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CHAPTER 1 Basic Concepts of Strategic Management

CHAPTER 1 Basic Concepts of Strategic Management. Basic Concepts 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

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CHAPTER 1 Basic Concepts of Strategic Management

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  1. CHAPTER 1 Basic Concepts of Strategic Management

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

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

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

  6. 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?

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

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

  9. Basic Concepts of Strategic Management Environmental Variables

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

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

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

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

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

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

  16. BasicConcepts of Strategic Management Hierarchy of Strategy

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

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

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

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

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

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

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

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

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