Chapter 1

The Nature of Strategic Management

Strategy

Strategic Management:

An elaborate and systematic plan of

action

Concepts and Cases

Cases.. 14th edition
Fred R. David

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Strategic Management Achieves

Organizational Success

Definition#1
The art and science of
formulating,
formulating, implementing,
implementing, and
evaluating cross
cross--functional
decisions that enable an
organization to achieve its
objectives.

Process of Integrating:

Management
Marketing
Finance/accounting
Production/operations
Research and development
Computer information systems (MIS)

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ThreeThree-Stage Process

Strategy Formulation

1. Strategy Formulation

1.

Vision & Mission

2. Strategy Implementation

2.

Opportunities & Threats

3.

Strengths & Weaknesses

4.

Long-Term Objectives

5.

Alternative Strategies

6.

Strategy Selection

3. Strategy Evaluation

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Strategy Implementation

Strategy Evaluation

1.

Annual Objectives

1.

Internal Review

2.

Policies

2.

External Review

3.

Employee Motivation

3.

Performance Measurement

4.

Resource Allocation

4.

Corrective Action

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Integrating Intuition and

Analysis

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Integrating Intuition and

Analysis
Intuition based on:

The strategic management process

attempts to organize quantitative and
qualitative information under
conditions of uncertainty.

Past experiences
Judgment
Feelings

Useful for decision making

Conditions of great uncertainty
Conditions with little precedent

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Integrating Intuition and

Analysis

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Adaptation to Change

Intuition and judgment

Management at all levels
Analyses are influenced

Organizations must monitor events

Analytical thinking and intuitive thinking

Complement each other

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On
On--going process
Internal and external events
Timely changes

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Comprehensive strategic
management model

Adaptation to Change

External
Audit

Rate and magnitude of changes

Chapter 3

Increasing dramatically

Vision
&
Mission

E-commerce
Demographics

Chapter 2

Technology

Generate,
Evaluate,
Select
Strategies

Implement
Strategies:
Mgmt Issues

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

Measure &
Evaluate
Performance

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

Internal
Audit

Merger
Merger--mania

Effective Adaptation
Long
Long--run

Long-Term
Objectives

Chapter 4

focus
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StrategicStrategic-Management Model

Strategic
Strategic--Management Model
StrategicStrategic-Management Process

1. Identify Organizations existing:

Dynamic and Continuous

More formal in larger organizations

Vision
Mission
Objectives
Strategies

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Benefits of Strategic
Management

StrategicStrategic-Management Model
2. Perform External Audit
3. Perform Internal Audit
4. Establish longlong-term objectives
5. Generate, evaluate, select strategies
6. Implement strategies
7. Measure and evaluate performance

Proactive in shaping organizations future

Initiate and influence activities
Formulate better strategies
Systematic, logical & rational approach

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Benefits of Strategic
Management

Benefits of Strategic
Management
Non
Non--Financial benefits
Enhanced awareness of external threats
Improved understanding of competitors
strategies
Increased employee productivity
Reduced resistance to change
Understanding of performance
performance--reward
relationships
Enhances problem
problem--prevention capabilities

Financial benefits
Improvement in sales
Improvement in profitability
Improvement in productivity

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Benefits of Strategic
Management

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Benefits of Strategic
Management

1. Identification of opportunities
2. Objective view of management problems
3. Improved coordination and control
4. Minimizes adverse conditions and
changes
5. Decisions to better support objectives
6. Effective allocation of time and resources
7. Internal communication among personnel

8. Integration of individual behaviors

9. Clarifies individual responsibilities
10. Encourages forward thinking
11. Encourages favorable attitude toward
change
12. Discipline and formality to the
management of business

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Business Ethics and Strategic

Management

Business Ethics and Strategic

Management

Business ethics defined:

Good business ethics:

Principles of conduct within

organizations that guide
decision making and
behavior.

Pre
Pre--requisite for good
strategic management

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Business Ethics & Strategic

Planning

Business Ethics and Strategic

Management

Business actions always unethical include:

Code of business ethics:

Provides basis on which

policies can be planed to
guide daily behavior and
decisions at the workplace
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Misleading advertising
Misleading labeling
Environmental harm
Poor product or service safety
Padding expense accounts
Insider trading
Dumping flawed products on foreign markets

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