The document provides an overview of the strategic management model and process. It includes the following key elements: 1) Strategy formulation which involves developing long-range plans including the mission, objectives, strategies, policies, and environmental scanning. 2) Strategy implementation which involves putting the strategy into action through programs, budgets, procedures, and evaluating internal strengths and weaknesses. 3) Environmental scanning which involves gathering external opportunities and threats as well as internal strengths and weaknesses. 4) Evaluation and control which involves monitoring performance against the mission, goals, and objectives and providing feedback to make corrections.

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3. Strategic Management Model
Strategy Formulation:
Developing Long-range Plans
Mission
Reason for
existence
Objectives
What results
to
accomplish
by when
Strategies
Plan to
achieve
mission &
objectives
Policies
Broad
guidelines
for decision
making
Strategy Implementation:
Putting Strategy into Action
Programs
Activities
needed to
accomplish a
plan
Budgets
Cost of the
programs
Procedures
Sequence of
steps needed
to do the job
Environmental
Scanning:
Gathering
Information
External:
Opportunities and
Threats
Societal
Environment:
General forces
Task Environement:
Industry analysis
Internal:
Strenghts and
Weaknesses
Structure:
Chain of command
Culture:
Beliefs, expectations, values
Resources:
Assets, skills,competencies,
knowledge
Evaluation and
Control:
Monitoring
Performance
Performance
Actual results
Feedback/Learning: Make corrections as needed
Source: Strategic Management and Business Policy by Thomas L. Wheelen and J. David Hunger

4. Strategy

 How do we measure success?
 What controls should we
implement?
 How is our return vs.
competitors’?

 How much do we have to spend?
 How should we allocate
resources?
 What budget process should we
use?
 What is critical for success?
 What activities must we do?
 What should we not do?
Priorities
Key Actions
Performance
Success Metrics
Payments
Budget
 Who are we?
 What do we offer that is unique?
 Where are we headed, exactly?
Position
Mission and Vision
4
Strategic
Leader

5. Environmental Analysis
•Economic
•Sociocultural
•Technological
•Political
Opportunities and threats
Evaluate current
Performance
•Mission
•Goals
•Objectives
•Strategies
Industry Analysis
•Structure
•Evolution
•Competition
Competitive analysis and
positioning
Strategy Options
•Business unit
•Corporate
Evaluation
•Resource requirements
•Risk/Return
Implementation
Company Analysis
•Structure
•Resources
•Processes
•Staffing
•Culture
Strengths and weaknesses
The Strategy Formulation Process
How do we get there?
Where should we go?Where are we now?
Source: STRATEGY - A view from the Top : Cornelis A. de Kluyver & John A. Pearce II

6. Standard methodology: The Four Cs
• Identify relative channel leverage
— Sources of advantage
— Sustainability
• Impact of channel strategies on
market positioning
Market Positioning Of
XYZ Company
• Break down the company’s cost
structure
— Fixed
— Variable
• Estimate the competitor’s cost
structure
• Understand trends in cost
structures
• Segment the company’s customer
base
— New/existing
— Loyal/switchers
• Examine company profitability by
segment
— How much do they purchase?
— At what price?
• Identify major competitors
— Traditional
— Unexpected substitutes
• What are the competitor’s
strengths and weaknesses
— Profits
— Costs
• Investigate market share
Costs Customers Competitors Channels
Tools

7. R&D
 Definition: Discovering new knowledge about products, processes,
and services, and then applying that knowledge to create new and
improved products, processes, and services that fill market needs.
 On average, most companies spend only a small percentage of their
revenue on R&D (usually under 5%).
 Pharmaceuticals, software and semiconductor companies tend to spend quite a
bit more.
7

8. R&D – Blue Ocean Strategy
Red Ocean Strategy Blue Ocean Strategy
• Compete in existing market space
• Beat the competition
• Exploit existing demand
• Make the value/cost trade-off
• Align the whole system of a
company’s activities with its
strategic choice of differentiation
or low cost
• Create uncontested market
space
• Make the competition irrelevant
• Create and capture new
demand
• Break the value/cost trade-off
• Align the whole system of a
company’s activities in pursuit of
differentiation and low cost
Eliminate
Reduce
Raise
Create
Decide
which
factors to:
8

9. Forecasting
Assess
previous
sales/demand
history
9
Islamic banksIslamic banks

10. Financing Tools
10
•Government-backed funding created to facilitate the purchase of assets and
either the generation of jobs or training of employees.Grants and Soft Loans
•Provide finance for acquisition of specific assets such as cars, equipment, and
machinery involving a deposit and repayments over three to ten years.Hire Purchase and Leasing
•When a lender gives money or property to a borrower and the borrower agrees to
return the property or repay the money, without interest.
Islamic Loans
•Loan finance where there is little or no security left after the senior debt has been
secured, usually through higher interest or shorter repayment term.
•Financing a corporate project through institutional debtPublic Debt Issue
•The first offering of equity to the public. Both small companies and large
companies may go public to rapidly raise money.Initial Public Offering
•Typically occurs when a company finds itself in a troubled financial situation and
needs to ask the public for financial resources.Public Equity Raising
•Finance raised against debts due from customers via invoice discounting or
invoice factoring.Invoice Discounting and Factoring
•Intended for higher risk business development where the investing institution
acquires ownership in the business.Venture Capital
DebtEquity

11. Financing Tools
11
Existing
shareholders
and directors
funds
Family and
friends
Business angels
Grants
Factoring and
invoice
discounting
Hire purchase
and leasing
Islamic banks Venture capital
Potential Sources of Finance

12. Technology
 A technology strategy for a company outlines how an
organization will use information technology to achieve the
organizations business strategy. This includes the following
uses:
Communicate
internally
Knowledge
management
Communicate
with customer
Promote
product,
service or
brand
12

13. Manufacturing/Supply Chain
 Supply chain design involves decisions including:
 Selection of partners
 Location and capacity of warehouse/production facilities
 Modes of transportation,
 Mode of transformation
 Supporting information systems
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Focus Area
CustomerSupplier
DISTRIBUTIONPRODUCTIONPURCHASING

14. Stakeholder Analysis
The
company
Management
National
Constituencies
Local Community
Vendors
Shareholders
Customers
Employees
Local Politicians
14Tools

15.  Business Plan
Company Name

16.  Clearly state your company’s long-term mission.
 Try to use words that will help direct the growth of your company, but be as
concise as possible.
Mission Statement

17.  List CEO and key management by name.
 Include previous accomplishments to show that these are people with a
record of success.
 Summarize number of years of experience in this field.
The Team

18.  Summarize your market in the past, present, and future.
 Review those changes in market share, leadership, players, market shifts,
costs, pricing, or competition that provide the opportunity for your
company’s success.
Market Summary

19.  Identify problems and opportunities.
 State consumer problems, and define the nature of product/service
opportunities that are created by those problems.
Opportunities

20.  Summarize the key technology, concept, or strategy on which your
business is based.
Business Concept

21.  Summarize the competition.
 Outline your company’s competitive advantage.
Competition

22.  List five-year goals.
 State specific, measurable objectives for achieving your five-year goals.
 List market-share objectives.
 List revenue/profitability objectives.
Goals and Objectives

23.  Outline a high-level financial plan that defines your financial model and
pricing assumptions.
 This plan should include expected annual sales and profits for the next three
years.
 Use several slides to cover this material appropriately.
Financial Plan

24.  List requirements for the following resources:
 Personnel
 Technology
 Finances
 Distribution
 Promotion
 Products
 Services
Resource Requirements

25.  Summarize the risks of the proposed project and how they will be
addressed.
 Estimate expected rewards, particularly if you are seeking funding.
Risks and Rewards

26. R&D
 Definition: Discovering new knowledge about products, processes,
and services, and then applying that knowledge to create new and
improved products, processes, and services that fill market needs.
 On average, most companies spend only a small percentage of their
revenue on R&D (usually under 5%).
 Pharmaceuticals, software and semiconductor companies tend to spend quite a
bit more.
Source: www.12manage.com
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27.  Near term
 Identify key decisions and issues that need immediate or near-term
resolution.
 State consequences of decision postponement.
 Long term
 Identify issues needing long-term resolution.
 State consequences of decision postponement.
 If you are seeking funding, be specific about any issues that require
financial resources for resolution.
Key Issues

28. Competitors Plans
Global Competition
Substitutes
Threats
Industry Capacity
Cyclical / Seasonal
Economy
Consumer tastes
Market Trends
Market Demand
Bottlenecks
Design for manuf.
Improve Productivity
Add shifts
Acquire
Outsource
Add Capacity
Investment vs. Improvement
Should We Increase Capacity?
28
Case-specific Frameworks: Increase capacity
Should we increase capacity?
28

29. Product
Is quality sagging?
Price
Have sensitivities changed?
Overpriced versus our competition?
Place
Is our distribution getting squeezed out?
Are Customers Changing Channels?
Promotion
Are we spending?
Push vs. pull?
Has public image changed?
Company
Tastes changing?
Disposable income?
Demographics of our target?
Do new substitutes exist?
Customer
Are low cost competitors
stealing from us?
Are diffentiated competitors
stealing from us?
Are competitors integrating
into distribution and
shutting us out?
Are they offering our customers
special incentives to switch?
(particularly with substitutes)
Competition
Do new tax
incentives exist?
Any new regulations
restricting the use of our
product and favoring substitues?
Regulatory
What Has Changed in
the Following Environments?
Case-specific Frameworks: Customer turnover
What has changed in the
following environments?
29

30. Susbsitutes
Demographic changes
New customers?
Values/Tastes
Disposable income
Mature market?
Price Sensitivity
Distribution channel
Bundled product?
Normal good?
Purchasing Habits
Customer
- What do they want?
- How do they choose?
Product
Place
Price
Promotion
Competitor
- Where are we positioned?
- Where is the competition?
Cost structure
Tangible
Intangible
Finances
Resources to respond?
Distributor
Vendor
Customer
Business relationships
Company
- How do we add value?
• Given the above, is it worth making a competitive response?
• How will the competition react?
• Applying game theory or PARTS analysis may help.
Case-specific Frameworks: Competitive Response
How should company respond to
competitor’s move?
30

31. Product
Have we done homework?
What does the segment want?
Proliferation of products already?
Price
Have we explored sensitivity?
Can we make a profit at this price?
Promotion
Push or Pull?
Cost of launch?
Will current promotions help?
Place
Is distribution aligned with customer?
Are we experienced in this channel?
Customer
Does product met a need?
Is market growing?
Can we eat the young?
Many
What wil be the strategy?
Low cost or Differentiated?
Few
Yes
Yes
Can we beat them?
No
Can we erect some?
Are there barriers to entry?
Any precious resource
that we own?
(Ricardian rents)
Will we be first movers?
No
Competition
Is there any?
Finance
Are we able to finance the launch?
Should we buy an existing producer?
Operations
D0 we have capacity?
Supply network?
Marketing
Will we cannibalize existing products?
Is this a complement / bundled good
Does it build on resources?
Company
Can we do it?
Case-specific Frameworks: New Product Introduction
Should company launch the new
product?
31

32. Doesit match our growth strategy?
- ROE/ROI
Alliance with local firm?
- Joint venture/distributor
Can our resources succeed overseas?
- Flexible enough to adapt?
Is organization consistent
with overseas 'autonomy'
Corporate Values
- Bribery
Worker's conditions / child labor
Internal
Cultural Differences of Customers
- Tastes / product preferences
- Values / gender roles
Methods of Conducting Business
- Introductions
- Government contacts
Educational Differences
Economy & Exchange Rates
Seasonality
- Weather
Distribution system
- Transportation infrastructure
- Different channels
Political Climate
- Instability
Local Market
- Size
- Competition
External
Amount
Timing
- Startup / disposition
- Operating
Discount Rate
Cash Flows
ROI / Hurdle Rate
Quantitative
Case-specific Frameworks: International Expansion
Should company expand internationally?
32