Business Policies

2-1

Definition of Strategy

A firms theory about how to gain

competitive advantage

1-2

Strategic Management
Defined

Art & science of formulating,

implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives.

1-3

Strategic Management

In essence, the strategic plan is a

companys game plan.

1-4

What Andrew Grove Suggests

Continual change and quick strategic

decisions are essential if a firm is to
be successful in the new world of
hyper competition

1-5

Strategic Management
achieves a firms success
through integration --

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

MIS

1-6

Strategy Formulation
Vision & Mission
External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives
Alternative Strategies
Strategy Selection

1-7

Issues in Strategy
Formulation
New Business
opportunities
Businesses to abandon
Allocation of resources
Expansion or
diversification
International markets
Mergers or joint ventures

1-8

Strategy Implementation

Annual Objectives
Policies

Employee Motivation
Resource Allocation

1-9

Strategy
Implementation
Action Stage of Strategic
Management
Most difficult stage
Mobilization of
employees & managers
Interpersonal skills
critical
Organizational Culture &
employee motivation

1-10

Strategy Evaluation

Internal Review
External Review
Performance Metrics
Corrective Actions

1-11

Strategy
Evaluation
Final Stage of Strategic
Management
Subject to future
modification
Todays success no
guarantee of future success
New & different problems

1-12

Prime Task of
Strategic Management

Peter Drucker: -- think through the

overall mission of a business. Ask
the key question: What is our
Business?

1-13

Efficient: means to use resourcespeople,

money, raw materials, and the likewisely
and cost-effectively

Effective: means to achieve results, to

make the right decisions and successfully
carry them out so that they achieve the
organizations goals
1-14

Adapting to Change

Organizations must monitor

events
On-going process
Internal and external events
Timely changes

1-15

How Globalization Effect

on Strategic
Management?

1-16

The Strategic Management Process

External
Analysis

Mission

Strategic
Choice

Objectives

Strategy
Implementation

Competitive
Advantage

Internal
Analysis

1-17

The Strategic Management Process

External
Analysis

Strategic
Choice

Objectives

Strategy
Implementation

Competitive
Advantage

Internal
Analysis

Mission
1-18

The Strategic Management Process

Objectives:
specific, measurable targets
the things a firm needs to do to achieve
its mission
should influence other elements in the strategic
management process
Example: PTCL mission & objectives
Steel con: to provide the safest, highly
Quality shoes to the steel construction industry

1-19

The Strategic Management Process

External and Internal Analysis
Systematic Examination
of the Environment
External Analysis
interest rates
demographics

Internal Analysis
human resources
(knowledge)

social trends

manufacturing
abilities

technology

technology
1-20

The Strategic Management Process

Strategic Choice
Internal
Analysis

External
Analysis
Strategic
Choice
Business
Level
positioning
a business

Corporate
Level
which
businesses?

1-21

The Strategic Management Process

Strategy Implementation
how strategies are carried out
who will do what
organizational structure and control
who reports to whom
how does the firm hire, promote, pay, etc.

1-22

The Strategic Management Process

Strategy Implementation
every strategic choice has strategy implementation
implications
strategy implementation is just as important as
strategy formulation

A Strategy Is Only As Good As Its Implementation

1-23

The Strategic Management Process

Competitive Advantage
Definition: the ability to create more economic value
than competitors
External
Analysis
Mission

Strategic
Choice

Objectives

Strategy
Implementation

Competitive
Advantage

Internal
Analysis

all other elements of the strategic management

process are aimed at achieving competitive advantage
1-24

Competitive Advantage
The Ability to Create More Economic
Value Than Competitors
there must be something different about a firms
offering vis--vis competitors offerings
if all firms strategies were the same, no firm
would have a competitive advantage
competitive advantage is the result of doing
something different and/or better than competitors
1-25

1-26

Competitive Advantage
Two Types of Difference
1) Preference for the firms output

2) Cost advantage vis--vis competitors

lower costs of production/distribution

1-27

Competitive Advantage
The Strategic Management Process
External
Analysis
Internal
Analysis

Strategic
Choice

Strategy
Competitive
Implementation Advantage

identify and exploit differences that may lead

to competitive advantage

1-28

Competitive Advantage
Economic Models
Imperfect Competition

Perfect Competition

ATC
MC

ATC
MC

MR
Q

(D=MR=Price)

Competitive Advantage
1-29

The Strategic Management Process

ATC
MC

ATC
MC

MR
Q

Thriving!

Q
(D=MR=Price)

Surviving
1-30

The Strategic Management Process

Applying Strategy to Your Career
a solid understanding of strategy concepts will
help set you apart from other job candidates
you can use the process to identify and
exploit difference between you and others
you can use the process to determine if you
want to stay with a company

1-31

Global Population
Changes
US, EU, Japan , Population growth
has slowed.
Population in China India Africa ,
Latin America Other third world
countries grow significantly

1-32

Global Economic Interdependence

After 2020 the Six largest

economies will be the US, China,
Japan, Indonesia, India, & Korea

1-33

Comparing
revenue of the
world's 10 most
global firms to
the gross
domestic
product of
nations

1-34

Top 20 Global Nations

Political
Technological
Personnel
Economic

1-35

So What's Happening in the

World??????
The globalization of Business has shifted
from trade & invetment to integrating
global operations, Management, &
strategic alliances.
e.g, HP & Compaq, Demler Craylser,Sony Ericsson etc

1-36

Thank You!

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