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TheNatureofStrategicManagement ChapterOne ChapterObjectives Describethestrategic managementprocess Explaintheneedforintegratinganalysisandintuitioninstrategicmanagement Defineandgiveexamplesofkeytermsinstrategicmanagement Discussthenatureofstrategyformulation implementation andevaluationactivities 1 2 Copyright 2013PearsonEducation Inc publishingasPrenticeHall ChapterObjectives cont Describethebenefitsofgoodstrategicmanagement DiscusstherelevanceofSunTzu sTheArtofWartostrategicmanagement Discusshowafirmmayachievesustainedcompetitiveadvantage Copyright 2013PearsonEducation Inc publishingasPrenticeHall 1 3 DefiningStrategicManagement Strategicmanagementtheartandscienceofformulating implementing andevaluatingcross functionaldecisionsthatenableanorganizationtoachieveitsobjectives 1 4 Copyright 2013PearsonEducation Inc publishingasPrenticeHall DefiningStrategicManagement Strategicmanagementisusedsynonymouslywiththetermstrategicplanning Sometimesthetermstrategicmanagementisusedtorefertostrategyformulation implementation andevaluation withstrategicplanningreferringonlytostrategyformulation 1 5 Copyright 2013PearsonEducation Inc publishingasPrenticeHall DefiningStrategicManagement Astrategicplanisacompany sgameplan Astrategicplanresultsfromtoughmanagerialchoicesamongnumerousgoodalternatives anditsignalscommitmenttospecificmarkets policies procedures andoperations 1 6 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StagesofStrategicManagement 1 7 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StagesofStrategicManagement Strategyformulationincludesdevelopingavisionandmission identifyinganorganization sexternalopportunitiesandthreats determininginternalstrengthsandweaknesses establishinglong termobjectives generatingalternativestrategies andchoosingparticularstrategiestopursue 1 8 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StrategyFormulation Decidingwhatnewbusinessestoenter Whatbusinessestoabandon Howtoallocateresources Whethertoexpandoperationsordiversify Whethertoenterinternationalmarkets Whethertomergeorformajointventure Howtoavoidahostiletakeover 1 9 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StagesofStrategicManagement Strategyimplementationrequiresafirmtoestablishannualobjectives devisepolicies motivateemployees andallocateresourcessothatformulatedstrategiescanbeexecutedoftencalledtheactionstage 1 10 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StagesofStrategicManagement Strategyevaluationreviewingexternalandinternalfactorsthatarethebasesforcurrentstrategies measuringperformance andtakingcorrectiveactions 1 11 Copyright 2013PearsonEducation Inc publishingasPrenticeHall StagesofStrategicManagement Strategyformulation implementation andevaluationactivitiesoccuratthreehierarchicallevelsinalargeorganization corporate divisionalorstrategicbusinessunit andfunctionalStrategicmanagementhelpsafirmfunctionasacompetitiveteam 1 12 Copyright 2013PearsonEducation Inc publishingasPrenticeHall IntegratingIntuitionandAnalysis Mostorganizationscanbenefitfromstrategicmanagement whichisbaseduponintegratingintuitionandanalysisindecisionmakingIntuitionisparticularlyusefulformakingdecisionsinsituationsofgreatuncertaintyorlittleprecedent 1 13 Copyright 2013PearsonEducation Inc publishingasPrenticeHall AdaptingtoChange Thesecond largestbookstorechainintheUnitedStates BordersGroup declaredbankruptcyin2011asthefirmhadnotadaptedwelltochangesinbookretailingfromtraditionalbookstoreshoppingtocustomersbuyingonline preferringdigitalbookstohardcopiesBorderswasonthebrinkoffinancialcollapsebeforebeingacquiredinJuly2011byDirectBrands Copyright 2013PearsonEducation Inc publishingasPrenticeHall 1 14 KeyTermsinStrategicManagement Competitiveadvantageanythingthatafirmdoesespeciallywellcomparedtorivalfirms Strategiststheindividualswhoaremostresponsibleforthesuccessorfailureofanorganization 1 15 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Visionstatementanswersthequestion Whatdowewanttobecome oftenconsideredthefirststepinstrategicplanning 1 16 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Missionstatementsenduringstatementsofpurposethatdistinguishonebusinessfromothersimilarfirmsidentifiesthescopeofafirm soperationsinproductandmarkettermsaddressesthebasicquestionthatfacesallstrategists Whatisourbusiness 1 17 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Externalopportunitiesandexternalthreatsrefertoeconomic social cultural demographic environmental political legal governmental technological andcompetitivetrendsandeventsthatcouldsignificantlybenefitorharmanorganizationinthefuture 1 18 Copyright 2013PearsonEducation Inc publishingasPrenticeHall SomeOpportunitiesandThreats Computerhackerproblemsareincreasing Intensepricecompetitionisplaguingmostfirms Unemploymentandunderemploymentratesremainhigh Interestratesarerising Productlifecyclesarebecomingshorter Stateandlocalgovernmentsarefinanciallyweak 1 19 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Internalstrengthsandinternalweaknessesanorganization scontrollableactivitiesthatareperformedespeciallywellorpoorlydeterminedrelativetocompetitors 1 20 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Objectivesspecificresultsthatanorganizationseekstoachieveinpursuingitsbasicmissionlong termmeansmorethanoneyearshouldbechallenging measurable consistent reasonable andclear 1 21 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Strategiesthemeansbywhichlong termobjectiveswillbeachievedmayincludegeographicexpansion diversification acquisition productdevelopment marketpenetration retrenchment divestiture liquidation andjointventures 1 22 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Annualobjectivesshort termmilestonesthatorganizationsmustachievetoreachlong termobjectivesshouldbemeasurable quantitative challenging realistic consistent andprioritizedshouldbeestablishedatthecorporate divisional andfunctionallevelsinalargeorganization 1 23 Copyright 2013PearsonEducation Inc publishingasPrenticeHall SampleStrategiesinActionin2011 1 24 Copyright 2013PearsonEducation Inc publishingasPrenticeHall KeyTermsinStrategicManagement Policiesthemeansbywhichannualobjectiveswillbeachievedincludeguidelines rules andproceduresestablishedtosupporteffortstoachievestatedobjectivesguidestodecisionmakingandaddressrepetitiveorrecurringsituations 1 25 Copyright 2013PearsonEducation Inc publishingasPrenticeHall TheStrategic ManagementModel 1 26 Copyright 2013PearsonEducation Inc publishingasPrenticeHall AComprehensiveStrategic ManagementModel 1 27 Copyright 2013PearsonEducation Inc publishingasPrenticeHall BenefitsofStrategicManagement Historically theprincipalbenefitofstrategicmanagementhasbeentohelporganizationsformulatebetterstrategiesthroughtheuseofamoresystematic logical andrationalapproachtostrategicchoice 1 28 Copyright 2013PearsonEducation Inc publishingasPrenticeHall BenefitsofStrategicManagement CommunicationisakeytosuccessfulstrategicmanagementThroughdialogueandparticipation managersandemployeesbecomecommittedtosupportingtheorganization Copyright 2013PearsonEducation Inc publishingasPrenticeHall 1 29 BenefitstoaFirmThatDoesStrategicPlanning 1 30 Copyright 2013PearsonEducation Inc publishingasPrenticeHall FinancialBenefits Businessesusingstrategic managementconceptsshowsignificantimprovementinsales profitability andproductivitycomparedtofirmswithoutsystematicplanningactivitiesHigh performingfirmsseemtomakemoreinformeddecisionswithgoodanticipationofbothshort andlong termconsequences 1 31 Copyright 2013PearsonEducation Inc publishingasPrenticeHall NonfinancialBenefits Itallowsforidentification prioritization andexploitationofopportunities Itprovidesanobjectiveviewofmanagementproblems Itrepresentsaframeworkforimprovedcoordinationandcontrolofactivities Itminimizestheeffectsofadverseconditionsandchanges 1 32 Copyright 2013PearsonEducation Inc publishingasPrenticeHall NonfinancialBenefits Itallowsmajordecisionstobettersupportestablishedobjectives Itallowsmoreeffectiveallocationoftimeandresourcestoidentifiedopportunities Itallowsfewerresourcesandlesstimetobedevotedtocorrectingerroneousoradhocdecisions Itcreatesaframeworkforinternalcommunicationamongpersonnel 1 33 Copyright 2013PearsonEducation Inc publishingasPrenticeHall WhySomeFirmsDoNoStrategicPlanning LackofknowledgeinstrategicplanningPoorrewardstructuresFirefightingWasteoftimeTooexpensiveLazinessContentwithsuccess 1 34 Copyright 2013PearsonEducation Inc publishingasPrenticeHall WhySomeFirmsDoNoStrategicPlanning FearoffailureOverconfidencePriorbadexperienceSelf interestFearoftheunknownHonestdifferenceofopinionSuspicion 1 35 Copyright 2013PearsonEducation Inc publishingasPrenticeHall PitfallsinStrategicPlanning UsingstrategicplanningtogaincontroloverdecisionsandresourcesDoingstrategicplanningonlytosatisfyaccreditationorregulatoryrequirementsToohastilymovingfrommissiondevelopmenttostrategyformulationFailingtocommunicatetheplantoemployees whocontinueworkinginthedarkTopmanagersmakingmanyintuitivedecisionsthatconflictwiththeformalplan 1 36 Copyright 2013PearsonEducation Inc publishingasPrenticeHall PitfallsinStrategicPlanning Topmanagersnotactivelysupportingthestrategic planningprocessFailingtouseplansasastandardformeasuringperformanceDelegatingplanningtoa planner ratherthaninvolvingallmanagersFailingtoinvolvekeyemployeesinallphases

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