Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 1 Basic Concepts of Strategic Management Chapter 1

Strategic Management: Chapter 1 Basic Concepts of Strategic Management

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Basic Concepts of Strategic

Management

Chapter 1


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Chapter Objectives

After finish this chapter student will: Understanding what Strategy is? Understanding what strategic

management means? Understanding The basic model of

strategic management Understanding the process of strategic

management and Benefit of strategic management


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1.1 The study of Strategic ManagementStrategic Management can be define as the art and science of formulating, implementing, and evaluating cross-functional decisions that able an organization to achieve its objectives. It is focus on integrating management, marketing, finance/accounting, production/ operation, research and development, and information systems to achieve organization success.Strategic Management is used to refer to strategy formulation, implementation, and evaluation.Strategic Planning referring only to strategy formulation.


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Management

Marketing

Production &Operation

Research & Development

Finance & Accounting

MIS issues

Strategic Management


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1.2 Aim of Strategy

To develop a successful company by developing better resources and product/services which are more suited to customer needs or in other words, to gain competitive advantage.

The word "strategy" comes from the Greek "strategos" referring to stratos ( the army) and ago ( to lead). The history of strategic planning began in the military. A key aim of both business and military strategy is "to gain competitive advantage". Both business and military organizations must adapt to change and constantly improve to be successful.


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1.3 Levels of Strategy

Corporate strategy : What direction are we going and what businesses are we in or do we want to be in?

Business strategy: How are we going to compete in our chosen businesses?

Functional strategy: What resources and capabilities do we have to support the corporate and competitive strategies?


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1.4 Basic Model of the Strategic Management

EnvironmentalScanning• External environment• Internal environment

StrategicFormulation• Vision• Mission• Objectives• Strategies• Policies

Strategic Implementation• Programs• Budgets• Procedures

EvaluationAnd Control• Performance

Feedback/Learning processFigure1-1 The Basic model of the strategic Management


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1.5 The Model of the Strategic Management Process

Develop Vision and

Mission Statements

Establish long-term objectives

MeasureAnd

Evaluate Performance

GenerateAnd SelectStrategies

Implement Strategies-

Management Issues

PerformInternalAudit

PerformExternal

Audit

Strategy Formulation Strategy Implementation

Strategy Evaluation

Implement Strategies- Marketing, Finance,

R&D ...


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1.6 Who Perform Strategic Management

CEO Owner of business In-country representative President Vice president Prime minister Deputy prime minister

Strategists: The individuals who are most responsible for the success or failure of an organization. All strategists help an organization gather, analyze, and organize information.


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1.7 The Board of Directors

Stockholders elect the board of directors to oversee company.

Selecting, assessing, rewarding or replacing CEO.Determine company strategic direction, vision, mission, and reviewing financial performanceAssuring ethical, socially responsible, and legal conduct.


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1.8 Benefits of Strategic Management

Strategic management allows an organization to be more proactive than reactive in shaping its own future, it allows an organization to initiate and influence activities.

Strategic management has been to help organization formulate better strategies through the use of more systematic, logical, and rational approach to strategic choice, but focus on process rather than decision or document (Communication is a key to successful strategic management).


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Review

Why strategic management is important to the organization?

Describe briefly about the strategic management process.

Documents

Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 1 Basic Concepts of Strategic Management Chapter 1