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1
Strategic
Management
Creating Competitive
Advantages
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
TRANSPARENCY-2
Learning Objectives
After studying this chapter, you should have a
good understanding of:
• The definition of strategic management and its four key
attributes
• The strategic management process and its three
interrelated and principal activities
• The vital role of corporate governance and stakeholder
management as well as how “symbiosis” can be
achieved among an organization’s stakeholders
• The key environmental forces that are creating more
unpredictable change and requiring greater
empowerment throughout the organization
• How an awareness of a hierarchy of strategic goals can
help an organization achieve coherence in its strategic
direction
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
TRANSPARENCY-3
Exhibit 1.1
Strategic Management Concepts
Definition: “Strategic management consists of the analysis,
decisions, and actions an organization undertakes in order
to create and sustain competitive advantages.”
Key Attributes of Strategic Management:
 Directs the organization toward overall goals and
objectives.
 Involves the inclusion of multiple stakeholders in decision
making.
 Needs to incorporate short-term and long-term
perspectives.
 Recognizes tradeoffs between efficiency and
effectiveness.
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
TRANSPARENCY-4
Exhibit 1.2
Realized Strategy and Intended
Strategy: Usually Not the Same
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
TRANSPARENCY-5
Exhibit 1.3
The Strategic Management Process
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
TRANSPARENCY-6
Exhibit 1.4
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
The Key Elements
of Corporate Governance
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
TRANSPARENCY-7
Exhibit 1.5
Brainpower Weighs In
PRICE
PRODUCT
Pentium III 800MHz microprocessor
WEIGHT
in pounds
PRICE per
pound
$851.00
0.01984
$42,893.00
$8.00
0.00068
$11,766.00
Gold (ounce)
$301.70
0.0625
$4,827.20
Hermès scarf
$275.00
0.14
$1,964.29
Palm V
$449.00
0.26
$1,726.92
$34.99
0.04
$874.75
$4.00
0.04
$100.00
$19.99
0.49
$40.80
$78,445.00
4,134.00
$18.98
$40.00
2.99
$13.38
$17,770.00
2,630.00
$6.76
$370.00
2,000.00
$0.19
Viagra (tablet)
Saving Private Ryan on DVD
Cigarettes (20)
Who Moved My Cheese? by Spencer Johnson
Mercedes-Benz E-class four-door sedan
The Competitive Advantage of Nations by Michael Porter
Chevrolet Cavalier four-door sedan
Hot-rolled steel (ton)
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Source: Colvin, G. 2000. We’re worth our weight in Pentium Chips. Fortune, March 20: 68.
Chapter 1
TRANSPARENCY-8
Exhibit 1.6
Comparing Wellpoint Health
Network’s Vision and Mission
Vision
WELLPOINT will redefine our industry:
Through a new generation of consumer-friendly
products that put individuals back in control of their
future.
Mission
The WELLPOINT companies provide health security by
offering a choice of quality branded health and related
financial services designed to meet the changing
expectations of individuals, families and their sponsors
throughout a lifelong relationship.
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1
Source: Company Records
TRANSPARENCY-9
Exhibit 1.7
STRATEGIC MANAGEMENT
McGraw-Hill/Irwin
Strategic Objectives
Gregory G. Dess, G. T. Lumpkin and Marilyn L. Taylor
Chapter 1