Chapter 1 - The Nature ofStrategic Management

,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,5/13/2012,#,BUS 450 Strategic Management,KCPI,Dr. Jos Anbal Torres,中国,Chapter,1,The Nature of Strategic Management,中国,Introduction,This chapter introduces,a scholarly review of the schools of strategic management.,The,intention is to provide you a framework for understanding the breadth and scope of strategy, which is a process for determining where and how to compete.,中国,Leadership,Leadership is critical,Awareness of opportunities and threats in external environment,Thorough understanding of the firms resources and capabilities,Strategy determination & implementation,- a,critical leadership issue for senior management & Board,.,中国,Vision,An overarching, long-term view of,what,the firm aspires to be (the “destination”),中国,Mission,A broad statement of the purpose of the firm and,how the vision will be realized,(the basis of competition and competitive,advantage),A general set of stakeholder roles & governing principles,中国,Goals,Critical financial & non-financial,milestones,in the realization of the firms mission,中国,What Is Strategic Management?,It,is very important for managers to see their jobs as more than just custodians of the “status quo.”,Rather, they must proactively anticipate change and continually refine as well as, when necessary, make significant changes to their strategies.,This,has become particularly important as competitive environments become characterized by increasing rates of unpredictable change.,中国,Champoux, J.E. (2003) & Kreitner, R., & Kinicki, A. (2007).,Defining Strategic Management,One definition of strategic,management,is “,consisting of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages,.”,中国,Defining Strategic Management,This,definition captures two main elements of the field of strategic management,.,First, strategic management entails three on-going processes:,analysis,decisions,and,actions,. That is, managers must analyze the internal and external environment as well as their hierarchy of goals in order to formulate and implement,strategies.,Second, the essence of strategic management is the study of why some firms outperform others.,This focuses on,Michael Porters,(Chapter 5) work,to make the important distinction between strategy and operational effectiveness.,Managers,must create advantages that are sustainable over a period of time, instead of merely temporary.,That,is:,How can we create competitive advantages in the marketplace that are not only unique and valuable but also difficult for competitors to copy or substitute?,(This perspective, of course, draws upon the resource base view of the firm that we address in detail in Chapters,4.),中国,Another definition of strategic management is,the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives,.,Based on the above definition, strategic management focuses on integrating management, marketing, finance/accounting, production,/operations, research and development, and computer information systems to achieve organizational success.,Further, the term,strategic management,is used interchangeably with strategic,planning,and implementation.,Defining Strategic Management,David, F.R., (2009),中国,Purpose of Strategic Management,The purpose of strategic management is to exploit and create new and different opportunities for tomorrow: long-term strategic planning.,中国,David, F.R., (2009),Strategic Management vs. Strategic Management,Process,Strategic Management,Analyses,Decisions,Actions,Strategic Management Process:,Strategy Analysis,Strategy Formulation,Strategy Implementation,中国,Dess, Lumpkin & Eisner (2010),Strategic Management,Sustained Competitive Advantage(SCA),Formula,SCA = EA + IA + BS + CS + GS + IS + Implementation,EA = External Analysis (i.e.: Porters five forces),IA = Internal Analysis (i.e.: 7 Ss, Value Chain, Profit Pools, SWOT),BS = Business Strategy,CS = Corporate Strategy,GS = Global Strategy,IS = Innovation Strategy,Analysis of competitive environment:,EA and IA,中国,Four types of general moves organizations make to achieve SCA,Sustained Competitive Advantage Element,To support strategic moves perform the following:,External Analysis,SWOT analysis (opportunities & threats),Industry analysis such as Porters five forces.,Macroenvironmental,assessment,Application of stakeholder analysis to external environment,Internal Analysis,Cost/Benefit Analysis,Value Chain,Profit Pools,Value Mapping,SWOT analysis (strengths & weaknesses),Organizational systems,Stocking solutions & ROI,Capabilities (individual & organization),Core competencies,中国,Sustained Competitive Advantage Element,Four types of strategic moves that can be applied,:,Business strategy,Low-cost strategies,Differentiation strategies,Game theory,Corporate strategy,Global strategy,Marketing strategies (think globally; act locally),Market Analysis (cross-cultural competitive intelligence),Innovation strategy,中国,The Dimensions of Strategy and the Organizational Purpose,中国,Strategy Context,Conditions surrounding strategy activities,Organizational Purpose,Impetus for,Strategy activities (input),Strategy Process,Flow of strategy activities (throughput),Strategy,Content,Result of,Strategy activities (output),“Strategy process is concerned with the,how,and,when,of strategy. Strategy content is concerned with the,what,of strategy. Strategy context is concerned with the,where,of strategy,” (p. 5). Note that organizational purpose is the input of strategy that addresses the why of strategy. According to the authors “each strategic problem situation is by its nature three dimensional, possessing process, content, and context characteristics,” (p. 6) and leaders must have an in-depth understanding of these dimensions. Organizations exist to achieve results and strategies are a means to achieving them.,De Wit & Meyer (2005),Strategic Analysis,Strategy analysis consists of, in effect, the “advance work” that must be done in order to effectively formulate and implement strategies.,Many,strategies fail because managers may want to formulate and implement strategies without a careful analysis of the overarching goals of the organization, as well as a thorough analysis of its external and internal,environment.,中国,Strategy Formulation,A firms strategy is formulated at several levels.,First, business-level strategy addresses the issue of how firms compete in an industry to gain competitive advantage.,Second, corporate-level strategy focuses on two issues,:,(,1) what businesses to compete in, and,(,2) how businesses can be managed to achieve synergy, that is, create more value by working together than if they operated as a stand-alone entity.,Third, firms must develop international strategies as they expand beyond their national boundaries.,And, fourth, managers must develop entrepreneurial strategies and be aware of the competitive dynamics in their industry,中国,Strategy Implementation,Clearly, effective strategies are of little value if they are not properly implemented.,Implementing,strategies involves strategic controls and organizational designs; coordination and integration among activities within the firm as well as with customers and suppliers; and effective,leadership.,中国,Four Key Attributes of Strategic Manageme,nt,Strategic management is directed,toward:,organizational,goals and objectives;,includes,multiple stakeholders in decision making;,incorporates,both short-term and long-term perspectives; and,recognizes,tradeoffs between effectiveness and efficiency,中国,Stages of Strategic Management,Strategic Analysis,External Environmental Analysis,Internal Environmental Analysis,Strategy Formulation,Corporate Strategy Formulation,Divisional Strategy Formulation,Business Strategy Formulation,Strategy Implementation/Execution (The most difficult stage the action stage),Effective Leadership,Identification of Problems and Opportunities,Solutions,Resources,Metrics (i.e., financial, ratios, value propositions, and so on),Effective Organizational Systems,Stocking Solutions and Return on,Investment (i.e., cost benefit analysis, etc.),Establishing an organizational global presence and overcoming resistance to globalization,Strategy Evaluation (the final stage of assessment of all strategies),Review of the external and internal factors,Performance management (i.e. Measurement),Implementing corrective actions,中国,Productivity,Productivity = Effectiveness + Efficiency,Effectiveness = achieving a desired outcome,Efficiency = at the lowest cost,Often in strategic management there is a tradeoff between the two above,中国,Strategic Management Key Terms,Competitive Advantage,Strategists,Vision and Mission Statements,External Opportunities and Threats,Internal Strengths and Weaknesses,Long-term Objectives,Strategies and Tactics,Annual Objectives,Policies,中国,Strategies vs. Tactics,中国,Research suggests that strategy provides an overall direction with the final end in sight being long-term objectives.,In contrast, tactics always follow strategies, creating and developing action-oriented moves in the direction of objectives; although not directly oriented towards the objectives themselves.,Further, “strategy is the thought, and tactics are its formulation” (Ghauri & Usunier, 2003, p. 51).,Therefore, the thought, strategy, comes before the action, tactic.,And tactics are only effective, if they achieve their goals.,To this end, tactics have a greater flexibility then strategies; thus being versatile and adaptive to changes,Torres, 2011,Strategic/Tactical Funnel,中国,GOALS,Strategy,Tactics,Tactics,Tactics,Tactics,Torres, 2011,The Strategic Management Model,Research suggests that there are many different strategic management models; all based on a similar foundation of theory, empirical data, and real-world applications.,中国,中国,The Strategic Management Model,David, F. R., (2009),Ethics and Business Ethics,The terms,ethics,refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization.,Business ethics,are the accepted principles of right or wrong governing the conduct of business people, and an,ethical strategy,is a strategy, or course of action, that does not violate these accepted principles.,Another definition of,Business Ethics,is they are,principles of conduct within organizations that guide decision-making and behavior,中国,ETHICAL ISSUES IN INTERNATIONAL BUSINESS,In the international business setting, the most common ethical issues involve:,employment practices,human rights,environmental regulations,corruption, and,the moral obligation of multinational companies,中国,THE ROOTS OF UNETHICAL BEHAVIOR,The determinants of ethical behavior include:,personal ethics,decision making processes,leadership,unrealistic performance expectations, and,organizational culture,中国,Cultural Relativism,Cultural relativism,is the belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate, or in other words, “when in Rome, do as the Romans do.”,中国,