STRATEGIC MANAGEMENT

OVERVIEW
What is Strategy?
 An action a company takes to attain superior performance.

What is Strategic Management Process?

 The process by which managers choose a set of strategies for
the enterprise to pursue its vision.
 A Company’s Strategy is
Partly Planned and Partly Reactive

Company
Experiences,
Know-how,
Resource
Actual
Strengths and Company
Weaknesses, Strategy
and
Competitive
Capabilities
 Factors Shaping the Choice of
Company Strategy
Social, Competitive Company
political, conditions opportunities
regulatory and and industry and threats to
community attractiveness company’s  External Factors
factors well-being

Determine
relevance Identify
Craft
of internal and
COMPANY’S STRATEGIC SITUATION the
and evaluate
strategy
external alternatives
factors
Resource
Shared
strengths, Influences of
values and
 Internal Factors
capabilities, key
and company
executives
weaknesses culture
Strategy as an Emergent Process

 Strategy-making in an unpredictable world

– Creates the necessity for flexible strategic approaches.

 Strategy-making by lower-level managers

– Strategy evolves through autonomous action.

 Serendipity and strategy

– Accidental discoveries and happenstances can have dramatic effects on
strategic direction.

 Intended and emergent strategies

– Realized strategies are combinations of intended and emergent strategies
 Why do Strategies Evolve?

 A company’s strategy is a work in progress

 Changes may be necessary to react to

– Shifting market conditions
– Technological breakthroughs
– Fresh moves of competitors
– Evolving customer preferences
– Emerging market opportunities
– New ideas to improve strategy
– Crisis situations
STRATEGIC MANAGEMENT

 Set of decisions and actions that result to the formulation and

implementation of plans designed to achieve a company’s
objectives

 Study of why and how some firms outperform others

 • Strategy formulation activities enhance the firm’s ability to prevent problems.

• Group-based strategic decisions are likely to be drawn from the best available
alternatives.

• The involvement of employees in strategy formulation improves their

understanding of the productivity-reward relationship in every strategic plan
and, thus, heightens their motivation.

• Gaps and overlaps in activities among individuals and groups are reduced as
participation in strategy formulation clarifies differences in roles.

• Resistance to change is reduced.

R • The time that managers spend on the strategic management process may
have a negative impact on operational responsibilities.
I
• If the formulators of strategy are not intimately involved in its implementation,
S they may shirk their individual responsibility for the decision reached.
K • Strategic managers must be trained to anticipate and respond to the
S disappointment of participating subordinates over unattained expectations.
 Key Attributes of
STRATEGIC MANAGEMENT

 Directs the organization toward overall goals and objectives

 Includes multiple stakeholders in decision making

 Needs to incorporate short-term and long-term perspectives

 Recognizes trade-offs between efficiency and effectiveness

 Formality in
STRATEGIC MANAGEMENT
FORMALITY
– The degree to which participation, responsibility, authority, and
discretion in decision-making are specified in strategic management.
 Entrepreneurial Mode
– The informal, intuitive, and limited approach to strategic management
associated with owner-managers of smaller firms.
 Planning Mode
– The strategic formality associated with large firms that operate under a
comprehensive, formal planning system.
 Adaptive Mode
– The strategic formality associated with medium-sized firms that
emphasize the incremental modification of existing competitive
approaches.
 Critical Tasks of
Strategic Management
 Formulate the company’s mission
 Conduct internal analysis
 Assess the company’s external environment
 Analyze company’s options
 Identify most desirable option/s
 Select long-term objectives and grand strategies
 Develop annual objectives and short-term strategies
 Implement the strategic choices
 Evaluate success of the strategic process
Dimensions of Strategic Decisions

STRATEGIC ISSUES
 require top-management decisions
 require large amounts of the firm’s resources
 often affect the firm’s long-term prosperity
 are future oriented
 usually have multifunctional or multi-business consequences
 require considering the firm’s external environment
Develop
• •Formulate • Monitor,
Vision and Strategy to Evaluate, and
Mission Achieve Goals Take
& Objectives Corrective
Action
Revise as Needed
Recycle as Needed
Improve/Change

Improve/Change
Revise as Needed

Set Goals &

• • Implement
Objectives and Execute
Strategy
Develop Mission and Vision

MISSION

 This is the fundamental purpose that sets a firm apart from other
firms of its type and identifies the scope of its operations in product
and market terms.

 It sets out why the organization exists and what it should be doing.

 It broadly outlines the organization’s future course and serves to

communicate “who we are, what we do, and where we’re
headed”
Develop Mission and Vision

VISION

 This is a general statement of the organization’s intended direction

that evokes emotional feelings in organization members.

 It describes the route a company intends to take in developing and

strengthening
 Linking the Vision
with Company Values

 Companies often develop a statement of values to guide a

company’s pursuit of its vision and strategy and paint the white lines
for how the company’s business is to be conducted

 Values statements remain a bunch of nice words until the espoused

beliefs, traits, and behaviors are incorporated into company’s
operations and work practices and are used as the benchmark for
job appraisal, promotions, and rewards.
STRATEGIC MANAGEMENT PROCESS

Feedback / Learning
ENVIRONMENTAL SCANNING

External:
 Societal, Technological, economic, regulatory, competitive
environment- PEST analysis ETOP analysis
 Industry Analysis- Porter’s Model, Strategic groups

Internal:
 Organizational Capability analysis- SWOT, TOWS matrix, Value Chain
analysis Organization Structure
 Culture (Belief, expectation, Values)
 Resources (Assets, skills, competencies, knowledge)
STRATEGY FORMULATION
MISSION
Reason for
existence
OBJECTIVES
What to accomplish

STRATEGIES
Plan to achieve
the mission &
objective
POLICIES
Broad guidelines for
decision making

Development of long range plans for effective management of environmental

opportunities and threats in the light of corporate strengths and weaknesses.
STRATEGY IMPLEMENTATION
PROGRAMS
Activities needed to
accomplish a plan

BUDGETS
Cost of the program

PROCEDURES
Sequence of steps
needed to do the job

EVALUATION AND CONTROL

 Process of monitoring performance and taking corrective action
 Diversified
3 COMPANY-LEVELS OF STRATEGY
1. Corporate-Level Strategy
 Growth of business as a whole
Corporate-Level Strategy

2. Business-Level Strategy
Business-Level Strategy
 Division/business unit/product level

3. Functional-Level Strategy Functional-Level Strategy

 support corporate & business level

strategy
STRATEGIC CHOICES
Understanding the bases for future strategy at both corporate and business
unit levels and the options open for developing strategy in terms of both
 Corporate level – Highest level and is concerned with the scope of an
organization’s strategies and the adding of value through its relationship
with the separate parts of the business and the synergies created between
these parts

 Business level – The competitive advantage that is created from the

understanding of both markets and customers based on specific
competences

 Directions and methods – How an organization develops in terms of

feasibility and acceptability
STRATEGY INTO ACTION
This is where strategies are working in practice;

 Structuring – structure in terms of processes, boundaries and

relations and their interactions

 Enabling – Creation of support mechanisms in the organization in

order to support strategy implementation and development

 Change – Creating an environment that facilitates change

throughout the organization