Strategic management involves formulating, implementing, and evaluating cross-functional decisions to achieve organizational goals. It integrates various business functions like management, finance, production, R&D, and IT. Strategic management has three stages - formulation, implementation, and evaluation of strategies. In formulation, companies analyze their internal strengths/weaknesses and external opportunities/threats to develop long-term objectives and strategies. Implementation requires setting annual goals, policies, budgets and structures. Evaluation reviews performance and strategies based on changing internal and external factors. The purpose is to create new opportunities by capitalizing on strengths and responding to threats and weaknesses.

1. Strategic Management

2. Strategic Management –
defined as the art and science of formulating, implementing and evaluating
cross functional decision that enables an organization to achieve its
objective.
It involves – integrating management, finance/accounting,
production/operations, R & D, and CIS to achieve organizational success
Strategic Management is synonomous with the term Strategic Planning
(strategic formulation)
Strategic Management is a combination of strategic formulation,
implementation, and evaluation.
The purpose of Strategic Management is to exploit and create new and
different opportunities for tomorrow.

3. Stages of Strategic Management
1.Strategy formulation  (Corporate )
2.Strategy Implementation  (Divisional)
3.Strategy Evaluation  (SBU)

4. Strategy formulation
 including a firm’s mission and vision, SWOT Analysis, creating long term objectives,
alternative strategies and choosing particular strategies to pursue.
 Other issues include, deciding what new businesses to enter, which business to abandon,
how to allocate resources, whether to expand or diversify (Garments vs Fresh/Rahim
Afrooz)
 Entering into the international market
 How to avoid hostile take over
 Due to resource limitation, strategist must decide which alternatives will benefit the firm
most
 Strategies determine long term competitive advantage, and only top management team must
have the foresight to understand the full ramification of strategy formulation decisions, and
have the authority to disperse the resources for implementation

5. Strategy implementation
Strategy implementation demands a firm to establish
annual objective, create policies, motivate employees and
allocate resources so the formulated strategies can be
implemented.
Strategy Implementation involves -
developing strategy supportive culture
Creating effective organizational structure
Redirecting marketing efforts
Preparing budges
Developing and utilizing information system

6. Strategic Evaluation
Strategic Evaluation – is the final stage of Strategic
Management where all strategies are modified as internal
and external factors are constantly changing
Reviewing external and internal factors which are linked to
current strategies
Measuring performance
Taking corrective actions

7. Competitive Advantage
Anything that a firm does better compared to its rival firm
Getting and sustaining C.A. is essential for a firms long term success
Pursue of competitive advantage can leads to a firm’s success or
failure
Normally a firm can sustain a competitive advantage for a certain
period of time due to rivals imitation and undermining the advantage
(i.e. Vigin Cans, City Cell)
Firms try to sustain competitive advantage via
Continually adapting to changes in external trends and events, and
internal capabilities, competencies and resources
Effectively formulating, implementing and evaluating strategies that
capitalizes upon these factors

8. Strategist-
those individuals who are most responsible for the success or
failure of an organization – CEO, Chairman, BOD etc .
Their main role is to gather, analyze and organize
information
i.e. Steve Jobb – Apple Bill Gates - Microsoft
These individuals track industry and competitive trends,
forecasting models, spot emerging markets etc

9. Vision & Mission Statements
Vision – 1st
step in strategic planning and consist of one
sentence
‘what do we want to become’
i.e. Stokes Eye Clinic – Our vision is to take care of your
vision
Mission – used to distinguish one business from another, and
identifies scope of a firm’s operations in product and market
terms’

10. Internal Strength &
Weakness
Are a firms controllable activities – Marketing, finance/accounting,
production/operations, R & D, and CIS to achieve organizational
success
Firms are constantly trying to increase their internal strengths and
eliminate their weaknesses i.e. TQM - Edward Deming
Firms measure internal strengths via
Computing ratio’s ( turnovers, measuring performance, comparing
past periods & industry averages
Surveys – employee morale, production efficiency, advertising
effectiveness and customer loyalty

11. External Opportunities and
Threats
Refers to economic, social, cultural, demographic, environmental,
political, legal, governmental, technological and competitive trends
which may benefit or harm an organization in the future
Opportunities and Threats are beyond the span of control of an
organization
The theory of strategic management is that firms need to take advantage
of external opportunities and reduce the impact or external threats
Internet has revolutionized the way how people conduct business, and
focus is now on changing work values and attitude, space exploration,
recyclable packages and increased competition from foreign companies

12. Long Term & Short Term
objectives
Objective – is a state of direction, which help in evaluations, creating
synergy, reveal priorities, focus coordination and provides basis for
effective planning, organization and motivation controlling activities
Objectives -must be challenging, measurable consistent reasonable
and clear
Long term objective are objectives which takes more an a year to
achieve (usually 5 years or more)
Strategies means long term objectives – which could be geographic
expansion, diversification, acquisition, product development, market
penetration, joint venture or liquidation

13. Short term objectives
Are also known as annual objectives which are short term mile stones
that a firm must achieve to reach long term objectives
Short term objective must be measurable, quantifiable, challenging,
realistic, consistent and prioritized
Annual objectives are stated in all parts of the organization in terms of
management, finance, production, R& D, MIS accomplishment.
A set objective is needed for each long term objectives
Annual objectives are most important in strategy implementation
Annual objectives represent basis for resource allocation

14. Benefits of Strategic
Management
Firms must be more proactive than reactive – initiate influence and
have control over its own destiny
Strategic Management helps to formulate better strategies via
systematic, logical and rational approach
Communication is the key to successful Strategic Management
Understanding the important of S M helps employees understand what
an organization is doing and why they are doing it
This helps to make build commitment from employees and they feel
empowered
Empowerment is the act of strengthening employees sense of
effectiveness by encouraging them to take part in decision making

15. Why some firms do not focus on strategic planning
Poor reward structure – failing to reward success
Fire fighting – crisis management they do not have enough time to plan
Waste of time
Too expensive – culturally some firms are opposed to spending money
Laziness – don’t want to put the effort to formulate a plan
Content with success – they are happy with today
Fear of Failure – what is the guarantee of success
Overconfidence –some firms rely on their own experience and expertise.
But overestimating their experience can bring their demise
Prior bad experience - people may have had some bad experience with
planning, which may have been long, impractical or inflexible.

16. Pitfalls in Strategic Planning
Using strategic planning to gain control over decision and resource
Satisfy a credential and regulatory requirements
Hastily moving from mission development to strategy formulation
Failing to communicate plans with employees
Top manager are making too many intuitive decision which effects formal plan
Top managers not actively supporting strategic planning process
Delegating ‘planning’ to planner
Failing to involve key employees in all phases of planning
Viewing planning as unnecessary or un important
Being engrossed with current problems where no emphasis is given on
planning
Being so formal in planning that flexibility and creativity is shifted

17. Reference Books
1. STRATEGIC MANAGEMENT (12th
Edition)
Author: Fred R. David
2. STRATEGIC MANAGEMENT & BUSINESS POLICY (12TH
EDITION)
Authors : THOMAS L. WHEELEN & J. DAVID HUNGER
Optional Recommended book
2. STRATEGIC MANAGEMENT, Thinking, Analysis & Action
– (2nd
Edition)
Author: Graham Hubbard