Chapter 1 - The Strategic management process

Chapter 1 - The Strategic management process - I ntr oducti...

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I ntroduction to Strategic Management
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What is strategy NOT????
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Strategy isn’t… Mintzberg - Planning Analysis and calculation Prediction Detachment Formalization Porter – Operational Effectiveness Imitation Competitive Convergence
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So then what Strategy?
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Strategy is… The creation of a unique and valuable positioning involving a different set of activities. Making trade-offs in competing Creating fit among a company’s activities.
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What are the 3 kinds of strategic positioning? Variety-based positioning Needs-based positioning Access-based positioning
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What is straddling?
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What is meant by fit? First-order fit – simple consistency between activities (functions) Second-order fit – activities that are reinforcing Third-order fit – customization of effort
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What is the growth trap?
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What is the role of leadership? General management is more than the stewardship of individual functions. Its core is strategy: defining and communicating the company’s unique position, making trade-offs, and forging fit among activities.
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Who are some great strategic leaders… what makes them great? 1- 11
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Strategic Management What is the main goal of strategic management?
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Strategic Management “Maximizing shareholder value is the ultimate goal of profit making companies…”
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Shareholder Value What is shareholder value? Shareholder Value – The returns that shareholders earn from purchasing shares in a company. What drives shareholder value?
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Shareholder Value Profitability (ROI C): (net profit)/(invested capital + debt) Measures how efficiently companies are utilizing their invested capital Profit Growth – The increase in net profit (net income – taxes)
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Determinants of Shareholder Value To increase shareholder value, managers must To increase shareholder value, managers must pursue strategies that increase the profitability of the pursue strategies that increase the profitability of the company company and and grow the profits. grow the profits.
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Strategic Management How do firms achieve sustainable profit growth?
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Competitive Advantage Firms must achieve a sustainable competitive advantage, which results when a company’s strategies lead to superior performance compared to competitors over time. Examples of companies with a sustainable competitive advantage?
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Levels of Strategic Management What are the differences between corporate level managers, business level managers, and functional managers?
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Strategic Managers Corporate-Level Managers Oversee development of strategies for whole organization
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