Strategic Management

Art & science of formulating, implementing, and evaluating, cross-functional decisions that
enable an organization to achieve its objectives
Strategic management help us to make strategic plan or business plan, main goal for strategic plan to set
corporate direction
Business plan will contain industry description, product portfolio and three micro plans include financial plan,
marketing plan & operational plan

Strategic decision or plan criteria Basic Elements of Strategic Management

Long term plan C > Corporate plan > Board of directors & CEO
Scope for plan is very wide B > Business plan > Middle management
Required resources should be major resources F > Functional plan > FLM

Thomas Wheelen Steps for Strategic plan Fred David Steps for Strategic plan
Vision
(1)
Strategy Formulation

Enviro.
Strategy Evaluation

(2) (3) (4)

Implementation.

Scanning Vision
Mission External Internal Strategic
Strategy

(Analysis analysis analysis objectives

for current Core value
situation)
Internal & (7) (6) (5)
external Strategies Strategies Strategies
Evaluation Implementation Generation
PLOCS P LOS C
Fred David Models
1. Input Phase (3)
2. Matching Phase (5)
EFAS (Thomas Wheelen) / EFE (Fred David) 3. Decision Phase (1)
External factor analysis Summary (PESTEL- BCG Boston consulting group
Porter 5 Force Model- Issue Priority Matrix IE Internal External QSPM
External factor Evaluation SPACE Strategic planning & action Quantitative Strategic
Evaluation Planning Matrix
IFAS / IFE
TOWS
Internal Factor Analysis Summary
Internal Factor Evaluation Grand Strategy Matrix
Distinctive competitive advantages
CPM = Competitor Profile Matrix Ex: Toyota operation excellence
All the above models should be quantified as follows Apple & Microsoft Innovation
Singapore airline best service
Thomas Wheelen 12345 Non forced
Fred David 1234 Forced (more accepted) Rate here refer to organization ability to adapt with
threats & weaknesses or to use strengths & opportunities

Delphi technique everyone from board makes rate &

weight ALONE

3.1
 Importance of Managers - Real life examples

Bringing the company

back from redundancy
& a near-death
experience by shifting it
into software and
Reed Hastings
services & exiting most
hardware businesses Netflix has primarily replaced traditional video rental
services like Blockbuster due to its convenience, more
extensive selection, and lower cost.

Toyota’s Recipe for Success

Just in
time

Alan Mulally Fred Smith

Renowned for his strategic and
operational leadership and working
together, Alan Mulally transformed a
Operation struggling Ford Motor Company into
excellence one of the world’s leading automobile
companies and the #1 automobile
brand in the United States.
He is the founder and chairman
of FedEx Corporation, the world's
largest transportation company
He was cited in Forbes “100 Greatest
Living Business Minds” and has been
named a top CEO by both Barron’s
and Chief Executive Magazines.
FedEx Strategy PSP > People Service
Profit

Prospectors’
companies invest in
R&D Ex: Apple
Nokia CEO Stephen
Elop Analyzers companies
Peter Drucker Said to survive you have to
little invest in R&D
Innovate, Grow, Make profit
Ex: Samsung
& Satisfy your customer
Defenders all
“Trees die from the top.” products are
EX: Mikhail Gorbachev traditional
Former President of the Soviet Union
Reactors
Miles & Snow’s
Strategy

Creation of assembly lines, which made

standardization and mass production
possible. The advantage of the assembly
line was that it brought the work to the
worker instead of making the worker go to
the work. Increases productivity by 35%
Frederick Winslow Taylor
known as the Father of
Scientific Management,
which also came to be known
Captive pricing as “Taylorism.”

"An army of sheep led by a Hawthorn studies by Elton Mayo

lion defeating an army of lions Better lightening more regular
led by a sheep" improves productivity. However,
when workers see that people
show concern of them,
productivity rises more

Company turnaround meaning to change an unsuccessful

business, plan, or system so that it becomes successful: The
Daniel Schwartz
new management team turned the ailing company around in
Burger King CEO
under six months.
Example: Managing by walking around (Burger King Strategy)

Shared Economy
Real sharing ex: Wikipedia
Importance of strategy Gift giving
Pseudo sharing ex: airbnb
 Ghosn known as one of the automobile industry’s great
turnaround artists. Nissan & Renault forming a strategic
alliance, they hoped to share best practice and balance
out access to all the major markets across the world

Carlos Goshen
“Saving the business without losing the company”

• Lee Iacocca, American automobile executive who was

president and chairman of the board of Chrysler
Corporation, credited with reviving the foundering
company
• Ford dismissed Iacocca to prevent him from becoming
the company's CEO

Jack Welch: was the chair and chief executive of General

Electric from 1981 to 2001.
The master of transformational leadership theory
Welch sees the process of leading an organization in four simple
steps: Start by working on yourself. Encourage your people to take
the initiative. Use the brains of every worker

Lee Kuan Yew, politician and lawyer who was founding father
and first prime minister of Singapore, who transformed the
tiny island outpost of Singapore into one of Asia’s wealthiest
and least corrupt countries. Lee Kuan used succession
planning strategy, died here on Monday. He was 91

Mahathir Mohamed is a Malaysian politician, author, and physician

who served as the 4th and 7th Prime Minister of Malaysia for 22
years, from 1981 to 2003.He is widely credited for Malaysia's rapid
economic development and transformation from the 1980s.
 Sources of data
Secondary ……. Primary data
Free freemium = free part only of report/ premium
1. Cia.gov = up to date data about all industries
Ideal Data should 2. Worldbank.org
be
3. IMF = international monetary fund
Up to date
Timely 4. CAPMAS ‫الجهاز المركزي للتعبئة العامة واإلحصاء‬
Accurate 5. CBE Central Bank of Egypt
Documented 6. Statista
Relevant 7. GCI Global competitiveness index report – political & economic analysis ‫تقرير‬
Cost effective ‫ دولة‬140 ‫التنافسية العالمية‬
Clear
Complete 8. Doing business ‫ دولة‬190 ‫تقرير تسيير األعمال‬
Credible 9. Google trends – analysis for people trends
10. Google alert search by key words public figure name or Topics
11. Feedly -RSS really simple syndication – following websites for competitor
12. Euromonitor = reports about industries ‫تقريردولي لصناعة في دولة‬
13. BMI Business monitor international Fitch ‫–منظمة تختص بالتصنيف اإلئتماني للدول‬
14. Primary research

Business Efficiency

Pareto ratio – Italian Economist Warren Buffett’s

20% customers 80% revenue strategy and Pareto
20% products 80% revenue ratio
20% salespeople 80% revenue If we want something
20% regions 80% revenue bigger for ourselves,
20% marketing expenses 80% revenue we must shrink our
focus.

Mix and match strategy lead to synergy 1+1 = 3 Steve Jobs

select only
10 products
out of 300
 Internal Analysis

‫ثالوث القيم‬
Developed by Michael Treacy and
Prospectors
Fred Wiersema in their book The Ex: Apple
Discipline of Market Leaders and Differentiation
suggests that in order to be
viable a business must be
successful in three key areas Products in pipeline are
hidden for end customer

Analyzers
Ex: Toyota
Cost leadership

Ex: Singapore Airline

FMA = First mover advantage Ways to measure customer satisfaction

Ex: Walkman for SONY & iPod for apple NPS> Net Promoter Score (0-10)
0-6 Detractor – 7-8 Passive – 9-10 Promoter
NPS = Promoter – Detractor
One Piece Flow NPS should be conducted after a major activity
CSAT = Customer Satisfaction
Batch Flow
Customer Intimacy
ERP = Enterprise Resource Planning
Connect company’s department e’ each other
CRM = Customer Relationship Manager
Hub spot website free CRM
RFID = Radio frequency Identification
Inventory management through detection for
expiry
 Chapter 2
Vision, Mission& Core values
Vision: how the company foresees itself in the future. Vision should be UN realistic.
Vision must be
Vision statement …3Cs
1. Very broad • Clear
2. Very elastic • Concise
3. Intangible • Common understanding
4. Non achievable

Mission: what is the reason behind the

existence of the company?
Objectives: future goals, should be realistic

“To develop leaders who will one day make a

global difference.”
 Core Values
1. Respect
2. Integrity and honesty FCPA (Foreign
Corruption Practice Act)
3. Loyalty (McClelland’s Theory)
4. Creativity and innovation
Creative idea & Innovative product
Thinking is creativity – Innovation is execution
5. Team spirit opposite to Silo Mentality (gossip)
The most individualistic country USA
The most collectivism country Costa Rica
Sweden the highest country in feminine culture &
Japan is the highest in masculine
Masculine values (assertiveness, success,
achievement & time orientation)
6. Assertiveness >> there is strong relation
between assertiveness & decision making,
problem solving, risk taking, confrontation
7. Perfection / ISO…. Six sigma / Deming PDCA
Core values selection according to
(Plan, Do, Corrective Action)
8. Commitment / time orientation 1. Industry
9. Transparency > related to employees’ 2. Internal problems
maturity 3. Vision
10. Environmental protection 4. Customer perception
11. Customer focus
12. Efficiency
 How to publish core values
Internal meetings >> orientation>> training
Visualization Toyota Slogan
Rewards & incentives Continuous improvement & Respect for people
Jack Welsh consider himself as a gardener trying
Punishment
to grow up his employee
Task force
Change agent
Digital tools

Starbucks Green Apron Book

10 guiding principles ‘know who you are, know why you’re here, think independently, build trust,
listen for the truth, be accountable, take action, face challenge, practice leadership and dare to dream’
5 green apron behavior 1. Be Welcoming: Offer everyone a sense of belonging 2. Be Genuine: Connect,
discover, and respond 3. Be Knowledgeable: Love what you do. Share it with others. 4. Be Considerate:
Take care of yourself, each other, and the environment. 5. Be Involved: In the store, in the company,
and in the community
Service quality (SERVQUAL) RATER (to provide high quality service sticky to the following 5
components
Responsive
Assurance (service provider knowledge)
Tangibles (physical evidence from service)
Empathy (How to put yourself in the shows of the others?)
Reliability (service accuracy)

Starbucks culture success

• The employees’ turnover of Starbucks includes 20% management and 80% lower tier.
• That means the Starbucks has its turnover rate of 120% lower than the average turnover and
employees of Starbucks have 82% of satisfaction rate.
 Chapter 3
S Share holders
External Scanning S Suppliers
PESTEL analysis C Customer
C Competitors
Performed for country D Distributors
Pressure Group
not Worldwide
Media
External AAST
Used to analyze Government
Internal
Ex: Employees
Management
Porter 5 Forces Model
Macro Environment Used to analyze the external Micro Environment
part of micro environment
Taxes
Main differences between macro & Micro Environment
Micro environment controllable by company, Macro not controllable

Political (Governmental) Gross income 1350

Political Stability BMI (business Monitor International) Disposable income 1000
‫ الف‬100‫بيقيس كام واحد بيتقتل في ال‬ - 350 direct taxes
Discretionary income – essentials
Taxation (direct ex: from salary & indirect tax ex: VAT
Ex: education, medicine & food
Pressure groups (sectional ex: Medical syndicate & Promotional ex:
‫فائض الدخل‬
human rights) Leisure services or saving

Economic Forces GDP & GNP

• GDP / GNP Example: ORASCOM branch in Algeria its income for Egypt GNP & for Algeria GDP
• Interest Rates
• National income Time deposit ‫وديعه‬1, 3, 6, months & 1 year
• Inflation rate Certificate of deposit ‫شهادة‬3, 5, 7, 10 years
• Unemployment Level
• Exchange rate (21-60) Socio-Cultural Forces
Factors used to measure social
class:
Income
Education Technological Forces
Occupation • Government Spending on R&D
• Industry Spending on R&D
• Patent protection
PESTEL outcomes > Threatsn& opportunities • Telecom infrastructure
• Internet availability
• Availability of certain Technology
need to improve productivity
 Issue Priority Matrix
Legal (Parliament) Used to identify & analyze all external factors
Contract law threats & opportunities
1. Offer
2. Acceptance
3. Consideration ‫وجود قيمة مالية للعقد‬
4. Capacity ‫األهلية‬
5. Legality
Customer protection law (law of negligence)
Competition law
Patency
Environmental protection law
Labor law

Risk = Uncertain

which may be positive or negative

Power of Suppliers

Tetra pack > sole supplier

Cartel an association of manufacturers or
suppliers with the purpose of maintaining
prices at a high level and restricting
Entry Barriers- Patency – loyalty
- infrastructure – know how
competition
Mass production- Switching cost
OPEC
Organization of Petroleum Exporting
Companies
IATA
International Airline Transfer Association
DeBeers
Competition important to increase
Existence competitors Buyers = Customers product quality & decreases its price
= Intermediaries
Competition may be
Healthy by introducing more innovative
Or lowest price product
UN healthy rumors on competitor
Or dumbing ‫حرق‬

Eurostar substitute
For Ryanair
 EFE Matrix Steps
1. List key external factors
Rate x Weight 2. Weight from 0 to 1
Important of The 3. Rate effectiveness of
opportunity company’s 2.5 average current strategies
or threat for ability to for Fred David 4. Multiply weight * rating
the company deal e’ 5. Sum weighted scores
oppo. Or 3 averages for
threats Thomas Wheelen

Generating a Strategic Factors Analysis Summary (SFAS) Matrix

SFAS summarizes an organization’s strategic factors by combining the external factors from the
EFAS Table with the internal factors from the IFAS Table
Competitive Profile Matrix CPM
 Chapter 4
Internal scanning

Internal Factor Evaluation (IFE) Matrix

We measure Strengths & Weaknesses
for Product, Company & Employee
SKus = Stock Keeping units
1. List key internal factors
2. Assign a weight ranging from 0.0
to 1.0
3. Assign a 1 to 4 rating to each
factor
4. Multiply the weight times the
rating
5. Sum the weighted scores

Value Chain Analysis

360 campaigns
Integration between online
& offline marketing

Porter divided Distinctive Competitive Advantages into

1) POPs = Point of parity
2) PODs = Point of Difference
 Mackinsey 7S model

Two important Dimension in culture can affect

organization

Fear affect decision making

Freedom affects creativity & innovation

Company Culture
Ritual

Managerial Skills
Conceptual
Human
Inter personal skills >Skills help me TOP
to deal with others
Intra personal skills> Skills help me SLM
to deal with myself
Technical FLM
 Matching models

Fred David Steps for Strategic plan Fred David Models

(1) Vision, Mission & Core values 1. Input Phase (3) EFAS, IFAS & CPM
(2) External Environmental analysis
(3) Internal Environmental analysis TOWS, SPACE, BCG, IE &
2. Matching Phase (5)
(4) Strategic objectives Grand Strategy Matrix
(5) Strategy Generation
(6) Strategy Implementation
(7) Strategy Evaluation 3. Decision Phase (1) QSPM

SWOT Analysis

S & W for your

Products
Employees
Company
T & W for
Competitors
Customers
Market size
Political environment
Economic environment CAGR % = Compound Annual Gr. Rate PPG % = Previous Period Growth
Govern. Regulations YTD = Year to Date How to calculate =the newest / the oldest - 1
Others MAT = Moving Annual Total
 SO, ex:
S1… rich R&D unit …. Strong Pipeline
O3...Tender / ministry of health/
economic products
S1O3 strategy ……. new product
development
ST ex:
S1… company x has wide product
portfolio including 100 products with
at least 30 products priced below 20 LE
T3...Inflation in 2022 is 20%
S1T3 strategy> mass production
WO ex:
W1 high priced products …higher than
close competitors by almost 25%
O2 competitor X has product shortage
in 2022
WO strategy promotional tools
advertising / sales promotion
WT ex:
W1 …. expensive/ prestigious/
products
T2 …inflation / decreased customer
purchasing power
WT strategy...Sales promotion …. non
price accessory second brand (Gillette
/ Nacet)
Product portfolio analysis over time (PLC) Product Life Cycle
 Star = Invest & Expand
Dog = Divest
Question Mark = Investigate
Cash cow = Milking

BCG Model depends only on two dimensions

RMS & industry growth
& Neglect other dimensions like company
strength points, industry profit margin
High market shares not mean high profitability
Ex: product launch phase

SBU = Strategic Business Unit

GE model
General Electric
(Traffic light)
IE matrix
 Strategic Position and Action Evaluation Matrix (SPACE)

Two Internal Dimensions Two External Dimensions

▪ Financial Strength (FS) ▪ Environmental Stability (ES)
▪ Competitive Advantage (CA) ▪ Industry Strength (IS)

1 -6
2 -5
X=3 3 -4
Y=4 4 -3
5 -2
6 -1

CA = -3
IS = 6
X=3

FS = 5
ES = -1
Y=4

After we finish SPACE (matching

phase) we select which action we
will perform first by using QSPM
Decision phase
Grand strategy matrix
 Strategy

C > Corporate plan > Board of directors & CEO directional or Grand strategy Ex: Disney diversification in hotel
B > Business plan > Middle management Ex: How to compete >> either competitive or cooperative strategy
F > Functional plan > FLM Ex: Marketing plan

Miles and Snow’s Organizational Strategies

Mix & Match Miles and Snow’s & Porter competitive strategies
Defender = Cost leadership Prospector strategy is First
Prospector = Differentiation & Focus Mover Advantage (FMA)

Directional / Grand strategies

Or Defensive

According to
Thomas
Wheleen

Entry Strategies
• Exportation
• Grand strategies
• Franchising and licensing
• Competitive strategies
Strategies • Turnkey operations
• Blue ocean strategy
• BOT (Build Operate & Transfer)
• Entry strategies
• Joint venture
• FMA strategy ex: Sarmady, McDonalds & Apple
• FDI (Foreign Direct Investment)
• Greenfield Investment Strategy
 Grand strategies 4x3

Competitive Strategy / Generic > porter > Cost Leadership –

1. Integration
Differentiation – Focus – cost focus – Differentiation focus
2. INTENSIVE
3. DIVERSIFICATION Growth Strategy > Ansoff > Market Penetration – Market development –
4. Defensive Product Development (INTENSIVE) – DIVERSIFICATION

organic or Internal growth Inorganic or External growth

Francise is a
forward
integration
Original Equipment Manufacture

X + Y = XY Merge

X + Y = X Acquisition

X + Y = X+Y+Z Joint venture ex: Beyti JV Bet. Almarai & Pepsico

X + Y = X + Y Strategic Alliance ex Renu & Nissan

 How to apply a Market Penetration strategy?
Same Product through two sub strategies
Same Market 1- Conversion of non-user into a user.
2- Increase the consumption of actual users

Market Development Three sub strategies

Same Product 1. New geographical coverage
New Market 2. New country (globalization)
3. New indication

Diversification New Product R & D supply the company by new products or

New Product Same Market new SKUs
New Market

• QIZ Qualifying Industrial Zones 1998- agreement between Egypt, Jordan & Israel goods produced
in QIZ-notified areas (Cairo, Giza, Central Delta, Beni Seuif & Menia) can directly access US markets
without tariff or quota restrictions, produced goods contains 15 % of its components from Israel
Trade
• CO M E S A > Common Market for East and South Africa > constitute of 20 countries members
agreements
• GAFTA Great Arab Free Trade Area
Egypt • Aghadir Egypt, Jordan, Morocco & Tunisia
• Euro 1
• RORO Roll in Roll out Agreement between Turkey & Egypt

Related diversification > a moving from one industry to a

similar industry - low risk ex: Dunlop for tire & Squash ball

Un related diversification > a moving from one industry to

non-similar industry - high risk

It’s a risk strategy

that can reduce risk

Classification of organizations

1. Size SMEs (Small & Medium Enterprises) Small 1 –

50 Employees – Medium 51 – 250 Employees -
LSEs (Larg Scale Enterprises) 251 Employees and
more
2. Ownership (Public sector – Private sector – Public
Private ‫ قطاع االعمال‬- QUANGOs (Quazi
Autonomas Non-Governmental Organizations) ex:
BBC – Al Jazeera – Red Cresent
3. Legal status (Sole trader un limited liability –
Partnership (Active unlimited liability & Silent
limited liability) – LLC Limited Liability Company –
SAE ‫ –شركة مساهمة‬Holding company or Group
4. Activity (Supplier – manufacturer – Distributer)
5. Profit (profit or non-profit organization)
 - Pause/proceed-with-caution
Stability strategies -No-change
-Profit strategies.

Marketing
Budget
 Industry structure regarding the number of players

1. Monopoly
2. Oligopoly = small numbers of large companies
3. Pure (perfect competition) = large numbers of small companies

Porter / Competitive / Generic Strategy

Big Market
Cost Leadership ex: Nissan & Toyota size
Target High end
Stuck in the Middle K Mart
Medium
Walmart low end Market
Differentiation ex: Mercedes & BMW
size

Differentiation Focus ex: Rolls Royce Small Very small Segment

Market
size Price insensitive
Cost Focus ex: Cars for disabled people
Small Very small Segment
Market
size Price Sensitive
Cooperative strategy
Dell and HP have had a rather interesting relationship as well.
Dell used to resell HP printers, but after HP bought Compaq, the firms went to war

Red versus blue ocean

strategies
Blue Ocean Strategy BOS = Value innovation = Value Creation + Innovation
Increase Customer Value + Non-Traditional products
Innovation doesn’t increase customer value ex: reduction of smoker smoke
Increase customer value without innovation

BOS Matching with differentiation strategy

Psychological pricing ex full creamy & skimmed milk

The Profit and Growth Consequences

of Blue Oceans

BOS has very significant effect on profit, as

there is no direct competition therefore, it
has low marketing activity and budget
 Strategy Canvas (one of BOS tools)

Four Actions: RREC

Reduce/Raise/ Eliminate/Create
• Which should be raised well above
standard?
• Which should be reduced?
• Which of the factors that the industry
takes for granted should be eliminated?
• Which factors should be created that
have not existed before?

Strategy Strategy Analysis

BOS Competitive Strategies Porter 5 forces Model

Value Differentiation Strategy Rivalry & Bargaining
Differentiation power of buyer
 Functional Strategies

Marketing Strategy

Competitive Strategy Porter 5 forces Model

Push strategy- promotions to gain or hold shelf space
Growth Strategy Ansoff
in retail outlets (Targeting intermediaries)
Pull strategy- advertising to “pull” products through
STP the distribution channels (Targeting End customer)

7 Ps 7 Cs = Product (customer solution)

1- Product (Services or Goods) -price (cost)
Goods classified into -place (convenience)
B2B Goods ex: raw materials -promotion (communication)-
B2C Goods which classified into people(consideration) -
process(coordination)
Convenience ‫( العيش والجرايد والخضار‬cost leadership St.)
-physical evidence (confirmation)
Shopping ‫(اللبس الموبايل العربية‬differentiation strategy)
Specialty specialized in one sector (as a competitive strategy it’s a focus strategy)
2- price There are four things we have to consider before pricing: 4Cs
Cost - Competitor – Customer - Company Objectives> if high MS >low price
If looking for rapid revenue > high price
Pricing Strategies (skimming used with innovative products ex Apple – penetration & Cost-plus low
price to increase MS used with middle & low-quality products – Captive pricing Steven Sasson Kodak –
Competitive Pricing – Psychological Pricing – Odd even Pricing 9.99 – loss leader pricing – Popcorn
Pricing – EDLP Every Day Low Pricing)
Skimming - Skim pricing- offers the opportunity to “skim the cream” from the top of the demand curve
with a high price while the product is novel and competitors are few
Penetration pricing- attempts to hasten market development and offers the pioneer the opportunity
to use the experience curve to gain market share with low price and then dominate the industry
3- place
Bricks & Mortar (physical outlet only)
Bricks & Clicks (online & offline)
Clicks Only (online only) E commerce B2B ex Alibaba owner Jackma – B2C ex amazon owner Jeff Bezos
& Jumia – C2B ex: freelancers Upwork – Fiver – ‫خمسات – مستقل‬- people per hour – profinder – Canva)
C2C ex OLX – G2B ex train tickets online
Place can be also classified into Up Market (high purchasing power) ex Zamalek, Dokki, Mohandsen &
Madinty ex Metro & Fresh food – Down Market (low purchasing power) ex Zawya & Waylli ‫خير زمان‬
4-Promotion
Personal Selling ex face to face selling in case of B2B because low number of customers & the product
complicated in its technique
Advertising ex through channels like TV, Radio, Online, Outdoor (ooh out of house) & Press
(Newspaper – Magazine) usually used in case of B2C because huge number of customers & the product
is very simple
Sales Promotion ex: Discount or Bonus
PR ex: Sponsorships – Exhibitions - Press release – Press conference – CSR
Direct Marketing ex: Email by ESP Email Service Provider ex: email chip – phone – SMS LBB Location
Based Broadcasting.
Word of Mouth (offline) / Mouse (online)
5 -people (more important in services) Customer Facing Employees should be well educated & trained
6-process Process to be professional (KISS Keep It Simple & Straight)
7-physical evidence it’s a tangible part of intangible service ex: Decoration for clinic
 Financial Strategy- examines the financial implications of corporate and business-level strategic
options and identifies the best financial course of action
Financial strategy includes the management of:
• Dividends
• Stock price
• Sales of company patents

Financial Strategy goal profit maximization & cost reduction

Revenue = cost + Profit >> (profit means increase revenue & Profit Maximizations means increase
revenue & Decrease cost

Research and Development Strategy- deals with product and process innovation and improvement
• Technological leader- pioneers innovation (prospectors)
• Technological follower- imitates the products of competitors (Defender)
• Open innovation- use of alliances and connections with corporate, government, academic labs and
consumers to develop new products and processes

Operations Strategy

Functions of operations Operations Strategy- determines how and where a product or

The seven main functions of operations are: service is to be manufactured, the level of vertical integration in
• Product management the production process, the deployment of physical resources
• Supply chain and relationships with suppliers
• Inventory -Mass production systems
Manufacturing Types include
• Forecasting -Continuous improvement
• Job shops
• Scheduling -Modular manufacturing
• Connected line batch flow
• Quality -Mass customization mix
• Flexible manufacturing systems
• Facilities planning and management bet. Mass production &
• Dedicated transfer lines
customization

-Mass customization mix bet. Mass production & Customization Strategies

Mass production advantage > cost reduction & disadvantage > dissatisfaction for customer
Customization advantage > customer satisfaction & company dissatisfaction due to high cost

A Flexible Manufacturing System (FMS) is a production

Job shops are typically small manufacturing systems method that is designed to easily adapt to changes in the
that handle job production, that is, custom/bespoke or type and quantity of the product being manufactured.
semi-custom/bespoke manufacturing processes such Machines and computerized systems can be configured
as small to medium-size customer orders or batch jobs to manufacture a variety of parts and handle changing
levels of production.
Examples include: a paint shop, a machine tool shop, a
Levels include: Product flexibility, process flexibility, and
commercial printing shop > Bespoke = customization program flexibility.
Dedicated transfer lines in this strategy, it is based on fixed automation and produce a company’s core products or
parts at high-volume. Where it has highly automated assembly lines that are typically designed to produce a single
part or single-mass produced product using little human labor. It is designed to create products at a high
production rate
 Purchasing Strategy, it deals with obtaining raw materials, parts and supplies needed to perform the
operations function
Options include:
• Sole suppliers (Deming)
• Multiple
• Parallel sourcing, two suppliers are the sole suppliers of two different parts, but they are also
backup suppliers for each other’s parts.

Seven •Rs of Logistics

Most popular concepts of logistics Management are the concept of Seven R’s
Right Product – Right Quantity – Right Condition – Right Place – Right Time – Right Customer – Right Price

Outsourcing- purchasing from someone else a product or service that had been previously provided internally
• Avoid outsourcing distinctive competencies
Offshoring- the outsourcing of an activity or a function to a wholly-owned company or an independent
provider in another country

Inventory management two strategies

Make to order (Just in Time) = Zero inventory
Make to Stock

Forecasting / demand planning

 Forecasting Methods

Qualitative Quantitative

Delphi Collected from

Technique 20% of Customers
Lack credibility
Suitable for B2B
Used e’ stable
market

Accurate but Weighted WMA

NOT Credible Simple Moving average SMA
Used for unstable market

Tender ‫مناقصة للشراء‬

Disadvantage > price fixation Reverse auction ‫مزايدة للشراء‬
Forward auction ‫مزايدة للبيع‬

M=Most likely P=Pacemistic

O= Optimistic

PERT= Program Evaluation & Review Technique

Quantitative methods used for stable market: This year

forecast
Naïve & Exponential Smoothing using Low Alpha
Quantitative methods used for unstable market:
WMA, SMA & Exponential Smoothing using High Alpha
 EX:
Year Sales Gr. Rate Forecast
2017 200
2018 190 -5%
2019 210 9%
2020 215 3% 220

SMA 190+210+215/3= 205

WMA 190x0.2 =
210x0.3 = Sum of three values = 208.5
215x0.5 =
Naïve 215x215 /210= 220 not suitable as its unstable market
Exponential 0.8x215+(1-0.8) x220 = 216
Smoothing In the below table we will measure MSE & MAE for Expo. Smoothing or SMA to select the
method with lowest error which will be more accurate

Year Sales SMA Forecast Error Absolute Error Squared Error Mean Squared Error
2017 200 200 0 0 0 MSE = 50/3 = 16.5
2018 210 205 5 5 25 Mean Absolute Error
2019 230 235 -5 5 25 MAE = 10/3 = 3.3

Human Resource Strategy

Trends include:
• Self-managed teams = training for employee with little supervision <> Micromanagement which lead
to low performance & skills
• 360-degree appraisal performed by employee peers; subordinates & direct manager used to
decrease bias
• Diverse workforce based on gender, religion & age

Recruitment strategy

Assessment centers using different tools for evaluation Psychometric test, IQ test, Role play, case study
Panel interview
Group interview for blue collar
Structured, Semi-structured & Un-structured interviews
 Information Technology Strategy

Trends include:
• Follow the sun management (am country is the moderator)
• Internet = Global Network
• Extranet = connect company or organization with external stock holder, customer or suppliers
• Intranet = local network for a company either in on country or more
• EDI Electronic Data interchange versus APIs Application Programming Interfaces

Strategy Implementation

Two Main factors in strategy implementation (Manager & Time) Successful Strategy Implementation
Leadership (PLOCS) • Market goods & services well
Leading Coaching, Delegation & Motivation • Raise needed working capital
Organizing ‫توزيع المهام على الناس‬ • Produce technologically sound
Control ... Evaluation goods
Staffing • Sound information systems
Time management
– Less than 10% of strategies formulated are
successfully implemented!

Six Criteria of effective Punishment

1. Should be private
2. Informative (why you punished & how to avoid?)
3. Immediate (classical conditioning ‫ارتباط الخطأ بالعقاب‬
4. Fair (‫يطبق على الجميع والعقاب على قدر الخطأ‬
5. Intense ‫رادع‬
6. Not followed by incentive

Purpose of Annual Objectives – Four Types of Resources (Need to make

▪ Basis for resource allocation integration between the 4 types)
▪ Mechanism for management evaluation 1. Financial resources
▪ Metric for gauging progress on long-term objectives 2. Physical resources
▪ Establish priorities (organizational, divisional, and 3. Human resources
departmental) 4. Technological resources

How to widen span of control

Implementation 5 M
Restructuring • Money 1. Overall assessment for managers & fire
▪ Downsizing • Manpower managers with score less than 70%
▪ Rightsizing • Minute 2. Early retirement
▪ Delayering • Machines 3. Promote to consultant
• Materials 4. Hire Freeze for managers
5. Not hire new managers in expansion
 Tactics (action plan)

No. Action Date Budget Responsible Accountable Consulted Informed Status Outcome KPIs Notes

Status Planned
On progress
Completed
Pending
Cancelled
Postponed

Gantt Chart

Used to Avoid overlap