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STRATEGIC MANAGEMENT
WHAT IS STRATEGIC MANAGEMENT?
Strategic management is the study of:
-why some firms outperform others?
-how to compete in order to achieve desired objectives.
DEFINITION
Strategic management is the art and science of executing a continous process of analysis, cross-functional decisions, and actions a company undertakes in order to earn and sustain competitive advantages and achieve its objectives.
Customers
Company Resources &
Capabilities
Competitors Offers
STRATEGIES
INDUSTRY KEY SUCCESS FACTORS
STRATEGIES
Distinctive Strengths Sources of Competitive Advantage
Needs &wants
& expectations Offers to satisfy
Industry
Strengths
to satisfy
CONCEPTS Competitive advantage - is a plus compared to competitors, the outcome of strategies, resulting in achieving higher sales and profits and keeping more customers; it is what makes company’s offer superior to competitors’ offers.
CA
CONCEPTS • Industry Key Success Factors (IKSFs) are those
things which determine the ability of firms of an industry to prosper; those things which every company that seeks success has to do; for example in automobile industry, image, distribution network, the reliability of technology, after sale service, safety and fuel efficiency.
Competitive advantage is built by concentrating on one or several industry key
success factors and performing them in a manner that is superior to rivals.
CONCEPTS • Resources are factors that provide a company the
means to perform its business processes.
• Capabilities are managerial abilities, skills and capacity from each function of the company , needed to exploit resources (combine, integrate, coordinate and capitalize) for undertaking activities and create value.
• Strengths are resources that a company possesses and capabilities that the company has developed which support the achievement of activities, realization of strategies and attainment of objectives; they can be used as a basis to develop a competitive advantage.
CONCEPTS
• Distinctive strengths are those strengths that the company does particularly well relative to competitors.
• Strategy is the integrated plan externally oriented of how a company will achieve its objectives and compete against rivals; it is the result of choices executives make, on WHERE to compete and HOW to compete.
CONCEPTS
• External opportunities and external threats refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm a company in the future.
• Weaknesses are negative internal factors, vulnerabilities, which hinders development, implementation of strategies and achievement of objectives.
CONCEPTS
• Vision – the strategic intent, the mental projection in the present of the company’s future expectations.
• Mission - defines the scope of the company’s business, expressing the essential characteristics of the company, the reasons for its existence, the nature of its business, the groups who are served and the principles/values under which it operates.
• Objectives - specific outcomes that a company seeks to achieve in pursuing its basic mission and accomplishing its vision; there are strategic and annual objectives.
In summary, a strategically thinking means:
THE STRATEGIC MANAGEMENT PROCESS
Situation analysis Strategy formulation Strategy implementation Strategy evaluation
1. External assessment
a1.1) Macroenvironmet
a1.2) Industry analysis
1. Setting strategic
direction
1. Setting annual
objectives
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2. Setting policies
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3. Allocating resources
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4. Matching OS to
strategy
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5. Creating control and
aarewards systems
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6. Developing a strategy-
aasupportive culture
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1. Examining the
aunderlying bases of the
company's strategy
2. Assessing
performance
3. Taking corrective
actions
2. Generating &
evaluating aaalternative
strategies 2. Internal assessment
3. Selecting strategies
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