wheelan 14e ch01

BasicConceptsofSt t iStrategic

ManagementManagement

Chapter 1Chapter1

Learning ObjectivesLearningObjectives

U d t d th b fit f t t iUnderstandthebenefitsofstrategicmanagement

Explainhowglobalizationandenvironmentalsustainabilityinfluencestrategicmanagement

Understandthebasicmodelofstrategicmanagementanditscomponents

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Learning ObjectivesLearningObjectives

Id tif t i i t th tIdentifysomecommontriggeringeventsthatactasstimuliforstrategicchange

UnderstandstrategicdecisionmakingmodesUsethestrategicauditasamethodof

analyzingcorporatefunctionsandactivities


The Study of Strategic ManagementTheStudyofStrategicManagement

St t i M tStrategicManagement asetofmanagerialdecisionsandactionsthatd t i th l f fdeterminesthelongrunperformanceofacorporation

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The Study of Strategic ManagementTheStudyofStrategicManagement

St t i M t i l dStrategicManagementincludes:InternalandexternalenvironmentscanningStrategyformulationStrategy implementationStrategyimplementationEvaluationandcontrol


Phases of Strategic ManagementPhasesofStrategicManagement

Phase 1: Basic financialPhase 1: Basic financialPhase1:BasicfinancialPhase1:Basicfinancialplanningplanning

Phase2:ForecastPhase2:Forecastbasedbasedplanningplanning

Phase3:ExternallyorientedPhase3:Externallyorientedstrategic planningstrategic planningstrategicplanningstrategicplanning

Phase4:StrategicPhase4:Strategicmanagementmanagement


Benefits of Strategic ManagementBenefitsofStrategicManagement

Th tt i t f i t t h fit Theattainmentofanappropriatematch,orfit,betweenanorganizationsenvironmentanditsstrategy structure and processes has positivestrategy,structureandprocesseshaspositiveeffectsontheorganizationsperformance.

Strategicplanningbecomesincreasinglyimportantastheenvironmentbecomesmore

blunstable.


Benefits of Strategic ManagementBenefitsofStrategicManagement

Cl f t t i i i f th fiClearersenseofstrategicvisionforthefirmSharperfocusonwhatisstrategically

importantImprovedunderstandingofarapidlychanging

environment

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Impact of GlobalizationImpactofGlobalization

Gl b li tiGlobalization theintegratedinternationalizationofmarketsand

ticorporations haschangedthewaymoderncorporationsdobusinessbusiness


Impact of InnovationImpactofInnovation

I tiInnovation describesnewproducts,services,methodsand

i ti l h th t ll th b iorganizationalapproachesthatallowthebusinesstoachieveextraordinaryreturns

Innovation istheimplementationofpotentialinnovationsthattrulydrivesbusinessestoberemarkable.


Impact of SustainabilityImpactofSustainability

S t i bilitSustainability referstotheuseofbusinesspracticestomanageth t i l b tt lithetriplebottomline

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Impact of SustainabilityImpactofSustainability

Th t i l b tt li i lThetriplebottomlineinvolves:1. themanagementoftraditionalprofit/loss;2. themanagementofthecompanyssocial

responsibility;and3. themanagementofitsenvironmental

responsibility.responsibility.


Theories of Organizational AdaptationTheoriesofOrganizationalAdaptation

P l ti l I tit ti thPopulationecology onceanorganizationis successfully

Institutiontheory organizationscananddo adapt to changingissuccessfully

establishedinaparticular

doadapttochangingconditionsbyimitatingotherp

environmentalniche,itisunabletoadapt

h

gsuccessfulorganizations

tochangingconditions



St t i h i tiStrategicchoiceperspective notonlydoorganizationsadapttoachanging

i t b t th l h th t itenvironment,buttheyalsohavetheopportunityandpowertoreshapetheirenvironment



O i ti l l i thOrganizationallearningtheory anorganizationadjustsdefensivelytoachanging

i t d k l d ff i l tenvironmentandusesknowledgeoffensivelytoimprovethefitbetweenitselfanditsenvironmentenvironment


Creating a Learning OrganizationCreatingaLearningOrganization

St t i fl ibilitStrategicflexibility theabilitytoshiftfromonedominantstrategyto

th d ianotherandrequires:

Longtermcommitmenttothedevelopmentandnurturingofcriticalresources

Learningorganization



L i i tiLearningorganization anorganizationskilledatcreating,acquiringandt f i k l d d t dif i ittransferringknowledgeandatmodifyingitsbehaviortoreflectnewknowledgeandinsights

Organizationallearningisacriticalcomponentofcompetitivenessinadynamicenvironment.



L i i ti kill d t f iLearningorganizationsareskilledatfourmainactivities: Solvingproblemssystematically Experimentingwithnewapproaches Learningfromtheirownexperiencesandpast

historyaswellasfromtheexperiencesofothers Transferringknowledgequicklyandefficiently

throughouttheorganization


Basic Model of Strategic ManagementBasicModelofStrategicManagement

St t i t i t f f b iStrategicmanagementconsistsoffourbasicelements:EnvironmentalscanningStrategyformulationStrategyimplementationEvaluation and controlEvaluationandcontrol


BasicElementsoftheStrategicManagementProcess

Figure 11Figure11


Strategic Management ModelStrategicManagementModel

Figure12Figure1 2



E i t l iEnvironmentalscanning themonitoring,evaluatinganddisseminatingofi f ti f th t l d i t linformationfromtheexternalandinternalenvironmentstokeypeoplewithintheorganizationorganization

SWOTanalysis


Environmental VariablesEnvironmentalVariables

Figure13g



St t f l tiStrategyformulation processofinvestigation,analysisanddecision

ki th t id th ith thmakingthatprovidesthecompanywiththecriteriaforattainingacompetitiveadvantage

includes defining the competitive advantages of includesdefiningthecompetitiveadvantagesofthebusiness(Strategy),craftingthecorporatemission, specifying achievable objectives andmission,specifyingachievableobjectivesandsettingpolicyguidelines.



Mi iMission thepurposeorreasonfortheorganizations

i texistence

Vision describeswhattheorganizationwouldliketobecome

Objectives the end results of planned activitytheendresultsofplannedactivity



St tStrategy formsacomprehensivemasterapproachthat

t t h th ti ill hi itstateshowthecorporationwillachieveitsmissionandobjectives

maximizes competitive advantage and minimizes maximizescompetitiveadvantageandminimizescompetitivedisadvantage

corporate business functional corporate,business,functional


Hierarchy of StrategyHierarchyofStrategy



P liPolicy abroadguidelinefordecisionmakingthatlinksth f l ti f t t ith ittheformulationofastrategywithitsimplementation



St t i l t tiStrategyimplementation aprocessbywhichstrategiesandpoliciesareputi t ti th h th d l t fintoactionthroughthedevelopmentofprograms,budgetsandprocedures



E l ti d t lEvaluationandcontrol aprocessinwhichcorporateactivitiesand

f lt it d th tperformanceresultsaremonitoredsothatactualperformancecanbecomparedwithdesired performancedesiredperformance



P fPerformance theendresultoforganizationalactivities includestheactualoutcomesofthestrategicmanagementprocess

Feedback/Learningprocess reviseorcorrectdecisionsbasedonperformance


Initiation of Strategy: Triggering EventsInitiationofStrategy:TriggeringEvents

T i i tTriggeringevent somethingthatactsasastimulusforachangein

t t d i l dstrategyandcaninclude:

NewCEO Externalintervention Threatofchangeofownership Performancegap Strategicinflectionpoint


Strategic Decision MakingStrategicDecisionMaking

St t i d i iStrategicdecisions dealwiththelongtermfutureofanentire

i ti d h th h t i tiorganizationandhavethreecharacteristics: Rare

l Consequential Directive


ThreeCharacteristicsofStrategicDecisions

RareRare Strategicdecisionsareunusualandtypicallyhavenoprecedenttofollow.

Consequential Strategicdecisionscommitsubstantialresourcesand demand a great deal of commitment fromanddemandagreatdealofcommitmentfrompeopleatalllevels.

Directive Strategicdecisionssetprecedentsforlesserdecisionsandfutureactionsthroughoutanorganizationorganization


MintzbergsModesofStrategickDecisionMaking

EntrepreneurialEntrepreneurial AdaptiveAdaptivet ep e eu at ep e eu a dapt edapt e

LogicalLogicalPlanningPlanning LogicalLogicalincrementalismincrementalism


Strategic DecisionMaking ProcessStrategicDecision MakingProcess

1 Evaluate current performance results1. Evaluatecurrentperformanceresults2. Reviewcorporategovernance3 Scan and assess the external environment3. Scanandassesstheexternalenvironment4. Scanandassesstheinternalcorporate

environment5. Analyzestrategic(SWOT)factors6. Generate,evaluateandselectthebest

lt ti t talternativestrategy7. Implementselectedstrategies8 Evaluate implemented strategies8. Evaluateimplementedstrategies



Figure15g


TheStrategicAudit:AidtoStrategickDecisionMaking

St t i ditStrategicaudit providesachecklistofquestions,byareaorissue,th t bl t ti l i t b d fthatenablesasystematicanalysistobemadeofvariouscorporatefunctionsandactivities


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wheelan 14e ch01