The document discusses strategic management concepts including long-term objectives, types of strategies, performance measurement, Porter's generic strategies, and responding to change. Long-term objectives should be quantitative, measurable, realistic, and associated with a timeline of 2-5 years. Strategies include integration, market penetration, product development, and diversification. Performance is measured differently at the corporate, division, and functional levels based on long and short-term objectives. Porter's strategies are cost leadership, differentiation, and focus applied at different market sizes. Firms can respond defensively, anticipatorily, or offensively to changes in the industry.

1. Strategic Management
2/5/2014
Not managing by objectives
Long-term objectives
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Managing by extrapolation
Managing by crises
Managing by subjective
Managing by hope
The time frame for objectives and
strategies should be consistent
usually from two to five years
Nature of Long-term objectives
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Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent
Associated with a timeline
Types of strategies
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Forward integration
Backward integration
Horizontal integration
Market penetration
Market development
Product development
Related diversification
Unrelated diversification
Retrenchment
Divestiture
Liquidation
Varying performance measure by
organizational level
Organizational level Basis for Annual bonus or Merit pay
Corporate
75% based on long-term objectives
25% based on annual objectives
Division
50% based on long-term objectives
50% based on annual objectives
Function
Strategic management model
Perform
external
audit
Develop
vision and
mission
statements
Establish
long term
objectives
25% based on long-term objectives
75% based on annual objectives
Generate,
Evaluate,
and Select
strategies
Implement
Strategiesmanagement
issues
Implement
StrategiesMarketing,
Finance,
Accounting
, R&D and
MIS issues
Measure
and
evaluate
performanc
e
Perform
internal
audit
Strategy
Formulation
Chap 5: Strategies in Action
Strategy
Implementation
Strategy
Evaluation
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2. Strategic Management
2/5/2014
Levels of strategies with persons
more responsible
Corporate
level----chief
executive
officer
Intensive strategies
• Market penetration
• Market development
• Product development
Division level----division
president or executive
vice president
Functional level----finance, marketing,
R&D, manufacturing, information systems
and human resource managers
Operational level----plant managers, sales
managers, production and department managers
Large company
Levels of strategies with persons
more responsible
Diversification strategies
• Related diversification
• Unrelated diversification
Functional level----finance,
marketing, R&D,
manufacturing,
information systems and
Corporate
human resource managers
level----owner
or president
Operational level----plant managers, sales
managers, production and department managers
Small company
Integration strategies
• Forward integration
• Backward integration
• Horizontal integration
Chap 5: Strategies in Action
Defensive strategies
• Retrenchment
• Divestiture
• Liquidation
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3. Strategic Management
2/5/2014
Michael porter’s five generic
strategies
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Type
Type
Type
Type
Type
1: Cost leadership----Low cost
2: Cost leadership----Best value
3: Differentiation
4: Focus----Low cost
5: Focus----Best value
Michael porter’s five generic
strategies
GENERIC STRATEGIES
SIZE OF MARKET
Cost leadership
Differentiation
Focus
Large
Type 1
Type 2
Type 3
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Type 3
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Joint venture/Partnering
Merger/Acquisition
Private-Equity Acquisitions
First Mover Advantages
Outsourcing
Strategic management in nonprofit
and governmental organizations
• Educational institutions
• Medical organizations
• Governmental Agencies and Departments
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Small
Means for achieving strategies
Type 4
Type 5
Meeting the challenge of high-velocity
change
Strategic posture
Actions
Strategy
 Introduce better productions in
Defensive
Reacting to
change
 React and respond as
response to new offerings of rivals
needed
 Defend and protest the
company’s position
 Respond to unexpected changes in
buyer needs and preferences
 Adjust to new government policies
 Analyze the prospects for market
globalization
Anticipating
change
 Research buyer needs,
preferences and expectations
 Monitor new technological
developments closely to predict future
path
 Pioneer new and better
Offensive
Leading
change
technologies
 Introduce innovative products that
open new markets and spur the
creation of whole new industries
 Seek to set industry standards
Chap 5: Strategies in Action
 Plan ahead for expected
future changes
 Add/adapt resources and
competitive capabilities
 Improve product line
 Strengthen distribution
 Seize the offensive
 Be the agent of industry
change; set the pace
 Influence the rules of the
game
 Force rivals to follow
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