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Chapter One

Chapter One. Strategic Management: Creating Competitive Advantages. Learning Objectives. TRANSPARENCY- 3. After studying this chapter, you should have a good understanding of:. the definition of strategic management and its four key attributes

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Chapter One

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  1. Chapter One Strategic Management: Creating Competitive Advantages

  2. Learning Objectives TRANSPARENCY-3 After studying this chapter, you should have a good understanding of: • the definition of strategic management and its four key attributes • the strategic management process and its three interrelated and principal activities • why stakeholder management is so critical in the strategic management process and how “symbiosis” can be achieved among an organization’s stakeholders • the key environmental forces that are creating more unpredictable change and requiring greater empowerment throughout the organization • how an awareness of a hierarchy of strategic goals can help an organization to achieve coherence in its strategic direction

  3. TRANSPARENCY-4 Strategic Management Concepts Exhibit 1.1 Definition:“Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.” Key Attributes of Strategic Management: • Directs the organization toward overall goals and objectives. • Involves the inclusion of multiple stakeholders in decision making. • Needs to incorporate short-term and long-term perspectives. • Recognizes tradeoffs between efficiency and effectiveness.

  4. The Strategic Management Process TRANSPARENCY-5 Chapter 1 Analyzing Goals and Objectives Chapter 2 Analyzing the External Environment Chapter 3 Analyzing the Internal Environment Chapter 4 Assessing Intellectual Capital Strategy Analysis Chapter 5 Formulating Business-Level Strategies Chapter 9 Implementation:Strategic Controls Chapter 10 Implementation: Organization Design Chapter 11 Strategic Leadership: Excellence, Ethics, and Change Chapter 6 Formulating Corporate-Level Strategies Chapter 7 Formulating International Strategies Chapter 12 Strategic Leadership: Fostering Entrepreneurship Chapter 8 Formulating Internet Strategies Strategy Implementation Strategy Formulation Chapter 13 Case Analysis Exhibit 1.2

  5. TRANSPARENCY-6 Excellent versus Poor Boards of Directors Exhibit 1.3 Fortune magazine recently pinpointed some of the key attributes of some excellent and poor boards of directors. Source: Boyle, M. 2001. The dirty half-dozen: America’s worst boards. Fortune, May 14: 250. With permission.

  6. Social Responsibility at McDonald’s: Some Elements TRANSPARENCY-7 Exhibit 1.4 • Supporting more than 200 Ronald McDonald Houses in 19 countries (providing comfort and care to children and their families) • Eliminating 150,000 tons of recycled products and more than one million tons of corrugated cardboard in the U.S. over a ten-year period • As part of their diversity program, more than 30 percent of their franchisees are now women or minority and in 1999, McDonald’s purchased approximately $3 billion worth of goods and services from women and minority suppliers • Providing about $5 million in educational assistance through a variety of scholarships • Partnered with Chicago’s Field Museum to restore Sue—the largest Tyrannosaurus Rex fossil ever discovered in a laboratory for public viewing Source: McDonald’s Corporation 1999 Annual Report, page 6.

  7. TRANSPARENCY-8 Brainpower Weighs In Exhibit 1.5 Source: Colvin, G. 2000. We’re worth our weight in Pentium Chips. Fortune, March 20: 68.

  8. Vision WELLPOINT will redefine our industry: Through a new generation of consumer-friendly products that put individuals back in control of their future. Mission 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. Comparing Wellpoint Health Network’s Vision and Mission TRANSPARENCY-9 Exhibit 1.6 Source: Company Records

  9. Strategic Objectives TRANSPARENCY-10 Exhibit 1.7 • Strategic Objectives (Financial) • Increase sales growth 6 to 8 percent and accelerate core net earnings per share growth to 13 to 15 percent in each of the next five years (Procter & Gamble) • Generate Internet-related revenue of $1.5 billion. (Automation) • Increase the contribution of Banking Group earnings from investments, brokerage and insurance from 16 percent to 25 percent (Wells Fargo) • Cut corporate overhead costs by $30 million per year (Fortune brands) • Strategic Objectives (Nonfinancial) • Capitalize on e-commerce (Federal Express) • We want a majority of our customers,when surveyed, to say they consider Wells Fargo the best financial institution in the community (Wells Fargo) • We want to operate 6,000 stores by 2010—up from 3000 in the year 2000 (Walgreen’s) • Develop a smart card strategy that will help us play a key role in shaping online payments (American Express) • Reduce greenhouse gases by 10 percent (from a 1990 base) by 2010 (BP Amoco) Source: Company Documents and Annual Reports

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