Professional Documents
Culture Documents
CHAPTER 1
Strategic Management:
Creating Competitive
Advantages
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Learning Objectives
1. Define strategic management and its four key attributes.
2. Understand the strategic management process and its three
interrelated and principal activities.
3. Identify the vital role of corporate governance and stakeholder
management as well as how “symbiosis can be achieved
among an organization’s stakeholders.
4. Understand the importance of social responsibility, including
environmental sustainability, and how it can enhance a
corporation’s innovation strategy.
5. Recognize the need for greater empowerment through the
organization.
6. Explain how an awareness of a hierarchy of strategic goals
can help an organization achieve coherence in its strategic
direction.
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The Important of Leadership
Consider …
Maintaining competitive success or even surviving
over long periods of time is difficult for companies of
any size.
SO how much credit (or blame) does a leader
deserve?
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Two Perspectives of Leadership
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Leaders Can Make a Difference
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Defining Strategic Management
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Strategic Management
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Strategic Management Trade-offs
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Question 1
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Intended vs. Realized Strategies. The business
environment is far from predictable.
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Strategic Management Process
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Strategy Analysis 1
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Strategy Analysis 2
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Strategy Formulation 1
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Strategy Formulation 2
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Strategy Implementation 1
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Strategy Implementation 2
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Strategy Implementation 3
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Strategy Implementation 4
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Strategy Implementation 5
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Corporate Governance and Stakeholder
Management
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Corporate Governance
Board of Directors
Elected representatives of the
owners.
Ensure interests and motives of
management are aligned with
those of the owners.
• Create an effective and engaged
board.
• Address shareholder activism.
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Stakeholder Management
Exhibit 1.5 An Organization’s Key Stakeholders and the
Nature of Their Claims.
Stakeholder Group Nature of Claim
Stockholders Dividends, capital appreciation
Employees Wages, benefits, safe working environment, job
security
Suppliers Payment on time, assurance of continued relationship
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Two Views of Stakeholder Management
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Question 2
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Social Responsibility and Environmental
Sustainability
• Firms have multiple stakeholders and must go
beyond a focus solely on financial results.
• Social responsibility is the expectation that
businesses or individuals will strive to improve
the overall welfare of society.
• Firms can measure a triple bottom line,
assessing financial, social, AND environmental
performance.
• Sustainability projects can yield substantial
benefits even when they are difficult to quantify.
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Empowered Strategic Management
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Coherence in Strategic Direction 1
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Coherence in Strategic Direction2
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Coherence in Strategic Direction 3
Organizational vision.
• A “massively inspiring” goal, overarching, long term.
• A destination driven by and evoking passion.
• Developed and implemented by leadership.
• A fundamental statement of an organization’s values,
aspirations, and goals.
• Captures both the minds and hearts of employees.
• BUT can backfire and erode a company’s credibility.
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Coherence in Strategic Direction 4
Mission statement.
• Encompasses both the purpose of the company and the
basis of competition and competitive advantage.
• More specific than the vision.
• Focuses on the means by which the firm will compete.
• Incorporates stakeholder management.
• Communicates why an organization is special and
different.
• Can and should change when competitive conditions
change.
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Coherence in Strategic Direction 5
Strategic objectives.
• Used to operationalize the mission statement.
• Provide guidance on how to fulfill mission and vision.
• Measurable, specific, appropriate, realistic and timely.
• Channel all employees’ efforts toward common goals.
• Can be both financial and nonfinancial.
• Should be challenging, yet help resolve conflicts.
• Provide a yardstick for rewards and incentives.
• BUT too many objectives can result in lack of focus.
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