CHAPTER 1 –

INTRODUCTION
TO STRATEGIC
MANAGEMENT
 LEARNING
OBJECTIVES:

• After the completion of the chapter, students

will be able to:

➢ define the strategic management in Tourism

and Hospitality Context;
➢ discuss the historical origins of strategic
management;
➢ identify the schools of thoughts on strategic
management;
➢ discuss the strategic management framework
and its objectives; and
➢ define key terms pertaining to strategic
management and their significance.
 WHAT IS STRATEGIC
MANAGEMENT?
➢Strategic management is a field of study that
involves the process through which firms define
their missions, visions, goals, and objectives.
➢It helps organizations to prioritize what is important
for them and provides a holistic view of an
organization.
➢Historic origins of strategic management have been
linked to the military
➢The word strategy comes from the Greek
STRATEGOS, which means “GENERAL.”.In literal
terms, it means “LEADER OF THE ARMY.”
 HISTORY AND ORIGINS OF STRATEGIC
MANAGEMENT

1950’s – 1960’s
400 B
18th CENTURY the focus was on
The basis of strategic leadership, interpersonal
management can be
Carl von Clausewitz’s relationships, and the
linked to the works of systems, processes, and
considered strategy
Sun Tzu. Reference to structures in an
“a variation of
space, quantities, and organization. Firms used
themes” in war
other factors related is the top-down approach,
situations. According
like the characteristics with the top management
to him, strategy was at the core of the
of the positioning
“open-ended and decision-making process.
school. According to
creative” in a situation The strategic
Sun Tzu, calculations
of chaos and management process was
underlie victorious
disorganization not formalized and
situations in wars. explicit.
 HISTORY AND ORIGINS OF STRATEGIC
MANAGEMENT

1970’s – 1980’s 2000’s – PRESENT

1990’s
firms adopted the globalization led to the
strategic planning emergence of network In the 2000s focus on
approach with an strategies, and strategic environmental
emphasis on alliances became the focal scanning in the
analysis and point around which hospitality industry
formalized planning, researchers developed the context have made
literature. More efforts from a
with special teams attempts to develop
resource-based perspective
assigned to develop led to the conceptualization the strategy
plans. Hospitality & of characteristics related to implementation
tourism domains on the firm’s internal framework for
strategic planning competencies that enabled hospitality and
has begun in this them to sustain competitive tourism firms during
period. advantage. this period.
10 SCHOOL OF THOUGHTS ON
STRATEGIC MANAGEMENT

➢ A framework that can be used to categorize

the field of Strategic Management.
➢ It describes each school in context and
provides a critique. Thus, it acts as a very
good overview to the entire field of Strategic
Management.
➢ Henry Mintzberg, a globally-acclaimed
academician and author on business and
management is the proponent of the 10
SCHOOL OF THOUGHTS ON STRATEGIC
MANAGEMENT
 10 SCHOOL OF THOUGHTS ON STRATEGIC
MANAGEMENT

PLANNING DESIGN LEARNING POWER

POSITIONING ENTREPRENEURIAL CULTURAL ENVIRONMENTAL

CONFIGURATION
COGNITIVE
 THE DESIGN SCHOOL
❖ The company does an internal analysis with the help of SWOT analysis
❖ The company then tries to match its internal strength with the market
strength which is required.

THE PLANNING SCHOOL

❖ The complete process and the plan which the company will implement
is documented from the start to finish.
❖ With the plan in hand, the management gets a clear direction to move
in, helping the company to move forward unanimously.

THE POSITIONING SCHOOL

❖ The management has to determine the competition already present in
the market, and where is their own company positioned
❖ Once the market has been analyzed, the right strategy is needed to
improve the positioning of the product.
 THE ENTREPRENEURIAL SCHOOL
❖ In this case, the CEO needs to be visionary, needs strong leadership skill,
and must have the right judgement and direction.
❖ This strategy has been proven right in very few cases over the years where
the leaders were legendary by themselves.
THE COGNITIVE SCHOOL
❖ It is a mental and psychological process to find out what is in the minds of the
consumer and how do we improve on that or use that information.
❖ Once you know customers perception and thought process about you, you
can change the same with strategy. You can either improve or you can
communicate better so that your customers have more information about you.

THE LEARNING SCHOOL

❖ The company looks at things that worked and tries to implement the same
thing over time with the assumption that it will work again.
❖ The company also looks at things that did not work in its favor (or in favor of
a competitor who tried the same thing) and discards such things / processes.
 THE POWER SCHOOL

❖ Anyone who is known to have power over the company, can drive the
company forward.
❖ This ensures that there is lesser resistance for the strategy to be
implemented
❖ It is a very realistic thought process, because in corporates, there are
so many people that power should reside in few hands.

THE ENVIRONMENTAL SCHOOL

❖ Major emphasis is on the environment – which can be a raw material or

a major factor in the strategy of the company.

❖ Situational analysis is the most used tool in the environmental school.

 THE CULTURAL SCHOOL
❖ The cultural school tries to involve many different departments
within a company. It is most useful during mergers and acquisitions.
❖ It emphasizes the role of social values, beliefs and culture in
decision making.

THE CONFIGURATION SCHOOL

❖ As per the configuration school, strategy needs to consider a lot of things
which can go wrong and cannot be derived from simple set of values.
❖ Over a period, an organization forms various sets of values which must be
transformed so that the organization reaches the point that it desires.
❖ To do this, the organizations stable business might need to be disrupted, and
the organization must be configured so that it reaches the success it was
looking for.
❖ Hence, the name configuration school, so that the organization is
configured over and over
STRATEGIC MANAGEMENT
FRAMEWORK

A strategic framework is a structured method

used to define how a project or initiative
supports the key objectives of stakeholders.
There are four components to a strategic
framework:

Business objective. What will the project

or initiative achieve?
Approach. How will that achievement be
realized?
Measurement. How will achievement be
measured and reported?
Target. What is the forecasted
improvement that will define success?
 AIMS OF STRATEGIC MANAGEMENT
1. AT THE CORPORATE LEVEL
Strategy is about asking questions about what business the firm is in or would like to
be in, the firm’s potential to create value by being in the business or expanding into a
new line of business, and the resources and capabilities the firm already has or needs
to get to sustain/create competitive advantage in its business or businesses.

2. AT THE BUSINESS LEVEL

Firms need to ask themselves the following questions: How can we create competitive
advantage in our product market domains in each strategic business unit (SBU)? How
can we continue to be an overall cost leader or a broad differentiator, or, for that matter,
have a cost focus or be a focused differentiator in our market domain?

3. AT THE FUNCTIONAL LEVEL

The firm’s objective is to sustain its advantage by focusing on efficiencies related to
production, operations, administration, marketing, and other support functions. It also
engages in constant innovation to ensure new product/service development rollout,
while ensuring that the service and product qualities, as well as the customer
satisfaction related to them, are at the highest level.