Course Title: Strategic Management Course Tutor: Dr Sabeeh Zaidi______________________________________________ School of Management, National University of Computers & Emerging Sciences, Lahore Campus
Lecture Contents INTRODUCTION What is Strategic Management?; Key Terms in Strategic Management; The Strategic-Management Model; Benefits of Strategic Management
Lecture Contents THE NATURE OF STRATEGIC MANAGEMENT Why Some Firms Do No Strategic Planning?; Pitfalls in Strategic Planning; Guidelines for Effective Strategic Management; Business Ethics and Strategic Management; Comparing Business and Military Strategy; The Nature of Global Competition
Defining Strategic Management Art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives A strategic plan is like a game plan results from tough managerial choices among numerous good alternatives Signals commitment to specific markets, policies, procedures and operations in lieu of other ‘less desirable’ courses of action!!
Stages of Strategic Management Strategy Formulation Developing vision/mission Identifying external opportunities/threats Determining internal strengths/weaknesses Establishing long term objectives Generating alternative strategies but choosing particular one to pursue!
Stages of Strategic Management Strategy Implementation To establish annual objectives Devise policies Motivate employees Allocate resources Develop strategy-supportive culture Creating an effective organisational culture Redirecting marketing efforts Preparing budgets Developing and utilising IS Linking employee compensation to organisational performance
Stages of Strategic Management Strategy Evaluation Reviewing external and internal factors that are the bases for current strategies Measuring performance Taking corrective actions
Strategic Management Process Integrating Intuition and Analysis Attempts to organise qualitative and quantitative information to allow effective decision making amid uncertainty. Adapting to Change
Key Terms in Strategic Management Competitive Advantage Anything that a firm does especially well compared to rival firms Debate on how best to capture and keep Competitive Advantage (CA) Is it sufficient to capture CA?
Key Terms in Strategic Management Strategists Individuals who are most responsible for the success or failure of an organisation Help gather, analyse and organise information Track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance, spot emerging market opportunities, identify business threats and develop creative action plans They differ in choice of their strategies and in their attitudes, values, ethics, willingness to take risks, social responsibility, concern for profitability ad management style
Key Terms in Strategic Management Vision and Mission Statements Answers the question: What do we want to become? Precedes development of a Mission Statement which identifies the scope of a firm’s operations in product and market terms – What is our business? Compels Strategists to think about present operations and assess the potential attractiveness of future market activities
Key Terms in Strategic Management External Opportunities & Threats Refer to economic, social, cultural, demographic, environ mental, political, legal, governmental, technologic al, and competitive trends that can harm an organisation in the future Beyond the control of organisation They create different type of consumer and consequently a need for different products, services ad strategies What about Lobbying? Does it have to be negative?
Key Terms in Strategic Management Internal Strengths & Weaknesses Consists of an organisation’s controllable activities that are performed especially well or poorly They arise in management, marketing, finance/accounting, production/operations, research and development, and MIS activities of a business Determined relative to competitors Can be determined by elements of being rather than performance???
Key Terms in Strategic Management Long Term Objectives Objectives are specific results that an organisation seeks to achieve in pursuing its mission statement They state direction, Aid in evaluation, Create synergy, Reveal priorities Focus coordination Provide a basis for effective planning, organising, motivating and controlling activities They should be challenging, measurable, consistent, reasonable, a nd clear.
Key Terms in Strategic Management Annual Objectives Short term milestones to achieve long term objectives Should be established at corporate, divisional and functional levels Basis for allocating resources Policies Are the means by which annual objectives will be achieved Includes guidelines, rules and procedures to support efforts to achieve objectives
The Strategic-Management Model Process is dynamic and continuous A change in any one of the major components can necessitate change in any or all of the other components Strategy formulation, implementation and evaluation should be performed on a continual basis Never really ends Never follow a step-wise approach
Benefits of Strategic Management to help organizations formulate better strategies through the use of a more systematic, logical, and rational approach to strategic choice. Communication is a key to successful strategic management. The major aim of the communication process is to achieve understanding and commitment throughout the organization. Results in empowerment??
Benefits of Strategic Management Financial Benefits: Research indicates that organizations using strategic-management concepts are more profitable and successful than those that do not. High-performing firms tend to do systematic planning to prepare for future fluctuations in the external and internal environments. Firms with planning systems more closely resembling strategic-management theory generally exhibit superior long-term financial performance relative to their industry.
Benefits of Strategic Management offers other tangible benefits, such as an enhanced awareness of external threats, an improved understanding of competitor’s strengths, increased employee productivity, reduced resistance to change, and a clearer understanding of performance-reward relationships. In addition to empowering managers and employees, strategic management often brings order and discipline to an otherwise floundering firm.
WHY SOME FIRMS DO NO STRATEGICPLANNING Poor reward structures Fire fighting Waste of time Too expensive Laziness Content with success Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Honest difference of opinion Suspicion
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 Failing to use plans as a standard for measuring performance Delegating planning to a ³planner´ 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 to be 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
Discussion What aspect of strategy formulation do you think requires the most time? Why? Why is strategy implementation often considered the most difficult stage in the strategic-management process? Why is it so important to integrate intuition and analysis in strategic management?
Discussion How can strategists best ensure that strategies will be effectively implemented? Why do you think some chief executive officers fail to use a strategic-management approach to decision making? Give an example of a recent political development that changed the overall strategy of an organization.