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Strategic Management Overview and Benefits

Strategic management involves formulating, implementing, and evaluating decisions to help organizations achieve their objectives. Key aspects include vision and mission, environmental analysis, strategy formulation, implementation, and evaluation. The process also highlights the importance of understanding internal strengths and weaknesses, setting long-term objectives, and recognizing the benefits of strategic management, while addressing reasons some firms may avoid strategic planning.

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5 views19 pages

Strategic Management Overview and Benefits

Strategic management involves formulating, implementing, and evaluating decisions to help organizations achieve their objectives. Key aspects include vision and mission, environmental analysis, strategy formulation, implementation, and evaluation. The process also highlights the importance of understanding internal strengths and weaknesses, setting long-term objectives, and recognizing the benefits of strategic management, while addressing reasons some firms may avoid strategic planning.

Uploaded by

hamzasoomroqqq
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Chapter 1

The Nature of Strategic Management Strategic Management


Strategic Management: The art and science of formulating,
implementing, and evaluating cross-functional decisions that
enable an organization to achieve its objectives.
Purpose and Key Aspects of Strategic
Management
• To exploit and create new and different opportunities for
tomorrow
Key Aspects:
• Vision and Mission
• Environmental Analysis
• Strategy Formulation
• Strategy Implementation
• Strategy Evaluation and Control
Stages of the Strategic Management Process
Strategy Formulation

• Vision & Mission


• External Opportunities & Threats
• Internal Strengths & Weaknesses
• Long-Term Objectives
• Alternative Strategies
• Strategy Selection
Strategy Implementation

• Annual Objectives Policies


• Employee Motivation
• Resource Allocation
Strategy Evaluation

Internal Review
External Review
Performance Measurement
Corrective Action
• Vision Statement

What do we want to become?


• Mission Statement –

What is our business?


External Opportunities and Threats
Analysis of Trends
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Competitors
Internal Strengths and Weaknesses

Typically located in functional areas of the firm


• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Management Information Systems
Assessing the Internal Environment
Internal Strengths and Weaknesses
Internal Factors

Performance Measures
Ratios
Industry Averages
Survey Data
Long-Term Objectives

• Long-term means more than one year


• Specific results that an organization seeks to achieve in
pursuing its basic mission
Long-Term Objectives

Essential for ensuring the firm’s success


Provide direction
Aid in evaluation
Create synergy
Reveal priorities
Focus coordination
Provide basis for planning, organizing, motivating, and controlling
Strategies
Means by which long-term objectives are achieved

Examples
• Geographic expansion
• Diversification
• Acquisition
• Product development
• Market penetration
• Retrenchment
• Divestiture
• Liquidation
Annual Objectives
Short-term milestones that firms must achieve to reach long-term
objectives
Policies
Means by which annual objectives will be achieved
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
• Enhanced problem-prevention capabilities
Why Some Firms Do No Strategic Planning
• Lack of knowledge of strategic planning
• Poor reward structures
• Fire fighting
• Waste of time
• Too expensive
• Laziness
• Content with success
• Fear of failure
• Overconfidence
• Prior bad experience
• Self-interest
• Fear of the unknown
• Honest difference of opinion

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