Chapter 1 Basic Concepts of Strategic Management Chapter

Chapter 1 Basic Concepts of Strategic Management

Chapter Objectives o After finish this chapter student will: n n n Understanding what Strategy is? Understanding what strategic management means? Understanding The basic model of strategic management Understanding the process of strategic management and Benefit of strategic management Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 2

1. 1 The study of Strategic Management q. Strategic Management can be define as the art and science of formulating, implementing, and evaluating cross -functional decisions that able an organization to achieve its objectives. q. It is focus on integrating management, marketing, finance/accounting, production/ operation, research and development, and information systems to achieve organization success. q. Strategic Management is used to refer to strategy formulation, implementation, and evaluation. q. Strategic Planning referring only to strategy formulation.

Management MIS issues Marketing Strategic Management Research & Development Finance & Accounting Production & Operation Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 4

1. 2 Aim of Strategy To develop a successful company by developing better resources and product/services which are more suited to customer needs or in other words, to gain competitive advantage. The word "strategy" comes from the Greek "strategos" referring to stratos ( the army) and ago ( to lead). The history of strategic planning began in the military. A key aim of both business and military strategy is "to gain competitive advantage". Both business and military organizations must adapt to change and constantly improve to be successful.

1. 3 Levels of Strategy o o o Corporate strategy : What direction are we going and what businesses are we in or do we want to be in? Business strategy: How are we going to compete in our chosen businesses? Functional strategy: What resources and capabilities do we have to support the corporate and competitive strategies? Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 6

1. 4 Basic Model of the Strategic Management Environmental Scanning Strategic Formulation Strategic Implementation • External environment • Internal environment • Vision • Mission • Objectives • Strategies • Policies • Programs • Budgets • Procedures Evaluation And Control • Performance Feedback/Learning process Figure 1 -1 The Basic model of the strategic Management

1. 5 The Model of the Strategic Management Process Perform External Audit Develop Vision and Mission Statements Establish long-term objectives Generate And Select Strategies Implement Strategies. Management Issues Implement Strategies. Marketing, Finance, R&D. . . Measure And Evaluate Performance Perform Internal Audit Strategy Formulation Strategy Implementation Strategy Evaluation

1. 6 Who Perform Strategic Management q CEO q Owner of business q In-country representative q President q Vice president q Prime minister q Deputy prime minister Strategists: The individuals who are most responsible for the success or failure of an organization. All strategists help an organization gather, analyze, and organize information.

1. 7 The Board of Directors Stockholders elect the board of directors to oversee company. q. Selecting, assessing, rewarding or replacing CEO. q. Determine company strategic direction, vision, mission, and reviewing financial performance q. Assuring ethical, socially responsible, and legal conduct.

1. 8 Benefits of Strategic Management Strategic management allows an organization to be more proactive than reactive in shaping its own future, it allows an organization to initiate and influence activities. Strategic management has been to help organization formulate better strategies through the use of more systematic, logical, and rational approach to strategic choice, but focus on process rather than decision or document (Communication is a key to successful strategic management).

Review o o Why strategic management is important to the organization? Describe briefly about the strategic management process. Strategic Management: Chapter 1 Basic Concepts of Strategic Management Page 13