WEEK 1

OVERVIEW OF STRATEGIC
MANAGEMENT

Dr. Nagwan AlQershi

FPTP-UTHM

Ch 1 - 1
Topics cover:
1. What is strategic management?
2. Stages of strategic management
3. Keys term in strategic
management
4. The strategic management model
5. Benefits of strategic management

Ch 1 - 2
Key Strategic Management
Questions

• What kind of business should we

become?
• Are we in the right fields?
• Are there new competitors
• What strategies should we
pursue?
• How are our customers
changing?

Ch 1 - 3
Strategic Management – Defined

Art & science of formulating,

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

Ch 1 - 4
 Without a strategy an organization is like a
ship without a rudder, going around in circle.
It’s like a tramps it has no place to go

(Joel Roes and Michael Kami)

“The formulation of strategy can develop competitive

advantage only to the extent that the process can give
meaning to workers in the trenches.”

(David Hurst)
Ch 1 - 5
Implication from the definition

• Strategic management focuses on

integrating management, marketing,
finance/accounting, production/operation,
research and development and information
system, to achieve organizational success.

• Purpose is to exploit and create new and

different opportunities for tomorrow; long-
term planning.

Ch 1 - 6
Example: Strategic Management of Fedex
• to produce outstanding financial returns through
its operational companies by providing
shareholders with, “high value-added supply
chain, transportation, and business and related
information services
• to provide reliable, competitive, global, air and
ground transportation of priority goods at a
remarkable speed

Ch 1 - 7
 Stages of Strategic Management
• Three stages
– Strategic formulation – identification & decision stage
– Strategic implementation – action stage
– Strategic Evaluation - reviewing, measuring and corrective stage

• Occur at three hierarchy levels in large organization: corporate,

divisional or strategic business unit, and functional
Peter Drucker; the prime task of strategic management is thinking through
the overall mission of a business:
… that is, of asking the question, “What is our business?” This lead to the
setting of objectives, the development of strategies, and the making of
today’s decisions for tomorrow’s results. This clearly must be done by a
part of the organization that can see the entire business; that can balance
objectives and the needs of today against the needs of tomorrow; and can
allocate resources of men and money to key results.

Ch 1 - 8
Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

Ch 1 - 9
Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

Ch 1 - 10
Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions

Ch 1 - 11
Key Terms in Strategic Management
Competitive Advantage
A firm ability to create value in a way that its
rival cannot

When firm can do something that rival firms

cannot do

Ch 1 - 12
 Achieving Sustained Competitive
Advantage
*Firm can sustain a CA for only a certain period due to rival firms
imitating and undermining that advantage. It is not adequate to
simply obtain CA.”

1. Adapting to change in external trends,

internal capabilities and resources

2. Effectively formulating, implementing &

evaluating strategies
Ch 1 - 13
 Three perspective of competitive advantage
Internal
Analyze firm resources
Use resources to embark
on strategies that rival
cannot duplicate

Dynamic Competitive Firm

Strategy
Look for opportunities advantage performance

Develop unique
resources to create
disruptive change

External
Analyze the industry
Position your firm to take
advantage of industry
opportunity

Ch 1 - 14
Key Terms
Vision Statement –
What do we want to become?

Mission Statement –
What is our business?

Ch 1 - 15
 Key Terms

Strategists -
individuals who are most responsible for the success or
failure of an organization
Helps an organization gather, analyze, and organize
information
Usually found in higher levels of management (CEO, CSO,
Chairman)
Have considerable authority in making decision of an
organization

Ch 1 - 16
Key Terms

Strategies - Means by which long-term objectives

are achieved

Ch 1 - 17
Key Terms

Opportunities & Threats (External)

Analysis of Trends:
• Economic
• Social
• Cultural
• Demographic/Environmental
• Political, Legal, Governmental
• Technological
• Competitors

Ch 1 - 18
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 - 19
Key Terms
Long-term objectives –
Objective - specific results that organization seeks to achieve in pursuing its basic mission

Long-term – more than one year

Annual objectives- short term milestone that organizations must achieve to reach long-term objective

Ch 1 - 20
 Comprehensive Strategic Management Model
External
Audit

Long-Term Generate,
Objectives Implement Implement Measure &
Vision Evaluate,
Strategies: Strategies: Evaluate
& Select
Mgmt Issues Marketing, Performance
Mission Strategies
Fin/Acct,
R&D, CIS

Internal
Audit

Ch 1 - 21
Benefits of Strategic
Management

General Benefits

• help organization formulate better

strategies through the use of a more
systematic, logical and rational approach to
strategic choice.

Ch 1 - 22
Benefits of Strategic
Management

Financial Benefits

• Improvement in sales
• Improvement in profitability
• Productivity improvement

Ch 1 - 23
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 - 24
 Guideline for effective strategic
Management
It should be:
1. People process more than a paper process
2. A learning process for all managers and employees
3. Words supported by numbers rather than numbers
supported by words
4. Simple and no routine
5. Vary assignments, team memberships, meeting formals
and even the planning calendar
6. Challenge the assumptions underlying the current
corporate strategy
7. Welcome bad news
8. Open-mildness and a spirit of inquiry and learning
Ch 1 - 25
 Guideline for effective strategic
Management
It should:
9. Not be bureaucratic mechanism
10. Not become rituals, stilled or orchestrated
11. Not be too formal, predictable or rigid
12. Not contain jargon or arcane planning language
13. Not be a formal system for control
14. Not disregard qualitative information
15. Not be controlled by technicians
16. Do not pursue too many strategies at once
17. Continually strengthen the good ethic is good business
policy

Ch 1 - 26
Thank you

Ch 1 - 27