gep asm session 1[1]
TRANSCRIPT
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Advanced St ra t eg i cM anagem en t
Prof Xiaobo WU
School of ManagementZhejiang [email protected]
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Without a strategy the
organization is like a ship without
a rudder, going around in circles.
Joel Ross and Michael Kami
Quote
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We may know that there are five essentials for
victory:
He will win who knows when to fight and when not to fight.
He will win who knows how to handle both superior andinterior forces
He will win who knows whose army is animated by the samespirit throughout all its ranks.
He will win who, prepared himself, waits to take the enemyunprepared.
He will win who has military capability and is not interferedwith by the sovereign.
----Sun Wu (The art of w ar)
The tradit ional thinking in China
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Cheshire Puss, she [Alice] began... would you please tell me which wayI ought to go from here?That depends on where you want to get to, said the cat.
Lewis Carroll
How can you lead if you dont know where you are going?George Newman
The Conference Board
My job is to make sure the company has a strategy and that everybodyfollows it.
Kenneth H. OlsenFormer CEO, Digital Equipment Corporation
A strategy is a commitment to undertake one set of actions rather thananother.
Sharon M. OsterProfessor, Yale University
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Course Schedule Overview
Session 1 The Nature of Strategic Management 8:30am 12:00pm, February 25
Session 2 Vision & Mission Statements 1:30pm 4:30pm, February 25
Session 3 The External Environment 8:30am 12:00pm, March 4
Session 4 The Internal Environment 1:30pm 4:30pm, March 4
Session 5 Business-Level Strategy 8:30am 12:00pm, March 10
Session 6 Corporate-Level Strategy 8:30am 12:00pm, March 18
Session 7 Strategy Analysis & Choice 8:30am 12:00pm, March 25
Session 8 Strategy Implementation 8:30am 12:00pm, April 1
Session 9 Strategy Review, Evaluation, & Control 8:30am 12:00pm, April 8
Session 10 Final Presentation & Course Conclusion 8:30am 12:00pm, April 15
Final Exam 8:30am 12:00pm, April 22
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Grading and Assessment Cri t eria
Presentation and report 40 Good collaboration among team members
Thorough and in-depth analysis
Clear, concise and convincing writing style (report)
Presentation skills (presentation)
Class participation 10 Presence in classes
Listening to the comments of others
Active in expressing constructive opinions in discussion
Final examination 50 Clear, concise and convincing writing style
Right understanding of concepts
Thorough and in-depth analysis of related questions, deploying relatedtheory
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Let s know each other
Where are you from?
Why you are here?
What would you do in 2020?
Suggested Readings
Books
M. A. Hitt, R. D. Ireland, and R. E. Hoskisson. Strategic Management:Competitiveness and Globalization, Concepts and Cases(8th Edition).South-Western College Pub. 2008
A. A. Thompson and A. J. Strickland. Strategic Management:
Concepts and Cases(12th Edition). The McGraw-Hill Companies, Inc.2008
D. Besanko, D. Remove, M. Shanley, and S. Schaefer. Economics ofStrategy(5th Edition). John Wiley & Sons, Inc. 2009
H. Mintzberg. Strategy Safari: The Complete Guide Through theWilds of Strategic Management(2nd Revised Edition). FT Press.2008
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Suggested Readings
M. E. Porter. Competitive Strategy: Techniques for AnalyzingIndustries and Competitors. Free Press. 1998
M. E. Porter. Competitive Advantage: Creating and SustainingSuperior Performance. Free Press. 1998
M. E. Porter. The Competitive Advantage of Nations. Free Press.1998
R. Burgelman, C. Christensen, and S. Wheelwright. StrategicManagement of Technology and Innovation(5th Edition). McGraw-Hill/Irwin. 2008
G. Hamel, C. K. Prahalad, H. Thomas, and D. ONeal. StrategicFlexibility: Managing in a Turbulent Environment. Wiley. 1999
A. Campbell and K. S. Luchs. Strategic Synergy(2nd Edition). IntlThomson Business Press. 1998
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Suggested Readings
Journals
Harvard Business Review
Strategic Management Journal
Sloan Management Review
California Management Review
Management Science
Journal of Management
Academy of Management Journal
RAND Journal of Economics
McKinsey Quarterly
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THE NATURE OF STRATEGI CMANAGEMENT
Session 1
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What is Strategic Management?
The Strategic-Management Model
Stages of Strategic Management
Key Terms in Strategic Management
Benefits of Strategic Management
Guidelines for Effective Strategic Management
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Outline
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The Evolution Of Strategic Management
1950s
Term strategic planning originates
1960s 1970s
Strategic planning very popular
Widely viewed as panacea for problems
1980s
Strategic planning cast aside
Planning models did not yield higher returns
1990s2000
Revival of strategic planning
Widely practiced in business world
Michael Poter s Talk
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What is St rat egic Management ?
Definition of strategic management
Strategic management can be defined as the art andscience of formulating, implementing, and evaluatingcross-functional decisions that enable an organizationto achieve its objectives.
The purpose of strategic management
The purpose of strategic management is to exploit
and create new and different opportunities fortomorrow; long-range planning, in contrast, tries tooptimize for tomorrow the trends of today.
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What is St rat egic Management ?
Integrating intuition and analysis indecision making
The strategic-management can be describedas an objective, logical, systematic approach
for making major decisions in an organization.
Yet intuitionis essential for making goodstrategic decisions, particularly for makingdecisions in situations of great uncertainty orlittle precedent.
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The Nature Of Strategic Management
Art and science of formulating, implementing,
and evaluating cross-functional decisions that
enable an organization to achieve its objectives..
As this definition implies, SM focuses on
integrating management, marketing,
finance/accounting, production/operations,research and development, and computerinformation systems to:
achieve organizational success.
A Local Case
The strategy of a private company inHangzhou, China
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The St rat egic-Management Model
A Comprehensive Strategic-Management Model
The framework is a widely accepted, comprehensivemodel of the strategic-management process.
The strategic-management process is dynamic andcontinuous.
The strategic-management process is not as cleanlydivided and neatly performed in practice as the
strategic-management model suggests.
Involvement and commitment from mangers andemployees is essential to successful strategic-management.
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A Comprehensive Strategic-Management Model
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DevelopVision and
MissionStatement(Session 2)
EstablishLong-Term
Objectives
(Session 5, 6)
Generate,Evaluate,
and SelectStrategies(Session 7)
ImplementStrategies
(Session 8)
Measureand Evaluate
Performance
(Session 9)
PerformExternalAudit
(Session 3)
PerformInternalAudit
(Session 4)
StrategyFormulation
StrategyImplementation
StrategyEvaluation
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Stages of St rategic Management
The process consists of three stages
Strategy formulation
Strategy formulation includes developing a visionand mission, identifying an organizations externalopportunities and threats, determining internalstrengths and weaknesses, establishing long-termobjectives, generating alternative strategies, and
choosingparticular strategiesto pursue
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StrategyFormulation
StrategyImplementation
StrategyEvaluation
Stages of St rategic Management
Strategy implementation
Strategy implementation requires a firm establishannual objectives, devisepolicies, motivateemployees, and allocate resourcesso thatformulated strategies can be executed.
Implementing strategy means mobilizingemployees and managers to put formulatedstrategies into action. Successful strategyimplementation hinges upon managers ability tomotivate employees, which is more an art than ascience.
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StrategyFormulation
StrategyImplementation
StrategyEvaluation
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Stages of St rategic Management
Strategy evaluation
Strategy evaluation is the final stage in strategicmanagement.
Three fundamental strategy-evaluation activities
reviewing external and internal factors that are the basesfor current strategies
measuring performance
taking corrective actions
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StrategyFormulation
StrategyImplementation
StrategyEvaluation
Adapt ing to Change
The only constant is change
In todays business environment, more than in anypreceding era, the only constant is change.
E-commerce
Globalization
Economic recession Merger mania
Manage change
Successful organizations effectively manage change.The strategists should continually monitor internaland external events and trends so that timelychanges can be made as needed.
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The emphasis of st rat egic management
The emphasis of strategic management should beput on the four basic, educational themes. First, the tasks of general management in leading the
overall enterprise, in contrast to the tasks of a specialistmanager
Second, the strategic management as a key functionand responsibility of the line general manager, not as astaff planning activity.
Third, the general managers ability to manage the
process by which an organization both formulates andimplements its strategy.
Finally, the responsibility of a general manager tomultiple constituencies with conflicting needs and goals,and the management of that organization so as toachieve both economic and social-ethical goals.
The Five Tasks Of Strategic Management
1. Developing a strategic vision and businessmission
A well-conceived strategic vision prepares a companyfor the future, establishes long-term direction, and
indicates the companys intent to stake out a particularbusiness position.
2. Setting objectives.
Objectives are yardsticks for tracking an organizationsperformance and progress.
Companies need both financial objectives and strategicobjectives.
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The Five Tasks Of Strategic Management
3. Crafting a strategy to achieve the desiredresults. An organizations strategy consists of the actions and
business approaches
Good strategy-making is more outside-in than inside-out
A companys strategy is dynamic, emerging in bits andpieces
A companys strategy is both proactive (intended) andreactive (adaptive).
The Five Tasks Of St rat egic Management
4. Implementing and executing the chosen strategyefficiently and effectively.
5. Evaluating performance, reviewing new developments,
and initiating corrective adjustments in long-term direction.
A companys mission, objectives, strategy, and approachto implementation are never final; evaluating performance,reviewing changes in the surrounding environment, andmaking adjustments are normal and necessary parts of thestrategic management process.
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Who Perform s The Five Tasks Of St rat egic Management :St rat egic Decision Makers
Modes Of Strategy Formulation
Entrepreneurial Mode.
Strategy is made by one powerful individual. The focus is onopportunities. Problems are secondary.
Strategy is guided by the founders own vision of direction and isexemplified by large, bold decisions.
Adaptive Mode.
Sometimes referred to as muddling through, this strategy-formulationmode is characterized by reactive solutions to existing problems, rather
than a proactive search for new opportunities. Planning Mode.
Analysts assume major responsibilities for strategy-formulation.Strategic planning includes both the proactive search for newopportunities and the reactive solution of existing problems. Systematiccomprehensive analysis is used for the development of strategies.
Corporat e Board Directors Cont inuum :
The degree of involvement in strategic management (fromlow passive to high active) is as follows: Phantom:
Never knows what to do, if anything; no degree of involvement.
Rubber Stamp: Permits officers to make all decisions. It votes as the officers
recommend on action issues.Minimal Review: Formally reviews selected issues that officers bring toits attention.
Nominal Participation: Involved to a limited degree in the performance or review of selected
key decisions, indicators, or programs of management.
Active Participation: Approves, questions, and makes final decisions on mission, strategy,
policies, and objectives. Has active board committees. Performs fiscaland management audits.
Catalyst: Takes the leading role in establishing and modifying the mission,
objectives, strategy, and policies. It has a very active strategycommittee.
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Top Management (1/ 2)
Top Management, especially the CEO (chief
executive officer), is responsible to the board ofdirectors for the overall management of the
corporation. It is tasked with getting thingsaccomplished through and with others, in order tomeet the corporate objectives.
All top managers are people who see the businessas a whole, who can balance the present needs ofthe business against the needs of the future, andwho can make final and effective decisions.
Top Management (2/ 2)
The CEO must successfully handle three
responsibilities crucial to the effective strategic
management of the corporation:
1. fulfill ten interrelated key roles
2. provide executive leadership
3. initiate and manage strategic planning process
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Key Term s in St rat egic Management
Competitiveadvantage
Strategists
External opportunitiesand threats
Long-term objectives
Annual objectives
Sustained competitiveadvantage
Vision and mission
Internal strengths andweaknesses
Strategies
Polices
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Key Term s in St rat egic Management
Competitive Advantage
Strategic management is all about gaining and
maintaining competitive advantage.
Competitive advantage can be defined as anything
that a firm does especially well compared to rival
firms. When a firm can do somethingthat rival firms
cannot do, or owns somethingthat rival firms desire,
that can represent a competitive advantage.
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Key Term s in St rat egic Management
Sustained Competitive Advantage
Normally, a firm can sustain a competitive advantagefor only a certain period due to rival firms imitatingand underminingthat advantage. Thus it is notadequate to simply obtain competitive advantage.
A firm must strive to achieve sustained competitiveadvantageby
(1) continually adapting to changesin external trends andevents and internal capabilities, competencies, and resources;
and by (2) effectively formulating, implementing, andevaluating strategies that capitalize upon those factors.
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Key Term s in St rat egic Management
Strategists
Strategists are the individuals who are mostresponsible for the success or failureof anorganization.
Strategists have various job titles, such as chiefexecutive officer, president, owner, chair of the board,executive director, chancellor, dean, or entrepreneur.
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Jak W elch Bill Gates Steve Paul Jobs LIU Chuanzhi REN Zhengfei
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Key Term s in St rat egic Management
Vision and Mission Statements
Vision statement answers the question, What do wewant to become? Developing a vision statement isthe first step in strategic planning.
Mission statements are enduring statements ofpurpose that distinguish one business from othersimilar firms. A mission statement identifies the scopeof a firms operations in product and market terms.It answers the question: What is our business?
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Key Term s in St rat egic Management
External Opportunities and Threats
External opportunities and external threats refer toeconomic, social, cultural, demographic,environmental, political, legal, governmental,technological, and competitive trends and events that
could significantly benefit or harman organization inthe future. They are largely beyond the control of asingle organization.
A basic tenet of strategic management is that firmsneed to formulate strategies to take advantage ofexternal opportunitiesand to avoid or reduce theexternal threats.
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Key Term s in St rat egic Management
Internal Strengths and Weaknesses
Internal strengths and internal weaknesses are an
organizations controllable activitiesthat are
performed especially well or poorly.
Organizations strive to pursue strategies that
capitalize internal strengths and eliminate internal
weaknesses.
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Key Term s in St rat egic Management
Long-Term Objectives
Objectives can be defined as specific resultsthat an organization seeks to achieve inpursuing its basic mission.
Long-term means more than one year.
Strategies
Strategies are the meansby which long-termobjectives will be achieved.
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Key Term s in St rat egic Management
Annual Objectives
Annual objectives are short-term milestonesthat organizations must achieve to reachlong-term objectives.
Policies
Policies are the meansby which annualobjectives will be achieved.
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Benefi t s of St rat egic Management
Control its own destiny
Strategic management allows an organization to bemore proactive than reactive in shaping its own future;it allows an organization to influence (rather than justrespond to) activitiesand thus to exert control overits own destiny.
Financial benefits
Organizations using strategic-management conceptsare generally more profitable and successful.
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Benefi t s of St rat egic Management
Other benefits
Enhanced awareness of external threats
Improved understanding of competitorsstrategies
Increased employee productivity
Reduced resistance to change
Clearer understanding of performance-rewardrelationships
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Guidelines for Eff ect ive St rat egicManagement
Some fundamental guidelines
Change comes through implementation andevaluation, not through the plan.
Keep the strategic-management process as simpleand non-routineas possible.
Strategic management must be self-reflective learningprocess.
Effective strategic management is open-mindedness.
Most organizations can afford topurse only a fewcorporate-level strategiesat any given time.
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Thanks