1. The Basics of Strategic Management

2. Derived from The Greek word ‘strategtia’
Means are and science of directing military forces.
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3. Strategic Management –Defined
Art & science of formulating, implementing, and evaluating, cross- functional decisions that enable an organization to achieve its objectives
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4. Purpose of Strategic Management
To exploit and create new and different opportunities for tomorrow
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5. Strategic Management
In essence, the strategic plan is a company’s game plan
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6. Benefits of Strategic Management
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7. Benefits of Strategic Management
Nonfinancial Benefits
Enhanced awareness of threats
Improved understanding of competitors’ strategies
Increased employee productivity
Reduced resistance to change
Clearer understanding of performance-reward relationship
Enhanced problem-prevention capabilities
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8. Strategic Management Model
Environmental
Strategy
Strategy
Evaluation
Scanning
Formulation
Implementation
and Control
External
Mission
Reason for
Societal
existence
Environment
Objectives
General Forces
What results to
Task
Strategies
accomplish
Environment
by when
Plan to
Industry Analysis
achieve the
Policies
mission &
Internal
objectives
Broad
guidelines for
Programs
Structure
Process
decision
Chain of Command
making
Activities
to monitor
needed to
performance
Culture
Budgets
and take
accomplish
Beliefs, Expectations,
corrective
a plan
Cost of the
Values
action
programs
Procedures
Resources
Sequence
Assets, Skills
of steps
Competencies,
needed to
Knowledge
do the job
Performance
Feedback/Learning

9. 4 Stages of the Strategic Management Process
Strategy formulation .
Strategy analysis and choice.
Strategy implementation.
Strategy evaluation.

10. Strategy Formulation
The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses.
Composed of:
Mission
Vision
Objectives
Strategies
Policies

11. Strategy Formulation Vision & Mission External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
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12. Issues in Strategy Formulation
Businesses to enter
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile takeover
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13. Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
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14. Strategy Implementation Steps
Developing a strategy-supportive culture
Creating an effective organizational structure
Redirecting marketing efforts
Preparing budgets
Developing and utilizing information systems
Linking employee compensation to organizational performance
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15. Issues in Strategy Implementation
Action Stage of Strategic Management
Mobilization of employees & managers
Most difficult stage
Interpersonal skills critical
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16. Performance Measurement
Strategy Evaluation
Internal Review
External Review
Performance Measurement
Corrective Action
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17. Components of Strategy
Culture and
stakeholder
expectations
Resources
and strategic
capabilities
The
environment
Context:
Strategic
Analysis
Identifying strategic options
Planning and allocating resources
Content:
Strategic
Choice
Process:
Strategy
Implementation
Evaluating options
Firm structure and design
Selecting strategy
Managing strategic change

18. Levels of Strategy
Functional
Business
Corporate
Global 15

19. Hierarchy of Strategy Functional Strategy Business (Division Level)
Corporate
Manufacturing
Finance
Marketing
Research
and
Development
Human
Resources
Strategic
Unit
Headquarters

20. Vision and Mission Statements
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?
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21. Vision It is description of something in future
An organisational charter of core values and principles.
A puller into the future.

22. Mission
The purpose or reason for the corporation’s existence It tells who the company is? what they do? what they’d like to become?

23. Objectives
The end results of planned activity. They state WHAT is to be accomplished by WHEN. They should be quantified, if possible.
Should be specific, measurable and obtainable.

24. Strategies
A strategy is a comprehensive master plan stating HOW the corporation will achieve its mission and objectives. There are three types:
Corporate - a corporation’s overall direction and the management of its businesses.
Business - emphasizes improving the competitive position of a corporation’s products or services in a specific industry or market segment.
Functional - concerned with developing a distinctive competence to provide a company or business unit with a competitive advantage.

25. Broad guidelines for making decisions.
Policies
Broad guidelines for making decisions.
E.g. - 3M’s policy requiring researchers to spend 15% of their time working on something other than their primary project.

26. Strategy Implementation
The process of putting strategies and policies into action through the development of:
Programs - statements of activities or steps needed to accomplish a single-use plan.
Budgets - statements of a corporation’s programs in dollar terms.
Procedures - systems of sequential steps or techniques that describe in detail how to perform particular tasks or jobs.

27. Evaluation and Control
The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance.

28. Long-term means more than one year
Long-Term Objectives
Specific results that an organization seeks to achieve in pursuing its basic mission
Long-term means more than one year
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29. Long-Term Objectives Essential for ensuring the firm’s success
Provide direction
Aid in evaluation
Create synergy
Reveal priorities
Focus coordination
Provide basis for planning, organizing, motivating, and controlling
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30. Strategies Means by which long-term objectives are achieved
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31. Strategies Examples Geographic expansion Diversification Acquisition
Product development
Market penetration
Retrenchment
Divestiture
Liquidation
Joint venture
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32. Annual Objectives
Short-term milestones that firms must achieve to reach long-term objectives
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33. Policies Means by which annual objectives will be achieved
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35. Strategic Management
Communication is a key to successful strategic management
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36. Effective Strategic Planning is:
A people process more than a paper process
A learning process
Words supported by numbers
Simple and nonroutine
Varying assignments, team membership, meeting formats, and planning calendars
Challenging assumptions underlying corporate strategy
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37. Effective Strategic Planning continued
Welcomes bad news
Requires open-mindedness and a spirit of inquiry
Is not a bureaucratic mechanism
Is not ritualistic or stilted
Is not too formal, predictable, or rigid
Does not contain jargon or arcane language
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38. Effective Strategic Planning continued
Is not a formal system for control
Does not disregard qualitative information
Is not controlled by “technicians”
Does not pursue too many strategies at once
Continually strengthens the “good ethics is good business” policy
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39. Comparing Business and Military Strategy
Strategic planning started in the military
Similarity
Both business and military organizations must adapt to change and constantly improve
Difference
Business strategy assumes competition
Military strategy assumes conflict
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40. Adapting to Change
Organizations should continually monitor internal and external events and trends so that timely changes can be made as needed
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41. Key Terms in Strategic Management
Competitive advantage
Strategists
Vision and mission statements
External opportunities and threats
Internal strengths and weaknesses
Long-term objectives
Strategies
Annual objectives
Policies
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