strategic management unit 1.ppt
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IndrajitCh 1 -1
Unit 1
The Nature of Strategic Management
Strategic Management: by
Indrajit C
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Art & science of formulating,
implementing, and evaluating,cross-functional decisions that
enable an organization to achieve its
objectives
Strategic Management efined
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!urpo"e of Strategic Management
To exploit and create new and different
opportunities for tomorrow
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Strategic Management
In essence, the "trategic planis a
companys game plan
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! "tages of the "trategic
#anagement $rocess
"trategy formulation
"trategy implementation
"trategy evaluation
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#i"ion$Mi""ion
Strategy%ormulation
&'ternal(pportunitie"$Threat"
InternalStrength"$)ea*ne""e"
+ong,Term(bjective"
-lternativeStrategie"
StrategySelection
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I""ue" in Strategy
%ormulation
.u"ine""e" to enter.u"ine""e" to abandon-llocation of re"ource"&'pan"ion or
diver"ificationInternational mar*et"Merger" or joint
venture"
-voidance of ho"tileta*eover
.u"ine""e" to enter.u"ine""e" to abandon-llocation of re"ource"&'pan"ion or
diver"ificationInternational mar*et"Merger" or joint
venture"-voidance of ho"tile
ta*eover
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StrategyImplementation
-nnual (bjective"
!olicie"
&mployee Motivation
/e"ource -llocation
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I""ue" in Strategy
Implementation
-ction Stage of Strategic
Management
Mobili0ation of
employee" $ manager"
Mo"t difficult "tage
Interper"onal "*ill"
critical
-ction Stage of Strategic
Management
Mobili0ation of
employee" $ manager"
Mo"t difficult "tage
Interper"onal "*ill"
critical
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Strategy &valuation
Internal /evie
&'ternal /evie
!erformance Mea"urement
Corrective -ction
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$eter %rucer' Thin through the
overall mission of a business( Asthe ey )uestion'
*)hat i" our .u"ine""23
!rime Ta"* of
Strategic Management
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(rgani0ation" "hould continually
monitor internal and e'ternalevent" and trend" "o that timely
change" can be made a" needed
-dapting to Change
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+ey Terms in "trategic #anagement
ompetitive advantage
"trategists
ision and mission statements
.xternal opportunities and threats Internal strengths and weanesses
/ong-term objectives
"trategies Annual objectives
$olicies
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Anything that a firm does especially
well compared to rival firms
Strategic Management i"
4aining and Maintaining
Competitive -dvantage
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"trategic #anagement #odel
Strategy%ormulation
StrategyImplementation
&valuationand Control
Mi""ion
(bjective"
Strategie"
!olicie"
0eedbac1/earning
&nvironmentalScanning
"ocietal
.nvironment
2eneral 0orces
Tas.nvironment
Industry Analysis
"tructure
hain of ommand
3esources
Assets, "ills
ompetencies,
+nowledge
ulture
4eliefs, .xpectations,
alues
3eason for
existence
5hat results
to
accomplish
by when $lan to
achieve the
mission &
objectives 4road
guidelines for
decision
maing
!rogram"
Activities
needed to
accomplish
a plan
.udget"
ost of the
programs!rocedure"
"e)uence
of steps
needed to
do the job
$rocess to monitor performance
and tae corrective
action
!erformance
&'ternal
Internal
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Strategi"t"
4ather Information
-naly0e Information
(rgani0e Information
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#i"ion Statement
)hat do e ant to become2
Mi""ion Statement
)hat i" our bu"ine""2
#i"ion and Mi""ion Statement"
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&'ternal (pportunitie" and Threat"
Analysis of Trends .conomic
"ocial
ultural %emographic1.nvironmental
$olitical, /egal, 2overnmental
Technological ompetitors
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.a"ic Tenet of Strategic Management
&'ternal (pportunitie" and Threat"
Strategy %ormulation
Ta*e advantage of&'ternal (pportunitie"
Ta*e advantage of&'ternal (pportunitie"
-void5minimi0e impact of
&'ternal Threat"
-void5minimi0e impact of
&'ternal Threat"
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ontrollable activities performedespecially well or poorly
%etermined relative to competitors
Internal Strength" and )ea*ne""e"
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-""e""ing the Internal &nvironment
Internal Strength" and )ea*ne""e"
Internal %actor"
!erformance Mea"ure"
/atio"
Indu"try -verage"
Survey ata
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+ong,Term (bjective"
&""ential for en"uring the firm6" "ucce""
!rovide direction
-id in evaluation
Create "ynergy
/eveal prioritie"
%ocu" coordination
!rovide ba"i" for planning7 organi0ing7motivating7 and controlling
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#eans by which long-term objectivesare achieved
Strategie"
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Strategie"
.xamples 2eographic expansion
%iversification
Ac)uisition
$roduct development
#aret penetration
3etrenchment
%ivestiture /i)uidation
6oint venture
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"hort-term milestones that firms mustachieve to reach long-term objectives
-nnual (bjective"
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#eans by which annual objectives willbe achieved
!olicie"
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"trategic #anagement $rocess
%ynamic & continuous#ore formal in larger
organizations
Strategic Management Model
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.valuation and ontrol
The process of monitoring corporate activities
and performance results so that actual
performance can be compared with desired
performance
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"trategic #anagement
ommunicationis a ey tosuccessful strategic management
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7ierarchy of "trategy
0unctional"trategy
4usiness8%ivision/evel9
"trategy
orporate"trategy
#anufacturing 0inance #areting3esearch
and%evelopment
7uman3esources
"trategic4usiness
:nit
"trategic4usiness
:nit
"trategic4usiness
:nit
orporate7ead)uarters
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"trategic %ecision-#aing $rocess
3eview and3evise as;ecessary' #ission
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.enefit" of Strategic Management
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.enefit" of Strategic Management
;onfinancial 4enefits .nhanced awareness of threats Improved understanding of competitors strategies Increased employee productivity 3educed resistance to change learer understanding of performance-reward
relationship .nhanced problem-prevention capabilities
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Types of Taeovers
Ta*eover
The transfer of control from one ownership group to another(
-c;ui"ition
The purchase of one firm by another
Merger
The combination of two firms into a new legal entity
A new company is created
4oth sets of shareholders have to approve the transaction(
-malgamation
A genuine merger in which both sets of shareholders must approve the transaction
3e)uires a opinion by an independent expert on the true value of the firms shareswhen a public minority exists
Conglomerate
A merger in which two firms in unrelated businesses combine(
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Than Dou
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