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Basic Concepts Of Strategic Management
1. Basic Concepts of Strategic
Management
"Effective managers live in the present â but concentrate on the future."
James L. Hayes    Â
2. What is Strategy?
âą A combination of the words
stratos, which meant âarmyâ, and
agein meaning âto leadâ.
Greek Language (6th century BC)
3. What is Strategy?
âą A strategy is a comprehensive
action plan that identifies long-term
direction and guides resource
utilization to accomplish
organizational goals
with sustainable competitive
advantage.
4. Strategic Management
Process of formulating,
implementing, and evaluating,
strategies to accomplish long-term
goals and sustain competitive
advantage.
6. Phases of Strategic Management
Basic financial Forecast-based Strategic Strategic
planning: planning: planning: management:
-little analysis; -more thorough -more thorough -analysis of external
analysis; -analysis; and internal
environment;
-info coming from -internal info + -internal info +
within the firm; environmental data; environmental data + -implementation,
forecast future trends; evaluation and control;
-only managers are -only managers are -made by planning -made by lower level
involved; involved; staff (top managers) managers+
+ consultants; top managers+
-takes 2-3 weeks; -takes one month; consultants;
-meet once a year; -throughout the year;
- one year plan -three to five years
-plan - five-year plans - five-year plans
7. Benefits of Strategic Management
âą Clear sense of strategic vision of
the firm
âą Sharper focus on what is
strategically important
âą Improved understanding of a
rapidly changing environment
8. Main Questions
âą Where is organization now?
âą If no changes are made, where will
the organization be in 1,2,5 years?
âą If the answers are not acceptable,
what specific actions should
management undertake?
âą What are risks and payoffs
involved?
9. Basic Model of Strategic
Management
Environmental Evaluation
Strategy Strategy
Scanning and
Formulation Implementation
Control
11. Environmental Scanning
Opportunities & Threats (External)
Analysis of Trends:
âą Economic
âą Social
âą Cultural
âą Demographic/Environmental
âą Political, Legal, Governmental
âą Technological
âą Competitors
12. Environmental Scanning
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
âą Management
âą Marketing
âą Finance/Accounting
âą Production/Operations
âą Research & Development
âą Computer Information Systems
14. Strategy Formulation
Vision Statement â
What do we want to become?
Mission Statement â
What is our business?
15. Strategy Formulation
Key Strategic Questions
by Peter Drucker
âą What is our business mission?
âą Who are our customers?
âą What do our customers
consider value?
âą What have been our results?
âą What is our plan?
16. Vision Examples
To be the happiest place on earth.
To be the worldâs best quick service restaurant.
17. Mission Statement Example
We should build good ships here
â at a profit if we can
â at a loss if we must
â but always good ships
-- Newport News Shipbuilding
(since foundation in 1886)
19. WellPont health Networkâs
Vision and Mission
WellPoint redefine our industry: through a new
generation of consumer-friendly products that
put individuals back in control of their future.
The WellPoint companies provide health
security by offering a choice of quality branded
health and related financial services designed
to meet the changing expectations of
individuals, families, and their sponsors
throughout a lifelong relationship.
20. Importance of Mission
Benefits from a strong mission
Unanimity of Purpose
Resource Allocation
Mission
Organizational Climate
Focal point for work
structure
21. Products
Services Markets
Customers
Technology
Mission
Employees
Elements
Survival
Growth
Profit
Public
Image
Self-Concept Philosophy
22. Strategy Formulation
Objectives
The end results of planned activity:
âą what is to be accomplished
âą by when
âą it should be quantified if possible
ââŠincrease profits 10% over last yearâ
23. Strategy Formulation
Types of Strategies Corp
Level
A Large Company
Division Level
Functional Level
Operational Level
25. Being Better versus Being Different
Playing the Game Better Playing the Game DifferentlyÂ
Focus on your existing Try to identify:
strategic position and try to âąÂ new or unexploited customerÂ
improve it and make it better. segments to focus on (a newÂ
Practices such as âWHOâ)
restructuring, refocusing, âąÂ new customer needs that noÂ
process reengineering, quality competitor is currently satisfyingÂ
programs, empowering (a new âWHATâ)
employees, and the like, all âąÂ new ways of producing,Â
aim to achieve this delivering, selling or distributingÂ
your products or services (a newÂ
âHOWâ)
âŠto be successful, a company must be able to do BOTH!
                                                         Constantinos Markides