Transcript Strategic mangenet - All about Afghanistan

Strategic Management
Definition
Strategic management is a continuous
iterative process keeping an
organization fully matched with its
environment.
“Without a strategy the
organization is like a ship
without a rudder, going
around in circles.”
“Quote”
Joel Ross and Michael Kami
Thinking Strategically:
The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
– Business(es) to be in and market positions to
stake out?
– Buyer needs and groups to serve?
– Outcomes to achieve?
3. How do we get there?
The Hows That
Define a Firm's Strategy
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How to grow the business
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How to please customers
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How to outcompete rivals
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How to respond to changing
market conditions
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How to manage each functional piece of the business
and develop needed organizational capabilities
•
How to achieve strategic and financial objectives
Strategy
is HOW
to . . .
Terminology
“Strategic Management”
Synonymous with
“Strategic Planning”
• Strategic management
 Used more often in academia
• Strategic planning
 Used more often in the business world
Ch. 1-6
Terminology
• Strategic management
Refers to:
 Strategy formulation
 Strategy implementation
 Strategy evaluation
• Strategic planning
Refers to:
 Strategy formulation
Ch. 1-7
Brief History
• 1950s
 Term strategic planning originates
1960s – 1970s
 Strategic planning very popular
 Widely viewed as panacea for problems
Ch. 1-8
Brief History
• 1980s
 Strategic planning cast aside
 Planning models did not yield higher returns
• 1990s–till today
 Revival of strategic planning
 Widely practiced in business world
Ch. 1-9
Strategic-Management Process Three
Stages
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Ch. 1-10
Strategy Formulation
Vision & Mission
Opportunities & Threats
Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
Ch. 1-11
Strategy Formulation
Issues include/ consideration:
– What new businesses to enter
– What businesses to abandon
– How to allocate resources
– Enter international markets
– Merge or form joint venture
Ch. 1-12
Strategy Implementation
Annual Objectives
Policies
Motivate Employees
Resource Allocation
Ch. 1-13
Strategy Implementation
Action Stage of strategic management:
– Most difficult stage
– Mobilizing employees and managers
– Consensus on pursuing goals
Ch. 1-14
Strategy Evaluation
Review
Standards
Measure Performance
Corrective Action
Ch. 1-15
Key Strategic Management Terms
(Cont’d)
1.
2.
3.
4.
5.
Strategists
Vision statements
Mission statements
External opportunities and threats
Internal strengths and weaknesses
Ch. 1-16
Key Strategic Management Terms
(Cont’d)
6.
7.
8.
9.
Long-term objectives
Strategies
Annual objectives
Policies
Ch. 1-17
Strategic Management Terms (Cont’d)
Strategists
• Usually found in high levels of management (CEO)
– Most responsible for success or failure of an
organization
– Various job titles:
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Chief executive officer
President
Owner
Chair of the Board
Executive Director
Entrepreneur
Ch. 1-18
Strategic Management Terms
(Cont’d)
Vision Statements
• Answers the question: “What do we want to become?”
First step in strategic planning
Oftentimes a single sentence
“Our vision is to take care of your vision.”
(Stokes Eye Clinic, Florence, South Carolina)
Ch. 1-19
Mission statement
Mission Statement
– What is our business?
Examples: Mission and Vision Statements
Intel
Our vision: Getting to a billion connected computers
worldwide, millions of servers, and trillions of dollars of
e-commerce. Intel’s core mission is being the building
block supplier to the Internet economy and spurring
efforts to make the Internet more useful. Being
connected is now at the center of people’s computing
experience. We are helping to expand the capabilities
of the PC platform and the Internet.
Strategic Management Terms (Cont’d)
External Opportunities & Threats
• Largely beyond the control of a single organization
• Significantly benefit or harm the organization in the
future
Political
Economic
Social and Cultural
Technological
Ch. 1-22
Basic tenet of strategic management
• Strategy formulation to:
– Take advantage of external opportunities
– Avoid or reduce impact of external threats
Strategic Management Terms
(Cont’d)
Internal Strengths & Weaknesses (Cont’d)
• Based on functional analysis of activities in the
firm’s:
– Controllable activities performed especially well
or poorly.
– Arise in functional areas of the business:
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Management
Marketing
Finance/accounting
Production/operations
Research & development
Computer Information Systems
© 2001 Prentice Hall
Ch. 1-24
Strategic Management Terms (Cont’d)
Long-Term Objectives
• Results to be achieved in pursuing the organization’s
mission. Time frame is beyond one year.
State direction
Aid in evaluation
Focus coordination
Provide basis for effective management
Ch. 1-25
Types of Objectives Required
Financial Objectives
Strategic Objectives
Outcomes focused on
improving financial
performance
Outcomes focused on
improving long-term,
competitive business
position
$
Examples of Financial Objectives
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Grow earnings per share 15% annually
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Boost annual return on investment from 15% to
20% within three years
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Increase annual dividends per share
to stockholders by 5% each year
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Maintain a positive cash flow every year
Examples of Strategic Objectives
• Increase firm’s market share
• Overtake key rivals on quality or
customer
service or product performance
• Attain lower overall costs than rivals
• Boost firm’s reputation with customers
• Attain stronger foothold in international markets
• Achieve technological superiority
• Become leader in new product introductions
Strategic Management Terms (Cont’d)
Strategies
• Potential actions that require top management
decisions and large amounts of firm’s resources
• Mechanisms by which long-term objectives are
realized(achieved)
Geographic expansion
Diversification
Product development
Ch. 1-29
Strategic Management Terms
(Cont’d)
Strategies (cont’d)
• Mechanisms by which long-term objectives are realized
Market penetration
Retrenchment
Liquidation
Ch. 1-30
Strategic Management Terms (Cont’d)
Annual Objectives
• Short-term milestones necessary to achieve
long-term objectives.
Ch. 1-31
Strategic Management Terms
(Cont’d)
Annual Objectives (cont’d)
• Stated in terms of accomplishments for:
management
 marketing
 finance/accounting
 production/operations
 research and development
 information systems accomplishments
Ch. 1-32
Strategic Management Terms
(Cont’d)
Policies
• Important in strategy implementation as the means by
which annual objectives will be achieved
 Guide to decision making and address repetitive situations
Ch. 1-33
Strategic Management Process
External
Environment
Analysis
Vision
&
Mission
Statements
Long-Term
Goals &
Objectives
Internal
Environment
Analysis
Strategy
Formulation
Corporate
Strategies
Strategy:
Implementation
Functional
Strategies
Strategy
Evaluation
Competitive
Strategies
Figure 1-1: The Five Tasks
of Strategic Management
Task 1
Task 2
Task 3
Task 4
Task 5
Develop a
Strategic
Vision
and
Mission
Set
Objectives
Craft a
Strategy
to Achieve
Objectives
Implement
and
Execute
Strategy
Monitor,
Evaluate,
and Take
Corrective
Action
Revise as
Needed
Revise as
Needed
Improve/
Change
Improve/
Change
Recycle
as Needed
Benefits of Strategic Management
• Allows an organization to be proactive than
reactive
• Increases commitment
• Empowerment by participation
• Gives direction to organizational activities
• Increases sales, profitability and
productivity
Ch. 1-36
Benefits of Strategic Management
(Cont’d)
Enhanced awareness of external threats
Understanding of competitors’ strategies
Reduced resistance to change
View change as opportunity
Ch. 1-37
Why Some Firms Do No
Strategic Planning
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Poor reward structures
Fire-fighting
Waste of time
Too expensive
Laziness
Content with success
Ch. 1-38
Why Some Firms Do No
Strategic Planning (Cont’d)
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Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
Ch. 1-39
Pitfalls to Avoid in Strategic Planning
• Failing to communicate to employees
• Top management not supportive of process
• Failing to use as standard for performance
measurement
• Failing to involve key personnel
• Failing to create collaborative environment
• Formality that stifles creativity and flexibility
Ch. 1-40
Business Ethics & Strategic Planning
Defined:
Principles of conduct within organizations that
guide decision making and behavior
• Good business ethics is a prerequisite for
good strategic management
• Good ethics is just good business!
• Strategists responsible for high ethical
principles
Ch. 1-41
Business Ethics & Strategic Planning
(Cont’d)
Business actions always unethical include:
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Misleading advertising
Misleading labeling
Environmental harm
Poor product or service safety
Dumping flawed products on foreign markets
Ch. 1-42
Nature of Global Competition
• Companies conduct business across
borders
International or multinational corporations
 Parent company
 Host country
• Strategy implementation more difficult
Cultural differences
 Norms, values, work ethics
Ch. 1-43
Advantages of International
Operations
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Reduce unit costs
Low-cost production facilities
Lower labor costs
Competition less intense
Reduced tariffs, lower taxes
Favorable political climate
Ch. 1-44
Disadvantages of International
Operations
Communication difficulties between parent and
subsidiaries
• Based on cultural, political, social, language,
demographic, and competitive forces
Foreign-based competitors
• Strengths underestimated
• Weaknesses overestimated
Ch. 1-45