THE NATURE OF STRATEGIC

MANAGEMENT
Fred R. David
Forest R. David

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What is Strategic Management?

■ The art and science of formulating, implementing and evaluating cross-functional decisions that
enable the organization to achieve its objectives.
■ Integration of management, marketing, finance, accounting, operations/production, R&D and
information systems.
■ Formulation, implementation and evaluation of strategies.
■ A strategic plan is, in essence, a company’s game plan.
■ Depends on choices among ‘alternatives’ : more desirable vs. less desirable alternatives.

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 Stages of Strategic Management

■ Three stages: formulation, implementation and evaluation.

Stage 1: Formulation:
1. Developing a mission and vision;
2. Identifying S-W-O-T.
3. Establishing long term objectives,
4. Generating alternative strategies (that match limited resources and the benefit sought), and
5. Choosing particular strategies to pursue.
Example: deciding on what business to enter, what business to abandon, whether to expand the current operation
or diversify etc.

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 Stages of Strategic Management (contd..)

Stage 2: Implementation [Action Stage]

1. Establish annual objectives;
2. Devising policies;
3. Motivate employees;
4. Allocate resources;
5. Developing strategy supportive culture;
6. Creating effective organizational structure;
7. Redirecting marketing efforts;
8. Preparing budgets;
9. Developing and using information systems;
10. Linking employee compensation to organizational performance.

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Stages of Strategic Management (contd..)

Stage 3: Strategy Evaluation

1. Reviewing external and internal factors that are the bases for current
strategies.
2. Measuring performance;
3. Taking corrective actions.