This document provides an introduction to a strategic management course. It discusses key concepts that will be covered, including applying the strategic audit process to case studies, integrating functional analyses, and viewing the firm from a board level. It outlines the purposes of strategic management, including expressing objectives and linking the firm to its environment. It then presents models of the strategic management process, including strategic analysis, choice, and implementation. Finally, it discusses the differences between corporate and business unit strategy and how value is created in organizations.

1. Strategic Management
Lecture 1

2. INTRODUCTION to strategic management as a framework for case
analysis. You will learn how to apply the stages of the strategic audit
to case studies involving real organisations.
INSTRUCTION and practice in the preparation and delivery of case
study presentations
INTEGRATION of functional analyses of the firm (that is, accounting
and finance, marketing, human resource management and operations) and
external macro-environmental analysis (the international business
environment). These aspects of the business programme mirror the
holistic nature of the actual process of strategic management.
INDUCTION into the top management team: the firm is viewed long-
term from board level.
Purposes of the Course

3. A specific level of decision:
Mission
« what business are we in? »
Strategy
(quantifiable objectives)
Operations/Tactics
(means)

4. How are the firm’s objectives expressed?
• Profitability
• Efficiency
• Growth
• Shareholder Wealth
• Resource Utilization
• Reputation
• Contribution to
employees
• Contribution to society
• Market leadership
• Technological leadership
• Survival
• Personal wishes of
management

5. Structure/Culture/Resources
• Structure: The way a firm is organized in terms
of communication, authority, and workflow.
• Culture: Pattern of beliefs, expectations, and
values, shared by an organization’s members.
• Resources: Assets of the firm, including skills
and abilities within functional areas.

6. Successful Strategy
Long-term,
simple and
agreed upon
objectives
Profound
understanding of
the competitive
environment
Objective
appraisal of
resources
Effective implementation
Common Elements in Successful
Strategy

7. The Basic Framework
THE FIRM
Goals & Values
Resources &
Capabilities
Structure & Systems
THE
INDUSTRY
ENVIRONMENT
Competitors
Customers
Suppliers
STRATEGY
STRATEGY
Strategy:
the Link between the Firm and its
Environment

8. A Basic Model of the
Strategic Management Process
• Strategic Analysis:
▫ Purposes and Expectations (or, Mission &
Objectives)
▫ The Environment:
 Opportunities & Threats!
▫ Resources, Competences, & Capabilities
 Strengths & weaknesses!
 …And culture

9. A Basic Model of the
Strategic Management Process
• Strategic Choice:
▫ Corporate (and diversification) & Business strategy
▫ Innovation strategy
▫ International strategy
▫ Strategic Options
▫ Strategy Evaluation & Selection
• Strategic Implementation:
▫ Organization Structure & Design
▫ Resource Allocation & Control
▫ Leadership & Managing Strategic Change

10. RATE OF PROFIT
ABOVE THE
COMPETITIVE
LEVEL
How do we
make
money?
INDUSTRY
ATTRACTIVENESS
Which
businesses
should we be
in?
COMPETITIVE
ADVANTAGE
How should
we compete?
CORPORATE
STRATEGY
BUSINESS
STRATEGY
Sources of superior profits

11. Corporate Level Strategic Decisions are Concerned
With:
• What business (industry) should we be in?
• How can we add value to shareholder
investment?
• Portfolio Issues
• Resource allocation between SBU’s
• Structure and control of SBU’s
• Corporate financial strategy

12. Business Unit Strategy is Concerned with:
• Competitive Strategy
• Developing market opportunities
• Developing new products & services
• Resource allocation within the SBU
• Structure and control of the SBU

13. How is value created?
• Consider the organization as a value chain,
i.e. a set of interrelated organizational activities
and relationships which are necessary to create
a product or a service: from research and
product development through to marketing and
after-sales services.
• Some companies are better than others when it
comes
to executing some (or all) activities of the value
chain

14. Value Chain Model
– M.Porter
Inbound
Logistics
Operations Marketing
and Sales
After sales
Services
Outbound
Logistics
Firm infrastructure
Human Resource Management
Procurement
Technology Development

15. Two definitions of strategy
• “The determination of the long-run goals and
objectives of an enterprise and the adoption of
courses of action and the allocation of resources
necessary for carrying out these goals.’’
▫ - Alfred Chandler
• “Strategy is about being different. It means
deliberately choosing a different set of activities
to deliver a unique mix of value”
▫ - Michael Porter

16. Your assignment:
• For the next session:
• Basic facts about your company
• Description of the ‘business model’
• Results (financial)
• Key strategic issues facing the company
• Send the presentation to:
▫ d.russell@psbedu.paris