This document provides an introduction to strategic management. It defines key terms like strategy, strategic management, and strategic planning. It outlines the stages of strategic management as strategy formulation, implementation, and evaluation. It also discusses strategic management models and the benefits of strategic management for organizations. Finally, it notes some reasons why firms may not implement strategic planning and potential pitfalls to avoid in the strategic planning process.

1. Introduction of Strategic Management
Presented by Khubib Hikmat
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NATURE OF STRATEGIC MANAGEMENT
 What is Strategic Management?
 Stages of Strategic Management
 Key terms in Strategic Management
 Strategic Management Model
 Benefits of Strategic Management
 Why some firms don’t implement Strategic Planning?
 Pitfalls in Strategic Planning

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• After attending this presentation you should be able to:
 Understand the concept of strategy and strategic management.
 Describe the stages of strategic management.
 Explain strategic management model.
 Understand important terms in strategic management.
 Understand the nature of strategy.

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MEANING & DEFINITIONS OF STRATEGY:
 The word strategy has been derived from Greek word “Strategia”, which means troop leader, office of general,
command, generalship or art and science of directing military forces.
 Strategy has its origin in military science. The head of military forces, “general” ahs to deploy his resources in
such a manner which ultimately results into a success in a competitive warfare.
 Strategy is a high level plan to achieve one or more goals under condition of uncertainty.
 In military theory, strategy is the utilization during both peace and war, of all the nation’s forces, through large
scale, long range planning and development, to ensure security and victory.
 In management theory, strategy is the determination of the basic long-term goals of an enterprise, and
adoption of courses of an actions and the allocation of resources necessary for carrying out these goals.

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CONTINUED.
 Some important definition of strategy are as under:
 Strategy is the organization’s pattern of response to its uncontrollable external and controllable internal
environment over a defined future period to achieve the mission of the organization.
 Strategy is a planned or emergent course of action that is expected to contribute to the achievement of
organizational goals.
 Alferd Chandler has defined strategy as “the determination of the basic long term goals and objectives of an
enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out
these goals.”
 Strategy is unified, comprehensive and integrated plan that relates to the strategic advantages of the firm and
to the challenge of the environment.

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CONT.
Characteristics of strategy:
The following are some notable characteristics of strategy.
I. Strategy presupposes competitive situation.
II. Strategy is unique to the organization.
III. Strategy is futuristic in nature.
IV. Strategy involves long term planning.
V. Strategy strives to fulfill the expectation of various stakeholders through converting win-loose
situation into a win-win situation.
VI. Strategy is always market driven and customer driven activity. Strategy primarily focuses on the
markets and consumer statistician.

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CONT.
Essential elements of strategy:
The strategy has following four elements:
I. Defining mission, for example the long term objective which rational for the
enterprise existence.
II. Competitive advantage, to emerge as a powerful player in the competitive
environment.
III. Synergy, making efforts of everybody in the organization.
IV. Vector, development of backward and forward relationships in the business
environment.

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STRATEGY VS POLICY
 Strategy refers to unique plan designed to reach organizational goals and objectives.
 Whereas policy is a set of principles and rules which directs the decisions of the organization.
 The key differences between strategy and policy are as under:
I. Strategy is plan of actions while policy is principle of actions.
II. Strategies can be modified as per the situation, so they are dynamic in nature. Policies are uniform in nature,
however relaxation can be made in some situation.
III. Strategies are concentrated towards actions, whereas policies are decision oriented.
IV. Strategies deal with external environment. On the other hand, policies are made for internal environment of
business.
V. Strategies are formulated by top and middle level management, whereas polices are made by top level
management only.

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DEFINITION OF STRATEGIC MANAGEMENT
According to Lawrence Janch and William Gluek: “Strategic Management is a set of decisions and actions
resulting in formulation of strategies to achieve the objectives of the organization.”
Strategic management is a set of managerial decisions and actions that determines the long run
performance of a corporation. It includes environmental scanning (both external and internal), strategy
formulation (strategic or long-range planning), strategy implementation, and evaluation and control.
Strategic management can be defined as;
• The art and science of;
• Formulating, implementing, and evaluating cross-functional decisions;
• That enable an organization to achieve its objectives.
Strategic Management focuses on;
• Integration of Management, Marketing, Finance, Operations, R&D, Production and Personnel
Management.

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STRATEGIC MANAGEMENT BACKGROUND
• Strategic Management originated in 1950s, while become popular in 1960s and 1970s.
• 1990s, world wide practiced in the Business World.
 The term strategic management in the text is used synonymously with the term strategic planning.
 The term strategic planning is more often used in the business world, whereas the Strategic Management is
often used in academia.
 Sometimes the term strategic management is used to refer to strategy formulation, implementation, and
evaluation, while strategic planning referring only to strategy formulation.

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STAGES OF STRATEGIC MANAGEMENT
 Strategic Management Process consist of three Stages;
I. Strategy Formulation;
II. Strategy Implementation;
III. Strategy Evaluation.

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CONT.
 First Stage – Strategy Formulation
⁃ Developing Vision and Mission
• Vision is What Do We Want to Become?
• Mission is What is our business?
⁃ Identifying External Threats and Opportunities
⁃ Determining Internal Strengths and Weaknesses
⁃ Establishing long-term objectives, Strategies and alternatives about;
• What new business to enter?
• How to abandon business?
• How to allocate resources?
• Or how to avoid hostile takeover?

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CONT.
 Second Stage – Strategy Implementation
Strategy implementation often is called the “action stage” of strategic management. Implementing
strategy means mobilizing employees and managers to put formulated strategies into action.
Often considered to be the most difficult stage in strategic management, strategy implementation
requires personal discipline, commitment, and sacrifice.
Required for firm to;
• To establish annual objectives, make policy, motivate employees
• Allocate resources to execute formulated strategies
• Strategy-supportive culture, effective organizational structure
• Redirecting Marketing, Preparing budget and utilizing Information system
• Linking employees compensation with organizational performance

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CONT.
 Third Stage – Strategy Evaluation
Strategy evaluation is the final stage in strategic management. Managers desperately need to know
when particular strategies are not working well; strategy evaluation is the primary means for
obtaining this information.
All strategies are subject to future modification because external and internal factors are constantly
changing.
Three fundamental strategy-evaluation activities are:
• Reviewing external and internal factors that are the bases for current strategies;
• Measuring performance;
• Taking corrective actions.

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KEY TERM IN STRATEGIC MANAGEMENT
A. Competitive Advantage
• Anything that a firm does especially well compared to rivals.
• When a firm can do something that rival firms can not do.
B. Strategists
• Individuals- responsible for success and failure of any organization.
• Job titles- Chief Executive Officer, President, Owner, Chair of the Board, Executive Director, Dean
and Chancellor etc.

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CONT.
C. Vision Statement
• What do we want to become? 1st step in Strategic planning.
• The vision statement should be short, preferably one sentence, and as many managers as possible
should have input into developing the statement.
• Vision of Stoke Eyes Clinic; our vision is to take care of your vision.
D. Mission Statement
• Enduring statement of purpose that distinguish one firm from similar firms.
• Identify Firm scope, products and values.
• Sometimes called a creed statement, a statement of purpose, a statement of philosophy, a statement
of beliefs, a statement of business principles, or a statement “defining our business,” a mission
statement reveals what an organization wants to be and whom it wants to serve.

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CONT.
E. External Opportunities and Threats
It refers to;
• Economic, Social, Cultural, Demographic, Environmental, Legal, Governmental, Technological and competitive
trends.
• Benefit or harm organization in the future.
• Mostly beyond control of single firm.
F. Internal Strengths and Weaknesses
It refers to;
• Organization controllable activities, may perform well or poorly
• Arise in; Marketing, Management, Finance, Accounting, Production, Operation, Research and Development.
• Strategists try to;
I. Capitalize internal strength
II. Eliminate or minimize weaknesses

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CONT.
G. Long-term Objectives
• Objective – Specific results that a firm seeks to achieve in perusing its basic mission.
• Long-term means more than one year
H. Strategies
• Strategies are the means by which to achieve long-term objectives.
• May be; Expansion, Diversification, integration, retrenchment …

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CONT.
I. Annual Objectives
• Short term milestone, enable firm to achieve long-term objectives.
• Objectives must be SMART
J. Policies
• Policies are the means by which annual objectives will be achieved.
• Policy includes; established Guidelines, rules and procedures.
• Policy assist during decision making.

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STRATEGIC MANAGEMENT MODEL

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CONT.
There are three important questions to answer in developing a strategic plan:
I. Where are we now?
II. Where do we want to go?
III. How are we going to get there?

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STRATEGIC MANAGEMENT BENEFITS
I. Financial Benefits
II. None financial Benefits
• Identification, prioritization and exploitation of opportunities.
• Manage and solve problems
• Activities control
• Integration of various functions
• Regular scanning

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WHY SOME FIRMS DO NOT DO STRATEGIC PLANNING
I. Lack of Knowledge and experience in the Strategic planning
II. Poor reward structures
III. Firefighting condition or crisis situation
IV. Waste of time, too expensive, laziness
V. Content with success- no need for plan cause firm is successful
VI. Fear of failure, prior bad experience, fear of unknown
VII. Overconfidence and suspicion- lack of trust on management.

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PITFALLS IN STRATEGIC PLANNING
Some pitfalls, need to watch and avoid in strategic planning;
I. Using SP, to gain control over decision and resources
II. Doing SP, to satisfy accreditation or regulatory requirements
III. Fail to communicate Strategic plan
IV. Top managers, not support Strategic planning
V. One man show, during strategic planning
VI. Viewing planning as unnecessary or unimportant

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