2. Strategic Management
STRATEGY Long Term Planning
Strategic management as ‘that set of managerial
decisions and actions that determines the long-run
performance of a corporation’
4. .
The strategic management process is typically broken
down into five events or steps:
1. organization’s direction
2. environmental analysis
3. strategy formulation
4. strategy implementation
5. strategy evaluation
STRATEGIC MANAGEMENT PROCESS
6. Strategic formulation
i) Strategic choice.
The term ‘strategic choice’ raises the question of who makes decisions
and why they are made
ii)Hierarchyofstrategy:
Different levels of strategy:
(1)Corporate level
(2)Business level
(3) functional level
8. Strategic Formulation (Cont)
Corporate-level
• Strategy describes a corporation’s overall direction in terms of its
general philosophy towards growth and the management of its various
business units.
That strategy for a multidivisional company involves at least four types of
initiatives:
• Establishing investment priorities and steering corporate resources into
the most attractive business units.
• Initiating actions to improve the combined performance of those business
units that the corporation first got into.
• Finding ways to improve the synergy among related business units in order
to increase performance.
• Decisions dealing with diversification
9. Strategic Formulation (Cont)
Business-level strategy
• Business-level strategy deals with decisions and actions
pertaining to each business unit.
• The main objective of a business-level strategy being to make
the unit more competitive in its marketplace.
• This level of strategy addresses the question, ‘How do we
compete?’
10. Strategic Formulation (Cont)
• In the 1980s, Porter (1980, 1985) made a significant contribution to
our understanding of business strategy by formulating a framework
that described three competitive strategies: cost
leadership, differentiation and focus.
Business Level Strategy
Porter's Generic Strategies
12. Strategy Formulation (Cont)
Functional-level strategy
• Functional-level strategy pertains to the major functional
operations within the business unit, including research and
development, marketing, manufacturing, finance and HR.
• ‘How do we support the business-level competitive strategy?’
Consistent with this, at the functional level, HRM policies and
practices support the business strategy goals.
13. Strategy Implementation
• Strategy implementation is an area of activity that focuses on
the techniques used by managers to implement their
strategies.
• In particular, it refers to activities that deal with leadership
style, the structure of the organization, the information and
control systems, and the management of human resources
• Emphasize that leadership is the most important and difficult
part of the strategic implementation process.
14. Strategy Evaluation
• Determines to what extent the actual change and
performance match the desired change and performance.
• Operating Performance
• Financial Performance
