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Strategic management
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Chapter Roadmap
management as a process
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piece of the business (R&D, production, marketing, HR, finance, and so on)
How to respond to changing market
conditions
How to achieve targeted levels of
performance
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element to
Attract customers and Produce a competitive edge
company makes to
Improve its financial performance,
company apart from rivals and yields a competitive advantage is a companys most reliable ticket to above average profitability
Operating with a competitive advantage is more profitable than operating without one Operating with a competitive disadvantage nearly always results in below-average profitability
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advantage when
An attractive number of buyers prefer its
products/services over those of rivals and The basis for this preference is durable
Its nice when a strategy produces A temporary competitive edge but A sustainable edge over rivals greatly enhances a
companys prospects for above-average profitability
What separates a powerful strategy from an ordinary strategy is managements ability to forge a series of moves, both in the marketplace and internally, that produces sustainable competitive advantage!
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Business Model . . .
Concerns whether revenues and costs flowing from the strategy demonstrate a business can be profitable and viable
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Strategic management: The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a companys objectives
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Critical Tasks of Strategic Management -1. Formulate the companys mission and vision 2. Conduct an internal analysis 1. 3. Assess the external environment competitive and general contexts 2. 4. Implement the strategic choices 3. 5. Evaluate the success of the strategic process for future decision making
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business and says something about Present products and services Types of customers served Geographic coverage Conveys Who we are, What we do, and Why we are here
A good mission statement describes a companys business makeup and purpose in language specific enough to give the company its own identity and distinguish it from other enterprises in the same or other industries!
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buying decisions. We provide these with a dedication to the highest quality of customer satisfaction
delivered with a sense of warmth, friendliness, fun,
statement typically focuses on its present business purpose - who we are and what we do
Current product and service offerings Customer needs and customer groups being served Geographic coverage
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Setting Objectives
Phase 2
Purpose of setting objectives Converts vision into specific performance targets Creates yardsticks to track performance Well-stated objectives are
Quantifiable
Measurable Contain a deadline for achievement Spell-out how much of what kind
of performance by when
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Strategic Objectives
Outcomes focused on improving competitive strength and market standing
on improving financial
performance
$
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Long-term objectives
Targets to be achieved within 3 to 5 years Calls for actions now that will permit reaching targeted long-range performance later
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1. Corporate level
2. Business level
3. Functional level
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Corporate Strategy
Orchestrated by headquarters executives and involves
Moves to diversify into different industries Actions to boost the combined performance
priorities and steering corporate resources into the most attractive businesses
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Business Strategy
Concerns the actions and approaches crafted to produce successful performance in one specific line of business. Is usually the responsibility of the manager in charge of the business and involves
Crafting competitive moves to build
Functional Strategies
Concerns the game plan for a function, activity, or process within a business; is usually orchestrated by the functional head and involves Crafting functional strategic initiatives that will support the overall business strategy
Adding function-related
Phase 5
Crafting and implementing a strategy is not a
one-time exercise
Customer needs and competitive conditions change New opportunities appear; technology
advances; any number of other outside developments occur
New managers with different ideas take over Organizational learning occurs
and implementing strategy Similar to participative decision making Assessing strategy formulation requires looking at nonfinancial evaluations as well as financial ones Promoting positive behavioral consequences enables achievement of financial goals
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Managers time away from other responsibilities - Unrealistic expectations promised by strategy formulators - Possible disappointment of participating subordinates if goal is not reached
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