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Strategic
StrategicManagement
Management
Chapter
An
AnIntegrated
IntegratedApproach
Approach10th
10thed.
ed.
Strategic
Strategic Leadership:
Leadership:
Managing
Managing the
the StrategyStrategyMaking
Making Process
Process for
for
Competitive
CompetitiveAdvantage
Advantage
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Prepared by C. Douglas Cloud , Professor Emeritus of Accounting, Pepperdine University
OVERVIEW
OVERVIEW
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning
Learning Objective:
Objective: After
After reading
reading this
this
chapter
chapter you
you should
should be
be able
able to
to explain
explain what
what
is
is meant
meant by
by competitive
competitive advantage.
advantage.
To increase shareholder value, managers must
pursue strategies that increase the profitability of the
company and ensure that profits grow.
To do this, a company must be able to outperform its
rival. In other words, it must have a competitive
advantage.
A company has competitive advantage over its rivals
when its profitability is greater than the average
profitability and profit growth of other companies
competing for the same set of customer.
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
SUPERIOR
SUPERIOR PERFORMANCE
PERFORMANCE
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
SUPERIOR
SUPERIOR PERFORMANCE
PERFORMANCE
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning
Learning Objective:
Objective: After
After reading
reading this
this chapter
chapter
you
you should
should be
be able
able to
to discuss
discuss the
the strategic
strategic role
role
of
of managers
managers at
at different
different levels
levels within
within the
the
organization.
organization.
PRIMARY
PRIMARY TYPES
TYPES OF
OF MANAGERS
MANAGERS
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
LEVELS
LEVELS OF
OF STRATEGIC
STRATEGIC
MANAGEMENT
MANAGEMENT
Corporate-Level Managers
Business-Level Managers
Responsible for business unit that provides product/service to
particular market
Functional-Managers
Supervise particular function/operation (e.g. marketing,
operations, accounting, human resources)
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning
Learning Objective:
Objective: After
After reading
reading this
this
chapter
chapter you
you should
should be
be able
able to
to identify
identify the
the
primary
primary steps
steps in
in aa strategic
strategic planning
planning
process.
process.
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
(continued)
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
The
The Mission
Mission Statement
Statement
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
The
The Mission
Mission Statement
Statement
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
External
External Analysis
Analysis
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
SWOT
SWOT Analysis
Analysis and
and the
the Business
Business
Model
Model
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
SWOT
SWOT Strategies
Strategies
Functional-level strategies are directed at improving
the effectiveness of operations within a company.
Manufacturing, marketing, materials management,
product development, and customer service.
Business-level strategies
The way a company positions itself in the
marketplace to gain a competitive advantage.
The different position strategies that can be used in
different industry settings.
(continued)
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
SWOT
SWOT Strategies
Strategies
Global strategies address how to expand operations
outside the home country.
How to grow and prosper in a world where
competitive advantage is determined at a global
level.
Corporate-level strategies address what business
should the company be in to maximize profitability.
How should a company enter and increase its
presence to gain a competitive edge.
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
STRATEGY
STRATEGY PLANNING
PLANNING PROCESS
PROCESS
Strategy
Strategy Implementation
Implementation
Strategy implementation involves taking action at
the functional, business, and corporate levels to
execute a strategic plan.
Learning
Learning Objective:
Objective: After
After reading
reading this
this
chapter
chapter you
you should
should be
be able
able to
to discuss
discuss the
the
common
common pitfalls
pitfalls of
of planning
planning and
and how
how those
those
pitfalls
pitfalls can
can be
be avoided.
avoided.
Criticisms
Criticisms of
of Formal
Formal Planning
Planning
Models
Models
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning
Learning Objective:
Objective: After
After reading
reading this
this
chapter
chapter you
you should
should be
be able
able to
to outline
outline the
the
cognitive
cognitive biases
biases that
that might
might lead
lead to
to poor
poor
strategic
strategic decisions,
decisions, and
and explain
explain how
how these
these
biases
biases can
can be
be overcome.
overcome.
Scenario
Scenario Planning
Planning
STRATEGY
STRATEGY DECISION
DECISION MAKING
MAKING
Cognitive
Cognitive Biases
Biases and
and Strategic
Strategic Decision
Decision
Making
Making
The rationality of decision-making
is bound by ones
cognitive capabilities.
When managers make decisions, they tend to fall
back on certain rules of thumb.
Sometimes these rules lead to severe errors,
called cognitive biases.
Prior hypothesis bias refers to making decisions
based on a belief, even when evidence proves that the
belief is incorrect.
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Cognitive
Cognitive Biases
Biases and
and Strategic
Strategic Decision
Decision
Making
Making
Techniques
Techniques for
for Improving
Improving Decision
Decision Making
Making
Devils advocacy requires the generation of a plan,
and a critical analysis of that plan.
Dialectic inquiry requires the generation of a plan
and a counter-plan that reflects plausible but
conflicting courses of action.
Strategic managers listen to a debate between
advocates of the plan and counter-plan and then
decide which will lead to higher performance.
This approach may reveal problems with
definitions, recommended courses of action, and
assumptions of both plans.
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning
Learning Objective:
Objective: After
After reading
reading this
this
chapter
chapter you
you should
should be
be able
able to
to discuss
discuss the
the
role
role strategy
strategy leaders
leaders play
play in
in the
the strategystrategymaking
making process.
process.
Characteristics
Characteristics of
of Good
Good Strategic
Strategic
Leaders
Leaders
1) Vision, Eloquence, and Consistency
a) A strong leader gives an organization a sense of
direction.
b) Examples: Winston Churchill, Martin Luther King, Sam
Walton
2) Articulation of a Business Model
a) Knowing how the various strategies that the company
pursues fit together.
b) Examples: Michael Dell (Dell, Inc.), Steve Jobs (Apple)
2013 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Characteristics
Characteristics of
of Good
Good Strategic
Strategic
Leaders
Leaders
3) Commitment
Characteristics
Characteristics of
of Good
Good Strategic
Strategic
Leaders
Leaders
Characteristics
Characteristics of
of Good
Good Strategic
Strategic
Leaders
Leaders
7) Emotional Intelligence