Chapter 1

The Nature of Strategic Management

Strategic Management:
Concepts & Cases

Course coordinator
Prof. Begum Khaleda Khanam

Ch 1 -1

Strategic Management
Defined

Art & science of formulating,

implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve its
objectives

Ch 1 -2

Strategic Management

In essence, the strategic plan is a

companys game plan

Ch 1 -3

Strategic Management
achieves a firms success
through integration

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

MIS

Ch 1 -4

Prime Task of
Strategic Management

Peter Drucker: -- Think through the

overall mission of a business. Ask
the key question: What is our
Business?

Ch 1 -5

Strategic Management is
Gaining and Maintaining
Competitive Advantage

Anything that a firm does especially

well compared to rival firms

Ch 1 -6

Key Terms
Strategists Firms success/failure
Vision Statement
What do we want to become?
Mission Statement
What is our business?
Ch 1 -7

Key Terms

Opportunities and Threats (External)

Largely beyond the control of a single

organization

Ch 1 -8

Key Terms
Opportunities & Threats (External)

Social

Cultural

Demographic/Environmental

Political, Legal, Governmental

Technological

Competitors

Industry
Environment
Competitor
Environment

Ec
on
om
ic

Economic

l
ra
ltu
cu
cio
So

Global
ic
ph
ra
og
m
De

Analysis of Trends:

Po
lit
ica
l /L
eg
al

General

Technological
Environment
Ch 1 -9

Key Terms
Strengths & Weaknesses (Internal)

Controllable activities performed especially

well or poorly

Ch 1 -10

Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Computer Information Systems

Ch 1 -11

Key Terms

Long-term Objectives

Mission-driven pursuit of specified results

more than one year out

Ch 1 -12

Key Terms

Strategies

Means by which long-term objectives are

achieved

Ch 1 -13

Key Terms
Strategies
Some Examples

Geographic expansion

Diversification

Acquisition

Market penetration

Retrenchment

Liquidation

Joint venture
Ch 1 -14

Key Terms

Annual Objectives

Short-term milestones that firms must

achieve to attain long-term objectives

Ch 1 -15

Key Terms

Policies

Means by which annual objectives will be

achieved

Ch 1 -16

Strategic Management Model

Strategic Management Process

Dynamic & Continuous

More formal in larger organizations

Ch 1 -17

Strategic Management Model

1. Identify Existing -

Vision

Mission

Objectives

Strategies

Ch 1 -18

Strategic Management Model

2.
3.
4.
5.
6.
7.

Audit external environment

Audit internal environment
Establish long-term objectives
Generate, evaluate & select
strategies
Implement selected strategies
Measure & evaluate performance

Ch 1 -19

Benefits of Strategic
Management
Proactive in shaping firms future

Initiate and influence firms activities

Formulate better strategies
Systematic, logical, rational

Ch 1 -20

Benefits of Strategic
Management
Financial Benefits
Improvement in sales
Improvement in profitability
Productivity improvement

Ch 1 -21

Benefits of Strategic
Management
Non-Financial Benefits
Improved understanding of competitors strategies
Enhanced awareness of threats
Reduced resistance to change
Enhanced problem-prevention capabilities

Ch 1 -22

Benefits of Strategic
Management (Greenley)
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives

Ch 1 -23

Benefits of Strategic Management

(Greenley contd)
6. Effective allocation of time & resources
7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
11. Encourages favorable attitude toward change
12. Provides discipline and formality to the
management of the business
Ch 1 -24

Why Some Firms Do No

Strategic Planning
Poor reward structures
Fire-fighting
Waste of time
Too expensive
Laziness
Content with success
Ch 1 -25

Why Some Firms Do No

Strategic Planning
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
Ch 1 -26

Guidelines for effective strategic

management
1.

Keep the strategic management process as simple and nonroutine as possible

2.
3.

The system should be a process of fostering learning and action

Avoid routinized behavior and stimulate creativity

4.

If strategy is not working, managers must desperately know it

5.

Build a corporate culture in which the role of strategic

management and its essential purposes are understood

6.

Attend to psychological, social and political dimensions and also

administrative procedures
Ch 1 -27

Comprehensive strategic management model

External
Audit

Chapter 3

Vision
&
Mission

Chapter 2

Long-Term
Objectives

Generate,
Evaluate,
Select
Strategies

Implement
Strategies:
Mgmt Issues

Chapter 5

Chapter 6

Chapter 7

Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8

Measure &
Evaluate
Performance

Chapter 9

Internal
Audit

Chapter 4

Ch 1 -28