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Chapter 1 The Nature of Strategic Management

Strategic Management: Concepts & Cases 11th Edition Fred David

PowerPoint Slides by Anthony F. Chelte Western New England College

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Strategic Management Defined

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

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Strategic Management achieves a firms success through integration --

Management Finance/Accounting Research & Development

Marketing Production/Operations MIS

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Strategy Formulation
Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies

Strategy Selection

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Strategy Implementation

Annual Objectives Policies Employee Motivation Resource Allocation

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Strategy Evaluation

Internal Review External Review Performance Metrics Corrective Actions

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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?
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Key Terms
Strategists Firms success/failure
Various Job Titles:

Chief Executive Officer (CEO) Chief Strategy Officer (CSO) President Owner Board Chair Executive Director
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Key Terms Vision Statement What do we want to become?

Mission Statement What is our business?

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Key Terms
Opportunities & Threats (External)
Analysis of Trends:
Economic Social Cultural Demographic/Environmental Political, Legal, Governmental Technological Competitors

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Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm Management Marketing Finance/Accounting Production/Operations Research & Development

Computer Information Systems

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Key Terms
Long-term Objectives: Mission-driven pursuit of
specified results more than one year out
Essential for ensuring the firms success Provide direction Aid in evaluation Create synergy Focus coordination Basis for planning, motivating, and controlling

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Key Terms
Strategies: Means by which long-term objectives
are achieved
Some Examples Geographic expansion Diversification

Market penetration Retrenchment Liquidation Joint venture
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Strategic Management Model

External Audit

Vision & Mission

Long-Term Objectives

Generate, Evaluate, Select Strategies

Implement Strategies: Mgmt Issues

Implement Strategies: Marketing, Fin/Acct, R&D, CIS

Measure & Evaluate Performance

Internal Audit

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Benefits of Strategic Management

Proactive in shaping firms future

Initiate and influence firms activities

Formulate better strategies

Systematic, logical, rational

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Benefits of Strategic Management

Financial Benefits

Well informed decisions will lead to increased

Sales Productivity Returns

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Benefits of Strategic Management

Non Financial Benefits

Identification, prioritization & exploitation of opportunities Objective view of problems Framework to coordinate & control of activities Minimizes the impact of change Affective allocation of resources Encourage forward thinking Favorable attitude towards change

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Why Firms Do No Strategic Planning

Poor reward structure Fire fighting Waste of time Too expensive Content with success Fear of failure Self interest Overconfidence Prior bad experience Fear of unknown Honest difference of opinion

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