Gage college

Strategic Management
Tadele B. (Ass. Professor)
 Mode of Assessment:
• Group presentation 20%
• Group assignment 20%
• Participation and class attendance 10%
• Final Examination 50%
• Total 100%
 Group assignment both written and
presentation(10 minutes)
1. What is strategic management? explain with some examples
from your oganization
2. Define and explain strategic Planning by relating one of
your organization
3. Write both external and internal environmental analysis by
taking one of your organization
4. What does mean industry and Competitor analysis?
5. How can be formulated Strategy?
6. What are business level strategies?
7. How can be implemented strategy?
8. Explain criteria's of Strategy review, evaluation, &
Control
 CHAPTER ONE
Strategic Management An Overview

 The term ‘strategy’ is derived from the Greek word strategos, which
means generalship, it is ‘the art of planning and directing larger
military movements and the operations of war.’

 Strategic management can be defined as the art and science of

formulating, implementing and evaluating cross-functional
decisions that enable an organization to achieve its objectives.
 Strategic management is the set of managerial decisions and actions
that determines the long-term performance of a corporation.
 It includes:
 environmental scanning (internal & external)
 strategy formulation: mission, vision, goal, objective
 strategy implementation: annual plan, allocation of resource
 evaluation and control
 Strategic Management processes

• Analysis
 Strategic goals (vision, mission, strategic objectives)
 Internal and external environment of the firm

• Decisions
 What industries should we compete in?
 How should we compete in those industries?

• Actions
 Allocate necessary resources
 Design the organization to bring intended strategies to reality
• strategy as: ‘a unified, comprehensive, integrated plan… designed to ensure that
the basic objectives of the enterprise are achieved’.
• A strategy is the means used to achieve the ends (objectives)
 Attributes of Strategic Management
• Directs the organization toward overall goals and
objectives.
• Includes multiple stakeholders in decision making.
• Needs to incorporate short-term and long-term
perspectives.
• Recognizes tradeoffs between efficiency and
effectiveness.
 Mintzberg’s Views of Strategy
• Plan - consciously intended course of action

• Ploy- maneuver to outwit opponent

• Pattern- consistency in behavior

• Position- location in environment

• Perspective- way of perceiving the world

 Forms of Strategy
• Formal versus informal - associated with size of firm and
stage of development.
• Intended versus realized –
 intended strategies are the plans managers develop; It is
the strategy that managers talk about and say they want
to see come into effect.
 realized strategies: are the actions that actually take
place over time.
• emergent strategies are the unplanned responses to
unforeseen circumstances, and they often arise from
autonomous action by individual employees deep within
the organization.
 Strategic Management Vs Planning

• Strategic planning is sometimes represented with

strategy formulation, because strategic plan is

constructed in this stage

 Benefits of Strategic Management
 Clearer sense of strategic vision
 Sharper focus on what is strategically important
 Improved understanding of rapidly changing
environment
 exploit and create new and different opportunities
for tomorrow; long-range planning, in contrast, tries
to optimize for tomorrow the trends of today.
 Three Key Strategic Questions
Where is the organization now?
where will the organization be in one, two, five or
ten years? Are the answers acceptable?
what specific actions should management
undertake? What are the risks and payoffs
involved?
Stages of Strategic Management Model
Scanning/intent:- Where are we now?
 Macro Analysis

 Industry Analysis – Competitive Intelligence

 SWOT Analysis

 Internal versus External Elements

 Strategy Formulation-Where do we want to be?
 Mission
 Vision
 Values
 Goals
 Objectives

• developing a vision and mission, establishing

long-term objectives, generating alternative
strategies, and choosing particular strategies
to pursue.
 Strategy Implementation- How do we get there?
• establish annual objectives, devise policies, motivate employees,
and allocate resources so that formulated strategies can be
executed.
• Strategy implementation includes developing a strategy-supportive
culture, creating an effective organizational structure, redirecting
marketing efforts, preparing budgets, developing and utilizing
information systems, and linking employee compensation to
organizational performance.
•The process of putting strategies and policies into action through the development of:
 Programs- statements of activities or steps needed to accomplish a single-use
plan.
 Budgets- statements of a corporation’s programs in monetary terms.
 Procedures- systems of sequential steps or techniques that describe in detail how
to perform particular tasks or jobs.
 Measurement/Performance- How do we measure our
progress?
 Three fundamental strategy-evaluation activities
are:-
 (1) reviewing external and internal factors that are
the bases for current strategies,
 (2) measuring performance, and
 (3) taking corrective actions.
• Strategy formulation, implementation, and

evaluation activities occur at three hierarchical

levels in a large organization:

 corporate,

 divisional or strategic business unit, and

 functional.
Important points in strategic management of organizations
• Mission. An organization's mission is the purpose or reason for the
organization's existence. It tells what the company is providing to
society, either a service g or a product.
• Objectives: are the end results of planned activity. They state what
is to be accomplished by when and should be quantified if possible.
• Goal: as an open-­ended statement of what one wants to accomplish
with no quantification of what is to be achieved and no time criteria
for completion.
• strategy: a comprehensive master plan stating how the corporation
will achieve its mission and objectives. It maximizes competitive
advantage.
• policy: is a broad guideline for decision-making that links the
formulation of strategy with its implementation.
 learning organization
 a learning organization—an organization skilled at
creating, acquiring, and transferring knowledge, and
at modifying its behavior to reflect new knowledge
and insights.
 Learning organizations are skilled at 4 main activities:
Solving problems systematically
Experimenting with new approaches
Learning from their own experiences and past
history as well as from the experiences of others
Transferring knowledge quickly and efficiently
throughout the organization
 Types of strategy
• Corporate strategy: describes a company's overall direction in
terms of its general attitude toward growth and the management
of its various businesses and product lines.
• Typically fit within the 3 categories of stability, growth, and
retrenchment.
• Business strategy: refers to the aggregated strategies of single
business firm or a strategic business unit (SBU) in a diversified
corporation.
• According to Michael Porter, a firm must formulate a business
strategy that incorporates either cost leadership, differentiation,
or focus to achieve a sustainable competitive advantage and
long-term success.
• Business strategies may fit within the 2 overall categories of
competitive or cooperative strategies.
• Functional strategy: is the approach taken by a
functional area to achieve corporate and
business unit objectives and strategies by
maximizing resource productivity.
 Initiation of Strategy: Triggering Events
• A triggering event is something that acts as a stimulus for a
change in strategy:
• New CEO: the new CEO cuts through the veil of complacency and
forces people to question the very reason for the corporation's
existence.
• External Intervention: The firm's bank refuses to approve a new
loan or suddenly demands payment in full on an old one.
• Threat of a Change in Ownership: Another firm may initiate a
takeover by buying the company's common stock.
• Performance Gap: when performance does not meet expectation.
• Strategic Inflection point: when a major change takes place due to
introduction of new technologies, regulatory environment, a
change in customer’s value, or a change in customers preference.
 STRATEGIC DECISION MAKING
• As organizations grow larger and more complex with more uncertain
environments, decisions become increasingly complicated and difficult to
make.
• Unlike many other decisions, Strategic decisions deal with the long-run
future of the entire Organization and have 3 characteristics:
1. Rare: Strategic decisions are unusual and typically have no precedent to
follow.
2. Consequential: Strategic decisions commit substantial resources and
demand a great deal of commitment from people at all levels.
3. Directive: Strategic decisions set precedents for lesser decisions and future
actions throughout the organization.
 STRATEGIC DECISION-MAKING PROCESS: AID TO BETTER DECISIONS

• Proposed 8-steps to strategic decision-making processes

1. Evaluate current performance results
2. Review corporate governance
3. Scan and assess the external environment
4. Scan and assess the internal corporate environment
5. Analyze strategic (SWOT) factors
6. Generate, evaluate, and select the best alternative
strategy
7. Implement selected strategies
8. Evaluate implemented strategies
 Characteristics of Strategic Management
• Long Term Focus
• Top management involvement
• Shared vision
• Creates the future
• Monitoring the strategic
• Continuous decision–making
• Clear links from strategy to operations
• Structures and processes support strategy
 Corporate social Responsibility
• [Traditionally], business had been viewed as an
economic institution with a sole objective of
profit maximization.
• However, in recent times, there has been
increasing awareness and acceptance of social
objective as one of business objectives.
• Primarily, the justification goes in such a way that business

is dependent on society for acquisition of inputs like

material, money and men and for selling its produces.

• Besides, business converts those inputs in to outputs in the

society or at least locates its facility within the society.

• Finally, business depends on society to sale its products

• CSR has been viewed as purely cost to the business
putting firms under financial strain and competitive
disadvantage.
• CSR even though looks the burden of business firms,
it ultimately results in societal cost as business firms
transfers the cost incurred in discharging social
responsibility to the society by charging higher
prices to their produces so as to recover the cost
incurred while performing social initiatives
• CSR the concept whereby companies integrate social
& environmental concerns in their business
operation & in their interaction with their
stakeholder on a voluntary basis.
 Thank you!
End of the chapter