Learning Outcomes

• Students are able to:

• 1. Define strategy
• 2. Process involved in strategic
management
• 3. Benefits of Strategic Management.
• 4. Types of strategy
 Definition of strategy
Strategy is defined as the direction
and scope of an organization over
the long term, which achieves
advantage in a changing environment
through its configuration of
resources and competences with the
aim of fulfilling stakeholder
expectations.
 Definition of Strategic Management
• Strategic Management is defined as the art
and science of formulating, implementing and
evaluating decisions that enable an
organization to achieve its objectives. In other
words, strategic management focuses on
integrating management, marketing,
finance/accounting, production/operations,
research and development and computer
information systems to achieve organization’s
success.
 Strategic Management Process
• The Strategic Management consists of 3
stages:
• Step 1 : Strategy formulation. Strategy
formulation includes developing business
mission, identifying the organization’s
external opportunities and threats,
determining the internal strengths and
weaknesses, establishing long term objectives,
generating alternatives strategies and
selecting suitable strategy to pursue.
Step 2 : Strategy implementation. Strategy
implementation requires the firm to establish
annual objectives, devise policies, motivate
employees and allocate resources so that
formulated strategies can be executed.

Step 3 : Strategy evaluation. Strategy

evaluation is a process adopted to evaluate
the success of strategy implementation and
the how far the organization has benefited
from the strategies adopted.
Benefits of Strategic Management
1. Businesses using strategic management
have shown significant improvement in sales,
profitability and productivity compare to
those without systematic planning activities.
2. Assist firms to avoid financial demise,
strategic management also offers other
intangible benefits, such as an enhanced
awareness of external threats, an improved
understanding of competitor’s strategies,
increased employees productivity and
reduced the resistance to change.
3. Strategic management also reduces the
resources and time devoted to correcting ad
hoc decisions.
4. Encourages a favorable attitude towards
change.
5. Promotes interaction among managers
enable the managers to share organization’s
objectives with employees at functional level,
empowering them to improve the product
and services.
 Alternatives strategies an enterprise
could pursue can be categorized into
13 categories :
• 1. Forward Integration – gaining ownership or
increased control over distributors or retailer.
• 2. Backward Integration – gaining ownership
or increased control over suppliers.
• 3. Horizontal Integration – seeking ownership
or increased control over competitors.
• 4. Market Penetration – seeking increased
market share for present products or services
in present markets through greater marketing
efforts.
• 5. Market Development – introducing present
products or services into new geographical
area.
• 6. Product development – Seeking increased
sales by improving present products or
services or developing new ones.
• 7. Concentric Diversification - Adding new, but
related products or services.
• 8. Conglomerate Diversification – adding new,
unrelated products or services.
• 9. Horizontal Diversification – Adding new,
unrelated products or services for present
customers.
• 10. Joint Venture - 2 or more sponsoring firms
forming a separate entity for cooperative
purposes.
• 11. Retrenchment – Regrouping through cost
and asset reduction to reverse declining sales
and profits.
• 12. Divestiture - Selling a division or part of an
organization
• 13. Liquidation - selling all of the company’s
assets, in parts, for their tangible worth.
THE END