Strategic Management Introduction Kemal Birdir, Ph.D. Mersin University Turizm Faculty

Strategic Management Definition – Strategic management is a field of study that involves the process through which firms define their missions, visions, goals, and objectives, as well as craft and execute strategies at various levels of the firms’ hierarchies to createand sustain a competitive advantage. – strategic management framework (p. 5)

OVERALL AIMS OF STRATEGIC MANAGEMENT: CREATING A COMPETITIVE ADVANTAGE A firm is in business to create value for its stakeholders. Creating a competitive advantage, and subsequently sustaining it over a period of time, requires a formal approach in terms of strategy formation and implementation. The firm should engage in constant evaluation of its market position, including benchmarking Since factors in the firm’s external and internal environments are constantly changing, the complexity and variability associated with creating and sustaining competitive advantage are high.

OVERALL AIMS OF STRATEGIC MANAGEMENT: CREATING A COMPETITIVE ADVANTAGE 1. At the corporate level, strategy is about asking questions about what business the firm is in or would like to be in, the firm’s potential to create value by being in the business or expanding into a new line of business, and the resources and capabilities the firm already has or needs to get to sustain/create competitive advantage in its business or businesses. 2. At the business level, firms need to ask themselves the following questions: How can we create competitive advantage in our product/market domains in each strategic business unit (SBU)? How can we continue to be an overall cost leader or a broad differentiator, or, for that matter, have a cost focus or be a focused differentiator in our market domain?

OVERALL AIMS OF STRATEGIC MANAGEMENT: CREATING A COMPETITIVE ADVANTAGE 3. At the functional level, the firm’s objective is to sustain its advantage by focusing on efficiencies related to production, operations, administration, marketing, and other support functions. It also engages in constant innovation to ensure new product/service development rollout, while ensuring that the service and product qualities, as well as the customer satisfaction related to them, are at the highest level. Note that the linkage among the three levels of strategy leads to the creation of sustainable competitive advantage.

DEFINING KEY TERMS Internal analysis pertains to strengths and weaknesses analysis, whereas external analysis pertains to opportunities and threats analysis, which is also referred to as SWOT analysis. The analysis enables a firm to engage in strategic decision making. Strategic decisions pertain to choosing an alternative among a set of alternatives that leads to strategy-related success. These decisions have an effect on the firm’s long-term orientation and direction. Strategic management includes two distinct phases: the strategy formation phase and the strategy implementation phase. Strategic formation is the process of defining the direction of the firm’s futuristic course of action which would enable the firm to allocate resources in order to achieve the set goals and objectives. An internal and external environment analysis is part of the assessment before strategy is formulated at the corporate, business, and functional levels. On the other hand, strategy implementation is the process of putting strategy into action, which includes designing the organizational structure and related systems

This process leads to effective resource allocation processes, including programs and activities such as setting budgets, developing support systems, recruiting, hiring, and training, as well as designing performance evaluation and rewards systems that lead to the attainment of set goals and objectives. The organization must first define its mission, goals, and objectives. The mission is a brief description of the very purpose of creating the organization. The mission statement includes a clear purpose and states why the organization is in existence

the corporate mission statement for Four Seasons Hotels and Resorts Four Seasons is dedicated to perfecting the travel experience through continual innovation and the highest standards of hospitality. From elegant surroundings of the finest quality, to caring, highly personalised 24-hour service, Four Seasons embodies a true home away from home for those who know and appreciate the best. The deeply instilled Four Seasons culture is personified by its employees – people who share a single focus and are inspired to offer great service.

The vision, however, describes where the organization wants to go from where it is at present. For instance, Hilton Hotels Corporation defines its vision as “Our vision is to be the first choice of the world’s travelers.” Goals are more specific in terms of what the organization aims to achieve in a definite period of time so it would be able to accomplish its mission and vision. Goals are planned over the short and long terms. Short-term goals are set for a period not exceeding one year, whereas long-term goals are set for a period of time exceeding three to five years

Goals need to be linked to objectives. Note that goals are more abstract than objectives. Objectives need to be definite and quantifiable, strategies clearly identify how the objectives will be met in terms of the plan, and tactics are the actions that operationalize the strategy—those that lead to the attainment of goals and objectives