This document provides an overview of strategic management concepts. It defines strategy as a comprehensive action plan that guides resource utilization to accomplish organizational goals. The strategic management process involves formulating strategies to achieve long-term goals, implementing those strategies, and evaluating performance. Key aspects of the process include environmental scanning, strategy formulation through establishing objectives and policies, strategy implementation via programs and budgets, and strategic evaluation and control.

1. Basic Concepts of Strategic Management
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"Effective managers live in the present – but concentrate on the future."
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2. Team Shas Production
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3. What is Strategy?
• A combination of the words stratos,
which meant “army”, and agein
meaning “to lead”.
Greek Language (6th century BC)
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4. What is Strategy?
• A strategy is a comprehensive action
plan that identifies long-term
direction and guides resource
utilization to accomplish
organizational goals
with sustainable competitive
advantage.
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5. Strategic Management
Process of formulating,
implementing, and evaluating,
strategies to accomplish long-term
goals and sustain competitive
advantage.
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6. Strategic Audit
21st Century Challenges in
Strategic Management
• Process is more an “art” than
“science”
• Should strategies be visible or hidden
from stakeholders
• Should process be more top-down or
bottom up
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7. Phases of Strategic Management
Basic financial
planning:
-little analysis;
-info coming from
within the firm;
-only managers are
involved;
-takes 2-3 weeks;
- one year plan
Forecast-based
planning:
-more thorough
analysis;
-internal info +
environmental data;
-only managers are
involved;
-takes one month;
-three to five years
-plan
Strategic
planning:
-more thorough
-analysis;
-internal info +
environmental data +
forecast future trends;
-made by planning
staff (top managers)
+ consultants;
-meet once a year;
- five-year plans
Strategic
management:
-analysis of external
and internal
environment;
-implementation,
evaluation and control;
-made by lower level
managers+
top managers+
consultants;
-throughout the year;
- five-year plans
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8. Benefits of Strategic Management
• Clear sense of strategic vision of the
firm
• Sharper focus on what is strategically
important
• Improved understanding of a rapidly
changing environment
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9. Main Questions
• Where is organization now?
• If no changes are made, where will the organization be in
1,2,5 years?
• If the answers are not acceptable, what specific actions
should management undertake?
• What are risks and payoffs
involved?
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10. Environmental
Scanning
Strategy
Formulation
Strategy
Implementation
Evaluation
and
Control
Basic Model of Strategic
Management
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11. External: Social Environment
Environmental Scanning
External: Task Environment
Internal: Structure
Internal: Culture
Internal: Resources
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12. Environmental Scanning
Opportunities & Threats (External)
Analysis of Trends:
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Competitors
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13. Environmental Scanning
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems
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14. Vision & Mission
Strategy Formulation
Objectives
Strategies
Policies
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15. Strategy Formulation
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?
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16. Strategy Formulation
Key Strategic Questions
by Peter Drucker
• What is our business mission?
• Who are our customers?
• What do our customers consider
value?
• What have been our results?
• What is our plan?
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17. Vision Examples
To be the happiest place on earth.
To be the world’s best quick service restaurant.
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18. Mission Statement Example
We should build good ships here
– at a profit if we can
– at a loss if we must
– but always good ships
-- Newport News Shipbuilding
(since foundation in 1886)
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19. Mission Statement Example
The Bellevue Hospital, with respect, compassion,
integrity, and courage, honors the individuality and
confidentiality of our patients, employees, and
community, and is progressive in anticipating and
providing future health care services.
-- The Bellevue Hospital
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20. WellPont health Network’s
Vision and Mission
WellPoint redefine our industry: through a new
generation of consumer-friendly products that put
individuals back in control of their future.
The WellPoint companies provide health security by
offering a choice of quality branded health and
related financial services designed to meet the
changing expectations of individuals, families, and
their sponsors throughout a lifelong relationship.
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21. Importance of Mission
Benefits from a strong mission
Mission
Unanimity of Purpose
Resource Allocation
Organizational Climate
Focal point for work
structure
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22. Customers Markets
Mission
Elements
Employees
Public
Image
Self-Concept Philosophy
Survival
Growth
Profit
Products
Services
Technology
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23. Strategy Formulation
Objectives
The end results of planned activity:
• what is to be accomplished
• by when
• it should be quantified if possible
“…increase profits 10% over last year”
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24. Strategy Formulation
Types of Strategies
Corp
Level
Division Level
Functional Level
Operational Level
A Large Company
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25. Strategy Formulation
Strategies
• Corporate strategy directs the organization as a
whole toward sustainable competitive advantage.
• Business strategy sets the strategic direction for a
single business unit or product line.
• Functional strategy guides the use of resources to
implement business strategy.
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26. Being Better versus Being Different
Playing the Game Better
Focus on your existing
strategic position and try to
improve it and make it better.
Practices such as
restructuring, refocusing,
process reengineering, quality
programs, empowering
employees, and the like, all
aim to achieve this
Playing the Game Differently
Try to identify:
• new or unexploited customer
segments to focus on (a new
“WHO”)
• new customer needs that no
competitor is currently satisfying
(a new “WHAT”)
• new ways of producing,
delivering, selling or distributing
your products or services (a new
“HOW”)
…to be successful, a company must be able to do BOTH!
Constantinos Markides
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27. Policies
Strategy Formulation
A policy is a broad guideline for decision making that
links the formulation of strategy with its implementation.
• Maytag Company: Maytag will not approve any cost reduction
proposal if it reduces product quality in any way.
• 3M: Researches should spend 15% of their time working on
something other than their primary project.
• GE: GE must be number one or two wherever it competes.
• Intel: Intel cannibalizes its own product line with better products
before a competitor does so.
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28. Strategy Implementation
Programs
Budgets
Procedures
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29. Strategy Implementation
• A program is a statement of the activities or steps
needed to accomplish a single-use plan.
• A budget is a statement of a corporation’s
program in terms of dollars.
• Procedures are a system of steps or techniques
that describe in detail how a particular task or job
is to be done.
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30. Strategy Evaluation & Control
Internal Review
External Review
Measuring Performance
Strategic audit
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31. Feedback/Learning Process
Internal/External Review
Revision of Decisions
Corrective Actions
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32. Strategic Decisions Characteristics:
• Rare: strategic decisions are unusual and
typically have no precedent to follow
• Consequential: strategic decisions commit
substantial resources and demand a great deal
of commitment from people on all levels.
• Directive: strategic decisions set precedents for
lesser decisions and future actions throughout
an organization.
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