lecture 05 mgt686. review of lecture 04 external audit chapter 3 internal audit chapter 4 long-term...

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LECTURE 05 MGT686

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Page 1: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

LECTURE 05

MGT686

Page 2: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

REVIEW OF LECTURE 04

ExternalAudit

Chapter 3

InternalAudit

Chapter 4

Long-TermObjectives

Chapter 5

Generate,Evaluate,

SelectStrategies

Chapter 6

ImplementStrategies:

Mgmt Issues

Chapter 7

ImplementStrategies:Marketing,Fin/Acct,R&D, CISChapter 8

Measure &Evaluate

Performance

Chapter 9

Vision &

Mission

Chapter 2

Page 3: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Strategic-Management Model

Strategic-Management Process –

• Dynamic and Continuous• More formal in larger organizations

Page 4: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Strategic-Management Model

1.Identify Organization’s existing:

• Vision• Mission• Objectives• Strategies

Page 5: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Strategic-Management Model

2. Perform External Audit3. Perform Internal Audit4. Establish long-term objectives5. Generate, evaluate, select strategies6. Implement strategies7. Measure and evaluate performance

Page 6: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Benefits of Strategic Management

• Proactive in shaping organization’s future• Initiate and influence activities• Formulate better strategies– Systematic, logical, rational approach

Page 7: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Benefits of Strategic Management

• Financial benefits– Improvement in sales– Improvement in profitability– Improvement in productivity

Page 8: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Benefits of Strategic Management

• Non-Financial benefits– Enhanced awareness of xternal threats– Improved understanding of competitors’

strategies– Increased employee productivity– Reduced resistance to change– Understanding of performance-reward

relationships– Enhances problem-prevention capabilities

Page 9: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Benefits of Strategic Management

1. Identification of opportunities2. Objective view of management problems3. Improved coordination and control4. Minimizes adverse conditions and changes5. Decisions to better support objectives6. Effective allocation of time and resources7. Internal communication among personnel

Page 10: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Benefits of Strategic Management

8. Integration of individual behaviors9. Clarifies individual responsibilities10.Encourages forward thinking11.Encourages favorable attitude toward change12.Discipline and formality to the management

of the business

Page 11: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Why Some Firms Do No Strategic Planning

• Poor reward structures• Waste of time• Too expensive• Laziness• Content with success

Page 12: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Why Some Firms Do No Strategic Planning (Cont’d)

• Fear of failure• Overconfidence• Prior bad experience• Self-interest• Fear of the unknown• Suspicion

Page 13: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Business Ethics and Strategic Management

Business ethics defined:–Principles of conduct within organizations

that guide decision making and behavior.

Page 14: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Business Ethics and Strategic Management

Good business ethics:

–prerequisite for good strategic management

Page 15: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Business Ethics and Strategic Management

Code of business ethics:

–Provides basis on which policies can be devised to guide daily behavior and decisions at the workplace

Page 16: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Business Ethics & Strategic Planning

Business actions always unethical include:

• Misleading advertising• Misleading labeling• Environmental harm• Poor product or service safety• Insider trading• Dumping flawed products on foreign markets

Page 17: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Nature of Global Competition

Companies conduct business across bordersInternational or multinational corporations

Parent company Host country

• Strategy implementation more difficultCultural differences

Norms, values, work ethics

Page 18: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Advantages of International Operations

• Absorb excess capacity• Reduce unit costs• Spread economic risks over wider markets• Low-cost production facilities• Competition may be less intense• Reduced tariffs, lower taxes• Economies of scale

Page 19: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

Disadvantages of International Operations

• Different social, cultural demographic, legal forces may create difficult communication

• Weaknesses of foreign competition may be underestimated

• Barriers to communication and effective management of personnel

• Complications from different monetary systems

Page 20: LECTURE 05 MGT686. REVIEW OF LECTURE 04 External Audit Chapter 3 Internal Audit Chapter 4 Long-Term Objectives Chapter 5 Generate, Evaluate, Select Strategies

THANKYOU