2. S
Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives
As this definition implies, strategic management focuses on
integrating management, marketing, finance/accounting,
production/operations, research and development, and information
systems to achieve organizational success
Strategic management consists of the analysis, decisions and
actions an organization undertakes in order to create a sustain
competitive advantage
3. S t r a t e g i c M a n a g e m e n t
The success of a strategy is based on the concept
of difference:
• Doing different things;
• Doing things differently;
• Dealing with different people/things differently
4. C h a r a c t e r i s t i c s o f S t r a t e g i c
M a n a g e m e n t
• It concentrates on the long term;
• It deals with achieving the objectives of the Organisation;
• The scope is wholesome;
• The deals with the Organisation’s environment (Internal & External);
• It is dynamic;
• It is about gaining competitive advantage over rivals;
• It builds on resource-base competences; (Capability)
• It deals with allocation of resources; (physical, financial & human)
• It addresses value creation for customers;
• It is about meeting the desires and expectations of shareholders.
5. C h a l l e n g e s t o S t r a t e g i c
M a n a g e m e n t
• Resources are scarce; (Men, Material, Money, Machinery & Market)
• Choices have to be made;
• How to create products that are desired by customers?
• How to position the company in the industry?
• How to deploy resources to create value?
• How each function should be operated?
• How to achieve performance targets?
• The business environment is complex; (difficult to understand)
• The business environment is uncertain; (it keeps changing)
• The business environment is diverse; (too many factors to consider)
6. L E V E L S O F S T R AT E G Y
• There are three levels of Strategy:
• Corporate (Strategic level) – top level
• outlines the overall direction of the business;
• It decides which market(s) the organisation will operate
in;
• It defines all other decisions that are made within the
organization;
• It is general in nature.
7. B u s i n e s s ( M a n a g e m e n t l e v e l ) –
m i d d l e l e v e l
•It stems from the corporate strategy which has
been set;
•It is more specific in nature;
•they are more common in larger firms that engage
in multiple activities, than they are in small
businesses.
8. F u n c t i o n a l ( O p e r a t i o n a l l e v e l ) – l o w
l e v e l
• day-to-day actions which are required to deliver corporate and business
strategies;
• Deals with meeting operational goals and how they will be monitored.
Strategy formulation, implementation, and evaluation activities occur at
three hierarchical levels in a large organization: corporate, business and
functional. Smaller businesses may only have the corporate and functional
levels or business and functional
9. S t a g e s o f S t r a t e g i c M a n a g e m e n t
The Strategic Management process consists of
three stages.
• Strategy Formulation
•Strategy Implementation
• Strategy Evaluation
10. S T R AT E G Y F O R M U L AT I O N
• refers to the process of choosing the most appropriate course of action for
the realization of organizational goals and objectives and thereby achieving
the organization’s desires.
• Strategy Formulation includes: developing a vision and mission, identifying
an organization’s external opportunities and threats, determining internal
strengths and weaknesses, establishing long-term objectives, generating
alternative strategies, and choosing particular strategies to pursue.
• Strategy formulation issues include deciding what new businesses to enter,
what businesses to abandon, how to allocate resources, whether to expand
operations or diversify, whether to enter international markets, whether to
merge or form a joint venture, and how to avoid a hostile takeover.
11. S t r a t e g y F o r m u l a t i o n
• Strategy Formulation includes:
• developing a mission and vision;
• establishing long-term objectives;
• determining internal strengths and weaknesses; (SWOT
Analysis)
• identifying an organization’s external opportunities and
threats; (SWOT ) Analysis, PEST Analysis)
• generating alternative strategies; (Gap Analysis)
• choosing particular strategies to pursue (Cost Benefit Analysis).
12. C r a f t i n g a M i s s i o n
Mission
•why we are in business;
•statement of purpose
•why the organization exists
13. C o n t e n t o f M i s s i o n S t a t e m e n t
Content of Mission Statement may include:
• Technology
• Company Objective
• Company core values
• Public image
• Self concept
14. C r a f t i n g a V i s i o n
•Vision
•Organisational aspiration
•Where do we want to be?
15. C o m p a r i n g M i s s i o n & V i s i o n
Mission
•There is no time or quantity factor;
•It is not achievable;
•It cannot be changed (legal implications);
•It communicates to the external;
•Its scope is present
16. C o m p a r i n g M i s s i o n & V i s i o n
Vision
•Time and quantity factor
•Achievable
•Basis to determine success or failure
•Can be changed
•Communicates to the internal
•Scope – future
17. S T R AT E G Y
I M P L E M E N TAT I
O N
is the translation of chosen strategy into organizational action(s) so
as to achieve strategic goals and objectives.
It requires a firm to establish annual objectives, devise policies,
motivate employees and allocate resources so that formulated
strategies can be well executed;
• It also includes preparing budgets, developing and utilizing
information systems and linking employees’ compensation to their
contribution towards meeting organizational vision;
• It creates structural, systemic, process and/or personnel changes
as well as resource requirements.
Strategy implementation often is called the “action stage” of
strategic management. Implementing strategy means mobilizing
employees and managers to put formulated strategies into action.
18. S t r a t e g y I m p l e m e n t a t i o n
This involves:
• motivating employees; linking employee compensation to
organizational performance.
• allocating resources;
• developing a strategy-supportive culture;
• creating an effective organizational structure;
• preparing budgets;
• developing and utilizing information systems
19. S T R AT E G Y E VA L U AT I O N
• is the final stage in strategic management. Managers desperately need to
know when particular strategies are not working well; strategy evaluation is
the primary means for obtaining this information. All strategies are subject
to future modification because external and internal factors are constantly
changing. Three fundamental strategy evaluation activities are:
• • reviewing external and internal factors that are the bases for current
strategies,
• • measuring performance, and
• • taking corrective actions.
20. S T R AT E G Y E VA L U AT I O N
• The significance of strategy evaluation lies in its capacity to co-ordinate the
task performed by managers, groups, departments etc, through control of
performance. Strategy formulation, implementation, and evaluation activities
occur at three hierarchical levels in a large organization:
• Corporate level
• divisional or strategic business unit, and
• functional level.
• By fostering communication and interaction among managers and employees
across hierarchical levels, strategic management helps a firm function as a
competitive team. Most small businesses and some large businesses do not
have divisions or strategic business units; they have only the corporate and
functional levels.
21. B E N E F I T S O F S T R A T E G I C
M A N A G E M E N T
Strategic management allows an organization to be more proactive than reactive in shaping its own future
It allows an organization to initiate and influence activities—and thus to exert control over its own destiny
Small business owners, chief executive officers, presidents, and managers of many for-profit and nonprofit organizations
have recognized and realized the benefits of strategic management
It allows for identification, prioritization, and exploitation of opportunities
It provides an objective view of management problems
It represents a framework for improved coordination and control of activities
It minimizes the effects of adverse conditions and changes
It allows major decisions to better support established objectives
22. B E N E F I T S O F S T R A T E G I C
M A N A G E M E N T
• It allows more effective allocation of time and resources to identified
opportunities
• It allows fewer resources and less time to be devoted to correcting
erroneous or ad hoc decisions
• It creates a framework for internal communication among personnel
• It helps integrate the behavior of individuals into a total effort
• It provides a basis for clarifying individual responsibilities
• It encourages forward thinking
• It provides a cooperative, integrated, and enthusiastic approach to tackling
problems and opportunities
• It encourages a favorable attitude toward change
• It gives a degree of discipline and formality to the management of a
