Chapter 1
The Strategic
Management Process
by Robert Pitts
& David Lei
Slides prepared by
John P. Orr
Cameron University
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-1
What you will learn…
Slide 1 of 2
• The importance of strategy and
why it matters to organizations
• The key roles of vision, mission,
and goals in shaping an
organization’s future
• The four stages of the strategic
management process
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-2
What you will learn…
Slide 2 of 2
• The concept of a SWOT analysis
• The concepts of corporate and
business strategies
• The central role of ethics in
strategy
• The different stakeholders of an
organization
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-3
Basic Strategy Concepts
• Distinctive Competence
The special skills, capabilities, or
resources that enable a firm to stand
out from its competition
• Terrain
The environment (or industry) in which
competition occurs
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-4
Exhibit 1-1: Military Strategy
Internal
External
Special
Battle
capabilities
Match
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
terrain
Slide 1-5
Corporate Variety in Fast Foods
• McDonald’s
Hamburgers
• Brinker International
Gourmet hamburgers and
similar cuisines
• Tricon Global Restaurants
Non-hamburger cuisines
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-6
Exhibit 1-2: Business Strategy
Internal
External
Strength
Opportunity
Apply, sustain
Discover
Strategy
Overcome
Weakness
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Avert
Threat
Slide 1-7
Charting a Direction
• Vision – What a firm wants to be
• Mission – Describes the organization
in terms of the:
– Business it is in
– Customers it serves
– Skills it intends to develop to fulfill its
vision
• Goals and Objectives – Results to be
achieved within a specific time period
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-8
Strategic Management Process
• Analysis
• Formulation
• Implementation
• Adjustment/
Evaluation
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-9
Exhibit 1-3:
The Strategic Management Process
Analysis
External environment
Opportunities, Threats
Internal environment
Strengths, Weaknesses
Mission
Customers to be served
Competencies to be
developed
Policies
Goals, guidelines for
major activities
Formulation
Implementation
Organization structure,
systems, culture, etc.
Adjustment/
Evaluation
(Cycle to earlier steps)
Copyright
Copyright
©2003
(c)by
2003
South-Western,
by South-Western,
a division
a division
of Thomson
of Thomson
Learning.
Learning.
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All reserved.
rights reserved.
1-10
Slide 18
Ex. 1-4: Multibusiness Enterprise
Corporate Managers
Chairman, Pres.,
Exec. VPs
Business Managers
Business #1
Business #2
Business #3
Research and
Development
Manufacturing/
Operations
Marketing
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-11
Exhibit 1-5:
Different Strategic Imperatives
Internal
Strength
External
(1) Apply or Extend Advantage/Strength/Opportunity)
Weakness
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Opportunity
Threat
Slide 1-12
Characteristics
of Strategic Decisions
• Large financial outlay
• Long-term impact
• Controversial nature
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-13
Who Are Strategic Managers?
• Business Managers
Manage and operate a
single line of business
• Corporate Managers
Oversee and manage a
portfolio of businesses
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-14
Key Stakeholders
Shareholders
Organization
Employees
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-15
Difficulties in Dealing
With Stakeholders
• Legal Obligations
• Societal Expectations
• Personal Standards
Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved.
Slide 1-16