Overview of Strategic Management Concepts

The Definition of Strategic Management

The Art and Science of Formulating, Implementing, and Evaluating Cross-Functional Decisions That Enable an Organization to Achieve Its Objectives

Prime Task of Strategic Management

Peter Drucker: -- Think through the overall mission of a business. Ask the key question: What is our Business?

The Basis for Good Strategic Decisions Intuition + Analysis

Effective Strategic Decisions

Integrating Intuition and Analysis

The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty

Integrating Intuition and Analysis

Intuition is based on: Past experiences Judgment Feelings

Intuition is useful for decision making in: Conditions of great uncertainty Conditions with little precedent

Strategic Management is Gaining and Maintaining Competitive Advantage

Anything that a firm does especially well compared to rival firms

Keys to Formulating Strategies

Business Mission

External Opportunities and Threats

Internal Strengths and Weaknesses

Strategy Formulation

Key Internal Forces

Management Marketing Manufacturing Production/ Operations

Research & Development

Purchasing

Distribution

Key Internal Forces (cont.)

Finance/Accounting Packaging Human Resource Management Vendor Relations Promotion

Employee/ Manager Relations

Computer Information Systems

Key External Forces

Competitive Economic Technological

Social Cultural
Demographic

Governmental Political
Environmental

Legal

Economic Forces: Examples of Variables To Be Monitored

Level of Disposable Income Interest Rates Inflation Rates Unemployment Trends Value of the Dollar Abroad Tax Rates Budget Deficits Stock Market Trends Economic Conditions Abroad

Economic Forces: Examples of Variables To Be Monitored

Level of Disposable Income Interest Rates Inflation Rates Unemployment Trends Value of the Dollar Abroad Tax Rates Budget Deficits Stock Market Trends Economic Conditions Abroad

Social, Cultural, Demographic, and Environmental Forces: Examples of Variables to be Monitored

Per Capita Income Levels of Disposable Income Population Changes By Race, Age, & Area Attitudes Towards Leisure Time Average Level of Education Attitudes Towards Customer Service Regional Changes in Tastes and Preferences Rising Consciousness for the Natural Environment

Political, Governmental, & Legal Forces: Examples of Variables to be Monitored

Government Regulations and Deregulation Special Tariffs Environmental Protection Laws U.S. - Foreign Country Relationships Import-Export Regulations World Oil, Currency, and Labor Markets The Rise of Democracies Worldwide Local, State, National, and Foreign Elections

Key Questions About Competitors

What are Competitors Objectives?
What are Competitors Strengths? How Vulnerable are we to our Competitors Strategies?

Who are our competitors?

Where are our competitors located?

What are Competitors Weaknesses?

A Comprehensive Strategic Management Model

Feedback

Perform External Audit

Develop Mission Statement

Establish Longterm Objectives

Generate, Evaluate, and Select Strategies

Establish Policies and Annual Objectives

Allocate Resources

Measure and Evaluate Performance

Perform Internal Audit

Strategy Formulation

Strategy Implementation

Strategy Evaluation

Benefits of Strategic Management

- Improved Communication - Greater Productivity - Increased Understanding - Enhanced Commitment - More Effective Strategies - Less Waste

- Allow Firm to Influence, Initiate, and Anticipate - Be Proactive Rather Than Reactive