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The Nature of Strategic Management
The Nature of Strategic Management
Management
A global perspective is a matter of
survival for businesses.
E-commerce is a vital strategic
management tool.
The natural environment is an important
strategic issue.
Ch. 1-1
Fred R. David
Three-Stage Process
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Ch. 1-2
Fred R. David
Strategy Formulation
Long-Term Objectives
Alternative Strategies
Strategy Selection
Ch. 1-3
Fred R. David
Strategy Formulation
Issues include:
What new businesses to enter
What businesses to abandon
How to allocate resources
Expand operations or diversify
Enter international markets
Merge or form joint venture
Avoidance of hostile takeover
Ch. 1-4
Fred R. David
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Ch. 1-5
Fred R. David
Strategy Implementation
Ch. 1-6
Fred R. David
Strategy Evaluation
Internal Review
External Review
Performance Measurement
Corrective Action
Ch. 1-7
Fred R. David
Strategy Evaluation
Ch. 1-8
Fred R. David
Integrating Intuition and Analysis
Ch. 1-10
Fred R. David
Adaptation to Change
Ch. 1-11
Fred R. David
Adaptation to Change
Strategists
Most responsible for success or failure of an
organization
Various job titles:
Chief executive officer
President
Owner
Chair of the Board
Executive Director
Entrepreneur
Ch. 1-14
Fred R. David
Key Terms
Vision Statement
What do we want to become?
Mission Statement
What is our business?
Ch. 1-15
Fred R. David
Key Terms
Environmental Scanning
Industry Analysis
Process of conducting research and
gathering and assimilating external
information
Ch. 1-18
Fred R. David
Key Terms
Financial ratios
Measuring performance
Industry averages
Survey data
Benchmarking
Ch. 1-20
Fred R. David
Key Terms
Long-term objectives:
Strategies:
Means by which long-term objectives will be
achieved.
May include:
Geographic expansion, diversification
Acquisition
Product development, market penetration
Retrenchment, divestiture
Liquidation, joint venture
Ch. 1-22
Fred R. David
Key Terms
Annual Objectives:
Short-term milestones that organizations must
achieve to reach long-term objectives.
Ch. 1-23
Fred R. David
Key Terms
Policies:
Means by which annual objectives will be
achieved.
Ch. 1-24
Fred R. David
Comprehensive Strategic Management Model
External
Audit
Chapter 3
Internal
Audit
Chapter 4
Ch. 1-25
Fred R. David
Strategic-Management Model
Strategic-Management Process
Ch. 1-26
Fred R. David
Benefits of Strategic
Management
Ch. 1-27
Fred R. David
Benefits of Strategic
Management
Financial benefits
Improvement in sales
Improvement in profitability
Improvement in productivity
Ch. 1-28
Fred R. David
Benefits of Strategic
Management
Non-Financial benefits
Enhanced awareness of external threats
Improved understanding of competitors
strategies
Increased employee productivity
Reduced resistance to change
Understanding of performance-reward
relationships
Enhances problem-prevention capabilities
Ch. 1-29
Fred R. David
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
Ch. 1-30
Fred R. David
Benefits of Strategic
Management
Ch. 1-31
Fred R. David
Business Ethics and Strategic
Management
Ch. 1-32
Fred R. David
Business Ethics and Strategic
Management
Ch. 1-33
Fred R. David
Business Ethics & Strategic
Planning
Business actions always unethical include:
Misleading advertising
Misleading labeling
Environmental harm
Poor product or service safety
Padding expense accounts
Insider trading
Dumping flawed products on foreign markets
Ch. 1-34
Fred R. David