Strategic Management and Business Policy: Globalization, Innovation, and Sustainability PDF

Strategic Management and Business Policy: Globalization, Innovation and Sustainability Sixteenth Edition Chapter 1 Basic Concepts of Strategic Management Copyright © 2024 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 1.1 Discuss the benefits of strategic management 1.2 Exp...

Strategic Management and Business Policy: Globalization, Innovation and Sustainability Sixteenth Edition Chapter 1 Basic Concepts of Strategic Management Copyright © 2024 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 1.1 Discuss the benefits of strategic management 1.2 Explain how globalization, innovation, and environmental sustainability influence strategic management 1.3 Discuss the differences between the theories of organizations 1.4 Discuss the activities where learning organizations excel Copyright © 2024 Pearson Education, Inc. All Rights Reserved Learning Objectives (2 of 2) 1.5 Describe the basic model of strategic management and its components 1.6 Identify some common triggering events that act as stimuli for strategic change 1.7 Explain strategic decision-making modes 1.8 Use the strategic audit as a method of analyzing corporate functions and activities 1.9 Explain the employment opportunities in Strategic Management Copyright © 2024 Pearson Education, Inc. All Rights Reserved The Study of Strategic Management (1 of 2) Strategic Management – a set of managerial decisions and actions that determines the long-run performance of a corporation ▪ originally called business policy Copyright © 2024 Pearson Education, Inc. All Rights Reserved The Study of Strategic Management (2 of 2) Strategic management includes: Internal and external environmental scanning Strategy formulation Strategy implementation Evaluation and reassessment Copyright © 2024 Pearson Education, Inc. All Rights Reserved Phases of Strategic Management As managers attempt to better deal with their changing world, a firm generally evolves through the following four phases of strategic management: Phase 1: Basic financial planning Phase 2: Forecast-based planning Phase 3: Externally oriented (strategic) planning Phase 4: Strategic management Copyright © 2024 Pearson Education, Inc. All Rights Reserved Benefits of Strategic Management (1 of 3) The attainment of an appropriate match, or “fit,” between an organization’s environment and its strategy, structure, and processes has positive effects on the organization’s performance. Strategic planning becomes increasingly important as the environment becomes more unstable. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Benefits of Strategic Management (2 of 3) Clearer sense of strategic vision for the firm Sharper focus on what is strategically important Improved understanding of a rapidly changing environment Copyright © 2024 Pearson Education, Inc. All Rights Reserved Benefits of Strategic Management (3 of 3) Strategic planning can be formal or informal Informal strategic planning can begin with a few simple questions; – Where is the organization now? – If no significant changes are made, where will the organization be in one year? Two years? Five years? Ten years? Are the answers acceptable? – If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved? Copyright © 2024 Pearson Education, Inc. All Rights Reserved Impact of Globalization Globalization – the integrated internationalization of markets and corporations – has changed the way modern corporations do business – can be a new avenue to achieve competitive advantage – formal trade agreements also altered how international business was conducted Copyright © 2024 Pearson Education, Inc. All Rights Reserved Impact of Innovation Innovation – describes new products, services, methods, and organizational approaches that allow the business to achieve extraordinary returns It is the implementation of potential innovations that truly drives businesses to be remarkable. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Impact of Sustainability (1 of 2) Sustainability – refers to the use of business practices to manage the triple bottom line Copyright © 2024 Pearson Education, Inc. All Rights Reserved Impact of Sustainability (2 of 2) The triple bottom line involves: 1. the management of traditional profit/loss 2. the management of the company’s social responsibility 3. the management of its environmental responsibility Copyright © 2024 Pearson Education, Inc. All Rights Reserved Theories of Organizational Adaptation (1 of 3) Population ecology – Once an organization is successfully established in a particular environmental niche, it is unable to adapt to changing conditions. Institution theory – Organizations can and do adapt to changing conditions by imitating other successful organizations. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Theories of Organizational Adaptation (2 of 3) Strategic choice perspective – not only do organizations adapt to a changing environment, but also have the opportunity and power to reshape their environment Copyright © 2024 Pearson Education, Inc. All Rights Reserved Theories of Organizational Adaptation (3 of 3) Organizational learning theory – an organization adjusts defensively to changing environment and uses knowledge offensively to improve fit between itself and its environment Copyright © 2024 Pearson Education, Inc. All Rights Reserved Creating a Learning Organization (1 of 3) Strategic flexibility – the ability to shift from one dominant strategy to another – demands long-term commitment to development and nurturing of critical resources – also demands that the company become a learning organization Copyright © 2024 Pearson Education, Inc. All Rights Reserved Creating a Learning Organization (2 of 3) Learning organization – an organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights Organizational learning is a critical component of competitiveness in a dynamic environment. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Creating a Learning Organization (3 of 3) Learning organizations are skilled at four main activities: 1. Solving problems systematically 2. Experimenting with new approaches 3. Learning from the organization’s own experiences and past history as well as from the experiences of others 4. Transferring knowledge quickly and efficiently throughout the organization Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (1 of 10) Strategic management consists of four basic elements: 1. 2. 3. 4. Environmental analysis Strategy formulation Strategy implementation Evaluation and reassessment Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-1 Basic Elements of the Strategic Management Process Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-2 Strategic Management Model Source: T. L. Wheelen, “Strategic Management Model,” adapted from “Concepts of Management,” presented to Society for Advancement of Management (SAM), International Meeting, Richmond, VA, 1981. Kathryn E. Wheelen solely owns all of (Dr.) Thomas L. Wheelen’s copyright materials. Kathryn E. Wheelen requires written reprint permission for each book that this material is to be printed in. Copyright © 1981 by T. L. Wheelen and SAM. Copyright © 1982, 1985, 1988, and 2005 by T. L. Wheelen and J. D. Hunger. Revised 1989, 1995, 1998, 2000, 2005, 2009, and 2013. Reprinted by permission of the copyright holders Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (2 of 10) Environmental Scanning – the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the organization – SWOT analysis: simple way to conduct environmental scanning Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-3 Environmental Variables Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (3 of 10) Strategy formulation – process of investigation, analysis, and decisionmaking that provides the company with the criteria for attaining a competitive advantage – includes defining the competitive advantages of the business, crafting the corporate mission, specifying achievable objectives, and setting policy guidelines Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (4 of 10) Mission – purpose or reason for the organization’s existence Vision – describes what the organization would like to become Objectives – results of planned activity Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (5 of 10) Strategy – forms a comprehensive master approach that states how the corporation will achieve its mission and objectives – maximizes competitive advantage and minimizes competitive disadvantage corporate, business, functional Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-4 Hierarchy of Strategy Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (6 of 10) Policy – a broad guideline for decision-making that links formulation of a strategy with its implementation Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (7 of 10) Strategy implementation – process by which strategies and policies are put into action through the development of programs, budgets, and procedures Program or tactic – a statement of activities or steps needed to support a strategy Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (8 of 10) Budget – A statement of an organization’s programs in terms of dollars Procedures – a system of sequential steps that provide detailed instructions on how to complete a task – sometimes referred to as Standard Operating Procedures (SOP) Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (9 of 10) Evaluation and reassessment – a process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance Copyright © 2024 Pearson Education, Inc. All Rights Reserved Basic Model of Strategic Management (10 of 10) Performance – result of activities – includes actual outcomes of the strategic management process Feedback/learning process – revise or correct decisions based on performance Copyright © 2024 Pearson Education, Inc. All Rights Reserved Initiation of Strategy: Triggering Events Triggering event – something that acts as a stimulus for a change in strategy and can include: ▪ new CEO ▪ external intervention ▪ threat of change of ownership ▪ performance gap ▪ strategic inflection point Copyright © 2024 Pearson Education, Inc. All Rights Reserved Strategic Decision-Making Strategic decisions: deal with the long-term future of an entire organization and have three characteristics: 1. Rare - strategic decisions are unusual and typically have no precedent to follow. 2. Consequential - strategic decisions commit substantial resources and demand a great deal of commitment from people at all levels. 3. Directive - strategic decisions set precedents for lesser decisions and future actions throughout an organization. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Mintzberg’s Modes of Strategic DecisionMaking (1 of 2) Entrepreneurial mode – strategy is made by one powerful individual Adaptive mode – characterized by reactive solutions to existing problems, rather than a proactive search for new opportunities Copyright © 2024 Pearson Education, Inc. All Rights Reserved Mintzberg’s Modes of Strategic DecisionMaking (2 of 2) Planning mode – involves the systematic gathering of appropriate information for situation analysis, the generation of feasible alternative strategies, and the rational selection of the most appropriate strategy Logical incrementalism – a synthesis of the planning, adaptive, and, to a lesser extent, the entrepreneurial modes Copyright © 2024 Pearson Education, Inc. All Rights Reserved Strategic Decision-Making Process 1. 2. 3. 4. 5. 6. Evaluate current performance results. Review corporate governance. Scan and assess the external environment. Scan and assess the internal corporate environment. Analyze strategic factors. Generate, evaluate, and select the best alternative strategies. 7. Implement selected strategies. 8. Evaluate implemented strategies. Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-5 (1 of 2) Strategic Decision-Making Process Source: T. L. Wheelen and J. D. Hunger, “Strategic Decision-Making Process.” Copyright © 1994 and 1977 by Wheelen and Hunger Associates. Reprinted by permission Copyright © 2024 Pearson Education, Inc. All Rights Reserved Figure 1-5 (2 of 2) Strategic Decision-Making Process Copyright © 2024 Pearson Education, Inc. All Rights Reserved The Strategic Audit: Aid to Strategic Decision-Making Strategic audit – provides a checklist of questions, by area or issue, that enables a systematic analysis to be made of various corporate functions and activities Copyright © 2024 Pearson Education, Inc. All Rights Reserved Employment in Strategic Management The more that you can connect your activities with the strategy of the organization, the more successful your efforts will be There are also very clear employment paths that rely on the work you will do in this course. These include; – internal strategy groups – business analysis – mergers and acquisitions (M&A) – Consulting – business development (BD) – and others Copyright © 2024 Pearson Education, Inc. All Rights Reserved Copyright This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Copyright © 2024 Pearson Education, Inc. All Rights Reserved