Introduction to Strategic Management

Successfully formulate and implement value-creating strategy Based on (sustainable) competitive advantage To earn above-average returns To create value for stakeholders

Introduction to Strategic Management

Strategic Management Process
Strategic Inputs: Internal and External Scanning Strategic Actions: Formulation and implementation of strategy Strategic Outcomes: Above, at or below average returns

Introduction to Strategic Management

From Organizational Vision to Tactical Steps
Define the Organization:
Vision Mission Statement

Understand the Operating Environment

External Environment (Threats and Opportunities) Internal Conditions (Strengths and Weaknesses)

Determine Strategic Alternatives Formulate Strategy (long term) Implement Strategy through Tactics (short term)

Introduction to Strategic Management

SWOT Analysis External Analysis EFAS Matrix (Chapter 3) Internal Analysis IFAS Matrix (Chapter 4) Strategy Formulation Alternative Strategies TOWS Matrix (Chapter 5) Corporate Strategy (Chapter 6) Functional Strategy (Chapter 7) Strategy Implementation Organizing (Chapter 8) Staffing (Chapter 9) Evaluating (Chapter 10)

Introduction to Strategic Management

The New Competitive Landscape
The Global Economy
Movement of goods, services, capital/financing, technology and innovation, information, and people across borders

Introduction to Strategic Management

The New Competitive Landscape
The Global Economy
Competitive Implications Managing supply and logistics (raw materials, components manufacturing, assembly, distribution) Adaptation-standardization decisions in management practices and marketing programs

Introduction to Strategic Management

The New Competitive Landscape
Technology and Technological Change Increasing Rate of Change Increasing Rate of Diffusion Competitive Implications Impact of Technology Convergence. Application of Nanotechnology.

Introduction to Strategic Management

The New Competitive Landscape
Information Intensity Declining costs Increasing accessibility Knowledge Intensity (Information, Intelligence, Expertise) Increasing proportion of shareholder value Strategic Flexibility, Capacity to Learn & Reorient

Introduction to Strategic Management

The New Competitive Landscape
Information and Knowledge Intensity
Competitive Implications Knowledge management systems (SAP) Control versus flexibility (strategic alliances)

Introduction to Strategic Management

Mission of Firm
Clearly articulate 3-5 year plan of firm Identify: The industry(ies) it wishes to participate in How it wishes to participate
Marketing mix (product, price, place, promotion Customer wants and needs it will serve Position it will hold in its chosen markets

Introduction to Strategic Management

Mission is: What is the ultimate accomplishment goal for the firm? Usually stated in the eyes of the customers and key stakeholders How it is achieved (core competencies of the firm)

Introduction to Strategic Management

Examples of Vision and Mission Statements
Vision: S C Johnson Mission Statement: Proctor & Gamble

Dilberts Mission Statement Generator

Introduction to Strategic Management

What leads to a formulating a new strategy?

New CEO

External intervention

Triggering events

Threat of change in ownership

Performance gap
Strategic inflection point

Stimulus for change in strategy

Introduction to Strategic Management

Strategy: Levels and Dynamics
Corporate: general perspective towards growth and management of various business units, product lines, functional areas Business: Strategic Business Units (SBUs), focus on improvement of competitive position of products and services Functional: focus on marketing, R & D, etc. to achieve SBU and overall corporate objectives.

Introduction to Strategic Management

Corporate goals and objectives include:

Profitability (net profits) Growth (increase in total assets, etc.) Utilization of resources (ROE or ROI) Market leadership (market share)

Introduction to Strategic Management

Intended Strategy

Deliberate Strategy Realized Strategy

Unrealized Strategy

Emergent Strategy

Introduction to Strategic Management

The Importance of Stakeholders
Capital Market Stakeholders - shareholders and major suppliers of firms capital Product Market Stakeholders - primary customers, suppliers, host communities, and unions Organizational Stakeholders - employees (managerial and non-managerial) Societal Stakeholders - environmental and social responsibility organizations

Governments

Employees

Supply Chain Associates

Investors, Shareholders and Lenders

Private Organizations

THE CORPORATION

Customers and Users

Local Communities and Citizens

Unions

Joint Venture partners and Alliances

Regulatory Authorities

Governments

Joint Venture partners & Alliances

Supply Chain Associates

Investors: Shareowners & Lenders Employees CORPORATION Customers & Users Regulatory Authorities

Unions

RESOURCE BASE Private Organizations

Local communities & Citizens

INDUSTRY STRUCTURE

SOCIAL POLITICAL ARENA

Community Relations Frankenstein Foods EU Approvals; Import licenses Strategic alliances Suppliers Investors Employees: - US - Global EPA regulations MONSANTO Customers: - Domestic - Global Global Joint ventures

GMOs

RESOURCE BASE

Greenpeace

INDUSTRY STRUCTURE

Environmental Issues

SOCIAL POLITICAL ARENA