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PowerPointPresentationbyCharlieCookCopyright©2005PrenticeHall,Inc.

Allrightsreserved.PowerPointPresentationbyChaLEARNINGOUTLINE

FollowthisLearningOutlineasyoureadandstudythischapter.TheImportanceofStrategicManagementDefinestrategicmanagement.Explainwhystrategicmanagementisimportant.Discusswhatstudiesoftheeffectivenessofstrategicmanagementhaveshown.TheStrategicManagementProcessListsixstepsinthestrategicmanagementprocess.Explainwhyit’simportanttoknowanorganization’smission.Describewhatmanagersdowhentheydoexternalandinternalanalyses.Explaintheroleofresources,capabilities,andcorecompetenciesintheinternalanalysis.2Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.TheStrategicManagementProcess(cont’d)Definestrengths,weaknesses,opportunities,andthreats.Discusswhathappensduringstrategyformulation,implementation,andevaluation.TypesofOrganizationalStrategiesTellwhatstrategieseachlevelofmanagementistypicallyresponsiblefor.Describethethreemajortypesofcorporatestrategies.Explainthethreegrowthstrategies.Discusswhenorganizationsmightpursueastabilitystrategy.Describetworenewalstrategies.3Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.TypesofOrganizationalStrategies(cont’d)DiscusstheBCGmatrixandhowit’sused.DefineSBUsandbusiness-levelstrategies.Describetheroleofcompetitiveadvantageinbusiness-levelstrategies.ExplainPorter’sfiveforcesmodel.Describethreegenericcompetitivestrategies.Tellwhatitmeanstobestuckinthemiddle.Definefunctional-levelstrategies.4Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.StrategicManagementinToday’sEnvironment(cont’d)Discusstheimplicationsofdynamicanduncertainenvironmentsonorganizationalstrategy.Explaintheruleofthreeanditssignificancetostrategicmanagement.Describestrategiesapplyinge-businesstechniques.Explainwhatstrategiesorganizationmightusetobecomemorecustomeroriented.Describeinnovationstrategiesorganizationsmightuse.5Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINEStrategicManagementThesetofmanagerialdecisions

andactionsthatdetermines

thelong-runperformance

ofanorganization.6Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementThesetofWhyStrategicManagementIsImportantItresultsinhigherorganizationalperformance.Itrequiresthatmanagersexamineandadapttobusinessenvironmentchanges.Itcoordinatesdiverseorganizationalunits,helpingthemfocusonorganizationalgoals.Itisverymuchinvolvedinthemanagerialdecision-makingprocess.7Copyright©2005PrenticeHall,Inc.Allrightsreserved.*WhyStrategicManagementIsImStrategicManagementProcessStep1:Identifyingtheorganization’scurrent mission,objectives,andstrategiesMission:thefirm’sreasonforbeingThescopeofitsproductsandservicesGoals:thefoundationforfurtherplanningMeasurableperformancetargetsStep2:ConductinganexternalanalysisTheenvironmentalscanningofspecificandgeneralenvironmentsFocusesonidentifyingopportunitiesandthreats8Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcessStStrategicManagementProcess(cont’d)Step3:ConductinganinternalanalysisAssessingorganizationalresources,capabilities,activities,andculture:Strengths(corecompetencies)createvalueforthecustomerandstrengthenthecompetitivepositionofthefirm.Weaknesses(thingsdonepoorlyornotatall)canplacethefirmatacompetitivedisadvantage.

Steps2and3combinedarecalledaSWOTanalysis.(Strengths,Weaknesses,Opportunities,andThreats)9Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(StrategicManagementProcess(cont’d)Step4:FormulatingstrategiesDevelopandevaluatestrategicalternativesSelectappropriatestrategiesforalllevelsintheorganizationthatproviderelativeadvantageovercompetitorsMatchorganizationalstrengthstoenvironmentalopportunitiesCorrectweaknessesandguardagainstthreats10Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(StrategicManagementProcess(cont’d)Step5:ImplementingstrategiesImplementation:effectivelyfittingorganizationalstructureandactivitiestotheenvironmentTheenvironmentdictatesthechosenstrategy;effectivestrategyimplementationrequiresanorganizationalstructurematchedtoitsrequirements.Step6:EvaluatingResultsHoweffectivehavestrategiesbeen?Whatadjustments,ifany,arenecessary?11Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(OrganizationalStrategiesCorporateStrategiesTopmanagement’soverallplanfortheentireorganizationanditsstrategicbusinessunitsTypesofCorporateStrategiesGrowth:expansionintonewproductsandmarketsStability:maintenanceofthestatusquoRenewal:redirectionofthefirmintonewmarkets12Copyright©2005PrenticeHall,Inc.Allrightsreserved.*OrganizationalStrategiesCorpoCorporate-LevelStrategiesGrowthStrategySeekingtoincreasetheorganization’sbusinessbyexpansionintonewproductsandmarkets.TypesofGrowthStrategiesConcentrationVerticalintegrationHorizontalintegrationDiversification13Copyright©2005PrenticeHall,Inc.Allrightsreserved.*Corporate-LevelStrategiesGrowGrowthStrategiesConcentrationFocusingonaprimarylineofbusinessandincreasingthenumberofproductsofferedormarketsserved.VerticalIntegrationBackwardverticalintegration:attemptingtogaincontrolofinputs(becomeaself-supplier).Forwardverticalintegration:attemptingtogaincontrolofoutputthroughcontrolofthedistributionchanneland/orprovidecustomerserviceactivities(eliminatingintermediaries).14Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategiesConcentrationGrowthStrategies(cont’d)HorizontalIntegrationCombiningoperationswithanothercompetitorinthesameindustrytoincreasecompetitivestrengthsandlowercompetitionamongindustryrivals.RelatedDiversificationExpandingbymergingwithoracquiringfirmsindifferent,butrelatedindustriesthatare“strategicfits”.UnrelatedDiversificationGrowingbymergingwithoracquiringfirmsinunrelatedindustrieswherehigherfinancialreturnsarepossible.15Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)HoriGrowthStrategies(cont’d)StabilityStrategyAstrategythatseekstomaintainthestatusquotodealwiththeuncertaintyofadynamicenvironment,whentheindustryisexperiencingslow-orno-growthconditions,oriftheownersofthefirmelectnottogrowforpersonalreasons.16Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)StabGrowthStrategies(cont’d)RenewalStrategiesDevelopingstrategiestocounterorganizationweaknessesthatareleadingtoperformancedeclines.Retrenchment:focusingofeliminatingnon-criticalweaknessesandrestoringstrengthstoovercomecurrentperformanceproblems.Turnaround:addressingcriticallong-termperformanceproblemsthroughtheuseofstrongcosteliminationmeasuresandlarge-scaleorganizationalrestructuringsolutions.17Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)ReneCorporatePortfolioAnalysisBCGMatrixDevelopedbytheBostonConsultingGroupConsidersmarketshareandindustrygrowthrateClassifiesfirmsas:Cashcows:lowgrowthrate,highmarketshareStars:highgrowthrate,highmarketshareQuestionmarks:highgrowthrate,lowmarketshareDogs:lowgrowthrate,lowmarketshare18Copyright©2005PrenticeHall,Inc.Allrightsreserved.*CorporatePortfolioAnalysisBCBusiness-LevelStrategyBusiness-LevelStrategyAstrategythatseekstodeterminehowanorganizationshouldcompeteineachofitsbusinesses(strategicbusinessunits).Low-costproviderDifferentiationFocus/Niche19Copyright©2005PrenticeHall,Inc.Allrightsreserved.*Business-LevelStrategyBusinesTheRoleofCompetitiveAdvantageCompetitiveAdvantageAnorganization’sdistinctivecompetitiveedgethatissourcedandsustainedinitscorecompetencies.QualityasaCompetitiveAdvantageDifferentiatesthefirmfromitscompetitors.Cancreateasustainablecompetitiveadvantage.Representsthecompany’sfocusonqualitymanagementtoachievecontinuousimprovementandmeetcustomers’demandforquality.20Copyright©2005PrenticeHall,Inc.Allrightsreserved.*TheRoleofCompetitiveAdvantTheRoleofCompetitiveAdvantage(cont’d)SustainableCompetitiveAdvantageContinuingovertimetoeffectivelyexploitresourcesanddevelopcorecompetenciesthatenableanorganizationtokeepitsedgeoveritsindustrycompetitors.21Copyright©2005PrenticeHall,Inc.Allrightsreserved.*TheRoleofCompetitiveAdvantFiveCompetitiveForcesThreatofNewEntrantsTheeaseordifficultywithwhichnewcompetitorscanenteranindustry.ThreatofSubstitutesTheextenttowhichswitchingcostsandbrandloyaltyaffectthelikelihoodofcustomersadoptingsubstitutesproductsandservices.BargainingPowerofBuyersThedegreetowhichbuyershavethemarketstrengthtoholdswayoverandinfluencecompetitorsinanindustry.22Copyright©2005PrenticeHall,Inc.Allrightsreserved.*FiveCompetitiveForcesThreatFiveCompetitiveForcesBargainingPowerofSuppliersTherelativenumberofbuyerstosuppliersandthreatsfromsubstitutesandnewentrantsaffectthebuyer-supplierrelationship.CurrentRivalryIntensityamongrivalsincreaseswhenindustrygrowthratesslow,demandfalls,andproductpricesdescend.23Copyright©2005PrenticeHall,Inc.Allrightsreserved.*FiveCompetitiveForcesBargainCompetitiveStrategiesCostLeadershipStrategySeekingtoattainthelowesttotaloverallcostsrelativetootherindustrycompetitors.DifferentiationStrategyAttemptingtocreateauniqueanddistinctiveproductorserviceforwhichcustomerswillpayapremium.FocusStrategyUsingacostordifferentiationadvantagetoexploitaparticularmarketsegmentratheralargermarket.24Copyright©2005PrenticeHall,Inc.Allrightsreserved.*CompetitiveStrategiesCostLeaStrategicManagementTodayTheRuleofThreeThecompetitiveforcesinanindustry,ifunfettered,willinevitablycreateasituationwherethreecompanies(full-linegeneralists)willdominateanygivenmarketSomefirmsinthesamemarketbecomesupernicheplayersandwhileothersendupasstuck-in-the-ditchdwellers.25Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementTodayTheStrategiesforApplyinge-BusinessTechniquesCostLeadershipOn-lineactivities:bidding,orderprocessing,inventorycontrol,recruitmentandhiringDifferentiationInternet-basedknowledgesystems,on-lineorderingandcustomersupportFocusChatroomsanddiscussionboards,targetedwebsites26Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategiesforApplyinge-BusiCustomerServiceStrategiesGivingthecustomerswhattheywant.Communicatingeffectivelywiththem.Providingemployeeswithcustomerservicetraining.27Copyright©2005PrenticeHall,Inc.Allrightsreserved.*CustomerServiceStrategiesGivInnovationStrategiesPossibleEventsRadicalbreakthroughsinproducts.Applicationofexistingtechnologytonewuses.StrategicDecisionsaboutInnovationBasicresearchProductdevelopmentProcessinnovationFirstMoverAnorganizationthatbringsaproductinnovationtomarketoruseanewprocessinnovations28Copyright©2005PrenticeHall,Inc.Allrightsreserved.*InnovationStrategiesPossiblePowerPointPresentationbyCharlieCookCopyright©2005PrenticeHall,Inc.

Allrightsreserved.PowerPointPresentationbyChaLEARNINGOUTLINE

FollowthisLearningOutlineasyoureadandstudythischapter.TheImportanceofStrategicManagementDefinestrategicmanagement.Explainwhystrategicmanagementisimportant.Discusswhatstudiesoftheeffectivenessofstrategicmanagementhaveshown.TheStrategicManagementProcessListsixstepsinthestrategicmanagementprocess.Explainwhyit’simportanttoknowanorganization’smission.Describewhatmanagersdowhentheydoexternalandinternalanalyses.Explaintheroleofresources,capabilities,andcorecompetenciesintheinternalanalysis.30Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.TheStrategicManagementProcess(cont’d)Definestrengths,weaknesses,opportunities,andthreats.Discusswhathappensduringstrategyformulation,implementation,andevaluation.TypesofOrganizationalStrategiesTellwhatstrategieseachlevelofmanagementistypicallyresponsiblefor.Describethethreemajortypesofcorporatestrategies.Explainthethreegrowthstrategies.Discusswhenorganizationsmightpursueastabilitystrategy.Describetworenewalstrategies.31Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.TypesofOrganizationalStrategies(cont’d)DiscusstheBCGmatrixandhowit’sused.DefineSBUsandbusiness-levelstrategies.Describetheroleofcompetitiveadvantageinbusiness-levelstrategies.ExplainPorter’sfiveforcesmodel.Describethreegenericcompetitivestrategies.Tellwhatitmeanstobestuckinthemiddle.Definefunctional-levelstrategies.32Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINELEARNINGOUTLINE(cont’d)

FollowthisLearningOutlineasyoureadandstudythischapter.StrategicManagementinToday’sEnvironment(cont’d)Discusstheimplicationsofdynamicanduncertainenvironmentsonorganizationalstrategy.Explaintheruleofthreeanditssignificancetostrategicmanagement.Describestrategiesapplyinge-businesstechniques.Explainwhatstrategiesorganizationmightusetobecomemorecustomeroriented.Describeinnovationstrategiesorganizationsmightuse.33Copyright©2005PrenticeHall,Inc.Allrightsreserved.*LEARNINGOUTLINEStrategicManagementThesetofmanagerialdecisions

andactionsthatdetermines

thelong-runperformance

ofanorganization.34Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementThesetofWhyStrategicManagementIsImportantItresultsinhigherorganizationalperformance.Itrequiresthatmanagersexamineandadapttobusinessenvironmentchanges.Itcoordinatesdiverseorganizationalunits,helpingthemfocusonorganizationalgoals.Itisverymuchinvolvedinthemanagerialdecision-makingprocess.35Copyright©2005PrenticeHall,Inc.Allrightsreserved.*WhyStrategicManagementIsImStrategicManagementProcessStep1:Identifyingtheorganization’scurrent mission,objectives,andstrategiesMission:thefirm’sreasonforbeingThescopeofitsproductsandservicesGoals:thefoundationforfurtherplanningMeasurableperformancetargetsStep2:ConductinganexternalanalysisTheenvironmentalscanningofspecificandgeneralenvironmentsFocusesonidentifyingopportunitiesandthreats36Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcessStStrategicManagementProcess(cont’d)Step3:ConductinganinternalanalysisAssessingorganizationalresources,capabilities,activities,andculture:Strengths(corecompetencies)createvalueforthecustomerandstrengthenthecompetitivepositionofthefirm.Weaknesses(thingsdonepoorlyornotatall)canplacethefirmatacompetitivedisadvantage.

Steps2and3combinedarecalledaSWOTanalysis.(Strengths,Weaknesses,Opportunities,andThreats)37Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(StrategicManagementProcess(cont’d)Step4:FormulatingstrategiesDevelopandevaluatestrategicalternativesSelectappropriatestrategiesforalllevelsintheorganizationthatproviderelativeadvantageovercompetitorsMatchorganizationalstrengthstoenvironmentalopportunitiesCorrectweaknessesandguardagainstthreats38Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(StrategicManagementProcess(cont’d)Step5:ImplementingstrategiesImplementation:effectivelyfittingorganizationalstructureandactivitiestotheenvironmentTheenvironmentdictatesthechosenstrategy;effectivestrategyimplementationrequiresanorganizationalstructurematchedtoitsrequirements.Step6:EvaluatingResultsHoweffectivehavestrategiesbeen?Whatadjustments,ifany,arenecessary?39Copyright©2005PrenticeHall,Inc.Allrightsreserved.*StrategicManagementProcess(OrganizationalStrategiesCorporateStrategiesTopmanagement’soverallplanfortheentireorganizationanditsstrategicbusinessunitsTypesofCorporateStrategiesGrowth:expansionintonewproductsandmarketsStability:maintenanceofthestatusquoRenewal:redirectionofthefirmintonewmarkets40Copyright©2005PrenticeHall,Inc.Allrightsreserved.*OrganizationalStrategiesCorpoCorporate-LevelStrategiesGrowthStrategySeekingtoincreasetheorganization’sbusinessbyexpansionintonewproductsandmarkets.TypesofGrowthStrategiesConcentrationVerticalintegrationHorizontalintegrationDiversification41Copyright©2005PrenticeHall,Inc.Allrightsreserved.*Corporate-LevelStrategiesGrowGrowthStrategiesConcentrationFocusingonaprimarylineofbusinessandincreasingthenumberofproductsofferedormarketsserved.VerticalIntegrationBackwardverticalintegration:attemptingtogaincontrolofinputs(becomeaself-supplier).Forwardverticalintegration:attemptingtogaincontrolofoutputthroughcontrolofthedistributionchanneland/orprovidecustomerserviceactivities(eliminatingintermediaries).42Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategiesConcentrationGrowthStrategies(cont’d)HorizontalIntegrationCombiningoperationswithanothercompetitorinthesameindustrytoincreasecompetitivestrengthsandlowercompetitionamongindustryrivals.RelatedDiversificationExpandingbymergingwithoracquiringfirmsindifferent,butrelatedindustriesthatare“strategicfits”.UnrelatedDiversificationGrowingbymergingwithoracquiringfirmsinunrelatedindustrieswherehigherfinancialreturnsarepossible.43Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)HoriGrowthStrategies(cont’d)StabilityStrategyAstrategythatseekstomaintainthestatusquotodealwiththeuncertaintyofadynamicenvironment,whentheindustryisexperiencingslow-orno-growthconditions,oriftheownersofthefirmelectnottogrowforpersonalreasons.44Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)StabGrowthStrategies(cont’d)RenewalStrategiesDevelopingstrategiestocounterorganizationweaknessesthatareleadingtoperformancedeclines.Retrenchment:focusingofeliminatingnon-criticalweaknessesandrestoringstrengthstoovercomecurrentperformanceproblems.Turnaround:addressingcriticallong-termperformanceproblemsthroughtheuseofstrongcosteliminationmeasuresandlarge-scaleorganizationalrestructuringsolutions.45Copyright©2005PrenticeHall,Inc.Allrightsreserved.*GrowthStrategies(cont’d)ReneCorporatePortfolioAnalysisBCGMatrixDevelopedbytheBostonConsultingGroupConsidersmarketshareandindustrygrowthrateClassifiesfirmsas:Cashcows:lowgrowthrate,highmarketshareStars:highgrowthrate,highmarketshareQuestionmarks:highgrowthrate,lowmarketshareDogs:lowgrowthrate,lowmarketshare46Copyright©2005PrenticeHall,Inc.Allrightsreserved.*CorporatePortfolioAnalysisBCBusiness-LevelStrategyBusiness-LevelStrategyAstrategythatseekstodeterminehowanorganizationshouldcompeteineachofitsbusinesses(strategicbusinessunits).Low-costproviderDifferentiationFocus/Niche47Copyright©2005PrenticeHall,Inc.Allrightsreserved.*Business-LevelStrategyBusinesTheRoleofCompetitiveAdvantageCompetitiveAdvantageAnorganization’sdistinctivecompetitiveedgethatissourcedandsustainedinitscorecompetencies.QualityasaCompetitiveAdvantageDifferentiatesthefirmfromitscompetitors.Cancreateasustainablecompetitiveadvantage.Representsthecompany’sfocusonqualitymanagementtoachievecontinuousimprovementandmeetcustomers’demandforquality.48Copyright©2005PrenticeHall,Inc.Allrightsreserved.*TheRoleofCompetitiveAdvantTheRoleofCompetitiveAdvantage(cont’d)SustainableCompetitiveAdvantageContinuingovertimetoeffectivelyexploitresourcesanddevelopcorecompetenciesthatenableanorganizationtokeepitsedgeoveritsindustrycompetitors.49Copyright©2005PrenticeHall,Inc.Allrightsreserved.*TheRoleofCompetitiveAdvantFiveCompetitiveForcesThreatofNewEntrantsTheeaseordifficultywithwhichnewcompetitorscanenteranindustry.ThreatofSubstitutesTheextenttowhichswitchingcostsandbrandloyaltyaffectthelikelihoodofcustomersadoptingsubstitutesproductsandservices.BargainingPowerofBuyersThedegreetowhichbuyershavethemarketstrengthtohol

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