Strategic management

Heading
- The meaning
- The purpose
- Object and scope
- Learning Methods
- Structure of the subject
The meaning
 Issues to be posed
• Past - Present - Future and change?
– Agricultural, industry, IT revolution
– Integration and globalization
– Relations between major countries and
today's global security
– The world is profoundly changing: giving
priority to environment-friendly/green and
energy-saving (sustainable and efficient)
sectors
– Infectious Diseases
 What to do
• To Receive future opportunities;
• To Be able to change yourself to
go to the future;
• To Know how to create the future
• To Know how to win in the future
• ………….
 The winner of the future
• A person who has the ability to change
his/her own org for more sustainable and
effective development
• Being creative, always thinking of new
things, better things
• The one who seizes/catch the opportunity,
knows the flexibility to change - "If you
don't change, you will die“
• ........................
How do you think about the/your
future??
“Without Business Policy and Strategy, an
organisation is like a ship without rudder,
going around in circles. It’s like a tramp; it
has no place to go” – Joel Ross and
Michael Kami.
THE PURPOSE
• OVERALL OBJECTIVES
– What is the strategy?
– What is strategic management?
– What to do for strategic management?
• DETAIL OBJECTIVES
– What is the strategy? Types of strategies.
– What is strategic management
– Content of strategic management.
– Processes, methods, and tools for building strategies.
– Implement the strategy.
– Evaluate and control the strategy
– Applying the knowledge in practice
 Learning Methods
• Listen to the lecturer
•  Self-study
•  Do individual exercises
•  Work in team
•  Case study
• Discussion, presentation (in class)
•  Implementing scientific research
->> Divide the class into groups (5-10 people),
choose given research topics, prepare and present
research results to the class.
 Scoring method
• 10% for attendance
• 20% for group lessons
• 20% for individual tests (it depends)
• 50% for the final exam
(plus is based on the active
participation/positive contribution of the
individual - according to the evaluation of the
group leader and the lecturer)
 Group EX: apply theory to practice
• 1 Choose the enterprise.
• 2 Analyze the external environment of the
company
• 3 Analyze the internal environment of the
company
• 4 Strategic planning for the company.
-> Note: do this from the group's own point of
view, not a copy of others, even the way the
business has done in practice
 Group EX : apply the theory
of "refreshing" a company
• Step 1: Choose a problem "enough" to
"renew" a company
• Step 2: State the basis of the selection
and application of the problem
• Step 3: Apply theory to the situation
• Step 4: Analyze and give your own
conclusions / statements.
 Structure of the subject
Chapter 1: Introduction to strategy and
strategic management
Chapter 2: Vision and mission statement
Chapter 3: Macro Environment
Chapter 4: Micro Environment
Chapter 5: Internal environment
Chapter 6: SWOT and IE matrix
Chapter 7: Controlling and evaluating
strategies
 References
• Fred R. David and Forest R. David (2015), Strategic
Management – Concept and cases, 15th edition,
Pearson/Prentice Hall.
• Giáo trình QUẢN TRỊ CHIẾN LƯỢC – PGS.TS Ngô Kim Thanh,
PGS.TS Lê Văn Tâm – NXB ĐH KTQD – Hà Nội – 2009.
• Fred R. David, Khái luận về Quản trị chiến lược (Bản dịch từ
Concepts of strategic management), NXB Thống kê, năm 2006.
 Chapter 1. Introduction to
Strategy and Strategic Management
S: The origin
The concepts
Characteristics
The role
Classification
SM: The concepts
The introduction and development of SM
SM levels and strategists
The meaning
The stages of SM and the general model
The process of formation and development of SM
 The origin of S
. S originated from the military(binh lính,
thuộc quân đội) -> the role of the generals-
> the art of the generals in military
. The S given by the generals depending on:
- The advantage/ disadvantage of the
battlefield
- Capacity, ability, power of each participant
- > On the basis of countervailing
• "Strategos" in Greek means “general".
•  Initially used in the military for simplicity,
to refer to the command and leadership
role of the generals,
• later gradually developed, expanded, used
to refer to science and art of the military
command, ways to act to defeat the
enemy.
• Strategy is the art of commanding to win
S in the military:
the art of fighting in a dominant
position
the art of using craftiness to triumph
over/win enemies.
the art of coordinating (resources,
method...) to win
 Evolution of Business Policy as discipline.
• – 1911- Harvard Business School – Integrated Course in
Origin
Management aimed at providing general management capability.
Hofer: Strategic Management – A Casebook in Policy and Planning:
The• Business Policy evolution has undergone four Paradigm Shifts.
This transition is of overlapping nature.
Development of subject of Business Policy has always followed the
demands of real life business.
• -1960: Environment change: New Products: Continuously
1930
changing market: Ford Foundation recommended report, by Gordon
and Howell, suggested a “Capstone” course of Business Policy which
would
• give the students an opportunity to pull together what they have
.learned in the separate business fields and utilise this knowledge in the
analysis of complex business problems
1969: The course was made mandatory by American Assembly of
Collegiate School of Business (AACSB)
1990: The course has become an integral part of management
education curriculum
2
1
 Evolution of Business Policy has undergone 4 Paradigms

Paradigm One: Ad-hoc Policy – making.

1900 -1930: Era of Mass Production

Maximising output, Normally a Single Product,

Standardised and low cost product, catering to unique set
•of customers servicing limited geographical area –
•
Informal control and co-ordination.

The Strategic planning was centred on maximising

output.
2
2
 Paradigm Two – Integrated Policy Formulation.

1930-1940: Changes in Technology, Turbulence in

Political environment, Emergence of new industries,
Demand for novelty products even at higher costs,
Product Differentiation, Market segmentation in
increasingly competitive and changing markets. These
all made investment decisions increasingly difficult.
This was era of integrating all functional areas and
framing policies to guide managerial actions.
 Paradigm Three – The Concept of Strategy.

1940 - 1960:

Planned policy became irrelevant due to increasingly

complex and accelerating changes. Firms had to
anticipate environmental changes. A strategy needed
to be formed with critical look at basic concept of
Business and its relationship to the existing
environment then.
 Paradigm Four – The Strategic Management.
• 1980 & onwards: The focus of Strategic Management is on
the strategic process of business firms and responsibilities
of general management.
• Everything out side the four walls is changing rapidly and
this phenomenon is called as “Discontinuity” by Mr. Peter
Drucker. Past experiences are no guarantee as science and
technology is moving faster. The future is no more extension
of the past or the present.
• The world is substantially compressed and managing the
External & Internal environment becomes crucial function.
• What to produce, where to market, which new business to
enter, which one to quit and how to get internally stronger
and resourceful are the new stakes.
• Strategic Planning is required to be done to endow the
enterprise with certain fundamental competencies /
distinctive strengths which could take care of eventualities
resulting from unexpected environmental changes.
Concepts of S
•
Strategy According to B. H. Liddell Hart
• his book, Strategy, Liddell Hart examines wars and
In
battles from the time of the ancient Greeks through World
War II. He concludes that Clausewitz’ definition of strategy
as "the art of the employment of battles as a means to gain
the object of war" is seriously flawed in that this view of
strategy intrudes upon policy and makes battle the only
means of achieving strategic ends.
•
Wiser definition of strategy could be "the practical
adaptation of the means placed at a General’s disposal
to the attainment of the object in view." Thus, military
strategy is clearly a means to political ends.
•Concluding his review of wars, policy, strategy and
tactics, Liddell Hart arrives at this short definition of
strategy: "The art of distributing and applying
military means to fulfil the ends of policy."
Strategy According to George Steiner

Strategy is that which top management does that is of great

importance to the organization.

Strategy refers to basic directional decisions, that is, to

purposes and missions.

Strategy consists of the important actions necessary to

realize these directions.

Strategy answers the question: What should the

organization be doing?

Strategy answers the question: What are the ends we seek

and how should we achieve them?
 Alfred D Chandler(1962) : “The determination of basic long-
• term goals and the adoption of courses of the courses of action
and the allocation of resources necessary for carrying out these
goals”
Kenneth Andrews(1965) : “The pattern of objectives,
• purpose, goals, and the major policies and plans for achieving
these goals stated in such a way so as to define what business
the company is in or is to be and the kind of company it is or
•
to be
”Kenneth Andrews (1965) : “Business Strategy is a method of
describing the future position of the company, its objectives,
purposes, goals, policies, and plans that may be required for
guiding the company from its existing position to where it
• desires to be
Igor Ansoff(1965) : “The common thread among the
organisation’s activities and product-markets…that defines the
essential nature of business that the organisation was or planned
to be in future”
 Defining Strategy
William F Gleueck(1972) : “A unified,
comprehensive and integrated plan designed to assure
that the basic objectives of the enterprise are
achieved”
Alfred D Chandler(1984) : “Basically, a strategy is a
• set of decisions-making rules for the guidance of
organisational behaviour”
Henry Mintzberg(1987) : “A pattern in a
• stream of decisions and actions”

Michael E Porter(1996) : “…developing and

• communicating the company’s unique position,
making trade-offs, and forging fit among activities”
 If we sum up all the above definitions, then Strategy is :

A•plan or course of action or a set of decisions

rules forming pattern or creating a common
•
thread.
Related to pursuing those activities which move an
organisation
• from its current position to a
desired future state,
Concerned with the resources necessary for
•
implementing a plan or following a course of action
and,
Connected to the strategic positioning of a firm,
.
making trade-offs between its different activities,
 Core Concept of Strategy
• A company’s Strategy consists of the competitive moves
and business approaches that managers employ to
attract and please customers, compete successfully,
grow the business, conduct operations and achieve
targeted objectives.

• Definition by Glueck: “Strategy is unified, comprehensive

& integrated Plan that relates the Strategic advantages of
the firm to the Challenges of the environment and is
designed to ensure that basic objectives of the enterprise
are achieved through proper implementation process.”
• Another Definition: Strategy is Organisation’s pattern of
response to its environment over a period of time to
achieve it’s goals, objectives and Mission.
 Johnson and Scholes (Exploring Corporate Strategy) define strategy as
follows:
"Strategy is the direction and scope of an organisation over the long-
term: which achieves advantage for the organisation through its
configuration of resources within a challenging environment, to meet the
needs of markets and to fulfil stakeholderexpectations".
*In other is
Where words, strategy istrying
the business about:to get to in the long-term (direction)
* Which markets should a business compete in and what kind of
activities are involved in such markets? (markets; scope)
* How can the business perform better than the competition in those
markets? (advantage)?
* What resources (skills, assets, finance, relationships, technical
competence, facilities) are required in order to be able to compete?
(resources)?
* What external, environmental factors affect the businesses' ability to
compete? (environment)?
* What are the values and expectations of those who have power in
and around the business? (stakeholders)
Three types of actions are involved in Strategy:

• Determination of Long Term Goals &

Objectives.
•
• Adoption of courses of action.
• Allocation of resources.
->>> S is “Creation of unique & valued position
involving a different set of activities. The
-•Company that is strategically positioned
performs different activities from rivals or
•
performs similar activities in different ways” –
Michael Porter.
 Essence Of Strategy
• Long Term Objectives: It emphasises on long term
growth and development. These Objectives give
direction for implementing Strategy.
• Competitive Advantages: The external environment
is continuously monitored & Strategy is made to
have the firm a continuous Competitive Advantage.
•
Vector: is a Direction with Force. Series of actions are
to be taken & they should have same direction for
• whole organisation.
•
Synergy: Once a series of decisions are taken to
accomplish the objectives in same direction, there will
be synergy. Synergy can happen due to Competitive
Advantages and Growth Vector. The Objectives need
be measurable and could be : ROI, Sales, grow rate...
 Nature of Strategy
•Strategic actions are different for different situations. Strategy is combination
of actions to solve a certain problem to achieve a desirable end.
Strategy may involve contradictory actions simultaneously or with a gap of
time like closing down some operations and expanding some at same time.
•
Strategy is future oriented. New situations, which have not arisen in past
will require revised Strategic Actions.
Strategy requires some systems and norms for its efficient adoption in any
•organisation.
Strategy provides overall framework for guiding enterprise thinking and
action.
•
a major course of action through which organisation relates itself to its
environment. (External)
-• blend of internal & external factors. Face opportunities & threats provided
by external factors, internal factors are matched with them.
 ???
• 3 KEY WORDS OF S DEFINITION
 Strategy v/s Policies
• Policy is guideline for • Strategies are concerned with
decisions & actions to be the direction in which human
taken by subordinates for the and physical resources are
fulfilment of the set of deployed to maximise the
objectives. chances of achieving
organisational objectives in
• face of variable environment.
Policies are commonly
accepted understanding of • Strategies are specific
decision making. actions suggested to
achieve objectives.
• Strategy is action oriented
• Policies are thought and empowers concerned
oriented. to implement them.
• Strategy cannot be
• Policies have to be integrated delegated downwards.
so that Strategy is implemented • Strategy is rule for
successfully and effectively. making decision
• PolicyStrategy
is contingent decision.both are the means directed
and policies
towards meeting organisational objectives.
 Strategy •v/s Tactics
• Strategy determines the major
plans to be undertaken.
• Goal of Strategy is to gain
competitive advantage, break
the opponent.
• Strategic decisions cannot be
delegated downwards.
• Strategy formulation is
dynamic, responding to
environment. It can be
continuous or
• irregular.
Strategy has a long term
perspective & have a high
• element of uncertainty.
Strategy formulation is
affected by the personal
values of person involved in
the process.
Tactics is means by which
previously determined plans are
executed.
Goal
• of Tactics is to achieve
success in a given action.
Tactics
• decisions can be
delegated to all levels of
organisation.
Tactics
• are determined on a
periodic basis with some fixed
timetable.
Tactical
• decisions are more
certain as they work upon
framework set by Strategy.
Tactical
• decision implementation is
impersonal.
Tactical
• decisions are less
important than Strategic
decisions.
Feature of S
 Feature of S
• Concerned with/ effects the long term
direction of the org
• Normally about trying to achieve some
advantage for the org
•  right combination of factors both external
and internal.
• Strategy is forward looking. It has 
orientation towards the future.
• May contain significant risks to the
bussiness
 Features of Strategy
• Top management responsibility
• Allocation of large amount of resources
• Impact on long term prosperity of the firm
• Future oriented
• Multi-functional or multi-business
consequences
• Consideration of factors in the external
environment
 STRATEGY is…………..

?
?
 NOTE
• A real strategy involves a clear set of choices that
define what the firm is going to do and what it’s not
going to do.
• Many so-called strategies are in fact goals. “We
want to be the number one or number two in all
the markets in which we operate” . It does not tell
you what you are going to do; all it does is tell you
what you hope the outcome will be, you’ll still need
a strategy to achieve it.
• Many strategies fail to get implemented, despite the
efforts of hard-working people, because they do
not represent a set of clear choices.
 Flawed Concepts of Strategy
• Strategy as action
– “Our strategy is to merge…”
– “… internationalize…”
– “… consolidate the industry…”
– “… outsource…”
– “…double our R&D budget…”

• Strategy as aspiration
– “Our strategy is to be #1 or #2…”
– “Our strategy is to grow…”
– “Our strategy is to be the world leader…”
– “Our strategy is to provide superior returns to our shareholders…”

• Strategy as vision
– “Our strategy is to best understand and satisfy our customers’
needs…”
– “… provide superior products and services…”
4
6

– “…to advance technology for mankind…”

 The role of S

• Framework for Operational

Planning
• Clarity in Direction of Activities
• Increase Organisational
Effectiveness
• Personal Satisfaction
Classification of S
Levels of Strategy
 The Strategy Hierarchy

Different Levels of Strategy

Levels Structure Strategy

Corporate Corporate Level

Corporate Office

SBU SBU - A SBU - B SBU - C Business level

Functional
Finance Marketing Operations Functional Level

Personnel Information 44
33
 Corporate-level Strategy
• At this level, strategic decisions relate to organization-
wide policies and are taken care by top-level
management (BOD) with a vision of determinin Where
the company wants to be?’
• It has two main aspects- Formulation of Strategy
(strategic planning) and Strategy Implementation
• There is also greater risk, cost and profit potential as
well as greater need of flexibility associated with this
level.
• Major financial policy decisions involving acquisition,
diversification and structural redesigning belong to this level.
 Business-Level Strategy
• Business-level strategy is more likely related to a unit
within the whole. It is concerned with competition in a
market.
• The concerns are about what products or services should be
developed and offered to which markets in order to meet
customer needs and organizational objectives.
• At this level, multifunctional strategies developed at
corporate level are formulated and implemented for
specific product market in which the business operates.
Thus, managers at this level translate general directions
and intent into concrete functional objectives.
• Decisions at this level include policies involving new
product development, marketing mix, research &
development, personnel, etc.
Functional/Operational-Level Strategy
• Functional strategy involves decision-making with respect
to specific functional areas- production, marketing,
personnel, finance etc.
• While corporate and business level strategies are
concerned with “Doing the right things”, functional
strategies stress on “Doing things right”.
• Operating level strategy is concerned with strategic
approaches for managing frontline operating units(like
plants, sales, etc) and for handling day to day tasks of
strategic significance(like advertising campaign,
purchasing materials, inventory control, maintenance,
etc.). Thus, it focuses on how the different functions of the
enterprise contribute to the other levels of strategy.
• Thus, functional level strategic management is the
management of relatively narrow areas of activity, which
are of vital, pervasive or continuing importance to the total
organization.
 Kinds of Corporate Strategy -1
There are four Grand Strategic alternatives:
Stability Strategy: Main aim here is Stabilising and
improving Functional Performance.
No Change Strategy.
Profit Strategy.
Pause / Proceed with
caution Strategy.
Expansion Strategy: Main aim is here High Growth.
Concentration.
Integration.
Diversification.
Cooperation.
Internationalisation
.
Mergers, Takeovers,
Multi-domestic Joint Ventures, Strategic Alliances, Global
Strategy. 51
Strategy, Trans-national Strategy, International Strategy,
 Kinds of Corporate Strategy - 2

Retrenchment Strategy Main aim here is contraction of its

activities. It is done through Turnaround, divestment and
liquidation in modes like
Compulsory winding up.
Voluntary winding up.
Winding up under
supervision of Court.
Combination Strategies: It is combination of all above
three policies simultaneously in different businesses or at
different times.

52
 Functional strategies include Marketing
Strategies, new product development
strategies, human resource strategies,
legal strategies, supply-chain strategies,financial
and information technology
strategies,
management strategies. The emphasis is on short and medium term plans
and is limited to the domain of each department’s functional responsibility
and is executed by Functional heads. Each functional department attempts
to do its part in meeting overall corporate objectives, and hence to some
extent their strategies are derived from broader Corporate & Business
strategies.
Operational Strategy
The “lowest” level of strategy is operational strategy. At this level, detailing
is done to add completeness to Business & Functional Strategies. It is very
narrow in focus and deals with day-to-day operational activities such as
scheduling criteria. It must operate within a budget but is not at liberty to
adjust or create that budget. Operational level strategy was encouraged by
Peter Drucker in his theory of Management By Objectives (MBO).
Operational level strategies are informed to business level strategies which,
in turn, are informed to corporate level strategies. These strategies are
executed by ‘Brand Managers’, ‘Operating Managers’, ‘Plant managers’.
Important activities like Advertising, Web site operations, distributions are
45
involved at this level.
STRATEGISTS

49
 Strategists - Their Roles &
Levels:
•Strategists are individuals/groups who are
primarily involved in the formulation,
implementation, and evaluation of Strategy.
•In a limited sense, all managers are
Strategists. But we may have outside
agencies involved in various aspects of
Strategic Management, who are also
Strategists.

46
•Board of Directors
Board is responsible to owners, share holders, government, controlling
agencies, and financial institutes. Board is requires to direct and is involved
in reviewing and screening executive decisions in light of their
environmental, business and organisational implications. Board is
involved in setting strategic direction, establishing objectives &
strategy, monitoring and reviewing achievement.
Chief Executive Officer:-
is responsible for all aspects of strategic management from the
formulation to evaluation of strategy. CEO plays a pivotal role in setting
mission, objectives and goals. He formulates and implements strategy
•and ensures that organisation does not deviate from a predetermined
path. CEO is primarily responsible for strategic management of the
organisation
Middle Level Managers:-
They relate to operational matters and are seldom play active role in
Strategic Management. They form departmental / functional plan in light
•of broad objectives and goals of organisation provided in vision,
mission, goals and objective statements of the organisation. They are
implementers, followers of guide lines, receivers of communication
about strategic plans. They are basically involved in the implementation47
of functional strategies
 Strategic Management Defined

- Process of formulating, implementing, and

evaluating, strategies to accomplish long-term
goals and sustain competitive advantage.
- The Art and Science of
Formulating,Implementing, and Evaluating Cross-
Functional Decisions That Enable an Organization
to Achieve ít objectives
 Strategic Management
• Strategic management is a set of management decisions and
actions that determines the long-run performance of a
corporation. It includes environmental scanning, strategy
formulation, strategy implementation and evaluation and
control to achieve the objectives of an organization.
• The study of strategic management emphasizes the
monitoring and evaluating of external opportunities and
threats in light of a corporation’s strengths and
weaknesses.
• As per Fred R. David, strategic management is an art and
science of formulating, implementing and evaluating cross
functional decisions that enable an organization to achieve its
objectives.
• As per Channon, strategic management is defined as that set
of decisions and actions that result in formulating of strategy
an its implementation to achieve the objectives of the
corporation.
 Benefits of Strategic Management

- Improved Communication - Greater Productivity

- Increased Understanding - More Effective Strategies
- Enhanced Commitment - Higher Productivity
- Allow Firm to Influence, Initiate, and Anticipate
- Be Proactive Rather Than Reactive
 The Stages and Activities in the
Strategic Management Process

Stages Activities

Strategy Conduct Integrate Make

formulation research intuition with decisions
analysis

Strategy Establish Devise Allocate

implementation annual policies resources
objectives

Review internal Measure Take

Strategy and external performance corrective
evaluation factors action
 Strategic Management Model

Environmental Strategy Strategy Evaluation

Scanning Formulation Implementation and Control

External Mission
Reason for
Societal
existence
Environment Objectives
General Forces
What results
Task to
Environment Strategies
accomplish
Industry by when Plan to
Analysis
achieve the
Policies
mission &
Internal objectives Broad
guidelines for Programs
Structure decision Process
Chain of Command making Activities to monitor
needed to performance
Culture Budgets and take
accomplish
Beliefs, a plan corrective
Cost of the
Expectations, action
programs
Values Procedures
Resources
Sequence
Assets, Skills
of steps
Competencies,
needed to
Knowledge do the job Performance

Feedback/Learning
 A Comprehensive Strategic Management Model
Feedback

Perform
External
Audit

Generate,
Develop Establish Evaluate, Establish Measure
Long- and Policies and Allocate and
Mission term Annual Resources Evaluate
Statement Objectives Select
Strategies Objectives Performance

Perform
Internal
Audit

Strategy Formulation Strategy Implementation Strategy Evaluation

Forces Influencing Design of Strategic
Management Systems
Toward more Toward less
formality and formality and
Organization
more details fewer details

Small one-plant companies

Large companies
Management Styles
Policy maker
Democratic-permissive
Authoritarian
Day-to-day operational thinker
Intuitive thinker
Experienced in planning
Inexperienced in planning
 Forces Influencing Design of Strategic
Management Systems
Toward more Toward less
formality and formality and
more details
Complexity of fewer details

Environment

Stable environment
Turbulent environment
Little competition
Many markets and customers
Single market and customer
Competition severe
 Forces Influencing Design of Strategic
Management Systems
Toward more Complexity of Toward less
formality and
more details Production Process formality and
fewer details

Long production lead times

Short production lead times
Capital intensive
Labor intensive
Integrated manufacturing processes
Simple manufacturing processes
High technology
Low technology
Market reaction time for new
product is short
Market reaction time is long
 Forces Influencing Design of Strategic
Management Systems
Toward more Toward less
formality and formality and
more details
Nature of Problems fewer details

Facing new, complex, tough

problems having long-range
aspects

Facing tough short-range problems

Purpose of Planning
System
Coordinate division activities
Train managers
 Key terms
• Opportunity
• Threat
• Strength
• Weakness