Strategic management process . 1. Basic financial planning 2. Forecast-based planning 3. Externally-oriented planning 4. Strategic management

2. Basic Concepts of Strategic Management
Presented by: KAMMAL Group

3. KAMMAL Group:
Kiran Saleem SoomroK
• Abdul Karim Malak (Leader)A
•
Mian Iqrar AhmedM
•Mehak Panhwar
•Ali Baba Malokani
M
A
L Lakhmir Khan Dal

4. Strategic Management is:
• Set of managerial decisions and actions that
determines the long-run performance of a firm.
It includes environmental scanning (both
external and internal), strategy formulation
(strategic or long-range planning), strategy
implementation, and evaluation and control.

5. 4 Phases of Strategic Management:
Firms evolve through the following phases of strategic
management.
1. Basic financial planning
2. Forecast-based planning
3. Externally-oriented planning
4. Strategic management

6. 1. Basic financial planning: initiate some planning when
they requested to set up their budgets; considers
activities for one year.
2. Forecast-based planning: consider projects for more
than a year. The time horizon is usually 3-5 years.
3. Externally-oriented planning: conduct strategic
planning by top management and they leave
implementation to low level.
4. Strategic management: planning by forming a team
from all levels in the company.

7. Strategy formulation:
• Strategy formulation is typically not a regular, but
continuous process and often initiated by generating
events, such as a new CEO or a performance gap.
1. Corporate strategy
2. Business strategy
3. Functional strategy
Types of Strategy:

8. 1. Corporate Strategy: describes a company’s overall
direction in terms of its general attitude toward growth
and the management of its various businesses and
product lines.
2. Business Strategy: usually occurs at the business unit or
product level, and it emphasizes improvement of the
competitive position of a corporation’s products or
services in the specific industry or market segment
served by that business unit.
3. Functional Strategy: is the approach taken by a financial
area to achieve corporate and business unit objectives
and strategies by minimizing resource productivity .

9. Highly Rated Benefits:
• A survey of nearly 50 firms in a variety of countries and
industries found the three most highly rated benefits of
strategic management to be:
1. Clearer sense of strategic vision
2. Sharper focus on strategic importance
3. Improved understanding of changing environment

10. Globalization:
• Internationalization of markets and corporations Global
(worldwide) markets rather than national markets.
• As more industries become global, strategic management
is becoming an increasingly important way to keep track
of international developments and position the company
for long term competitive advantage.
• Globalization presents real challenge to the strategic
management of business corporations.

11. Creating a Learning Organization:
• Strategic management has now evolved to the point that
its primary value is in helping the organization operate
successfully in a dynamic, complex environment.
• To be competitive in dynamic environments,
corporations are having to become less bureaucratic and
more flexible.
• Learning organizations avoid stability through continuous
self-examination and experimentation. Not just top
management but people at all levels in organization,
need to be involved in strategic management.

12. • Learning organizations are skilled at four main activities:
1. Solving problems systematically.
2. Experimenting with new approaches.
3. Learning from their own experiences and past history as
well as from the experiences of others.
4. Transforming knowledge quickly and effectively
throughout the organization.

13. Environmental
Scanning
Strategy
formulation
Strategy
implementation
Strategy
evaluation
External: Societal
Environment, General
Forces, Task Environment
Industrialist
Internal: Structure, Chane
of Command, Cultural
Believe Expectation, Values,
Resources: Assets, Skills,
Competencies, Knowledge
Mission – Reason for existence,
Object what results accomplish by
when, Strategies - Plan to achieve
Mission and Objectives , Polices –
Broad guidelines for decision
making
Programs – activities needed to
accomplish the plan, Budget – cost
of the program, Procedure -
sequences or steps needed to do
the job
Performance- process
to monitor
performance and take
corrective actions
Fig: 1.1 Strategic Management Process:-

14. Environmental Scanning:
• Environmental scanning is the monitoring evaluating and
distributing of information from the external and internal
environments to key people within the corporation.
• The simple way to conduct environmental scanning is
through SWOT analysis.
1. External Environment: consists of variables
(Opportunities and Threats) that are outside the
organization and not typically within the short run
control of top management. Fig. 1.2 depicts key
environmental variables.

15. 2. Internal Environment: consists of variables (Strength and
Weaknesses) that are within the organization itself andn
are not usually within the short run control of top
management.
• These variables from the context in which work is done.
They includes corporations structure, culture and
resources.

16. i
Internal
Environment
Structure, Culture
Resources
Societal Environment
Economic
Forces
Technological
ForcesPolitical - Legal
Forces
Sociocultural Forces
Task Environment
Industry
Suppliers
Employee/Labo
r Union
Competitors
Communities
Creditors
Customers
Government
Trade Associations
Special Interest
Groups
Shareholders
Fig: 1.2 Environmental Scanning:-

17. Strategic Decision Making:
• Unlike many other decisions, strategic decisions deals
with the long-run future of the entire organization and
have three characteristics:
1. Rare: Strategic decisions are unusual and typically have
no precedent to follow.
2. Consequential: Strategic decisions commit substantial
recourses and demand a great deal of commitment
from people at all levels.
3. Directive: Strategic decisions set models for smaller
decisions and future actions throughout the
organization.

18. Henry Mintzberg Modes of Strategic Decision
Making:
• According to Henry Mintzberg the most typical
approaches, or modes of strategic decision making are:
1. Entrepreneurial Mode
2. Adaptive Mode
3. Planning Mode
1. Entrepreneurial Mode: Strategy is made by one
powerful individual. The focus is on opportunities;
problems are secondary.

19. 2. Adaptive Mode: Sometimes referred to as “muddling
through,” this decision making mode is characterized by
reactive solutions to existing problems, rather than a
proactive search for new opportunities.
3. Planning Mode: This decision-making mode involves the
systematic gathering of appropriate information for
situation analysis, the generation of feasible alternative
strategies, and selection of most appropriate strategy.

20. • In some instances, a corporation might follow a forth
approach called logical incrementalism, which is s
synthesis of planning, adaptive, and, to a lesser extent,
the entrepreneurial modes of strategic decision making.

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