STRATEGIC MANAGEMENT

BA 218
6.53
WHAT IS STRATEGY
AND WHY IS IT
IMPORTANT
6.53
 BASIC CONCEPT OF
STRATEGY
Strategy is the quest to gain and sustain competitive
advantage.
 It is the managers' theories about how to gain and
sustain competitive advantage.
 It is about being different from your rivals.
 It is about creating value while containing cost.
 It is deciding what to do, and what not to do.
 It combines a set of activities to stake out a unique
position.
It requires long-term commitments that are not easily
reversible
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WHAT IS A STRATEGY?
describes the goal-directed actions
a firm intends to take in its quest to
gain and sustain competitive
advantage. The firm that possesses
competitive advantage provides
superior value to customers at a
competitive price or acceptable
value at a lower price. Profitability
and market share are the 4
 IS AN OVERARCHING
APPROACH TAKEN TO MEET
OR EXCEED ONE'S GOALS
AND THE ACTIONS TAKEN
RELATIVE TO THE ORIGINAL
AND OVERALL GOAL SET BY
HIGHER AUTHORITY.

WHETHER IN A PRIVATE
ENTERPRISE OR PUBLIC
ORGANIZATIONS
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Is about understanding where you
are now, where you are heading and
how you will get there.

Effective strategic decision-making is

vital - not just for the Chief Executive
Officer but for the managers at all
levels of the organization who will
determine how that vision can be
transformed into action. 6
It has been observed
that the greater the
difference between
value creation and cost,
the greater the
economic contribution
the firm makes, and
thus the greater the
likelihood for 7
To gain a competitive advantage, a
firm needs to provide either goods
or services consumers value more
highly than those of the
competitors, or goods or services
similar to the competitors' but at a
lower price.

Making money to most businessmen

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The essence of strategy, therefore, is
being different from rivals.

Managers accomplish this difference

through strategic positioning, (the
process of differentiating your business
from the competition)

staking out a unique position in an

industry that allows the firm to provide
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Strategy on how to compete provides managers
with a roadmap to navigate the competitive
territory. the more accurate the map, the better
strategic decisions managers can make.

In the competitive world, managers test their

theories and assumptions in the marketplace.

Positive feedback validates managers' strategic

assumptions while negative feedback allows
managers to adjust their assumptions.

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A firm’s relative performance in the competitive
marketplace provides managers with the
necessary feedback to assess how well their
strategy works in their quest for competitive
advantage.

The strategic management process, therefore, is

a never-ending cycle of analysis, formulation,
implementation, and feedback.

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 WHAT STRATEGY IS NOT
ALTHOUGH IT IS IMPORTANT TO KNOW
WHAT STRATEGY IS AND WHY IT IS
IMPORTANT,
IT IS ALSO USEFUL TO APPRECIATE
WHAT STRATEGY IS NOT.

THERE IS MUCH CONFUSION ABOUT THE

NATURE OF STRATEGY. STRATEGY IS
NOT:
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 A vision or mission statement such as "Or strategy is to be a
leading-edge provider/employer". This explains neither where the
firm is going nor how it will make progress, Consequently, it is not a
strategy.
 A goal, budget, or business plan. Strategy is not a goal such as "We
aim to be the best or number one. This is, at best, an aspiration.
Also, strategy is neither a budget nor a business plan, although
elements of these may contribute to how a strategy is implemented.
 Data analysis. Too often, data analysis leads to strategy, when what
should happen is that strategic choices are made first and then
refined an explored further using data analysis.
Strategy is not, a zero-sum game-it is not always
the case that one party wins while all others
lose.

Many strategic successes are accomplished when

firms and individuals cooperate with one
another. Even direct competitors cooperate
occasionally to create win-win scenarios.

When competitors cooperate with one another to

achieve strategic objective, it is called co-
opetition.

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Many people today refer to a host of different
plans and activities such as pricing strategy,
alliance strategy, operations strategy, marketing
strategy and so on.

While all these elements may be part of a firm’s

functional strategy to support its business
model, the term strategy should be reserved for
describing the firm's overall efforts to gain and
sustain competitive advantage.

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Best-in-class practices such as just-in-time
inventory system, enterprise resource planning
system and so on, all fall under the tools for
operational effectiveness.

Being best-in-class is a sufficient but not a

necessary condition for competitive advantage.
Operational effectiveness, marketing skills and
other functional expertise, along with best
practices, contribute to a unique strategic
position but by themselves, they are not a
substitute for Strategy.

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WHAT CAN STRATEGY ACHIEVE?
 An inspired and clearly considered strategy provides the
impetus(force) for commercial success. A clear and
effectively communicated strategy is crucial in developing a
successful business.

 A focus on strategy will highlight where a unit or group of

businesses can be more successful as well as those areas
where it is weak, vulnerable, or failing. It will show in detail
where the business is making its money and why .
 The process of developing and implementing strategy
enables managers to understand their customers and
competitors. The company is able to develop its products and
approach in line with its customers' changing preferences.

 Developing and implementing strategy strengthen a business

by making sure that resources are devoted to the most
important customers in order to retain their loyalty and get
them to buy even more of the company's products or
services.
 A Clear Strategy shows managers where business
skills need to be added or strengthened. It also
highlights where productivity can be improved and
why particular initiatives and activities have succeeded
or failed.

 A strategy that employees understand provides a

guiding view of the future that influences employees'
decisions, priorities, and way of working.
 For owners or stakeholders, strategy provide a
way of measuring their businesses' progress.

 A successful strategy benefits customer. The

crucial component of strategy is how it will result
in greater appeal to customers and how they can
achieve their goals.
STRATEGY VS
OBJECTIVE
6.53
WHAT IS A STRATEGY?

An overarching
approach taken to meet
or exceed your goals,
and the actions taken
must relate to the
original goal set by
management. 23
 WHAT IS AN OBJECTIVE?

An objective is a measurable action taken to execute

the strategy agreed on by management and the rest of the
organization. An objective follows the paradigm of the
SMART formula (Specific, Measurable, Actionable,
Relevant and Time-based). Thus, a series of objectives
must be assigned and completed in order to complete the
strategy and meet the company's primary goal.
Something you plan to achieve
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 Objectives are
measurable steps you take
to achieve a strategy,
strategies are the
approaches or way you
take to achieve a goal
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HOW THE SMART
FORMULA
6.53
CAN BE
USED IN PURSUING
AN OBJECTIVE:
 1. Specific
(Clearly defined or identified)

This step details what you want to achieve. In

fact, the formulation of your goals and strategy
should meet the requirements of this step to
proceed. The more clarity you have, the more
likely it is to produce successful results.

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 Improving your diet
Simple Goal:
I want to eat Better.

1. Specific
I’m going to stop eating deep-fried food and
eliminate bad carbs from my diet in order to drop
thirty pounds.
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2. Measurable
Stating your evidence is crucial in
finding out how you are
measuring your goal. Setting up
milestones can assist you in
breaking down a timeline to reach
the desired steps of your
objectives.
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 2. Measurable
I’ll plan my diet
every week, and
weigh my self weekly
to ensure I’m
dropping weight.

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3. Achievable
Ensure that the objective is one you can
achieve and is aligned with your strategy.
Identifying your motivation in meeting your
objectives helps you keep your focus on
current tasks. Also, it can outline the effort
and resources needed to achieve your
objective and move onto the next one.
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 3. Achievable
I have a meal plan
and can follow it. I’ve
let myself go but have
been at my goal
weight before.

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4. Relevant
Make sure that the objectives are
aligned with your core values and with
your long-term aspirations. Rethink
your objective if you continue to
express doubts about it representing
your core values.
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 4. Relevant
My weight and
health are affecting
my lifestyle, and I
want to get back to
being more active.

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5. Time-based
Decide on the appropriate timeline to
complete this objective and review if that
pursuit is dependent on the completion of
other objectives. You want to ensure that
you can move forward after an objective's
conclusion. There are times where you will
need to consider variables that may affect
the timeline of certain tasks. 35
 5. Timebound
I’ll weigh myself
every week to ensure
that I’m trending in
the right direction,
with an end goal to
be at my ideal weight
one year from today.
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 Complete smart goal
I’ll start my diet plan
next week, weighing
myself consistently in
order to reach my goal
of dropping thirty
pounds one year from
today.
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STRATEGY VS.
6.53
OBJECTIVE: KEY
DIFFERENCES
A strategy helps you create a plan for
how you want to achieve a goal,
whereas
an objective is a list of documented
steps that assist you in fulfilling the
goals of the strategy.( is something you plan to achieve)

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THE DIFFERENCES
BETWEEN
6.53
A STRATEGY
AND AN OBJECTIVE
ALSO INCLUDE:
1. Purpose
A strategy is meant to solve problems and
determine a pathway towards a goal.

An objective has measured elements that

relate to the execution of the strategy and
when it should be finalized. 41
2. Execution
To build a strategy, you need to have an overview of your
core values and the motivations for why you are coming up
with a strategy. Consistent motivation is the driver of
diligence in the workplace. A robust (strong) strategy can
maximize the output of a team if it fully buys into the
mission of the organization.
Preparing objectives occurs once you have a finalized set of
core values and motivations. Objectives also assess how you
will apply your core values and motivations to perform tasks
and find out how you can improve in the process.
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ILLUSTRATION OF HOW STRATEGY RELATES TO
OBJECTIVE
Strategy
A strategy is designed to measure a goal. For example, a goal may be
for a company to increase the client base of Stevie's Marketing from
five clients to 10 by the end of the year. To accomplish this goal, the
company needs to do the following:
 Increase the size of its sales staff.
 Clean up the lead generation software and have management inspect
for execution.
 Schedule proposal meetings and dates for the sales manager to close
sales.
 Hold weekly meetings on progress.
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Objectives
Here are objectives that can lead to the success of the strategy:
 Human resources will hire five new members of the sales team by the end of
September.
 Three members of the sales team will work on inserting the right data into the
lead generation software and complete it by the end of November.
 The sales manager will be on proposal calls in order to secure five in-person
meetings with prospects by Thanksgiving and will meet with the prospects to
close five deals to bring them onboard.
 Sales team meetings are held on Monday afternoon to report on the progress of
these meetings. Jan from human resources will take notes on progress and action
items for the team to work on during the week. The CEO is continually
monitoring the progress to ensure the completion of all objectives by the end of
the year. 44
 While objectives
are the measurable
steps you take to
achieve a strategy,
strategies are the
approaches you
take to achieve a
goal.

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 THANK
YOU!!!

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