STRATEGIC

MANAGEMENT
Lecture 5 & 6

(Mamoona Arshad)
 STRATEGIC
MANAGEMENT
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CHAPTER OUTLINE
What would be learn?

• Define strategic management process

• Summarize the types of choices available for corporate strategy.
• Discuss how companies can achieve competitive advantage through business strategy.
• Describe the keys to effective strategy implementation.

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STRATEGY

1. Strategy is a plan, a “how”, a means of getting from here to there.

2. Strategy is a pattern in actions over time; for example, a company that

regularly markets very expensive products is using a “high end” strategy.

3. Strategy is the position; that is; it reflects the decisions to offer particular
products or services in particular markets.
4. Strategy is perspective; that is; vision and direction.

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STRATEGIC MANAGEMENT PROCESS

• A process that involves managers from all parts of the organization in the formulation and
implementation of strategic goals and strategies.

1. Strategic planning is the name we customarily give to the sense making activities. This
includes both the goals setting and the strategy formulating process.

2. Strategy implementation is the name we give to the action based on that kind of
planning.

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CONT..
Six components

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STRATEGIC MANAGEMENT PROCESS
1. Mission, vision and goals

• Vision - The long-term direction and strategic intent of a company.

• Answers that Why do we exist?
• Vision statement is very broad and is not something a business could use as a strategy
because there’s simply not enough information to exhibit out what kind of business.
• Mission - An organization’s basic purpose and scope of operations.
• Focused on How will we accomplish our vision?
• mission statements, on the other hand, describe the products and services each company
plans to offer and the customers each company plans to serve in order to fulfill their
vision
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 ANALYZING THE ENVIRONMENT

• Successful strategies are aliened with the environment .

• Examine both the specific and general environment to determine what trends
and changes are occurring.

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 2. Identifying opportunity and threats.

•Opportunities – positive trends in the external environment.

•Threats – negatives trends in external environment.

For Farif Ali Abood, who opened a shop to make commercial signs in his hometown of Najaf,
Iraq, the difficulties included sporadic electrical service, lack of funds to borrow, and even
occasional sniper fire in the area. Despite these challenges, Abood kept the business running by
using a generator when the power goes out. As conditions in the city stabilized, business grew
enough for Abood to hire several full-time employees and earn a modest profit. Those who, like
Abood, best serve customer needs in difficult times will earn customer loyalty and longer-
term business relationships.

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ANALYZING THE ENVIRONMENT
3. Internal strengths and weaknesses

•Strength – activities the organization does well or any unique resources.

•Weakness – activities the organizations does not do well or resources it needs but does not
purposes.

• Using resources (i.e. inputs) to enhance performance. Either tangible or intangible assets.
• Internal resources allows a company to compete through:
1. Through providing influential services;
2. Through Core competitions – a unique and exceptional capabilities of resources.
3. Through competitive advantage (hard to imitate)

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CONT..
• Benchmarking- point of reference against which you make comparison with other
firms.
• Benefit- Help companies in eliminating inefficiencies and improving competitiveness.
• For comparison- regions, their cultural preferences and factors must be similar.

Core competencies
• BMW – core competence in high performance engine.
Food Panda-
• Technological innovations – to reduce delivery time.
• Social media presence & campaign like discount coupons.

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SWOT ANALYSIS
Manager’s role

• Helps managers to summarize the relevant, important facts from their external
and internal analyses.
• identify the primary and secondary strategic issues their organization faces.
• To formulate a strategy that will use the SWOT analysis to pursue opportunities
by capitalizing on the organization’s strengths, neutralizing its weaknesses, and
countering potential threats.
• For uncertain external environment - needs to focus on strengthening internal
capabilities through practices e.g. seeking new company expertise, opportunistic
knowledge sharing, and continuous process improvement.

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 Strengths Weaknesses
EXAMPLE – Starbucks Coffee - Strong brand recognition - Product is not customized to
Shop - Clients love the local tastes
atmosphere in - Not easily affordable in all
Identify SWOT starbucks countries
Strong brand recognition - Starbucks is present all - High employee turnover/job
Clients love the atmosphere in starbucks over the world quitting
- Superb supply chain
Product is not customized to local tastes
management
Not easily affordable in all countries
Easy access to new countries Opportunities Threats
Starbucks is present all over the world -Easy access to new - Saturation of similar products
Superb supply chain management countries in US market
- Agreement with movie - Healthier life style
Saturation of similar products in US market products
Healthier life style
High employee turnover/job quitting.
Agreement with movie products

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VIDEO - Starbucks

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Corporate Strategies

Apple Inc:
• Mobile Device I-phone has excelled vertical integration by doing backward integration by
manufacturing the chipset used in its popular devices. By doing so the company has succeeded in
keeping a check on quality and economizing its cost of chipsets which ultimately helps the
company and its customers by providing quality products at better prices.
• Also used forward integration by opening its retail stores popularly known as Apple Stores to sell
its entire product offering. By doing so the company is able to better save on the commissions that
are to be paid to its retail partners, improve the uniformity aesthetics and style of its stores across
the globe, and at the same time able to use them to provide better price points to its end users i.e.
Customers. It improves its business efficiency and business offering.

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Corporate Strategies

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BCG Matrix - Boston consulting group

• Business portfolio- diversified

businesses of an organization.
• Each business is plotted on the based
on the growth rate of its market and the
relative strength of its competitive
position in that market (market share).
• A tool to understand business portfolios
and strategic options and weigh each
business relative merits.

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 BCG Matrix
• Market growth/ Market share (competitive position)
• Company E.g.: Coca Cola, Product. E.g.: Any Coca Cola product.
STARS- High market share and high growth.
• Leaders.
QUESTION MARK: low market share and high • All time high demand.
growth. • Attempts should be made to hold the market
• Initial position. share otherwise the star will become a cash
• New in the market. cow.

• Earnings: low, unstable or growing. • Earnings: high stable and growing.

• Cash flow: negative. • Cash flow: neutral (not necessarily produce
• Investment: high. high cash flow).
• Strategy: analyze to determine whether business • Strategy: Invest for growth. Or, heavy
can be growth into a star, or will degenerated into investment.
a dog.

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BCG Matrix
DOGS- low market share and low growth.
• No demand/ Outdated.
• No Cash trappers.
• Dogs should me Minimum.
• Earnings: low, unstable.
• Cash flow: neutral or negative.
• Strategy: divest.
• Declining stage.
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CASH COWS- High market share and low
growth.
• The stars of yesterday.
• Revenue generation.
• More cash flow.
• Earnings: High stable
• Investment: Low.
• Cash flow: High stable
• Mature stage.
 FOR PRACTICE – BCG Matrix of Apple
https://www.youtube.com/watch?v=JrQfcVoNXvA&t=1s

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 5. Strategy Implementation

• Strategic managers must ensure that the new strategies are implemented
effectively and efficiently.
• This process, though straightforward, does not always go smoothly.

6. Control

• helps managers evaluate the organization’s progress with its strategy and, when
discrepancies exist, identify needed corrective actions.

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STRATEGIC
MANAGEMENT: NO
BAND-AID REQUIRED

Aileron , Nov 19, 2012

Former Contributor, Entrepreneurs
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Key takeaways
• Strategic management isn't a sprint, but a marathon i.e., Go deeper rather than going for a quick-
fix.
• Ensure that the process is not placed on autopilot (Think before implementing again).
• Management must challenge the organization to review changes constantly—in both the inside
and outside environments.

Years Planning process Results

Year 1 Early stage - Modest
No acceptance by employees
planning process starts to become part of Improvements
Years 2 & 3 the organization’s business process
Years 4 & Fully integrated throughout the Strong competitive
beyond organization position

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