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Chapter 1 Chapter 1
The Nature of Strategic The Nature of Strategic Management Management
Will NAFTA Will NAFTA affect our firm? affect our firm?
Should we Should we upgrade our upgrade our PCs? PCs? Should we buy Should we buy our sales staff our sales staff laptops? laptops?
Is our firm Is our firm environmentally environmentally friendly? friendly? Should we Should we recycle? recycle?
Should we Should we burn low-sulfur burn low-sulfur coal? coal? Will Congress Will Congress pass tougher pass tougher laws? laws?
The Definition of The Definition of Strategic Management Strategic Management The Art and Science of Formulating, Implementing, and Evaluating Cross-Functional Decisions That Enable an Organization to Achieve Its Objectives
The Stages and Activities in the The Stages and Activities in the Strategic Management Process Strategic Management Process
Stages
Strategy formulation Conduct research
Activities
Integrate intuition with analysis Make decisions
Strategy implementation
Devise policies
Strategy evaluation
Measure performance
The Basis for Good The Basis for Good Strategic Decisions Strategic Decisions Intuition + Analysis
What Traits CEOs Have Now -- And Will What Traits CEOs Have Now And Will Need in the Year 2000 Need in the Year 2000
Personal Behaviors Conveys strong sense of vision Links compensation to performance Communicates frequently with employees Emphasizes ethics Plans for management succession Communicates frequently with customers Reassigns or terminates Rewards loyalty Makes all major decisions Behaves conservatively Now 75% 66% 59% 74% 56% 41% 34% 39% 39% 32% Year 2000 98% 91% 89% 85% 85% 78% 71% 44% 21% 13%
What Traits CEOs Have Now -- And Will What Traits CEOs Have Now And Will Need in the Year 2000 (cont.) Need in the Year 2000 (cont.)
Knowledge and Skills Strategy formulation Human resource management International economics and politics Science and technology Computer literacy Marketing and sales Negotiation Accounting and finance Handling media and public speaking Production Now 68% 41% 10% 11% 3% 50% 34% 33% 16% 21% Year 2000 78% 53% 19% 15% 7% 48% 24% 24% 13% 9%
Purchasing
Distribution
Generate, Generate, Evaluate, Evaluate, and and Select Select Strategies Strategies
Establish Establish Policies and Policies and Annual Annual Objectives Objectives
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Forces Influencing Design of Strategic Forces Influencing Design of Strategic Management Systems Management Systems
Toward more formality and more details
Organization
Small one-plant companies Large companies
Management Styles
Policy maker Democratic-permissive Authoritarian Day-to-day operational thinker Intuitive thinker Experienced in planning Inexperienced in planning
Forces Influencing Design of Strategic Forces Influencing Design of Strategic Management Systems Management Systems
Toward more formality and more details
Complexity of Environment
Stable environment Turbulent environment Little competition Many markets and customers Single market and customer Competition severe
Forces Influencing Design of Strategic Forces Influencing Design of Strategic Management Systems Management Systems
Toward more formality and more details
Forces Influencing Design of Strategic Forces Influencing Design of Strategic Management Systems Management Systems
Toward more formality and more details
Nature of Problems
Facing new, complex, tough problems having long-range aspects Facing tough short-range problems
- Improved Communication - Greater Productivity - Increased Understanding - Enhanced Commitment - More Effective Strategies - Higher Productivity
- Allow Firm to Influence, Initiate, and Anticipate - Be Proactive Rather Than Reactive
How to Create an Ethical Culture How to Create an Ethical Culture (cont.) (cont.)
Encourage Whistle Blowing Encourage Good Business Ethics Behavior Publicize Good Business Ethics Behavior Reward Good Business Ethics Behavior Set a Good Example
The Communications Benefits of The Communications Benefits of Engaging In Strategic Management Engaging In Strategic Management
Managers from all functional areas listen and discuss their views in strategic management meetings. This interaction yields learning, appreciation, and understanding among managers who otherwise do not communicate with each other