Business Policies

Chapter 1 Strategic management : is that set of managerial decisions and actions that determines the long run performance of a corporation. Phases of strategic management: 1) Basic Financial Planning. 2) Forecast based planning. 3) Externally oriented strategic) planning. !) "trategic management. Benefits of Strategic Management: #learer sense of strategic $ision for the firm. "harper focus on %hat is strategically important. &mpro$ed understanding of a rapidly changing en$ironment.

Globalization: the internationali'ation of mar(ets and corporation. spreading of business.) International: 2 or more countries are in$ol$ed in the trade. NAF A: North American Free ra!e Agreement "#: "uropean union CAF A: Central American Free ra!e Agreement "lectronic Commerce: the use of the &nternet to conduct business transactions. heories of $rganizational A!aption: Population ecology. &nstitution theory. "trategic #hoice Perspecti$e. )rgani'ational *earning +heory.

%earning $rganizations are s&ille! at four main acti'ities: 1. "ol$ing Problems systematically. 2. Experimenting %ith ne% approaches.

3. *earning from their o%n experiences and past history as %ell from experiences of others. !. +ransferring (no%ledge ,uic(ly and efficiently throughout the organi'ation.

Basic mo!el $f Strategic Management : 1. En$ironmental scanning 2. "trategy Formulation. 3. "trategy &mplementation. !. E$aluation and control. S($ : is an acronym used to describe the particular strengths- %ea(nessesopportunities- and threats that are strategic factors for a specific company. ")ternal en'ironment: consists of $ariables opportunities and threats) that are used outside the organi'ation and not typically %ithin the short run control of top management. Internal en'ironment: : consists of $ariables "trength and %ea(nesses) that are %ithin the organi'ation itself and are not usually %ithin the short run control of top management. Strateg* Formulation: is the de$elopment of long.range plans for the effecti$e management of en$ironmental opportunities and threats- in light of corporate strengths and %ea(nesses "/)+). Mission: is the purpose or reason for the organi'ation0s existence. $b+ecti'es: the end result of planned acti$ity. Goal: an open ended statement of %hat one %ants to accomplish- %ith no ,uantification of %hat is to be achie$ed and no time criteria for completion. *pes of Strategies: #orporate strategy. Business strategy. Functional strategy.

Strateg* Implementation: is a process by %hich strategies and policies are put into actions through the de$elopment of programs- budgets- and procedures. Strategic ,ecision Ma&ing: Strategic !ecision deal %ith the long.run future of an entire organi'ation and ha$e three characteristics1

1. 2are 2. #onse,uential. 3. 3irecti$e. Mintzberg-s Mo!es of strategic ,ecision Ma&ing: Entrepreneurial 4ode. 5dapti$e 4ode. Planning 4ode. *ogical &nstrumentalism. Chapter . Corporation: is a mechanism established to allo% different parties to contributes capital- expertise- and labor for their mutual benefit. Corporate go'ernance: the relationship among these three groups in determining the direction and performance of the corporation. Boar! of !irectors responsibilities: 1. "etting corporate strategy- o$erall direction- mission- or $ision. 2. 6iring and firing the #E) and top management. 3. #ontrolling- monitoring- or super$ising top management. !. 2e$ie%ing and appro$ing the use of resources. 7. #aring for shareholder interests. /ole of the boar! in strategic management: 4onitor. E$aluate and influence. &nitiate and determine.

Figure .01 Page 12 Members of a Boar! of ,irectors: 1. Insi!e 3Management4 ,irector*: are typically officers or executi$es employed by the corporation. 2. $utsi!e 3Non Management4 ,irector*: may be executi$es of other firms but are not employees of the board0s corporation.

Ste5ar!ship heor*: because of their long tenure %ith corporation- insiders tend to identify %ith the corporation and its success. $rganization of the Boar!: the si'e of a board is determined by the corporation0s charter and its byla%s- in compliance %ith state la%s.