Lesson 1: Strategic Management: Creating Definition: Strategic management requires balancing

Competitive Advantages short-term operational needs with long-term vision.

Concept of "creative tension" as described by Peter
Strategic management consists of the analyses,
Senge. Discussion on the challenges of balancing
decisions, and actions to create and sustain
short-term pressures with long-term value creation.
competitive advantages.
Attribute 4 - Recognition of Trade-offs between
Three Ongoing Processes
Effectiveness and Efficiency
Analyses: Examination of strategic goals, internal
Definition: Strategic management involves making
and external environments.
trade-offs between effectiveness (doing the right
Decisions: Addressing questions on industries to
thing) and efficiency (doing things right).
compete in and how to compete.
Quote from Meg Whitman, Hewlett-Packard’s CEO,
Actions: Implementing decisions through resource
highlighting the importance of strategy execution.
allocation and organizational design.
Explanation of the central role of trade-offs in
Study of Competitive Advantage:
strategic management practice.
Core Focus: Strategic management revolves around
Key Terms for LO1
understanding why some firms outperform others.
Strategic management = the analyses, decisions,
Essential Questions:
and actions an organization undertakes to create and
- How should we compete to create
sustain competitive advantages.
marketplace advantages?
Strategy = the ideas, decisions, and actions that
- How can we sustain unique, valuable, and difficult-
enable a firm to succeed.
to-copy advantages?
Sustainable Competitive Advantage:
Competitive advantage = a firm’s resources and
Operational Effectiveness vs. Strategy:
capabilities that enable it to overcome the
Operational effectiveness improves performance but
competitive forces in its industry(ies).
does not guarantee sustained advantage. Strategy
Operational effectiveness = performing similar
focuses on uniqueness and differentiation.
activities better than rivals.
Making Clear Choices
Stakeholders = individuals, groups, and
Importance of Clear Strategy:
organizations that have a stake in the success of the
● A good strategy requires clear choices and
organization.
differentiation from rivals.
Effectiveness = tailoring actions to the needs of an
● Trying to compete with rivals leads to
organization rather than wasting effort, or “doing the
destructive price competition, not
right thing.”
sustainable advantage.
Efficiency = performing actions at a low cost relative
The Four Key Attributes of Strategic
to a benchmark, or “doing things right.”
Management
THE STRATEGIC MANAGEMENT
Attribute 1 - Directed Toward Overall
PROCESS
Organizational Goals and Objectives
Strategy Analysis is A study of firms’ external and
Definition: Strategic management focuses on what is
internal environments, and their fit with
best for the total organization, not just individual
organizational vision and goals.
functional areas.
Key Components of Strategy Analysis:
Attribute 2 - Includes Multiple Stakeholders
1. Analyzing Organizational Goals and
Definition: Strategic management involves
Objectives
considering the interests of various stakeholders such
2. Analyzing the External Environment of the
as owners, employees, customers, suppliers, and the
Firm
community.
3. Assessing the Internal Environment of the
Attribute 3 - Incorporates Short-term and Long-
Firm
term Perspectives
4. Assessing a Firm’s Intellectual Assets
Strategy formulation is developed at several levels. THE STRATEGIC MANAGEMENT
1. business-level strategy addresses the issue of how PERSPECTIVE: AN IMPERATIVE
to compete in each business to attain competitive THROUGHOUT THE ORGANIZATION
advantage. ● To develop and mobilize people and other
2. corporate-level strategy focuses on two issues: assets, leaders are needed throughout the
(a) what businesses to compete in organization.
(b) how businesses can be managed to ● No longer can organizations be effective if
achieve synergy; that is, they create more the top “does the thinking” and the rest of
value by working together than by operating the organization “does the work.”
as standalone businesses. ● Everyone must be involved in the strategic
management process.
3. develop international strategies as it ventures
CRITICAL NEED FOR THREE TYPES OF
beyond its national boundaries.
LEADERS:
4. formulate effective entrepreneurial initiatives.
Local line leaders who have significant profit-and-
Strategy implementation involves ensuring proper
loss responsibility.
strategic controls and organizational designs, which
Executive leaders who champion and guide ideas,
includes establishing effective means to coordinate
create a learning infrastructure, and establish a
and integrate activities within the firm as well as with
domain for taking action.
its suppliers, customers, and alliance partners.
Internal networkers who, although they have little
Leadership plays a central role to ensure that the
positional power and formal authority, generate their
organization is committed to excellence and ethical
power through the conviction and clarity of their
behavior.
ideas.
- promotes learning and continuous improvement and
Honing Strategic Management Perspective:
acts entrepreneurially in creating new opportunities.
Implementation Strategies: Empower employees,
Social responsibility - expectation that businesses or
promote transparency, and provide continuous
individuals will strive to improve the overall welfare
feedback to foster a strategic management
of society.
perspective.
Business’s perspective, this means that managers
Recommendations: Create a culture of
must take active steps to make society better by
accountability, feedback, and alignment with the
virtue of the business being in existence.
organization's strategy.
CSR 3 Theaters
Hierarchy of goals = the organizational goals
Theater one: Focusing on philanthropy.
ranging from, at the top, those that are less specific
programs are not designed to increase profits or
yet able to evoke powerful and compelling mental
revenues.
images, to, at the bottom, those that are more specific
Theater two: Improving operational effectiveness.
and measurable.
Initiatives in this theater function within existing
business models to provide social or environmental
benefits and support a company’s value creating
activities to enhance efficiency and effectiveness.
They typically can increase revenue or decrease costs
—or both.
Theater three: Transforming the business model.
Improved business performance is a requirement of
programs in this theater and is predicated on social
and environmental challenges and results.
TRIPLE BOTTOM LINE = Is an assessment of a
firm’s financial, social, and environmental
performance.
Vision = It pertains to the organizational goal(s) that
evoke(s) powerful and compelling mental images.
Leaders must develop and implement a vision.
A vision may or may not succeed; it depends on
whether or not everything else happens according to
an organization’s strategy.
VISION STATEMENT
develop a vision statement that answers the question
“What do we want to become?” Developing a
vision statement - first step in strategic planning,
preceding even the development of a mission
statement. Many vision statements are a single
sentence.
Challenges with Vision Statements:
Inconsistency Between Talk and Action:
- Idealistic visions can excite employees, but
inconsistency between senior management's
behavior and the vision can quickly erode
enthusiasm.
- Visions often become mere slogans without
consistent backing by management's actions.
Irrelevance:
- Visions created without consideration of
environmental threats, opportunities, or
organizational resources may fail to resonate
with employees.
Not a Magic Cure:
- Managers may view visions as a solution to
all problems, similar to a "holy grail" of
management, but visions alone cannot solve
organizational issues.
Narrow Focus Leading to Missed
Opportunities:
- Excessive focus on a grandiose vision may
result in overlooking emerging opportunities
or threats in the external and internal
environment.
Disconnect Between Ideal Future and Present
Reality:
- While visions are aspirational, they must be
grounded in present reality to be relatable
and credible to employees.
- Employees struggle to identify with visions
that ignore the challenges and weaknesses
faced by the organization.
Mission statement – set of organizational goals that
identifies the purpose of the organization, its basis of
competition, and competitive advantage.
Mission statements are “enduring statements of
purpose that distinguish one business from other
similar firms.
A mission statement identifies the scope of a firm’s
operations in product and market terms.”
basic question: “What is our business?”
clear mission statement describes the values and
priorities.
Variability in Mission Statements:
Length and Specificity:
Mission statements can vary significantly in length
and specificity, reflecting different organizational
priorities and values.
several key steps in developing a mission
statement several key steps:
1. Understanding Current Operations:
● Begin by thoroughly understanding the
nature and scope of the organization's
present operations.
● This includes assessing products or services,
target market, competitive position, and
existing strengths and weaknesses.
2. Assessing Future Potential:
● Evaluate the potential attractiveness of
future markets and activities.
● Consider emerging trends, market dynamics,
technological advancements, and potential
opportunities for growth or expansion.
3. Clarifying Organizational Direction:
● Define the organization's future direction
and overarching goals.
● Determine the purpose of the organization
beyond just financial success and identify its
broader impact on society, customers,
employees, and other stakeholders.
4. Incorporating Founders' Vision:
● Consider the founders' original vision and
values that inspired the creation of the
organization.
● Reflect on the core principles and beliefs
that guided their decisions and actions, and
incorporate these into the mission statement.
5. Involving Key Stakeholders:
● Engage key stakeholders, including
employees, customers, suppliers, and
shareholders, in the mission development
process.
 ● Seek their input and feedback to ensure that
the mission resonates with all stakeholders Timely. There must be a time frame for achieving the
and reflects their perspectives. objective.
6. Crafting a Clear and Concise Statement:
● Distill the organization's purpose, values,
and aspirations into a clear and concise
mission statement.
● Avoid jargon and ambiguity and ensure that
the statement is easily understandable and
memorable.
7. Ensuring Alignment and Commitment:
● Ensure that the mission statement aligns
with the organization's strategic objectives,
culture, and values.
● Foster commitment to the mission among
employees by communicating its importance
and relevance to their work.
8. Iterative Refinement:

● Recognize that developing a mission

statement is an iterative process.

● Continuously review and refine the

statement as the organization evolves, adapts
to changing circumstances, and achieves
new milestones.
Strategic objectives = It refers to a set of
organizational goals that are used to put into practice
the mission statement and that are specific and cover
a well- defined time frame.

FOR OBJECTIVES TO BE MEANINGFUL, THEY

NEED TO SATISFY SEVERAL CRITERIA. AN
OBJECTIVE MUST BE:

Specific. This provides a clear message as to what

needs to be accomplished.

Measurable. There must be at least one indicator (or

yardstick) that measures progress against fulfilling
the objective.

Appropriate. It must be consistent with the

organization’s vision and mission

Realistic. It must be an achievable target given the

organization’s capabilities and opportunities in the
environment. In essence, it must be challenging but
doable.