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Learning Outcomes

Learning Outcomes. Review the strategic planning process Appreciate the causes and implications of Globalisation. Characteristics of Strategic Decisions. Long-term direction of an organisation Achieving advantage Scope of an organisation’s activities

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Learning Outcomes

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  1. Learning Outcomes • Review the strategic planning process • Appreciate the causes and implications of Globalisation

  2. Characteristics of Strategic Decisions • Long-term direction of an organisation • Achieving advantage • Scope of an organisation’s activities • Matching the activities of an organisation to the environment • Building on or ‘stretching’ resources and competences • Major resource changes • Affect operational decisions • Affected by the values and expectations of those in power

  3. A Definition of Strategy Strategy is the direction and scopeof an organisation over the long termwhich achieves advantagefor the organisation through its configuration of resources within a changingenvironmentto meet the needs of marketsand to fulfill stakeholderexpectations.

  4. Levels of Strategy (1) Corporate Level strategic decisions are concerned with: • Overall purpose and scope • Adding value to shareholder investment • Portfolio issues • Resource allocation between SBUs • Structure and control of SBUs • Corporate financial strategy

  5. Levels of Strategy (2) Business Unit Strategy is concerned with: • Competitive strategy • Developing market opportunities • Developing new products/services • Resource allocation within the SBU • Structure and control of the SBU

  6. Levels of Strategy (3) Operational Strategies are concerned with: • the integration of resources, processes, people and skills • to implement strategy

  7. Term The Vocabulary of Strategy Definition A Personal Example Mission Overriding purpose in line with the values or expectations of stakeholders Be healthy and fit Vision or strategic intent Desired future state: the aspiration of the org. To run the London marathon Goal General statement of aim or purpose Lose weight and strengthen muscles Objective Quantification (if possible) or more precise statement of the goal Lose 10 lbs by 1Sept & run the the marathon in 2006 Core competences Resources, processes or skills which provide ‘competitive advantage’ Proximity to a fitness centre, supportive family& friends & past experience of successful diet

  8. The Vocabulary of Strategy Term Definition A Personal Example Associate with a collaborative network (eg join running club), exercise regularly, compete in marathons locally, stick to appropriate diet Long-term direction Strategies Strategic architecture Combination of resources, processes & competences to put strategy into effect Specific exercise & diet regime, appropriate training facilities, etc. Control • The monitoring of action • steps to: • assess the effectiveness • of strategies & actions • modify strategies and/or • actions as necessary Monitor weight, miles run & measure times: if progress OK, do nothing; if not, consider other strategies & actions

  9. Ambiguous Complex Organisation-wide Fundamental Long-term implications Routinised Operationally specific Short-term implications Characteristics of Strategic Management and Operational Management Strategic Management Operational Management

  10. A Basic Model of the Strategic Management Process Strategic analysis Strategic choice Strategy implementation

  11. Expectations and purposes Resources, competences and capability The environment Strategic analysis Organisation structure and design Bases of strategic choice Strategy implement-tation Strategic choice Resource allocation and control Strategic options Strategy evaluation and selection Managing strategic change

  12. Strategic Management in Different Contexts (1) In small businesses, the importance of: • the expectations of individuals (e.g. owners and founders) • competitive positioning In the multi-national corporation, the importance of: • product and geographic scope • portfolio decisions • corporate structure and control

  13. Strategic Management in Different Contexts (2) In the public sector, the importance of: • powerful stakeholder influence (eg by government) • constraints or guidelines on strategic decision making by government • competition for resources • delivery of value for money • within a political context

  14. Strategic Management in Different Contexts (3) In professional service organisations, the importance of: • the expectations and standards of professionals • the powerful influence of internal stakeholders (e.g. partners) • increasingly, competitive positioning.

  15. The Challenge of Strategic Management • The management of complexity and ambiguity • The ability to analyse and conceptualise strategic issues. • The reconciliation of the influences of a changing environment, stakeholder expectations and resource capabilities. • To identify or create strategy opportunities. • And manage change.

  16. What is globalization? • The shift towards a more integrated and interdependent world economy • Two components: • The globalization of markets • The globalization of production Hill, 2005

  17. Globalization of markets • The merging of distinctly separate national markets into a global marketplace • Tastes and preferences converge onto a global norm • Firms offer standardized products worldwide creating a world market Hill, 2005

  18. Globalization of markets • Significant differences still exist between national markets on many relevant dimensions • These differences require that marketing and operating strategies and product features be customized to best match conditions in a country. Hill, 2005

  19. Globalization of markets • Countries are different • Range of problems are wider and more complex • Government intervention in trade and investment creates problems • International investment is impacted by different currencies Hill, 2005

  20. Globalization of production • Refers to sourcing of goods and services from locations around the world to take advantage of • Differences in cost or quality of the factors of production • Labor • Land • Capital Hill, 2005

  21. Volume of world trade and production, 1950-2002 Hill, 2005

  22. Emergence of global institutions • Globalization has created the need for institutions to help manage, regulate and police the global marketplace • GATT • WTO • IMF • World bank • United Nations Hill, 2005

  23. Global drivers • Macro factors that underlie trend towards greater globalization • Decline in trade barriers • Technological change Hill, 2005

  24. Pattern of declining tariffs Hill, 2005

  25. Declining barriers to trade • Globalization of markets and production has been facilitated by • Reduction in trade barriers • Removal of restrictions to foreign direct investment Hill, 2005

  26. Percentage share of total FDI stock Hill, 2005

  27. Volume of FDI inflows, 1994-2002($ billions) Hill, 2005

  28. The role of technological change • Microprocessors and telecommunications • The internet and world wide web • Transportation technology Hill, 2005

  29. Changing demographics of the world economy • World output and trade • Changing foreign direct investment • Changing nature of multinationals • Mini multinationals • Non US multinationals Hill, 2005

  30. National origin of largest multinational corporations Hill, 2005

  31. Globalization debate-Pro • Lower prices for goods and services • Economic growth stimulation • Increase in consumer income • Creates jobs • Countries specialize in production of goods and services that are produced most efficiently Hill, 2005

  32. Globalization debate-Con • Destroys manufacturing jobs in wealthy, advanced countries • Wage rates of unskilled workers in advanced countries declines • Companies move to countries with fewer labor and environment regulations • Loss of sovereignty Hill, 2005

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