2

Art & science offormulating,

implementing, andevaluating,cross-functional decisions that

enable an organization to achieve its

objectives

Strategic ManagementDefined

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Ch 1 -3

Strategic Management

In essence, the strategic plan is acompanys game plan

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Ch 1 -4

3 Stages of the Strategic

Management Process

Strategy formulation

Strategy implementation

Strategy evaluation

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Ch 1 -5

Vision&Mission

StrategyFormulation

ExternalOpportunities&Threats

InternalStrengths&Weaknesses

Long-TermObjectives

AlternativeStrategies

StrategySelection

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Ch 1 -6

StrategyImplementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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Ch 1 -7

Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action

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Ch 1 -8

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

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Ch 1 -9

Anything that a firm does especially

well compared to rival firms

Strategic Management isGaining and Maintaining

Competitive Advantage

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Ch 1 -10

Strategists

Gather Information

Analyze Information

Organize Information

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Ch 1 -11

Vision StatementWhat do we want to become?

Mission Statement

What is our business?

Vision and Mission Statements

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Ch 1 -12

External Opportunities and Threats

Analysis of Trends

Economic

Social

Cultural

Demographic/Environmental

Political, Legal, Governmental

Technological Competitors

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Ch 1 -13

Basic Tenet of Strategic Management

External Opportunities and Threats

Strategy Formulation

Take advantage ofExternal Opportunities

Avoid/minimize impact ofExternal Threats

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Ch 1 -14

Controllable activities performedespecially well or poorly

Determined relative to competitors

Internal Strengths and Weaknesses

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Ch 1 -15

Typically located in functional areas of the firm

Management

Marketing Finance/Accounting

Production/Operations

Research & Development Management Information Systems

Internal Strengths and Weaknesses

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Ch 1 -16

Assessing the Internal Environment

Internal Strengths and Weaknesses

Internal Factors

Performance Measures

Financial Ratios

Industry Averages

Survey Data

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Ch 1 -17

Specific results that an organization

seeks to achieve in pursuing its basicmission

Long-term means more than one year

Long-Term Objectives

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Long-Term Objectives Essential for ensuring the firms success

Provide direction

Aid in evaluation

Create synergy

Reveal priorities

Focus coordination

Provide basis for planning, organizing,motivating, and controlling

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Means by which long-term objectivesare achieved

Strategies

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Strategies Examples

Geographic expansion

Diversification

Acquisition

Product development

Market penetration

Retrenchment

Divestiture

Liquidation

Joint venture

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Short-term milestones that firms mustachieve to reach long-term objectives

Annual Objectives

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Means by which annual objectives willbe achieved

Policies

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Strategic Management Process

Dynamic & continuousMore formal in larger

organizations

Strategic Management Model

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Strategic Management

Communication is a key tosuccessful strategic management

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Benefits of Strategic Management

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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-rewardrelationship

Enhanced problem-prevention capabilities

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Why Some Firms Do No StrategicPlanning Lack of knowledge of strategic planning

Poor reward structures

Fire fighting

Waste of time

Too expensive

Laziness

Content with success

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Ch 1 -29

Why Some Firms Do No StrategicPlanning (continued)

Fear of failure

Overconfidence

Prior bad experience

Self-interest

Fear of the unknown

Honest difference of opinion

Suspicion