Chapter 1 - Basic Concepts of Strategic Management
Chapter 1 - Basic Concepts of Strategic Management
Chapter 1 - Basic Concepts of Strategic Management
Environmental Sustainability
- The use of business practices to reduce
Impact of globalization company’s impact upon natural, physical
- The integrated internationalization of markets environment.
and corporation - Climate change is playing a growing role in
business decision.
Innovation-
- Describes new product, services, methods and
organizational apporoaches Effects of climate Change
- Is the implementation of potential innovations
that truly drives usiness to be remarkable 1. Regulatory Risk
Kyoto Protocol
- Requires the developed countries to reduce
carbon dioxide and other greenhouse gasses.
5. Reputational Risk
A company’s impact on the environment can THEORIES OF ORGANIZATIONAL
heavily affect its overall reputation ADAPTATION
a company with a good record of environmental
sustainability may create a competitive 1. Population Ecology
advantage in terms of attracting and keeping proposes that once an organization is
loyal consumers, employees, and investors successfully established in a particular
environmental niche, it is unable to adapt to
changing conditions. Inertia prevents the
organization from changing
in sociology, research fails to support the
6. Physical Risk arguments of population ecology.
The direct risk posed by climate change includes
the physical effects of drought, flood, storms and
rising sea levels 2. Institution Theory
, in contrast, proposes that organizations can and
PROJECTED EFFECTS OF CLIMATE CHANGE do adapt to changing conditions by imitating
other successful organizations
1. Temperature Increase
Global average warming of 0.2 degrees 3. Strategic Choice perspective
Long term warming with doubles dioxide goes one step further by proposing that not only
concentrations do organizations adapt to a changing
Fewer cold day sand nights environment, but they also have the opportunity
Increase frequency, intensity and duration of and power to reshape their environment
heat waves
4. Organizational Learning Theory
2. Sea Level Rise -an organization adjusts defensively to a
Sea level will continue to rise due to thermal changing environment and uses knowledge
expansion offensively to improve the fit between itself and
Sea level at 18 to 59 cm by the end of 21st its environment. This perspective expands the
century strategic choice perspective to include people at
all levels becoming involved in providing input
3. Precipitation and Humidity into strategic decisions.
Increase number of wet days in high latitudes
Annual precipitation in Northern Europe, CREATING A LEARNING ORGANIZATION
Canada, Northeastern US
Winter precipitation in Asia Learning organizations are skilled at four main
activities:
Dry spells increase
(S-E-L-T)
1. Solving problems systematically
4. Extreme weather related events
2. Experimenting with new approaches
Increasing intense tropical cyclone activity
3. Learning from their own experience and past history
Increasing frequency of floods as well as from the experiences of others
Increasing of risk of drought 4. Transferring knowledge quickly and efficiently.
Increasing of wildfires
BASIC MODEL OF STRATEGIC MANAGEMENT
(E-S-S-E)
5, Other related events
Decreasing snow season A. Environment scanning
Fewer cold days and nights b. Strategy formulation
Accelerated glacier loss c. Strategy Implementation
Reduction in and warming permafrost d. Evaluation and Control
1. Environments scanning is a process by which strategies and policies are
monitoring, evaluating and disseminating put into action through the development of
information from external to internal programs, budgets, and procedures
environments. sometimes referred operational budget
Its purpose is to identify strategic factors---
external and internal elements that will Programs
determine the future of corporation - a statement of the activities or steps needed to
simplest way is to conduct SWOT accomplish a single-use plan
SWOT -strategic factors of specific company - tactics- individual action
Internal environment- consist of environment Budgets
(S - a statement of a corporation’s programs in terms
trenght & Weakness) that are within the of dollars. Used in planning and control, a
organization itself and not in a short run control budget lists the detailed cost of each program
of the top management.
- Procedures
2. Strategy formulation - sometimes termed Standard Operating
is the development of long-range plans for the Procedures (SOP), are a system of sequential
effective management of environmental steps or techniques that describe in detail how a
opportunities and threats, in light of corporate particular task or job is to be do
strengths and weaknesses (SWOT). It includes
defining the corporate mission, specifying 4, Evaluation and control
achievable objectives, developing strategies, and is a process in which corporate activities and
setting policy guidelines performance results are monitored so that actual
Mission performance can be compared with desired
- reason for organization’s existence performance.
- it drives the company
Performance
Vision - is the end result of activities. It includes the
- describe what the organizations would like to actual outcomes of the strategic management
become process
Policies
- Broad guidelines for decision making that links
the formulation of a strategy with its
implementation.
3. Strategy implementation
“an interactive process in which the organization
probes the future, experiments and learns from a
series of partial (incremental) commitments
rather than through global formulations of total
strategies
1. Rare: Strategic decisions are unusual and typically 3. Scan and assess the external environment to
have no precedent to follow determine the strategic factors that pose Opportunities
2. Consequential: Strategic decisions commit substantial and Threats.
resources and demand a great deal of commitment from
people at all levels. 4. Scan and assess the internal corporate
3. Directive: Strategic decisions set precedents for lesser environment to determine the strategic factors that are
decisions and future actions throughout an organization. Strengths (especially core competencies) and
Weaknesses.
over years