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Stratgie Management
Process
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Strategic Management Concepts
Definition: Strategic management consists of theanalysis, decisions, and actions an organizationundertakes in order to create and sustain
competitive advantages.
Art & science offormulating, implementing, andevaluating, cross-functional decisions that
enable an organization to achieve its objectives
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Key Attributes of Strategic
Management
:Directs the organization toward overall goalsand objectives.
Involves the inclusion of multiple stakeholdersin decision making.
Needs to incorporate short-term and long-term perspectives.
Recognizes tradeoffs between efficiency andeffectiveness.
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Ch 1 -4
Strategic Management achieves a
firms success through integration
Management
MIS
Production/OperationsFinance/Accounting
Marketing
Research & Development
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Vision & Mission
Strategy Formulation
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Strategy Selection
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Issues in Strategy Formulation
New business opportunities
Allocation of resources
Expansion or diversification
International marketsMergers or joint ventures
Avoidance of hostile takeover
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Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
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Strategy Evaluation
Final Stage of Strategic Management
Subject to future modificationTodays success no guarantee of future
success
New & different problemsComplacency leads to demise
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Peter Drucker: -- Think through the overall
mission of a business. Ask the key
question: What is our Business?
Prime Task of Strategic Management
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The strategic management
process attempts to organizequantitative and qualitative
information under conditions of
uncertainty
Integrating Intuition andAnalysis
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Intuition is based on:Past experiences
JudgmentFeelings
Integrating Intuition andAnalysis
Intuition isuseful for decision making in:
Conditions of great uncertainty
Conditions with little precedent
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Organizations must monitor
eventsOn-going process
Internal and external eventsTimely changes
Adapting to Change
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Anything that a firm does especially
well compared to rival firms
Strategic Management is Gaining
and Maintaining Competitive
Advantage
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Ch 1 -14
Rate & magnitude of change increasingdramatically
Adapting to Change
E-commerce
Demographics
Technology
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Hall Ch 1 -15
What kind of business shouldwe become?
Are we in the right fields
Are there new competitors?
What strategies should wepursue?
How are our customerschanging?
Adapting to Change Key Strategic
Management Questions
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Ch 1 -16
StrategistsFirms
success/failure
Various Job Titles:
Chief Executive Officer (CEO)
Chief Strategy Officer (CSO)
President
Owner
Board ChairExecutive Director
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Ch 1 -17
Strengths & Weaknesses (Internal)
Key Terms
Typically located in functional areas of the firm
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
Computer Information Systems
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Ch 1 -18
Assessing the Internal Environment
Key Terms
Strengths & Weaknesses
Internal Factors
Performance Metrics
Financial Ratios
Industry Averages
Survey Data
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Ch 1 -19
Mission-driven pursuit of specified results morethan one year out
Key Terms
Long-term Objectives
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Ch 1 -20
Long-term Objectives
Key Terms
Essential for ensuring the firms success
Provide direction
Aid in evaluation
Create synergy
Focus coordination
Basis for planning, motivating, and
controlling
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Ch 1 -21
Means by which long-term objectives areachieved
Key Terms
Strategies
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Ch 1 -22
Strategies
Key Terms
Some Examples
Geographic expansion Diversification
Acquisition
Market penetration
Retrenchment
Liquidation
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Example Strategies in Action
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Example Strategies in Action
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Ch 1 -25
1. Identify Existing --
Strategic Management Model
Vision
Mission
Objectives
Strategies
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Ch 1 -26
2. Audit external environment
3. Audit internal environment
4. Establish long-term objectives
5. Generate, evaluate & select strategies
6. Implement selected strategies
7. Measure & evaluate performance
Strategic Management Model
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Benefits of Strategic
Management
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
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Benefits of Strategic Management
6. Effective allocation of time & resources
7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
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Ch 1 -29
Why Some Firms Do No
Strategic Planning
Waste of time
Too expensive
Laziness
Content with success
OverconfidencePrior bad experience
Fear of the unknown
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Vision
A vision statement is a vivid idealized description
of a desired outcome that inspires, energizes and
helps you create a mental picture of your target.It could be a vision of a part of your life, or the
outcome of a project or goal. Vision statements
are often confused with mission statements, but
they serve complementary purposes.
What do we want to become?
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Comprehensive
Mission Statement
Key to strategic planning
Clear Business
Vision
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Vision --
Creates commonality of interests
Reduce daily monotony
Provides opportunity & challenge
Vision & Mission
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Vision Statement Examples
-- U.S. Poultry & Egg Association
"McDonald's vision is to be the world's bestquick service restaurant experience. Being thebest means providing outstanding quality,service, cleanliness, and value, so that we
make every customer in every restaurantsmile.
The vision statement of Tata Motors Limited,India's largest automobile company, is to be
"best in the manner in which we operate, bestin the products we deliver, and best in ourvalue system and ethics."
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Mission Statements
Mission: Defines the fundamental
purpose of an organization or an
enterprise, succinctly describing why it
exists and what it does to achieve itsVision.
What is our business?
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Ch 2 -35
Mission Statements Example
Mcdonald -Being the best by providingoutstanding quality, service, cleanliness, andvalue, so that we make every customer in
every restaurant smile. Tata Motors-To become a world class
automotive engineering and productdevelopment centre, and enable Tata Motors
to become a world class automotivecompany.
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Mission Statements
Enduring statement of purpose
Distinguishes one firm from another
Declares the firms reason for being
Reveal what an organization wants to be and whom itwants to serve
Essential for effectively establishing objectives and
formulating strategies
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Importance of Mission
Mission
Resource Allocation
Unanimity of Purpose
Organizational Climate
Focal point for work
structure
Benefits from a strong mission
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Effective Missions
Broad in scope
Generate strategic alternatives
Not overly specific
Reconciles interests among diverse stakeholders
Finely balanced between specificity & generality
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Effective Missions
Arouse positive feelings &
emotions
Motivate readers to action
Generate favorable impression of thefirm
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Effective Missions
Reflect future growth
Provide criteria for strategy
selection
Basis for generating &
evaluating strategic options
Are dynamic in nature
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Ch 2 -41
Define what the organization is
Define what it aspires to be
Mission & Customer Orientation
Broad enough to allow for growth
Distinguishes firm from all others
Stated clearly understood by all
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Anticipates customer needs Identifies customer needs
Provides product/service to satisfy
needs
Mission & Customer Orientation
An Effective Mission Statement --
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Ch 2 -43
2x average return on shareholders equity
Positive relationship to company performance
30% higher return on certain financial measures
Vision & Mission
Research results are mixed, however, firms
with formal mission statements generally see
a:
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Ch 2 -44
Mission
Elements
CustomersMarkets
Employees
PublicImageSelf-Concept Philosophy
Survival
Growth
Profit
Products
Services
Technology
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Ch 2 -45
PepsiCo Mission
PepsiCos mission is to increase the value of ourshareholders investment. We do this through sales
growth, cost controls, and wise investment resources.
We believe our commercial success depends upon
offering quality and value to our consumers andcustomers; providing products that are safe, wholesome,
economically efficient and environmentally sound; and
providing a fair return to our investors while adhering to
the highest standards of integrity.
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Ben & Jerrys Mission
Ben & Jerrys mission is to make, distribute and sell the
finest quality all-natural ice cream and related productsin a wide variety of innovative flavors made fromVermont dairy products. To operate the Company on asound financial basis of profitable growth, increasing
value for our shareholders, and creating careeropportunities and financial rewards for our employees.To operate the Company in a way that actively recognizesthe central role that business plays in the structure ofsociety by initiating innovative ways to improve the
quality of life of a broad communitylocal, national andinternational.
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Mission Statement Evaluation Matrix
COMPONENTS
Organizat ion Customers
Products
Services Markets
Concern for
Survival ,
Growth ,
Prof i tabi l i ty Technology
PepsiCo Yes No No Yes No
Ben & Jerry's No Yes Yes Yes No
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Mission Statement Evaluation Matrix
COMPONENTS
Organizat ion Phi losophy Self-Concept Concern forPubl ic Image Concern forEmployees
PepsiCo Yes No No No
Ben & Jerry's No Yes Yes Yes
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Growth Accelarator
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