MNGT 4113 Strategic Management Lecture 1 PDF

Lecture 1. Introduction to Strategic Management MNGT 4113 Strategic Management CENTRAL LUZON STATE UNIVERSITY COLLEGE OF BUSINESS AND ACCOUNTANCY Science C...

Lecture 1. Introduction to Strategic Management MNGT 4113 Strategic Management CENTRAL LUZON STATE UNIVERSITY COLLEGE OF BUSINESS AND ACCOUNTANCY Science City of Muñoz, Nueva Ecija 3120 Lecture 1. Introduction to Strategic Management Strategic Management Learning Outcomes Art and science of formulating, Describe the strategic-management process. implementing, and evaluating, cross- Discuss the three stages of strategy formulation, functional decisions that enable an implementation, and evaluation activities. organization to achieve its objectives Explain the need for integrating analysis and intuition in strategic management. 1  Stages of the Strategic Management Strategy Process Formulation Vision & Mission External Opportunities & Threats 1. Strategy formulation = strategic planning Internal Strengths & Weaknesses 2. Strategy implementation Long-Term Objectives 3. Strategy evaluation Alternative Strategies Strategy Generation and Selection Strategy Strategy Formulation Implementation Deciding what new businesses to enter What businesses to abandon Annual Objectives How to allocate resources Policies Whether to expand operations or diversify Employee Motivation Whether to enter international markets Resource Allocation How to avoid a hostile takeover 2  Strategy Strategic Management Process Evaluation Internal Review an objective, logical, systematic approach for making major External Review decisions in an organization Performance Measurement aimed at allowing organizations to Corrective Action adapt effectively to change over time *Change in inevitable, and all strategies are subject to modifications The Case of Toyota The Case of Toyota How are our customers changing? What kind of business should we become? What strategies should we pursue? Source: https://www.toyota-global.com/company/history_of_toyota/ 75years/data/conditions/philosophy/globalvision.html 3  The Case of Toyota The Case of Toyota Source: https://content.toyota.com.ph/uploads/pages/22/006_22_ Source: https://toyota.com.ph/company-profile 1635148866547_000.pdf Key Terms in Strategic Management Key Terms in Strategic Management Competitive advantage Achieve sustained competitive advantage: Strategists continually adapting to changes in Vision and mission statements external trends and events and internal capabilities, competencies, External opportunities and threats and resources; and effectively formulating, Internal strengths and weaknesses implementing, and evaluating strategies that capitalize on those factors. 4  The Case of Shopee External Opportunities and Threats Analysis of Trends Competitive advantage Political/Governmental Economic Social/Demographic, Cultural Technological Environmental Source: https://careers.shopee.ph/about Legal Competitors External Opportunities and Threats External Opportunities and Threats Some General Categories 1. Consumers expect green operations and products. 2. Marketing is moving rapidly to the Internet. 3. Commodity food prices are increasing. 4. No import quota is plaguing most local producers/firms. 5. New tax laws are passed. Note: Political factors includes the extent to which a government may influence the economy/ a certain industry. For example, as for labor law, the Philippines has its Labor Code/Law on having the regional minimum wage rates; however, these shall be prescribed by the Regional Tripartite Wages and Productivity Boards. 5 External Opportunities and Threats Internal Strengths and Weaknesses Controllable activities performed Take advantage of especially well or not well External Strategy Opportunities typically located in functional Formulation areas of the firm Avoid/minimize impact of Determined relative to External Threats competitors Basic Tenet of Strategic Management Internal Strengths and Weaknesses Key Terms in Strategic Management Financial Ratios Long-term objectives Strategies Annual objectives Performance Measures Internal Factors Industry Averages Policies Survey Data Assessing the Internal Environment 6  Long-Term Objectives Strategies Essential for ensuring the firm’s success Examples Provide direction Geographic expansion Aid in evaluation Diversification Create synergy Acquisition Reveal priorities Product development Focus coordination Market penetration Provide basis for planning, organizing, Retrenchment motivating, and controlling Divestiture Liquidation Joint venture Strategies Annual Objectives- The Case of General Electric Company (GE) Short-term milestones that firms must achieve to reach long-term objectives Policies- Means by which annual objectives will be achieved Source: David, F. R., and F. R. David. (2017). Strategic management: Concepts and cases: A competitive advantage approach (16th ed./ Global ed.). Pearson Education Limited. 7  Strategic Management Model Policies Example: The Case of Starbucks Starbucks has banned smoking within 25 feet of its 7,000 stores not located inside another retail establishment. Especially in Europe, smoking-related diseases costing more than $100 billion a year, so firms are continually implementing policies to curtail smoking. Benefits of Strategic Management Benefits of Strategic Management Nonfinancial Benefits Enhanced awareness of threats Improved understanding of competitors’ strategies Increased employee productivity Reduced resistance to change Clearer understanding of performance-reward relationship Financial Benefits Enhanced problem-prevention capabilities Generally profitable and successful Exhibit superior long-term financial performance relative to their industry Good anticipation of short-/long-term consequences 8  Why Some Firms Do No Strategic Why Some Firms Do No Strategic Planning Planning 6. View planning as a waste of time, since no 1. No formal training in strategic management product/service is made 2. No understanding of or appreciation for the 7. Laziness; effective planning takes time and effort; time is money benefits of planning 8. Content with current success; failure to realize 3. No monetary rewards for doing planning that success today is no guarantee for success 4. No punishment for not planning tomorrow 5. Too busy “firefighting” (resolving internal 9. Overconfident crises) to plan ahead 10. Prior bad experience with strategic planning done sometime/somewhere Pitfalls in Strategic Planning Using strategic planning to gain control over decisions and resources Doing strategic planning only to satisfy accreditation or regulatory requirements Too hastily moving from mission development to strategy formulation Failing to communicate the plan to employees, who continue working in the dark Top managers making many intuitive decisions that conflict with the formal plan 9  Pitfalls in Strategic Planning Pitfalls in Strategic Planning Top managers not actively supporting the strategic- planning process Viewing planning as unnecessary or unimportant Failing to use plans as a standard for measuring Becoming so engrossed in current problems that performance insufficient or no planning is done Delegating planning to a “planner” rather than Being so formal in planning that flexibility and involving all managers creativity are stifled Failing to involve key employees in all phases of planning Failing to create a collaborative climate supportive of change Lecture 1. Introduction to Strategic Management Learning Outcomes Describe the strategic-management process. Discuss the three stages of strategy formulation, implementation, and evaluation activities. Explain the need for integrating analysis and intuition in strategic management. Thank you for listening! 10