An Overview of Strategic Management Chapter # 1 An Overview of Strategic Management References Strategic Management Concepts & Cases, Fred R. David Strategic Management: Text and Cases, Gregory G. Dess, G. T. Lumpkin Advanced Strategic Management: A multiple Perspective Approach, Mark Jenkins, Véronique Ambrosini, Nardine Collier Resource Person: Furqan-ul-haq Siddiqui

In September 2013, Nokia sold what was once the world's largest vendor of mobile phones to Microsoft as part of an overall deal totaling €5.44 billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and several other executives joined the new Microsoft Mobile subsidiary of Microsoft as part of the deal, which closed on 25 April 2014.

Nokia CEO Rajeev Suri (pictured below) seems to have finally given up on saying that his company will not return to the smartphone market. Following one denial last year and another in April of this year, Suri now says the company is in fact planning on putting its name on new smartphones starting in 2016. It is yet to announce a release date or design for the next snake-enabled device.  

Strategy…! A strategy is an integrated plan of action designed to achieve a particular goal. The word strategy has military connotations, because it is derives from the Greek word for army ("leader or commander of an army, general“).

Tactic is concerned with the conduct of an engagement while strategy is concerned with how different engagements are linked. Tactics are the actual means used to gain an objective, while strategy is the overall campaign plan, which may involve complex operational patterns, activity, and decision-making. a method of employing forces in combat

Strategic Management Strategic or Institutional management is comprehensive and ongoing management process aimed at the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives Science (from the Latin scientia, meaning "knowledge") refers to any systematic knowledge-base or prescriptive practice that is capable of resulting in a prediction or predictable type of outcome. In this sense, science may refer to a highly skilled technique or practice.[1] Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Strategic management Analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. Strategic management is the study of why some firms outperform others How to compete in order to create competitive advantages in the marketplace How to create competitive advantages in the market place. An advantage that a firm has over its competitors, Unique and valuable Difficult for competitors to copy or substitute

Two Fundamental Questions How should we compete in order to create competitive advantages in the marketplace? How can we create competitive advantages in the marketplace that are unique, valuable, and difficult for rivals to copy or substitute?

Strategic Management Concepts Efficiency: A measure of how well resources are used to achieve a goal Effectiveness: Making right decisions & successfully implementing them.

SM Integrates Intuition & Analysis Intuition is based on: Past experiences Judgment Feelings Intuition is useful for decision making in conditions of: Great uncertainty Little precedent Highly interrelated variables Several plausible alternatives Intuition is the ability to acquire knowledge without inference or the use of reason. If you win you need not to explain....But if you lose you should not be there to explain. ( by Adolph Hitler ).

Strategic Management Achieves Organizational Success Process of Integrating: Marketing HRM Finance/Accounting Production/Operations R & D Computer information systems

“Strategic Management” General Terminology “Strategic Management” Synonymous with “Strategic Planning” Strategic management Used more often in academia Strategic planning Used more often in the business world

Specifically Strategic management Strategic planning Refers to: Strategy formulation Strategy implementation Strategy evaluation Strategic planning

Strategic-Management Process Strategy Formulation Strategy Implementation Strategy Evaluation

Strategic-Management Process Strategy formulation: the set of processes involved in creating or determining the strategies of the organization; it focuses on the content of strategies. Strategy implementation: the methods by which strategies are operational or executed within the organization; it focuses on the processes through which strategies are achieved. Strategy evaluation: Process by which strategies are evaluated & rectified

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

Strategy Implementation Annual Objectives Policies Motivate Employees Resource Allocation

Strategy Evaluation Review External & Internal Measure Performance Corrective Action

Strategic Planning vs. Long-range Planning Strategic planning assumes that an organization must be responsive to a dynamic, changing environment Strategic planning assumes that organization must be quick to respond to a dynamic, changing environment, which may require changes in the future. Strategic planning, then, points out the importance of making decisions that will ensure your organization's ability to successfully respond to changes in the environment. Long-range planning is considered to mean the development of a plan for accomplishing a goal or set of goals over a period of several years, with the assumption that current knowledge about future conditions is sufficiently reliable to ensure the plan's reliability over the duration of its implementation.

Adaptation to Change Organizations must monitor events On-going process Internal and external events Timely changes Rate and magnitude of changes Increasing dramatically E-commerce Demographics Technology Merger-mania “The measure of intelligence is the ability to change.” ― Albert Einstein

Importance of Strategic Management Provides a sense of long-term direction for organisation members. Enhanced awareness of SWOT Understanding of competitors’ strategies Increased employee productivity & involvement Reduced resistance to change Clear performance-reward relationships Order and discipline to the firm View change as opportunity Proactive vs. Reactive More profitable and successful Formulate better strategies (Systematic, logical, and rational approach)

Importance of Strategic Management Competitive Advantage Direction for the Organisation Supports Innovation Builds Commitment An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition

Why Some Firms Do No Strategic Planning Poor reward structures- Fire-fighting- Embroiled in crises management Waste of time- Too expensive- Laziness- Content with success- We are successful so what's need of SM Fear of failure- Overconfidence on experience- Prior bad experience Self-interest- viewing new plans as threat Fear of the unknown- uncertainty regarding new plans, system, new role, new skills Suspicion- distrust upon management

Strategic Management Terms Competitive Advantage Anything that a firm does specially well as compared to rival firms. A firm can sustain CA for only a certain period due to rival firms imitating & undermining that advantages. A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation.

Long-Term Objectives Long-term objectives are results that an organization seeks over a multiyear period. Common categories for business long-term objectives include profitability, employee development, productivity, technology development, employee relations & competitive position etc. Challenging Measurable Consistent Reasonable Focus coordination Provide basis for effective management

Annual Objectives Short-term milestones necessary to achieve long-term objectives. Represent the basis for allocating resources Established at corporate, divisional, and functional levels Stated in terms of accomplishments for: management marketing finance/accounting production/operations research and development information systems accomplishments

Policies Important in strategy implementation as the means by which annual objectives will be achieved Guide to decision making and address repetitive situations Established at corporate, divisional, or functional levels Allow consistency & coordination within and between organizational departments