You are on page 1of 32

Welcome To Strategic Management

Abdul Sattar sattarudin@hotmail.com
A. Sattar (sattarudin@hotmail.com)
Ch 1 - 1

Strategic Management – Defined

Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

A. Sattar (sattarudin@hotmail.com)

Ch 1 - 2

Strategic Management achieves a firm’s success through integration ––

Management Finance/Accounting Research & Development

Marketing Production/Operations MIS

A. Sattar (sattarudin@hotmail.com)

Ch 1 - 3

Strategy Formulation Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection A.com) Ch 1 . Sattar (sattarudin@hotmail.4 .

Sattar (sattarudin@hotmail.com) Ch 1 .5 .Strategy Implementation Annual Objectives Policies Employee Motivation Resource Allocation A.

Sattar (sattarudin@hotmail.com) Ch 1 .Strategy Evaluation Internal Review External Review Performance Metrics Corrective Actions A.6 .

Prime Task of Strategic Management Peter Drucker: -.com) Ch 1 .Think through the overall mission of a business. Ask the key question: “What is our Business?” A. Sattar (sattarudin@hotmail.7 .

Sattar (sattarudin@hotmail.Integrating Intuition & Analysis Analytical Thinking Intuitive Thinking A.com) Ch 1 .8 .

9 .com) Ch 1 .Strategic Management is Gaining and Maintaining Competitive Advantage “Anything that a firm does especially well compared to rival firms” A. Sattar (sattarudin@hotmail.

Sattar (sattarudin@hotmail.10 .Adapting to Change Rate & magnitude of change increasing dramatically E-commerce Demographics Technology A.com) Ch 1 .

11 .Adapting to Change Effective Adaptation Requires long-term focus A.com) Ch 1 . Sattar (sattarudin@hotmail.

com) Ch 1 . Sattar (sattarudin@hotmail.Adapting to Change – Key Strategic Management Questions • What kind of business should we become? • Are we in the right fields • Are there new competitors? • What strategies should we pursue? • How are our customers changing? A.12 .

Sattar (sattarudin@hotmail.Key Terms Strategists – Firm’s success/failure Various Job Titles: •Chief Executive Officer (CEO) •Chief Strategy Officer (CSO) •President •Owner •Board Chair •Executive Director A.13 .com) Ch 1 .

com) Ch 1 .14 .Key Terms Vision Statement – What do we want to become? Mission Statement – What is our business? A. Sattar (sattarudin@hotmail.

Key Terms Opportunities and Threats (External) Largely beyond the control of a single organization A.com) Ch 1 .15 . Sattar (sattarudin@hotmail.

Key Terms Opportunities & Threats (External) Analysis of Trends: • • • • • • • Economic Social Cultural Demographic/Environmental Political. Governmental Technological Competitors A. Sattar (sattarudin@hotmail. Legal.16 .com) Ch 1 .

17 . Sattar (sattarudin@hotmail.Key Terms Opportunities & Threats Environmental Scanning (Industry Analysis) – Process of conducting research and gathering and assimilating external information A.com) Ch 1 .

com) Ch 1 . Sattar (sattarudin@hotmail.18 .Key Terms Opportunities & Threats Basic Tenet of Strategic Management Take advantage of External Opportunities Strategy Formulation Avoid/minimize impact of External Threats A.

com) Ch 1 . Sattar (sattarudin@hotmail.Key Terms Strengths & Weaknesses (Internal) Controllable activities performed especially well or poorly A.19 .

com) Ch 1 . Sattar (sattarudin@hotmail.Key Terms Strengths & Weaknesses (Internal) Typically located in functional areas of the firm • • • • • Management Marketing Finance/Accounting Production/Operations Research & Development • Computer Information Systems A.20 .

21 .com) Ch 1 .Key Terms Strengths & Weaknesses Assessing the Internal Environment Financial Ratios Performance Metrics Internal Factors Industry Averages Survey Data A. Sattar (sattarudin@hotmail.

com) Ch 1 .22 .Key Terms Long-term Objectives Mission-driven pursuit of specified results more than one year out A. Sattar (sattarudin@hotmail.

23 . Sattar (sattarudin@hotmail.Key Terms Long-term Objectives Essential for ensuring the firm’s success • • • • • Provide direction Aid in evaluation Create synergy Focus coordination Basis for planning.com) Ch 1 . and controlling A. motivating.

com) Ch 1 . Sattar (sattarudin@hotmail.24 .Key Terms Strategies Means by which long-term objectives are achieved A.

com) . Sattar (sattarudin@hotmail.25 A.Key Terms Strategies Some Examples • • Geographic expansion Diversification • • • • • Acquisition Market penetration Retrenchment Liquidation Joint venture Ch 1 .

Sattar (sattarudin@hotmail.com) Ch 1 .26 .Key Terms Annual Objectives Short-term milestones that firms must achieve to attain long-term objectives A.

com) Ch 1 .27 . Sattar (sattarudin@hotmail.Key Terms Policies Means by which annual objectives will be achieved A.

Evaluate. R&D. Sattar (sattarudin@hotmail. CIS Measure & Evaluate Performance Chapter 2 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Internal Audit Chapter 4 A.28 .Comprehensive Strategic Management Model External Audit Chapter 3 Vision & Mission Long-Term Objectives Generate. Fin/Acct.com) Ch 1 . Select Strategies Implement Strategies: Mgmt Issues Implement Strategies: Marketing.

29 .Benefits of Strategic Management Financial Benefits • Improvement in sales • Improvement in profitability • Productivity improvement A.com) Ch 1 . Sattar (sattarudin@hotmail.

com) Ch 1 . Sattar (sattarudin@hotmail.Benefits of Strategic Management Non-Financial Benefits • Improved understanding of competitors strategies • Enhanced awareness of threats • Reduced resistance to change • Enhanced problem-prevention capabilities A.30 .

Sattar (sattarudin@hotmail.Advantages of International Operations Absorb excess capacity Reduce unit costs Spread risk over wider markets Low-cost production facilities A.com) Ch 1 .31 .

Disadvantages of International Operations Difficult communications Underestimate foreign competition Cultural barriers to effective management Complications arising from currency differences A.com) Ch 1 .32 . Sattar (sattarudin@hotmail.