Strategic

Management
Prepared by : Md. Rubayet Abedin
ID: 15202016

Date of Submission : 25 June 2015

(1) What is business strategy? What is Strategic Management? Why it is done?

Benefit of strategic management?

What is business strategy?

George Steiner, a professor of management and one of the founders of The
California Management Review, is generally considered a key figure in the
origins and development of strategic planning. His book, Strategic Planning [2]
points out in his notes that there is very little agreement as to the meaning of
strategy in the business world. Some of the definitions in use to which Steiner
pointed include the following:

Strategy is that which top management does that is of great importance to the
organization.

Strategy refers to basic directional decisions, that is, to purposes and missions.

Strategy consists of the important actions necessary to realize these directions.

Strategy answers the question: What should the organization be doing?

Strategy answers the question: What are the ends we seek and how should we
achieve them?

Steiner was writing in 1979, at roughly the mid-point of the rise of strategic planning.
Perhaps the confusion surrounding strategy contributed to the demise of strategic
planning in the late 1980s.

Henry Mintzberg, in his 1994 book, The Rise and Fall of Strategic Planning [3],
points out that people use "strategy" in several different ways, the most common
being these four:
1. Strategy is a plan, a "how," a means of getting from here to there.
2. Strategy is a pattern in actions over time; for example, a company that regularly
markets very expensive products is using a "high end" strategy.
3. Strategy is position; that is, it reflects decisions to offer particular products or
services in particular markets.
4. Strategy is perspective, that is, vision and direction.

Mintzberg argues that strategy emerges over time as intentions collide with and
accommodate a changing reality. Thus, one might start with a perspective and conclude
that it calls for a certain position, which is to be achieved by way of a carefully crafted
plan, with the eventual outcome and strategy reflected in a pattern evident in decisions
and actions over time. This pattern in decisions and actions defines what Mintzberg
called "realized" or emergent strategy.
Kenneth Andrews presents this lengthy definition of strategy in his book, The
Concept of Corporate Strategy [4]:
"Corporate strategy is the pattern [italics added] of decisions in a company that
determines and reveals its objectives, purposes, or goals, produces the principal
policies and plans for achieving those goals, and defines the range of business
the company is to pursue, the kind of economic and human organization it is or
intends to be, and the nature of the economic and non-economic contribution it
intends to make to its shareholders, employees, customers, and communities.
(pp.18-19)."
Andrews definition obviously anticipates Mintzbergs attention to pattern, plan,
and perspective. Andrews also draws a distinction between "corporate strategy,"
which determines the businesses in which a company will compete, and
"business strategy," which defines the basis of competition for a given business.
Thus, he also anticipated "position" as a form of strategy.
In a 1996 Harvard Business Review article [5] and in an earlier book [6], Porter
argues that competitive strategy is "about being different." He adds, "It means
deliberately choosing a different set of activities to deliver a unique mix of value."
In short, Porter argues that strategy is about competitive position, about
differentiating yourself in the eyes of the customer, about adding value through a
mix of activities different from those used by competitors. In his earlier book,
Porter defines competitive strategy as "a combination of the ends (goals) for
which the firm is striving and the means (policies) by which it is seeking to get
there." Thus, Porter seems to embrace strategy as both plan and position.

What is Strategic Management?

Strategic management is the process of managing the pursuit of organizational
mission while managing the relationship of the organization to its environment
(James M. Higgins).

 Strategic management is defined as the set of decisions and actions resulting in

the formulation and implementation of strategies designed to achieve the
objectives of the organization (John A. Pearce II and Richard B. Robinson, Jr.)
Strategic management is the process of examining both present and future
environments, formulating the organization's objectives, and making,
implementing, and controlling decisions focused on achieving these objectives in
the present and future environments (Garry D. Smith, Danny R. Arnold, Bobby
G. Bizzell)
Strategic management is a continuous process that involves attempts to match
or fit the organization with its changing environment in the most advantageous
way possible (Lester A. Digman)

Why it is done (Strategy)?

Strategy is Significant because it is not possible to foresee the future. Without a perfect
foresight, the firms must be ready to deal with the uncertain events which constitute the
business environment.
Strategy deals with long term developments rather than routine operations, i.e. it deals
with probability of innovations or new products, new methods of productions, or new
markets to be developed in future. Strategies dealing with employees will predict the
employee behavior. Strategy is a well defined roadmap of an organization. It defines the
overall mission, vision and direction of an organization. The objective of a strategy is to
maximize an organizations strengths and to minimize the strengths of the competitors.
Benefit of strategic management?
Strategic management includes strategic planning, implementation and review/control of
the strategy of an organization. All most all the modern organizations engage in
strategic management to ensure that they achieve the desired level of performance.
There are many benefits that an organization can obtain by engaging in strategic
management and they can be described as follows:
1) Sets the strategic direction to the firmStrategic management process clearly defines what is the desired level of performance
(mission/goals/objectives) and it sets the direction so that everyone in the organization
knows where they are heading towards.

2) Focus on critical factors of the organizationStrategic management identifies the critical factors that are strategically important to the
organization.
3) Understanding the changing environmentStrategic management predicts the future changes that can take place and
take necessary steps to manage change with contingency planning and change
management strategies.
4) Obtaining sustainable competitive advantageThis is the most important and the most critical benefit of strategic planning.
5) Lead to better performanceThe successful strategic management should ensure that the company performs very
well and generates profits for its owners.
6) Ensure the long term survival in the market placeIt makes use of opportunities and minimizes threat to make sure that company can
survive in the market by outperforming its rivals.
7) Simplifies complex scenarios and develop suitable strategiesIn contrast firm with strategic management makes the business complexities simple,
predict future dynamics and take proactive steps to minimize threats and make use of
opportunities.
Financial Benefits:
1. Improvement in sales.
2. Improvement in profitability.
3. Improvement in productivity.
Non-Financial Benefits:
1. Improved understanding of competitors strategies.
2. Enhanced awareness of threats.
3. Reduced resistance to change.
4. Enhanced problem-prevention capabilities.

(2) Mention briefly, the external and internal stakeholder and their impact in an
organizational strategy?

Stakeholder is a person who has something to gain or lose through the

outcomes of a planning process, programmed or project.

Internal stakeholders are people who are already committed to serving your
organization as board members, staff, volunteers, and/or donors.
External stakeholders are people who are impacted by your work as
clients/constituents, community partners, and others. It is important to get the
perspectives of both groups.

The external and internal stakeholder

internal
___ Board members
___ Former board members
___ Staff members
___ Former staff members
___ Volunteers
___ Former Volunteers
___ Donors
___ Other

external
Competitors
Industry trade groups
Clients
Community partners
Customers
Suppliers
Quality assessors
Media
Others

Impact of stakeholder an organizational strategy?

Impact and importance is always in relation
seeking to achieve.

to

the

objectives

that

are

Impact
Simply refers to how powerful a stakeholder is in terms of influencing
direction of the project and outcomes.
Simply refers to those stakeholders whose problems, needs and interests
are priority for an organization.
Here are some examples of types of direct impact:
Legal hierarchy (command control of budgets)
Authority of leadership (charismatic, political)
Control of strategic resources (suppliers of services or other inputs)
Possession of specialist knowledge
Negotiation position (strength in relation to other stakeholders).
Indirect impact may also be achieved through:
Social, economic or political in status
Varying degrees of organization and consensus in groups
Ability to influence the control of strategic resources significant to the
project

Informal influence through links with other groups

Other stakeholders in assessing their importance to the project issues.
Appointing external stakeholders can be more economical for a company than
developing its own specialists and spending an important part of the budget
intraining them.

(3) Please explain what is SWOT analysis?

A SWOT analysis is an integral part of a company's strategic planning process because
it provides a good all-around view of the company's current and forward-looking
situation. The strengths (S) and weaknesses (W) sections provide a look at the
company's current position. The opportunities (O) and threats (T) sections help the
company project possibilities and challenges going forward. Each of these four sections
has specific advantages to the overall analysis.
Strengths:
The strengths section allows the company to consider its competitive
advantages in the marketplace. These advantages are typically a focal point of the
company's operation and strategic planning. They also often coincide with the way the
company markets. For instance, companies that have strengths related to
manufacturing and production quality often promote themselves as high-quality brands.
Companies that have very efficient distribution systems and good bargaining power with
suppliers as strengths can often leverage those to provide low costs to buyers.
Weaknesses:
It may seem counterintuitive that a company would see
advantages in assessing its weaknesses, but understanding them makes them easier to
deal with. Generally, companies have two approaches to dealing with weaknesses.
They can either seek to improve them if those weaknesses restrict the company from
implementing its strategies to achieve objectives. Or, they realize that their weaknesses
are simply a part of the overall business approach and company leaders try to downplay
those weaknesses in marketing their brand.
Opportunities:
The opportunities section is critical to development of company
strategies as it helps the company identify ways to improve and grow. Constantly
reviewing market opportunities helps companies take advantage of emerging markets
or changes in the marketplace that the company has strengths to match. These are
significant advantages over companies that fail to routinely assess opportunities and
miss out on the ability to gain new business, market share and access to capital.

Threats:
Again, analyzing threats to your business is not a fun part of a SWOT
analysis, but it helps the company insulate itself as well as possible from external
threats. The environment, regulations, technology and trends are among possible
factors that can threaten the viability and ongoing success of a business. By assessing
these risks and challenges, company leaders can better prepare them or decide how to
respond from a strategic standpoint.
Ref: http://smallbusiness.chron.com/advantages-swot-analysis-strategic-plan25672.html
(4) Please explain what is PEST analysis?

Numerous factors determine and affect the environment of an organization, which

should be identified, understood and analyzed by the company so it can achieve
optimum performance. PEST analysis categorizes these factors affecting the
organization under four headings, namely:

Political

Economic

Social

Technological

If you want to know what is PEST analysis and how it can be used to gain an insight
into the environment of your organization, you need to understand what these factors
represent and how they are interdependent. Once these environmental factors are
identified and analyzed, organizations are in a better position to plan an effective
strategy to meet their objectives and minimize any errors that might be causing a
performance-expectation gap.
Political:
Political factors refer to the degree of government intervention in the economy.
The legal and regulatory factors included are labor laws, tax policies, consumer
protection laws, employment laws, environmental regulations, and tariff & trade
restrictions. Often, the foreign policy of a country play an important role in determining
the trade regulations, which can either result in trade restrictions or trade incentives.
The industry-specific regulations imposed by the government also significantly impact
the company and are also a part of this category in the PEST analysis.

Economical:
Economical factors include the inflation rate, exchange rate, interest rate,
employment/ unemployment rate and other economic growth indicators. The economic
factors faced by an organization have a significant impact on how a business carries on
its operations in the future. The exchange rates affect the organization by affecting the
cost of imported and exported goods. Furthermore, the interest rates prevailing in the
economy influence the cost of capital available to the organization and hence play an
important role in the expansion and growth of the organization.

Social:
Social factors include different cultural and demographic aspects of society that
form the macro-environment of the organization. Social factors include career attributes,
age distribution, population and its growth rate, health consciousness and safety
awareness. A study of these factors is important to understand what is PEST, and can
help organizations understand the dynamics of existing and emerging potential markets
and future customer needs.

Technological:
Technology is evolving at a rapid pace and consumers are becoming
extremely tech-savvy. With the advent of new technology, older technology gets
outdated and obsolete. The technological factors an organization faces include
technological changes, R&D activity, obsolescence rate, automation and of course,
innovation. If an organization does not look out for technological changes, it can lag
behind its competitors.

Developing an understanding of what is PEST analysis becomes even more important

when an organization is about to launch a new business or a new product as all these
factors play an important role in determining the feasibility and profitability of the new
venture.