OVERVIEW OF STRATEGIC MANAGEMENT

TOPIC 1
 LEARNING OBJECTIVES
01 Describe the strategic-management process.

Discuss the three stages of strategy formulation, imple-

02 mentation, and evaluation activities.

03 Define key terms in strategic management.

Illustrate the comprehensive strategic-management

04 model

Describe the benefits of engaging in strategic

05 management.

06 Explain why some firms do no strategic planning.

LEARNING OBJECTIVES (cont.)
07 Describe the pitfalls in actually doing strategic planning.

Discuss the connection between business and military

08 strategy.
DEFINING STRATEGIC MANAGEMENT

The art and science of;

Formulating
Implementing
Evaluating
cross-functional decisions that
enable an organization to achieve its
objectives
 STRATEGIC MANAGEMENT
STRATEGY
FORMULATION
Also referred as
strategic planning

STRATEGIC
MANAGEMENT
STRATEGY
Used synonymously IMPLEMENTATION
with the term stra-
tegic planning.

STRATEGY
EVALUATION

Strategic planning is a company’s game plan.

results from tough managerial choices among numerous good alternatives.
it signals commitment to specific markets, policies, procedures, and operations.
 Stages of Strategic Management

Strategy formu- Strategy imple- Strategy eval-

lation mentation uation
 STRATEGY
FORMULATION
Strategy Formulation includes:
01 Developing a vision and mission

Identifying an organization’s external opportunities

02 and threats

03 Determining internal strengths and weaknesses

04 Establishing long-term objectives

05 Generating alternative strategies

06 Choosing particular strategies to pursue

 Strategy Formulation Issue

01 04

What new businesses to To enter international

enter markets?

02 05

What businesses to To merge or form a joint

abandon venture?

03 06

To expand operations or How to avoid a hostile

diversify? takeover?
 STRATEGY
IMPLEMENTATION
STRATEGY IMPLEMENTATION
(Action Stage)
requires a firm to establish;
annual objectives
devise policies
motivate employees
allocate resources
so that formulated strategies can be
executed
 STRATEGY
EVALUATION
 STRATEGY EVALUATION

Determining which strategies are not

working well

01 02 03
Reviewing Taking cor- Three (3)
external Measuring
& internal performance
rective ac-
tions
Fundamental
factors
Activities
KEY TERMS IN STRATEGIC MANAGEMENT

01 Competitive Advantage
• Any activity a firm does especially well compared to activities
done by rival firms, -- OR –
• Any resource a firm possesses that rival firms desire.
A firm must strive to achieve sustained competitive advantage

02 Strategists
• Individuals most responsible for the success or failure of an or-
ganization
• Help an organization gather, analyze, and organize information

03 Vision and Mission Statements

• A vision statement answers the question “What do we want to
become?”
• A mission statement answers the question “What is our busi-
ness?”
KEY TERMS IN STRATEGIC MANAGEMENT

04 External Opportunities and Threats

Economic, social, cultural, demographic, environmental, political,
legal, governmental, technological, and competitive trends and
events that could significantly benefit or harm an organization

05 Internal Strengths and Weaknesses

• An organization’s controllable activities that are performed espe-
cially well or poorly
• Determined relative to competitors

06 Long-Term Objectives
• Specific results that an organization seeks to achieve in pursuing
its basic mission
• Long-term means more than one year
• Should be challenging, measurable, consistent, reasonable, and
clear
KEY TERMS IN STRATEGIC MANAGEMENT

07 Strategies
• The means by which long-term objectives will be achieved
• May include geographic expansion, diversification, acquisition,
product development, market penetration, retrenchment, divestit-
ure, liquidation, and joint ventures

08 Annual objectives
• short-term milestones that organizations must achieve to reach
long-term objectives
• should be measurable, quantitative, challenging, realistic, con-
sistent, and prioritized
• should be established at the corporate, divisional, and functional
levels in a large organization

09 Policies
• the means by which annual objectives will be achieved
 THE STRA-
TEGIC
MANAGEMENT
MODEL

w?
no
e
w
e
o
tt ?

ar
n
wa go

re
he
we

W
do
re
he
W to
go ing ?
we e re
w are get th
H o
Comprehensive Strategic-Management Model
BENEFITS OF STRATEGIC MANAGEMENT

Strategic management allows an organization to;

be more proactive than reactive in shap-

01 ing its own future

initiate and influence (rather than just

02 respond to) activities—and thus to exert
control over its own destiny.
Benefits to a Firm That Does Strategic Planning
 BENEFITS OF STRATEGIC MANAGEMENT

• Businesses using strategic- Financial Benefits

management concepts show
significant improvement in
i.Sales
ii.profitability, and • Enhanced awareness of
iii.productivity external threats
• High-performing firms tend to • Improved understanding of
do systematic planning to competitors’ strategies
prepare for future fluctuations • Increased employee
in their external and internal productivity
environments • Reduced resistance to
change
• Clearer understanding of
Nonfinancial Bene- performance–reward
fits relationships
Why Some Firms Do No Strategic Planning

01 No formal training in strategic management

02 No understanding of or appreciation for the benefits of planning

03 No monetary rewards for doing planning

04 No punishment for not planning

05 Too busy “firefighting” (resolving internal crises) to plan ahead

Why Some Firms Do No Strategic Planning

06 View planning as a waste of time, since no product/service is made

07 Laziness; effective planning takes time and effort; time is money

Content with current success; failure to realize that success today is no

08 guarantee for success tomorrow; even Apple Inc. is an example

09 Overconfident

10 Prior bad experience with strategic planning done sometime/somewhere

 PITFALLS IN STRATEGIC PLANNING
 Using strategic planning to gain control over decisions and
resources
 Doing strategic planning only to satisfy accreditation or
regulatory requirements
 Too hastily moving from mission development to strategy
formulation
 Failing to communicate the plan to employees, who continue
working in the dark
 Top managers making many intuitive decisions that conflict
with the formal plan
 Top managers not actively supporting the strategic-planning
process
 PITFALLS IN STRATEGIC PLANNING

 Failing to use plans as a standard for measuring performance

 Delegating planning to a “planner” rather than involving all
managers
 Failing to involve key employees in all phases of planning
 Failing to create a collaborative climate supportive of change
 Viewing planning as unnecessary or unimportant
 Becoming so engrossed in current problems that insufficient
or no planning is done
 Being so formal in planning that flexibility and creativity are
stifled
How to Gain and Sustain Competitive Advantage
 BUSINESS VS. MILITARY STRATEGY

BUSINESS STRATEGY MILITARY STRATEGY

Strategy is Strategy is based on an as-
• formulated, sumption of conflict
• implemented, and
• Evaluated
with an assumption of
competition
Both business and military organizations must adapt to
change and constantly improve to be successful
 Excerpts from Sun Tzu’s The Art of War Writings

War is a matter of vital

Know your enemy importance to the state:
and know yourself, a matter of life or death, the
and in a hundred road either to survival or ruin.
battles you will Hence, it is imperative that it be
never be defeated studied thoroughly

Skillful leaders do not

let a strategy inhibit
creative
counter-movement
Thank you
End of Topic 1