The Nature of Strategic Management

WHAT ARE THE MAJOR PROBLEMS FACING YOU TODAY? Load Shedding Drinking Water Waste and Garbage Rising Prices Security Most of these major problems persist for last several years.

CASES OF COMPANIES Janakpur Cigarette Factory Nepal Airlines Nepal Telecom Agricultural Development Bank

Football match

WHAT IS STRATEGY ? IT IS A PATTERN OF ORGANIZATIONAL MOVES AND APPROACHES USED TO ACHIEVE ORGANIZATIONAL OBJECTIVES AND MISSION IT IS A ROADMAP TO OPERATE BY A SET OF PRESCRIBED RULES, PLANS, AND ACTIONS TO GAIN SUSTAINABLE COMPETITIVE ADVANTAGE OVER RIVALS.

Strategic Management Defined Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

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

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

WHY STRATEGIC MANAGEMENT? TO PROVIDE GUIDANCE TO WHAT WE ARE TRYING TO ACHIEVE TO MAKE MANAGERS MORE ALERT OF THE CHANGING CIRCUMTANCES TO MANAGE RESOURCES EFFICIENTLY AND EFFECTIVELY TO UNIFY NUMEROUS STRATEGY-RELATED DECISIONS BY MANAGERS TO CREATE A MORE PROACTIVE MANAGEMNT

THREE OVERARCHING THEMES   Implementing a good strategy is at least as important as creating one, yet many managers give too little thought to implementation To succeed, the formulation of a good strategy and its implementation should be inextricably connected Strategic leadership is responsible for making substantive resource allocation decisions and developing key-stakeholder support of the strategy Firms and industries are dynamic in nature  Strategic leader- ship is essential if a firm is able to both formulate and implement strategies that create value We need to see a firm’s competitive position, not as a snapshot, but as an ongoing movie

STRATEGY Strategies: “the general’s view” Holistic “big picture” Lower officer (e.g., supply logistics infantry, heavy armored vehicles) Tactical details

FIVE TASKS OF STRATEGIC MANAGEMENT

WHAT IS OUR BUSINESS AND WHAT WILL IT BE? 1. DEVELOPING A CONCEPT OF THE BUSINESS AND FORMING A VISION OF WHERE THE ORGANIZATION NEEDS TO BE HEADED WHAT IS OUR BUSINESS AND WHAT WILL IT BE? WHO ARE WE, WHAT WE DO AND WHERE WE ARE HEADED?

Opportunities & Threats Strengths & Weaknesses Strategy Formulation Vision & Mission Opportunities & Threats Strengths & Weaknesses

2. CONVERTING THE MISSION INTO SPECIFIC PERFORMANCE OBJECTIVES TO CONVERT THE STATEMENT OF ORGANIZATIONAL MISSION AND DIRECTION INTO SPECIFIC PERFORMANCE TARGETS BY WHICH THE ORGANIZATION’S PROGRESS CAN BE MEASURED

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

CHALLENGING BUT ACHIEVABLE LONG-RANGE OBJECTIVES SHORT-RANGE OBJECTIVES FINANCIAL OBJECTIVES AND STRATEGIC OBJECTIVES OBJECTIVES SETTING IS REQUIRED FOR ALL MANAGERS

3. CRAFTING A STRATEGY TO ACHIEVE THE MISSION AND OBJECTIVES OBJECTIVES ARE THE END AND STRATEGY IS THE MEANS OF ACHIEVING THE OBJECTIVES EXISTING STRATEGIES PLANNED STRATEGIES

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

AN ORGANIZATION’S STRATEGY THAT IS MOSTLY NEW MOST OF THE TIME SIGNALS ERRATIC DECISION- MAKING AND WEAK STRETEGIZING ON THE PARTS OF MANAGERS

4. IMPLEMENTING AND EXECUTING THE CHOSEN STRATEGY EFFICIENTLY AND EFFECTIVELY IT IS FUNDAMENTALLY AN ADMINISTRATIVE ACTIVITY ORGANIZING BUDGETNG MOTIVATING CULTURE-BUILDING SUPERVISING LEADING

Strategy Implementation Annual Objectives Policies Motivate Employees Resource Allocation

IMPORTANCE OF EXECUTION “The important decisions, the decisions that really matter, are strategic . . . [But] more important and more difficult is to make effective the course of action decided upon.” – Peter Drucker

NEED TO DEVELOP A FIT BETWEEN - STREATEGY AND ORGANIZATIONAL CAPABILITIES STRATEGY AND THE REWARD STRUCTURE STRATEGY AND INTENAL POLICIES AND PROCEDURES STRATEGY AND ORGANIZATION’S CULTURE

5. EVALUATING PERFORMANCE, REVIEWING THE SITUATION, AND INITIATING CORRECTIVE ADJUSTMENTS IN MISSION, OBJECTIVES, STRATEGY, OR IMPLEMENTATION IN LIGHT OF ACTUAL EXPERIENCE, CHANGING CONDITIONS, NEW IDEAS, AND NEW OPPORTUNITIES STRATEGIC MANAGEMENT IS AN ONGOING PROCESS

Strategy Evaluation Review External & Internal Measure Performance Corrective Action

MINTZBERG’S ANALYSIS OF STRATEGIES Deliberate strategy ( Intended strategy a firm actually plans to implement) Intended strategy ( Strategy a firm thought it was going to pursue) Realized Strategy (Strategy firm actually pursues) Unrealized strategy ( Intended strategy firm does not actually implement Emergent Strategy ( Strategy that emerges overtime or has been radically reshaped )