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Basic Concepts of Strategic Management: Globalization, Electronic Commerce, and Competitive Advantage

This chapter explores the basic concepts of strategic management, including the impact of globalization, the rise of electronic commerce, and the shift towards competition on a strategic level. It also discusses the importance of environmental scanning, strategy formulation, organizational adaptation, and the hierarchy of strategy.

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Basic Concepts of Strategic Management: Globalization, Electronic Commerce, and Competitive Advantage

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  1. CHAPTER 1 Basic Concepts of Strategic Management STRATEGIC MANAGEMENT & BUSINESS POLICY10TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

  2. BasicConcepts of Strategic Management • Globalization • Internationalization of markets and corporations • Global (worldwide) markets rather than national markets • Electronic Commerce • Use of the Internet to conduct business transactions • Basis for competition on a more strategic level rather than traditional focus on product features and costs

  3. Basic Concepts of Strategic Management • Electronic Commerce -- Trends • Forcing company transformation • Market access & branding changing – disintermediation of traditional distribution channels • Balance of power shift to consumer • Competition changing

  4. Basic Concepts of Strategic Management • Electronic Commerce -- Trends • Pace of business increasing • Internet purchasing beyond traditional boundaries • Knowledge key asset – source of competitive advantage

  5. Strategic Management Defined Set of managerial decisions and actions that determines the long-run performance of a firm.

  6. Basic Concepts of Strategic Management • 4 Phases of Strategic Management • Basic financial planning • Forecast-based planning • Externally-oriented planning • Strategic management

  7. Basic Concepts of Strategic Management • Highly Rated Benefits • Clearer sense of strategic vision • Sharper focus on strategic importance • Improved understanding of changing environment

  8. Basic Concepts of Strategic Management • Not Always a Formal Process • Where is the organization now? (not where do we hope it is) • If no changes are made, where will the organization be in 1,2,5 or 10 years? • What specific actions should management undertake? • What are the risks and payoffs?

  9. Basic Concepts of Strategic Management Basic Elements of the Strategic Management Process

  10. Environmental Scanning Defined Monitoring, evaluation, and disseminating information from external and internal environments –to key people in the firm

  11. Basic Concepts of Strategic Management Environmental Variables

  12. Environmental Scanning • SWOT Analysis • Strengths – Weaknesses • Opportunities - Threats

  13. Strategy Formulation Development of long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses

  14. Strategy Formulation • Mission Statement • Purpose/reason for organization • Promotes shared expectations • Communicates public image • Who we are; what we do; what we aspire to

  15. Organizational Adaptation • Organization “fit” with environment • Theory of population ecology • Institution theory • Strategic choice perspective • Organizational learning theory

  16. Organizational Adaptation • Strategic flexibility • Demands long-term commitment to development of critical resources • Demands firm become a learning organization

  17. Learning Organizations An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights

  18. Learning Organizations • 4 Chief Activities • Systematic problem solving • New approach experimentation • Learning from experiences • Intra-organization knowledge transfer

  19. BasicConcepts of Strategic Management Hierarchy of Strategy

  20. Goals & Objectives • Corporate Goals/Objectives • Profitability (net profit) • Growth • Resource utilization (ROE, ROI) • Market leadership

  21. BasicConcepts of Strategic Management • 3 Types of Strategy • Corporate strategy • Business strategy • Functional strategy

  22. BasicConcepts of Strategic Management • Corporate Strategy • Stability • Growth • Retrenchment

  23. BasicConcepts of Strategic Management • Business Strategy • Competitive strategies • Cooperative strategies

  24. BasicConcepts of Strategic Management • Functional Strategy • Technological leadership • Technological followership

  25. Basic Concepts of Strategic Management Strategic Decision-Making Process

  26. Strategic Decision Making • Strategic Decisions • Rare • Consequential • Directive

  27. Strategic Decision Making • Mintzberg’s Modes • Entrepreneurial mode • Adaptive mode • Planning mode • Logical incrementalism

  28. Hambrick and Fredrickson – Good Strategy • 5 Elements of Good Strategy • Arenas • Vehicles • Differentiators • Staging • Economic logic

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