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CHAPTER 1 Basic Concepts of Strategic Management

STRATEGIC MANAGEMENT & BUSINESS POLICY
11TH EDITION
THOMAS L. WHEELEN J. DAVID HUNGER

Prentice Hall, Inc. © 2008

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Basic Concepts of Strategic Management

Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national markets www.iugaza.edu.ps\emp\melfarra

Electronic Commerce
Use of the Internet to conduct business transactions
Basis for competition on a more strategic level rather than traditional focus on product features and costs

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Basic Concepts of Strategic Management

Electronic Commerce -- Trends • • Forcing company transformation Market access & branding changing – disintermediation of traditional distribution channels Balance of power shift to consumer Competition changing

• •

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Basic Concepts of Strategic Management

Electronic Commerce -- Trends • • • Pace\speed of business increasing Internet purchasing beyond traditional boundaries Knowledge key asset – source of competitive advantage

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Strategic Management Defined

Set of managerial decisions and actions that determines the long-run performance of a firm. It includes environmental scanning, strategy formulation, strategy implementation, and evaluation and control.

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Strategy formulation
• Strategy formulation is typically not a regular, continuous process but is often initiated by generating events, such as a new CEO or a performance gap.

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Basic Concepts of Strategic Management

4 Phases of Strategic Management • Firms evolve through the following faces of strategic management. 1. Basic financial planning 2. Forecast-based planning 3. Externally-oriented planning 4. Strategic management

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Basic Concepts of Strategic Management

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Basic financial planning: initiate some planning when they requested to set up their budgets; considers activities for one year. Forecast-based planning: consider projects for more than a year. The time horizon is usually 3-5 years. Externally-oriented planning: conduct strategic planning by top management and they leave implementation to low level. Strategic management: planning by forming a team from all levels in the company. 1-٨

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Basic Concepts of Strategic Management

Highly Rated Benefits • • • Clearer sense of strategic vision Sharper focus on strategic importance Improved understanding of changing environment

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Basic Concepts of Strategic Management

Not Always a Formal Process • • • • Where is the organization now? (not where do we hope it is) If no changes are made, where will the organization be in 1,2,5 or 10 years? What specific actions should management undertake? What are the risks and payoffs? 1-١٠

Prentice Hall, Inc. © 2008

Basic Concepts of Strategic Management

Basic Elements of the Strategic Management Process

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Environmental Scanning Defined

Monitoring, evaluation, and disseminating information from external and internal environments –to key people in the firm

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Basic Concepts of Strategic Management

Environmental Variables

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Environmental Scanning

SWOT Analysis • • Strengths – Weaknesses Opportunities - Threats

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Strategy Formulation

Development of long-range plans for effective management of opportunities and threats in light of corporate strengths and weaknesses

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Strategy Formulation

Mission Statement • • • • Purpose/reason for organization Promotes shared expectations Communicates public image Who we are; what we do; what we...
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