Professional Documents
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STRATEGIC MANAGEMENT
Lecturer : Ms Seow Ai Na
Office Room No.: H269
Consultation Hours :
Monday 2.00 – 4.00 pm
Thursday 3.00 – 5.00 pm
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May 2019 Semester
Main Text Book
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UBMM3013 Strategic Management
Lecture 1
Introduction to Strategic Management
Refer Pearce II & Robinson (Chapter 1)
Learning Objectives
1. Explain the concept of strategic management
2. Describe how strategic decisions differ from other decisions
that managers make
3. Name the benefits and risks of a participative approach to
strategic decision making
4. Understand the types of strategic decisions for which different
managers are responsible
5. Describe a comprehensive model of strategic decision making
6. Appreciate the importance of strategic management as a
process
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Discussion: Borders Group Inc.
• International book and music retailer
• 1300 stores 674 stores
• 35k employees 19500
• Feb 2011 declare bankrupt C11
• Why? Cause by
- slow in reacting to the trend of e-retailing
- did not set up its own internet sales
- competition with other book retailers
(e.g. Barnes & Noble)
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THE NATURE AND VALUE OF STRATEGIC
MANAGEMENT
Definition
• Strategic management:
The set of decisions and actions that
result in the formulation and
implementation of plans designed to
achieve a company’s objectives
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Nine Critical Tasks of Strategic Management --
Tasks 1-5:
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Characteristics of Strategic Decisions:
Corporate
• Often carry greater risk, cost, and profit
potential
• Greater need for flexibility
• Longer time horizons
• Choice of businesses, dividend policies,
sources of long-term financing, and priorities
for growth
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Characteristics of Strategic Decisions:
Functional
• Implement the overall strategy formulated at
the corporate and business levels
• Involve action-oriented operational issues
• Relatively short range and low risk
• Modest costs: depend upon available resources
• Relatively concrete and quantifiable
• Common functional-level decisions: high versus
low inventory levels, close versus loose
supervision etc.
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Characteristics of Strategic Decisions:
Business/SBU
• Help bridge decisions at the corporate and
functional levels
• Less costly, risky, and potentially profitable
than corporate-level decisions
• More costly, risky, and potentially profitable
than functional-level decisions
• Include decisions on plant location, marketing
segmentation, and distribution
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Formality in Strategic Management
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Forces Determining Formality
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Three Modes of Formality
• Entrepreneurial Mode
- Associated with owner-managers of smaller firms.
- Basically under the control of a single individual
- Produce a limited number of products or services
- informal, intuitive, limited approach to strategic management
• Planning Mode
– most large firms
- comprehensive, formal planning system
• Adaptive Mode
– most medium size firms
- emphasize on the incremental modification of existing
competitive approaches (the identification and evaluation of
alternative strategies are closely related to existing strategy) 26
Strategy Makers
• Ideal strategic team includes decision
makers from all 3 levels.
• Because strategic decisions have at
tremendous impact on a company and
require large commitments of company
resources, top managers must give final
approval for strategic action.
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Strategy Makers: The CEO
A firm’s CEO plays a dominant role in
strategic planning
The CEO’s principal duty is giving long-
term direction to the firm
The CEO bears ultimate responsibility for
the firm’s success and strategic success
CEOs are typically strong-willed, company-
oriented individuals
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Benefits of Strategic Management
• Financial benefits: e.g. improve profit & sales, long-term
financial performance
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Components of the Strategic Management Model
(context)
• Company Mission • Internal Analysis
• External Analysis • Strategic Analysis &
Choice
• Long-Term Objectives
• Generic & Grand
• Short-Term Objectives Strategies
• Policies Empowering • Action Plans &
Action Functional Tactics
• Strategic Control & • Organizational Structure,
Continuous Leadership & Culture
Improvement (Restructuring, Reengineering &
Refocusing)
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Components of Strategic Management Model
• Company mission
The company’s mission describes the company’s
product, market, and technological areas of emphasis
in a way that reflects the values and priorities of the
company.
• Internal analysis
The company analyzes the quantity and quality of the
company’s financial, human, and physical resources
etc.
It also assesses the strengths and weaknesses of the
company’s management and organizational structure. 34
Components of Strategic Management Model
• External Environment
A firm’s external environment consists of all the
conditions and forces that affect its strategic
options and define its competitive situation.
• Long-term objectives
The results an organization seeks over a
multiyear period are its long-term
objectives, such as profitability, return on
investment, competitive position,
technological leadership, productivity, etc.
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Components of Strategic Management Model
• Generic & grand strategies
Many businesses explicitly and implicitly adopt
one or more generic strategies (e.g. low cost,
differentiation, or focus) characterizing their
competitive orientation in the marketplace
Grand strategies: Long term strategies, the
means by which objectives can be achieved
• Short-term Objectives
Desired results that provide specific guidance for
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action during a period of one year or less.
Components of Strategic Management Model
• Functional Tactics & Action Plans
Functional Tactics: Short-term, narrow scoped
plans that detail the “means” or activities that a
company will use to achieve short-term objectives.
• Policies
Predetermined decisions that substitute for
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managerial discretion in repetitive decision making.
Components of Strategic Management Model
• Organisational Structure, Leadership & Culture