All you need to know about strategic management

1. Strategic
Management

2. Strategies
• Strategy: it is from Greek word which means “ art of
troop leader”, office of general, command, generalship.
• It is a high level plan to achieve one or more goals under
conditions of uncertainty.
• Strategy helps to find out a best way to achieve goals
with in the limited resources
• Strategy generally involves setting goals, determining
actions to achieve the goals, and mobilizing resources to
execute the actions.
• A strategy describes how the ends (goals) will be
achieved by the means (resources).
• Generally strategies are determined by a senior
leadership in the organization.
• Strategy can be intended or can emerge as a pattern of
activity as the organization adapts to its environment or
competes.

3. Definitions
• Strategy is method or plan chosen to bring
about a desired future, such as achievement of
a goal or solution to a problem.
• The Strategy is the art
and science of planning and
marshalling resources for their most efficient
and effective use.
• A strategy is a means by which long-term
objectives are achieved

4. Components Strategies
• Diagnosis
• Guiding policy
• Action plan

5. Strategies process
• Strategy typically involves two major
processes: formulation and implementation.
• Formulation involves analyzing the environment
or situation, making the diagnosis, and
developing the guiding policy. It includes such
activities as Strategic planning and Strategic
thinking.
• Implementation refers to the action plans taken
to achieve the goals established by the guiding
policy

6. Factors include in strategies
• Bruce Henderson wrote in 1981 that "Strategy depends upon
the ability to foresee future consequences of present
initiatives.“
• He wrote strategy development include, among other factors:
1) extensive knowledge about the environment, market and
competitors;
• 2) ability to examine this knowledge as an interactive dynamic
system; and
• 3) the imagination and logic to choose between specific
alternatives.
• Henderson wrote that strategy was valuable because of:
"finite resources, uncertainty about an adversary's capability
and intentions; the irreversible commitment of resources;
necessity of coordinating action over time and distance;
uncertainty about control of the initiative; and the nature of
adversaries' mutual perceptions of each other."

7. Military Theory
• In military theory, strategy is "the utilization
during both peace and war, of all of the nation's
forces, through large scale, long-range planning
and development, to ensure security and
victory" (Random House Dictionary).
• military strategy as "the employment of battles
to gain the end of war.”
• strategy as "the art of distributing and applying
military means to fulfill the ends of policy”
• Eastern military philosophy dates back much
further, with examples such as the The Art of
War by Sun Tzu dated around 500 B.C

8. Management Theory
• Modern business strategy emerged as a field of study and practice in
the 1960s; prior to that time, the words "strategy" and "competition"
rarely appeared in the most prominent management literature.[
• Alfred Chandler wrote in 1962 that: "Strategy is the determination of
the basic long-term goals of an enterprise, and the adoption of courses
of action and the allocation of resources necessary for carrying out
these goals.
• Michael Porter defined strategy in 1980 as the "...broad formula for
how a business is going to compete, what its goals should be, and what
policies will be needed to carry out those goals”
• Henry Mintzberg described five definitions of strategy in 1998:
• Strategy as plan –
• Strategy as pattern –
• Strategy as position -
• Strategy as ploy –
• Strategy as perspective –

9. types of strategies
• Geographic expansion
• Diversification
• Differentiation
• Acquisition
• Product development
• Market penetration
• Retrenchment
• Liquidation
• Joint venture

10. Strategic Management
• Strategic management can be defined as the art and
science of formulating, implementing, and evaluating
cross-functional decisions that enable an organization to
achieve its objectives.
• Strategic management focuses on integrating
management, marketing, finance/accounting,
production/operations, research and development, and
computer information system to achieve organizational
success.
• The purpose of strategic management is to exploit and
create new and different opportunities for tomorrow;
long range planning,
• Strategic management, is defined as the set of decisions
and actions that result in the formulation and
implementation of plans designed to achieve a
company’s objectives.

11. Strategic Management
• The systematic analysis of factors associated with
customers and competitors ( the external
environment)and the organization itself(internal
environment) to provide the basis for maintaining
optimum management practices.
• Strategic management is the set of decisions and
actions that results in the formulation and
implementation of plans designed to achieve a
company’s objectives.
• Strategic management is the continuous process of
creating, implementing and evaluating decisions
that enable an organization to achieve its
objectives.

12. Strategic Management Definitions
• Strategic management is the process of managing the pursuit
of organizational mission while managing the relationship of
the organization to its environment (James M. Higgins).
• Strategic management is defined as the set of decisions and
actions resulting in the formulation and implementation of
strategies designed to achieve the objectives of the
organization (John A. Pearce II and Richard B. Robinson, Jr.).
• Strategic management is the process of examining both
present and future environments, formulating the
organization's objectives, and making, implementing, and
controlling decisions focused on achieving these objectives in
the present and future environments(Garry D. Smith, Danny R.
Arnold, Bobby G. Bizzell).
• Strategic management is a continuous process that involves
attempts to match or fit the organization with its changing
environment in the most advantageous way possible (Lester A.
Digman).

13. Strategic management tasks
• Formulate the company’s mission, including board
statements about its purpose, philosophy and goals
• Conduct an analysis that reflects the company’s
internal conditions and capabilities
• Assess the company’s external environment,
including both the competitive and general
contextual factors
• Analyze the company’s options with matching its
resources with the external environment.
• Identify the most desirable options by evaluating
each option in light of company mission
• Select a set of long-term objectives and grand
strategies that will achieve the most desirable
options.

14. Strategic management tasks
• Develop annual objectives and short-term
strategies that are compatible with the selected
set of long-term objectives and grand strategies.
• Implement the strategies choices by means of
budgeted resource allocations in which the
matching of task, people, structure, technologies
and reward system is emphasized.
• Evaluate the success of strategic process as an
input for future decision making.

15. Importance of Strategic
Management
• Proactive in shaping firm’s future
•Improved understanding of competitors strategies
• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities
• Initiate and influence firm’s activities
• Formulate better strategies
•Systematic, logical, rational

16. Importance of Strategic
Management
• Identification of Opportunities
• Objective view of management problems
• Improved coordination & control
• Minimizes adverse conditions & changes
• Decisions that better support objectives

17. Copyright 2007 Prentice Hall Ch 1 -17
Importance of Strategic
Management cont’d
• Effective allocation of time & resources
• Internal communication among personnel
• Integration of individual behaviors
• Clarify individual responsibilities
 Encourage forward thinking
 Encourage favorable attitude toward change
 Provides discipline and formality to the
management of the business.

18. Stages of Strategic management
• The strategic management process represents a
logical, systematic, and objective approach for
determining an enterprise's future direction.
• However, a clear separation is needed between
the managerial process by which an organization
formulates, evaluates, implements, and controls
the relationships between its objectives, its
strategies, and its environment.
• Researchers usually distinguish three stages in
the process of strategic management: strategy
formulation, strategy implementation,
and evaluation and control.

19. Strategy Formulation
• Strategy formulation is the process of
establishing the organization's mission,
objectives, and choosing among alternative
strategies. Sometimes strategy formulation is
called "strategic planning."

20. Vision & Mission
Strategy Formulation
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

21. Strategy Implementation
• It means mobilizing employees and managers to put
formulated strategy into actions. It is action stage
• It includes developing a strategy supportive culture,
redirecting marketing efforts, developing and
utilizing information system, linking employee
incentives to organizational performance
• The basic strategy - implementation activities are
establishing annual objectives, devising policies, and
allocated resources.
• Strategy implementation also includes the making
of decisions with regard to matching strategy and
organizational structure; developing budgets, and
motivational systems

22. Strategy Implementation…
• Often consider it is most difficult stage of SM
• It requires personal discipline, commitment, and
sacrifice.
• For successful implementation employee needs lots
of motivation from the managers which is more an
art than a science.
• Every department and division must decide to
answers questions such as what most we do to
implement strategy? How best can we get job
done?
• Challenge of implementation is to stimulate
managers and employees throughout an
organization to work with pride and enthusiasm to
wards stated objectives.

23. Strategy Implementation
Establish Annual Objectives
Devise Policies
Employee Motivation
Resource Allocation

24. Strategy Evaluation
• It is a final stage of strategic management
• Managers need to know when particular
strategies not working
• All strategies are subject to further modification
because external and internal factors are
constantly changing.
• Strategy evaluation is needed because success
today is not guarantee of success tomorrow.

25. Strategy Evaluation
Internal Review
External Review
Performance measuring
Corrective Actions

26. Strategy planning evolutions
• Strategic planning is an organization's process of
defining its strategy, or direction, and
making decisions on allocating its resources to
pursue this strategy.
• Strategic planning is a process undertaken by an
organization to develop a plan for achievement
of its overall long-term organizational goals.
• First strategy was used by army general Sun Tzu
in 500 BC.
• 1955 Peter Drucker

27. Evolution of Strategic Management
• Igor Ansoff
• Alfred Chandler wrote in 1962 that: "Strategy is the
determination of the basic long-term goals of an enterprise,
and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals.
• Michael Porter defined strategy in 1980 as the "...broad
formula for how a business is going to compete, what its goals
should be, and what policies will be needed to carry out those
goals”
• Henry Mintzberg described five definitions of strategy in 1998:
• Strategy as plan –
• Strategy as pattern –
• Strategy as position -
• Strategy as ploy –
• Strategy as perspective –

28. Vision Statement
• Strategic vision is a roadmap showing the route
the company intends to take in developing and
strengthening its business.
• It paints a picture of company’s future
destination and provides a rational for going
there.
• It gives a answers to
what do we want to become?

29. Mission
• Mission statement usually deals with a
company’s present business scope and its
purpose.
• It gives answers to three questions, Who we
are? What we do? Why we are here?
• A company mission is defined by buyer needs,
• it seek to satisfy to customer group and market
segment it Endeavour to serve,
• and resources and technology it is deploying in
trying to please its customers.

30. Mission
• The mission statement captures the essence of
an organization by identifying its purpose, what
it stands for and why it exists.
• It makes a bold statement to the public and
organizational members about the goals and
underlying philosophies of the organization
• The mission statement is a very personal and
deliberate declaration that symbolizes their
legitimacy to the world and what their desired
public image is

31. Mission
• The mission statement is one of the key
components of strategic planning in organizations.
• The importance of a mission statement is that it
communicates to the consumers and investors the
reason the company is selling their product.
• The mission statement is based on an analysis of
benefits sought by customers and a summary of
the business environmental conditions.
• It should summarize the entire reason a company
is in business, and what the purpose of the product
is in relationship to the consumer.

32. Long term objectives
• Objectives can be defined as specific results that an
organisation seeks to achieve in pursuing its basic
mission.
• Long-term means more than one year.
• Objectives are essential for organizational success
because they state directions; aid in evaluation; create
synergy; reveal priorities; focus coordination; and provide
a basis for effective planning, organizing, motivating, and
controlling activities.
• Objectives should be challenging, measurable, consistent,
reasonable, and clear.
• In a multidimensional firm, objectives should be
established for the overall company and for each division.

33. Levels of Strategy
3 Levels can be identified
- The decision-making hierarchy of a firm typically
contains three levels.
- At the top is the corporate level
• Composed principally of a board of directors
and the chief executive and administrative
officers.
- Here the emphasis is on stockholders
interests and the society at large.

34. - They determine what business a firm
should be involved.
- They also set objectives and formulate that
span the activities and functional areas of
the business.
- In the middle of the decision-making
hierarchy is the business level.
• Composed principally of business and
corporate managers
- These managers must translate the statements of
direction and intent generated at the corporate level
into concrete objectives and strategies for individual
business divisions or SBUs.
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35. - At the bottom of the decision-making
hierarchy is the functional level
• Composed principally of managers of product,
geographic and functional areas
- They develop annual objectives and short-term
strategies in such areas as production, operations
research and development, procurement, finance
and accounting, marketing, and human resources.
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36. Level of Strategy
• Strategy can be formulated in three levels
Corporate level
Business Level
Functional Level

37. Corporate Level Strategy
• It is organization wide overall strategy .It
provides long term direction and scope to the
organization. It aim to create higher share holder
value
• Current and future business
• Products to be offered and their scope
• Customers and market to be served
• Value to be added for competitive advantage
• Resource allocation to business unit
• Ways for environment adoptation

38. Corporate Level Strategy
• According to Johnson and Scholes “ Corporate
level strategy is concerned with the overall
purpose and scope of an organization and how
value will be added to the different part of the
organization”
• Corporate level strategy involves strategic
decisions. It is based on long term objectives of
the organization.

39. Business Level Strategy
• According to Johnson and Scholes” Business unit
strategy is about how to compete successfully in
particular market”
• Market development
• Product development
• Positioning
• Resource allocation
• Differentiation
Criteria for classification of SBU
Separate market segment, separate competitors,
separate manager, separate plan.

40. Functional Level Strategy
• It spells out specific strategies for each function.
It involves tactical decisions. It aims to create
higher customer value
• According to Johnson scholes” Operational
strategies are concerned with how the
component parts of an organization deliver
effectively the corporate and business level
strategies in term of recourse, process and
people”
• Function level strategies deals with
• Objectives, resource allocation and value
addition

41. Types of Functional Level Strategy
• Production strategies: focus on superior
efficiency
• Marketing strategies: focus on adding value for
customers
• Financial strategies: deals with mobilize, utilize
and distribution of financial resources
• Human resource management strategies: Focus
on competency, productivity and retention of
employees
• Resource and development strategies: it deals
with product innovation, modification and
imitation strategies.