STRATEGIC MANAGEMENT - MGT603

1 STRATEGIC MANAGEMENT - MGT603 Table of of STRATEGIC MANAGEMENT ..12 Key Terms of STRATEGIC MANAGEMENT ..63 Internal Factors and Long Term Goals ..94 Benefits of STRATEGIC MANAGEMENT ..135 Comprehensive STRATEGIC Model ..166 Characteristics of a Mission Statement ..237 External Assessment ..288 Key External Factors ..319 External Assessment (Key external factors) ..3510 Technological Forces ..3811 Industry Analysis ..4312 IFE Matrix ..4713 Functions of MANAGEMENT ..5414 Functions of MANAGEMENT ..6115 Internal Assessment (Finance/Accounting) ..6416 Analytical Tools ..7117 The Internal Factor Evaluation (IFE) Matrix.

2 7518 Types of Strategies ..7819 Types of Strategies ..8420 Types of Strategies .. 8921 Types of Strategies ..9122 Types of Strategies ..9423 Strategy-Formulation Framework ..9724 Threats-Opportunities-Weaknesses-Strengt hs (TOWS) Matrix ..9825 The STRATEGIC Position and Action Evaluation (SPACE) Matrix ..10026 The STRATEGIC Position and Action Evaluation (SPACE) Matrix (Contd) ..10127 Boston Consulting Group (BCG) & IE Matrix ..10328 Boston Consulting Group (BCG) & IE Matrix (Contd) ..10529 Grand Strategy Matrix & QSPM ..10730 Grand Strategy Matrix & QSPM ..11031 The Nature of Strategy Implementation ..11232 Resource Allocation.

3 11633 Organizational Structure ..11834 Restructuring & Reengineering ..12135 Production/Operations Concerns When Implementing Strategies ..12636 Marketing Issues (Market Segmentation) ..12937 Marketing Issues (Marketing Mix) (Cont) ..13238 Finance/Accounting Issues ..13539 Research and Development Issues ..14040 Strategy Review, Evaluation and Control ..14241 Porter s Supply Chain Model ..14742 Strategy Evaluation ..14943 Reviewing Bases of Strategy ..15044 Measuring Organizational Performance ..15345 Characteristics of an Effective Evaluation System ..154 STRATEGIC MANAGEMENT MGT603 VU Copyright Virtual University of Pakistan 1 lesson 1 NATURE OF STRATEGIC MANAGEMENT objectives : This Lecture provides an overview of STRATEGIC MANAGEMENT .

4 It introduces a practical, integrative model of the STRATEGIC - MANAGEMENT process and defines basic activities and terms in STRATEGIC MANAGEMENT and discusses the importance of business ethics. After reading this lecture you will be able to know that: What Is STRATEGIC MANAGEMENT ? Discuss the nature of strategy formulation, implementation, and evaluation activities. What is STRATEGIC MANAGEMENT ? STRATEGIC MANAGEMENT can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objective. Definition: The on-going process of formulating, implementing and controlling broad plans guide the organizational in achieving the STRATEGIC goods given its internal and external environment.

5 Interpretation: 1. On-going process: STRATEGIC MANAGEMENT is a on-going process which is in existence through out the life of organization. 2. Shaping broad plans: First, it is an on-going process in which broad plans are firstly formulated than implementing and finally controlled. 3. STRATEGIC goals: STRATEGIC goals are those which are set by top MANAGEMENT . The broad plans are made in achieving the goals. 4. Internal and external environment: Internal and external environment generally set the goals. Simply external environment forced internal environment to set the goals and guide them that how to achieve the goals?

6 How the STRATEGIC MANAGEMENT show: Influenced On-going Process Shaping & achieving broad plans Broad plans are for achieving STRATEGIC External Environment Top MANAGEMENT or Internal Environment to achieve ForcedStrategic MANAGEMENT MGT603 VU Copyright Virtual University of Pakistan 2 Environment Scanning Strategy Fermentation Strategy Implication Evaluation Control Importance of STRATEGIC MANAGEMENT Why do we need to lay so much stress on STRATEGIC MANAGEMENT ? STRATEGIC MANAGEMENT becomes important due to the following reasons: Globalization: The survival for business First, global considerations impact virtually all STRATEGIC decisions!

7 The boundaries of countries no longer can define the limits of our imaginations. To see and appreciate the world from the perspective of others has become a matter of survival for businesses. The underpinnings of STRATEGIC MANAGEMENT hinge upon managers' gaining an understanding of competitors, markets, prices, suppliers, distributors, governments, creditors, shareholders, and customers worldwide. The price and quality of a firm's products and services must be competitive on a worldwide basis, not just a local basis. The distance between the business sectors are becoming less due to the provisions of certain facilities.

8 Although political boundaries are there but in order to become successful in business it is essential to laid stress on globalization. E-Commerce: A business tool A second theme is that electric commerce (e-commerce) has become a vital STRATEGIC - MANAGEMENT tool. An increasing number of companies are gaining competitive advantage by using the Internet for direct selling and for communication with suppliers, customers, creditors, partners, shareholders, clients, and competitors who may be dispersed globally. E-commerce allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, eliminate paperwork, and share information.

9 In total, electronic commerce is minimizing the expense and cumbersomeness of time, distance and space in doing business, which yields better customer service, greater efficiency, improved products and higher profitability. The Internet and personal computers are changing the way we organize our lives; inhabit our homes; and relate to and interact with family, friends, neighbors, and even ourselves. The Internet promotes endless comparison shopping which enables consumers worldwide to band together to demand discounts. The Internet has transferred power from businesses to individuals so swiftly that in another decade there may be "regulations" imposed on groups of consumers.

10 Politicians may one day debate the need for "regulation on consumers" rather than "regulation on big business" because of the Internet's empowerment of individuals. Buyers used to face big obstacles to getting the best price and service, such as limited time and data to compare, but now consumers can quickly scan hundreds of vendors offerings. Or they can go to Web sites such as that offers detailed information on more than 100,000 consumer products. The Internet has changed the very nature and core of buying and selling in nearly all industries. It has fundamentally changed the economics of business in every single industry worldwide Earth environment has become a major STRATEGIC issue A third theme is that the natural environment has become an important STRATEGIC issue.