Group 1 Presentation: Strategic Management in Action By Mary Coulter Group Members: Mark Beal,...

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Group 1 Presentation:Strategic Management in ActionBy Mary Coulter

Group Members:Mark Beal, Adrienne Collins, Jessica Drummond, Mike Sanchez, Mario Santos, Spencer Thomas, Alec Wegmann

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Chp.1 Introducing the concepts of Strategic Management•Why it is important

•What it is

•Who’s involved

•Impacting factors

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Why is Strategic Management Important?

Individual Importance: • Everyone in an organization is somehow involved in strategic management• Understanding strategic decisions will enable you to do you job well, have your work valued, and be rewarded for your work

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Why is Strategic Management Important?

• Two of the most fundamental business questions relate back to strategy: • why firms succeed or fail• why firms have varying levels of performance

• Organizations that use strategic management tend to have higher levels of performance or profits

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Why is Strategic Management Important?• Situations are continually changing internally and externally; being able to adapt to these situations and achieve expected performance is challenging • Strategic management helps coordinate activities from various levels and departments; creating a more efficient organization

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Example: The importance of strategic management during the current recession

• Managers noticed that consumers no longer wanted to buy pens or paper in bulk. So the company created displays to sell individual sharpies and small packs of paper, which proved successful.

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Strategic Management can be found in almost every sector of any given business

Some Examples:Texas Tech’s head coaching

decisions.Blockbuster’s attempts to compete

with Netflix.Or Disney’s ever continuing global

expansions tactics.

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Why do similar companies differ in success?

Because of their strategy/strategic management.

Wal-Mart and Kmart both founded in 1962.

Wal-Mart: The world’s largest and most successful retailer.

Kmart: The largest retailer to seek Chp.11 bankruptcy.

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Strategizing “Outside the Box”

3M has all employees take an hour of each work day to brainstorm new product ideas.

The Post-it note was one of the products that resulted

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Four Characteristics of Strategic Management

1. Interdisciplinary –all areas of the business are involved.

2. External Focus – involves the interactions of the company with the economy, competitors, customers, etc.

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Four Characteristics of Strategic Management

3. Internal Focus – assessing the organization’s resources and capabilities. Such as all-star employees.

4. Future Direction – Companies must make projections about their future position to create a successful strategy.

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The Strategic Management Process

A process that implies sequential and interrelated activities leading to some outcome. These activities include:

Situation AnalysisStrategy FormulationStrategy ImplementationStrategy Evaluation

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Situation Analysis – Analyzing the Current Situation

Scanning and evaluating:The current organizational context –

The economy, the role of stakeholders, the dynamics of change, the role of the organizational culture and mission

External environment – competitors, economy, customers, trends

And organizational environment – resources, distinctive capabilities, core competencies

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Strategy Formulation

Developing and choosing appropriate strategies as guided by the results of situation analysis.

3 Main Types of Strategies:1. Functional Strategies2. Competitive Strategies3. Corporate Strategies

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1. Functional Strategies

Using functional areas, resources and capabilities to support the corporate and competitive strategies.

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Most common functional areas:

Production-Operations (Manufacturing)

Marketing Research and DevelopmentHuman resourcesFinancial AccountingInformation Systems Technology

and Support

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Functional Areas

AcademicsStudent Services (health, housing,

and hospitality)Financial ServicesFacilities ManagementAthletics Alumni Relations

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2. Competitive Strategies

Goal-directed plans and actions that are concerned with how an organization competes in a specific business or industry.

The competitive strategies and advantages an organization currently has or wants to develop.

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Competitive Strategy

Abercrombie and Fitch has strategies to compete with:

American Eagle OutfittersGapJ. CrewOther specialty clothing

retailers.

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3. Corporate Strategies

What business(es) to be in and what to do with those businesses.

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Corporate StrategyCompetes with a portfolio of more

than 3,000 beverages.

Coca-Cola Products A - Z

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Strategy Implementation• Putting the various strategies into action.

• It is not enough to just formulate a great strategy, it must be implemented.

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Strategy Evaluation

• Involves evaluating both the outcomes of the strategies and how they have been implemented.

•If the evaluation determines that the strategic goals are not being met, then the strategy may need to be modified.

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Looking at Strategic Management’s Past

•The history of strategic management helps us better understand how and why today’s managers implement strategic management.

•The history ranges from great military battles to current research.

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Strategy’s Military Roots

• Strategy can be seen in historical decisions and actions used by military organizations.

•Blitzkrieg – a lighting swift attack by mobile forces, named after the German WWII strategy.

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Academic Origins of Strategic Management•As a field of study, strategic management is relatively young.

•Most of its theoretical foundation comes from economics and organization studies.

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Strategic Planning and Strategic Management Emerge•1960’s - One correct way to manage in all situations was replaced by contingency approaches.

•1970’s and 1980’s - Researchers tried to understand and describe strategic management.

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Who’s Involved with Strategic Management?•Employees at all organizational levels play a role in developing, implementing, and changing strategy.

•The Board of Directors

•Top Management

•Other Managers and Organizational Employees

AC

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The Board of Directors

The Board of Directors is an elected group that represents a company’s shareholders.

Responsibilities:◦Review and approve strategic goals and

plans.◦Review and approve the organization’s

financial standards and policies.◦Select, evaluate, and compensate top-level

managers.◦Etc. AC

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Home Depot’s BoardCompany shareholders were vocal about

the unhappiness with the previous CEO’s pay and performance.

Bonnie G. Hill, the longest-serving director on Home Depot’s board, met with stockholders and listened to their complaints.

The Board of Directors decided to link the pay of current CEO Frank Blake to the company’s performance.

AC

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The Role of Top ManagementAn organization’s top manager is

typically the chief executive officer (CEO).

The CEO’s top management team usually includes:◦COO◦CFO◦CIO◦Other executive or senior managers.

AC

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Strategic Leadership

The ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the organization to initiate changes that will create a valuable future for the organization.

Samsung Electronics-Changing its Leadership Team after financial scandal in 2008. AC

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Effective Strategic

Leadership

Maintaining Core

Competencies

Developing Human Capital

Creating Strong Organizational

Culture

Emphasizing Ethical

Decisions

Establishing Balanced Controls

Determining Organization

s POV

Strategic Leadership

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Determining Organization’s Purpose/Vision

Reason for existenceBill Ford and the creation of the

Ford U CarFord’s vision is to respect their

past accomplishments but lead the way in the future.

MB

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Exploiting and Maintaining Core Competencies

Value adding to the company

Wal-Mart and the recession

MB

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Developing Human Capital

Retention

Intellectual Capital

MB

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Creating and Sustaining a Strong Organizational Culture

Best Buy CEO Brian Dunn

Focus on ‘the team’ and ‘local growth’

Proven itself in this recession

MB

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Emphasizing Ethical DecisionsKeeps the company in a positive

PR position

Johnson & Johnson Credo

MB

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Establishing Appropriately Balanced ControlsCurb the actions of the company

in the direction of the objectiveTwo Types

◦Financial (accounting based and typically short-term)

◦Strategic (exchanging information)A balance of the two is required

MB

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Other Managers and Organizational Employees

Strategic Responsibilities◦Implementation

Actually doing the job and completing the objective.

◦Evaluation Lower levels of the organization hierarchy

tend to do this: this is when the processes to complete the objective are evaluated to see their effectiveness.

iPhone, Dev Center, and Forum

MB

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Three Factors Impacting Strategic Management

•Globalization

•Corporate Governance

•E-Business

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Global Economy & Globalization

Benefits◦Economic◦Social

Challenges◦Current state of economy◦Openness◦Interdependence between trading

nations Mario

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Challenges of Openness

Open to the good and bad◦Breaks down geographic barriers

between countries◦ Increased sensitivity to political and

cultural differences?Interdependence of trading countries

◦Domino effect◦World Trade Organization◦World Bank Group◦International Monetary Fund (IMF)

Challenge of Cultural & Political Differences

Cultural differences◦ Religion, beliefs, traditions, etc…

Ex. Nike and the Muslim culture

Must be sensitive to cultural and political differences◦ Awareness of how decisions & actions will be viewed by

ALL◦ Adjust to diverse views

Negative views of capitalism

Corporate GovernanceObserves how a company uses its

resourcesProtects stakeholders’ interestSarbanes-Oxley Act

◦Enron, Tyco, Worldcom Billions of dollars lost in 18 months

◦Changed Role of Board of Directors Independent group that looked out for the interest of

stockholders “The Business Roundtable”

◦ Improved Financial Reporting More disclosure and transparency of financial

statements

Management in E-BusinessE-Business – information and

communication technologies that support activities of a business◦Cisco: Teleconferencing

E-Commerce – retailing side of E-Business

Three Approaches to E-BusinessEnhanced – provides a new medium of

doing business; does not replace traditional ways of doing business◦Wal-Mart.com

Enable – helps perform business functions better, but not to sell anything◦LeviStrauss.com

Internet Retail – utilizing the resource of the internet to reach customers◦TheMountainHideaway.com

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Bill's Corporate Strategy