SM - 1
SM - 1
SM - 1
Strategic Management -
An Overview
CHAPTER OBJECTIVES
After studying this chapter, you should be able to do
the following:
Management Marketing
Finance/Accounting Production/Operations
Strategy formulation
includes developing a vision and mission,
identifying an organization’s external opportunities
and threats, determining internal strengths and
weaknesses, establishing long-term objectives,
generating alternative strategies, and choosing
particular strategies to pursue
Strategy Formulation
Strategy implementation
requires a firm to establish annual objectives,
devise policies, motivate employees, and allocate
resources so that formulated strategies can be
executed
often called the action stage
Stages of Strategic Management
Strategy evaluation
reviewing external and internal factors that are the
bases for current strategies, measuring
performance, and taking corrective actions
Stages of Strategic Management
Competitive Strategists
advantage the individuals who are
anything that a firm most responsible for
does especially well the success or failure
compared to rival firms of an organization
Key Terms in Strategic Management
Vision statement
answers the question “What do we want to
become?”
often considered the first step in strategic
planning
Key Terms in Strategic Management
Mission statements
enduring statements of purpose that distinguish
one business from other similar firms
identifies the scope of a firm’s operations in
product and market terms
addresses the basic question that faces all
strategists: “What is our business?”
Key Terms in Strategic Management
Objectives
specific results that an organization seeks to
achieve in pursuing its basic mission
long-term means more than one year
should be challenging, measurable, consistent,
reasonable, and clear
Key Terms in Strategic Management
Strategies
the means by which long-term objectives will be
achieved
may include geographic expansion,
diversification, acquisition, product development,
market penetration, retrenchment, divestiture,
liquidation, and joint ventures
Key Terms in Strategic Management
Annual objectives
short-term milestones that organizations must
achieve to reach long-term objectives
should be measurable, quantitative, challenging,
realistic, consistent, and prioritized
should be established at the corporate, divisional,
and functional levels in a large organization
Key Terms in Strategic Management
Policies
the means by which annual objectives will be
achieved
include guidelines, rules, and procedures
established to support efforts to achieve stated
objectives
guides to decision making and address repetitive
or recurring situations
The Strategic-Management Model
A Comprehensive Strategic-
Management Model
Integrating Intuition and
Analysis
Judgment
Feelings
Business level
strategy
Financial Benefits
• Improvement in sales
• Improvement in profitability
• Productivity improvement
Benefits of Strategic
Management
Non-Financial Benefits
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
Benefits of Strategic Management (Greenley – cont’d)
6. Effective allocation of time & resources
7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
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