2. Strategic Management
• Strategic management is the study of why some firms
outperform others.
• How to create a competitive advantage in the market place that
is unique, valuable, and difficult to copy
• “Total organization” perspective, integrating across
functional areas.
• Two perspectives of leadership: romantic view and
external control perspective.
• Strategies put together an understanding of the
external environment with an understanding of internal
strengths and weaknesses.
Dr Md Moazzam
Husain
3. Definition of Strategic Management
Strategic management consists of the
analysis, decisions, and actions an
organization undertakes in order to create
and sustain competitive advantages
(Dess, Lumpkin, & Eisner, Strategic
Management: Creating Competitive
Advantage, 6th Ed., p. 43).
Dr Md Moazzam
Husain
4. Definition of Strategic Management
• Analysis
• Strategic goals (vision, mission, strategic objectives)
• Internal and external environment of the firm
• Decisions
• What industries should we compete in?
• How should we compete in those industries?
• Actions
• Allocate necessary resources
• Design the organization to bring intended strategies
to reality
Dr Md Moazzam
5. Attributes of Strategic Management
• Directs the organization toward overall goals
and objectives.
• Includes multiple stakeholders in decision
making.
• Needs to incorporate short-term and long-term
perspectives.
• Recognizes trade-offs between efficiency and
effectiveness.
Dr Md Moazzam
Husain
6. Mintzberg’s Views of Strategy
• Plan - consciously intended course of action
• Ploy - maneuver to outwit opponent
• Pattern - consistency in behavior
• Position - location in environment
• Perspective - way of perceiving the world
Dr Md Moazzam
Husain
7. Forms of Strategy
• Formal versus informal - associated with size of
firm and stage of development. Mintzberg’s
distinction between entrepreneurial and
planning mode.
• Intended versus realized - intended strategies
are the plans managers develop; realized
strategies are the actions that actually take
place over time.
Dr Md Moazzam Husain
8. Forms of Strategy
Source:H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and
Emergent,” Strategic Management Journal 6 (1985), pp. 257-72.
Dr Md Moazzam Husain
9. Strategic Vision
Management’s views and conclusions about what the
organization’s long-term direction should be, the technology-
product-customer focus it intends to pursue, and its future
business scope constitute a strategic vision for the company. A
strategic vision thus reflects management’s aspirations for the
organization and its business, providing a panoramic view of
“where we are going” and giving specifics about its future business
plans. A strategic vision points an organization in a particular
direction and charts a strategic path for it to follow.
Example: In 1999 Microsoft’s vision was “empower people
through great software anytime, anyplace, and on any device.”
Dr Md Moazzam Husain
10. Mission Statement
A company’s mission statement is typically focused on
its present business scope – “who we are and what we
do”; mission statements broadly describe an
organization’s present capabilities, customer focus,
activities, and business makeup.
Example: “The mission of the American Red Cross is
to improve the quality of human life; to enhance self-
reliance and concern for others; and to help people
avoid, prepare for, and cope with emergencies.”
Dr Md Moazzam Husain
11. Hierarchy of Goals
Company vision
Mission statements
Coherence in Strategic Direction
Strategic objectives
• Operationalize the
mission statement
• Measurable, specific,
appropriate, realistic,
timely, challenging,
resolve conflicts that
arise, and yardstick for
rewards and incentives
Strategic objectives
Dr Md Moazzam Husain
12. Stakeholders and Corporate Mission
A company’s stakeholders can be divided into internal
stakeholders and external stakeholders. Internal
stakeholders are stockholders and employees,
including executive officers, other managers, and board
members. External stakeholders are all other
individuals and groups that have some claims on the
company. Typically, this group comprises customers,
suppliers, governments, unions, local communities, and
the general public.
Dr Md Moazzam Husain
13. Stakeholders and Corporate Mission
All stakeholders are in an exchange relationship with
the company. Each of the stakeholder groups supplies
the organization with important resources or
contributions), and in exchange each expects its
interests to be satisfied (by inducements). Stockholders
provide the enterprise with capital and in exchange
expect an appropriate return on their investment;
employees provide labor and skills and in exchange
expect commensurate income, job satisfaction, job
security, and good working conditions.
Dr Md Moazzam Husain
14. Stakeholders and Corporate Mission
External Stakeholders
Customers
Suppliers
Governments
Unions
Local Communities
General Public
Internal Stakeholders
Stockholders
Employees
Managers
Board Members
Dr Md Moazzam Husain
15. Stakeholder Impact Analysis
A company must take into account the claims of
stakeholders when formulating its strategies or
stakeholders may withdraw their support. For example,
stockholders may sell their shares, employees leave
their jobs. But a company cannot always satisfy the
claims of all stakeholders. The goals of different may
conflict, and in practice few organizations have the
resources to manage all stakeholders. For example,
union claim for higher wages can conflict with
consumer demands for reasonable prices and
stockholder demands for acceptable returns.
Dr Md Moazzam Husain
16. Stakeholder Impact Analysis
Often the company must make choices. To do so, it must identify
the most important stakeholders and give highest priority to
pursuing strategies that satisfy their needs. Stakeholder impact
analysis can provide such identification. Typically, stakeholder
impact analysis follows these steps:
• Identifying stakeholders
• Identifying stakeholders’ interests and concerns
• As a result, identifying what claims stakeholders are likely to
make on the organization
• Identifying the stakeholders who are most important from the
organization’s perspective
• Identifying the resulting strategic challenges.
Dr Md Moazzam Husain
17. Stakeholder Impact Analysis
Such an analysis enables a company to identify the
stakeholders most critical to its survival and to make
sure that the satisfaction of their needs is paramount.
Most companies that go through this process quickly
reach the conclusion that there are three stakeholder
groups the company must satisfy if it is to survive and
prosper: customers, employees, and stockholders.
Dr Md Moazzam Husain
18. Strategic Management Process
• Analysis
• Hierarchy of goals
• Analysis of external and internal environments
• Formulation
• What business(es) should we be in?
• For each, what is the basis for competitive
advantage (low cost, differentiation, focus)?
• Implementation
• Functional tactics
• Culture and organization structure
Dr Md Moazzam Husain
19. Corporate
Strategy
Business Strategies
Functional Strategies
(R & D, manufacturing, marketing,
finance, human resources, etc.)
Operating Strategies
(regions and districts, plants, departments within
the functional areas)
Levels of Strategy – Diversified Company
Dr Md Moazzam Husain
20. Business
Strategies
Functional Strategies
(R & D, manufacturing, marketing,
finance, human resources, etc.)
Operating Strategies
(regions and districts, plants, departments within
the functional areas)
Levels of Strategy – Single Business
Company
Dr Md Moazzam Husain
