o Course Contents

Course & Self Part One: Introduction to Strategic

Management (SM)
Introduction
I: Basic Concepts of SM
Part Two
II:Vision & Mission Analysis
III: The External Env’t Audit
IV: The Internal Env’t Audit
V: Strategies in Action
VI: Strategy Analysis & Choice
Part Three: Implementation
VII: Strategy Implementation & Execution
Part Four: Strategy Monitoring
VIII: Strategy Review, Evaluation & Control
• Learning Objectives
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 Contents of the Chapter
NGVC Basic Concepts of Strategic Management (SM)
1.1 Definitions of SM?
PG 1.2 Schools of Thought on Strategic Management
Program: 1.3 Key Terms in SM
MBA 1.4 The SM Process Model
Course 1.5 The Benefits of SM
Code: 621 1.6 Guidelines for Effective SM
1.7 Comparing Business & Military Strategy
Ch I: Basic
1.8 SM Case Analysis
Concepts
of SM

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 Fred. R. David:
The Basic  Art & science of formulating, implementing &
Concepts evaluating cross-functional decisions that
of SM enable an organization to achieve its
objectives.

 This definition implies that SM focuses on

Definitions integrating organizational capabilities under
different management functions

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 Robert M. Grant:
The Basic
Concepts of Strategy is about achieving a success through a
SM unifying theme that gives coherence and
direction to the actions & decisions of an
individual or an organization.

 It implies that the strategy is a means to achieve

Definitions success

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 Wheelen, T.L., et.al.:
The  SM is a set of managerial decisions and actions that
Basic determines the long-run performance of an
Concept organization.
s of SM It includes environmental scanning, strategy
formulation, implementation, and evaluation &
control.
Defini  The study of SM, therefore, emphasizes the
tions monitoring and evaluation of external opportunities
and threats in light of an org’s strengths and
weaknesses.
 It implies that the strategy is managerial decisions &
actions that determines the future success

5
 SM is used synonymously with Strategic Planning
The in most literature, and here too.
Basic But, they have different connotations in that:
Concep  SM is used more often in academia,
ts of where as SP is used more often in the
SM business world.
 SM refers to strategy formulation,
implementation & evaluation, where as SP
SM refers to strategy formulation.
Vis-à-vis
SP

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 • There are numerous ways of studying strategic
The Basic
Concepts management; some of them are more pedagogic
of SM than others. One method is to classify strategic
Schools management into schools of thought and this is in
of terms of teaching and learning an ingenious
Thought methods. One of those methods developed by
on Henry Mintzberg are discussed as follows:
Strategic o Mintzberg’s 10 Schools of Thought in SM:
Managem
ent

7
The Basic  A school of thought refers to intellectual tradition
Concepts of collectively drawn by a group of people who share common
SM characteristics of opinion or outlook of a philosophy,
discipline, belief, social, economics, culture or art.
• In 1998, Mintzberg developed five types of strategic
management based on different definitions of the concept:
Five   Strategy as plan : a directed course of action to achieve an
Types intended set of goals; similar to the strategic planning
of concept;
 Strategy as pattern : a consistent pattern of past behavior,
Strategic with a strategy realized over time rather than planned or
Manageme intended. Where the realized pattern was different from the
nt? intent, he referred to the strategy as emergent;

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  Strategy as position: locating brands, products, or
The companies within the market, based on the conceptual
Basic framework of consumers or other stakeholders; a
Conc strategy determined primarily by factors outside the
epts firm;
of SM  Strategy as ploy: a specific maneuver intended to
outwit a competitor; and
Five  Strategy as perspective: executing strategy based on a
Types "theory of the business" or natural extension of the
mindset or ideological perspective of the organization.
of
• In the same year, Mintzberg developed the five types
Strategic of management strategy into 10 “schools of thought.”: 
Managem            
ent?

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 1. Design school (Strategy as a designed set of
The
decisions)Deliberate Strategy
Basic
Conc 2. Planning school (Strategy as the process of
epts planning) Deliberate Strategy
of SM 3. Positioning school (Strategy as a position in the
market)Deliberate Strategy
Ten
Schools of
4. Learning School (Strategy as a result of
Thought organizational learning) Emergent Strategy
by Henry 5. Cultural school (Strategy as a result of culture and
Mintzberg capabilities) Emergent Strategy
6. Power School (Strategy as a result of power play)
Emergent Strategy

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The
Basic 7. Cognitive School (Strategy as a result of
Conc strategic interpretation) Individual Focus Strategy
epts 8. Entrepreneurial School (Strategy as the vision of
of SM the leader)Individual Focus Strategy
9. Environmental School (Strategy as a reaction to
Ten
Schools the market) External Focus Strategy              
of 10. Configuration School (Mintzberg‘s attempt to
Thought create a synthesis between the deliberate and
by Henry emergent schools)
Mintzberg

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 1950s-60s:
Financial Budgeting
The  DCF capital budgeting
Basic  Operational budgeting
Concept
s of SM 1960s-1970s:
Corporate Planning
 Corporate plans based on medium-term
Evolution of economic forecasts
SM:  1970s-1980s
Dominant
Emergence of Strategic Management:
Themes
 Industry analysis and competitive positioning

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 1990s: Quest for competitive
The advantage
Basic  Emphasis on resources and capabilities
Concep  Shareholder value maximization
ts of  Refocusing, outsourcing, delayering, cost
SM cutting
2000-2015: Adapting to Turbulence
Evolution  Adapting to and exploiting digital technology
of SM:  The quest for flexibility and strategic
Dominant innovation
Themes  Strategic alliances
 CSRs and sustainability

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The  Originally, the word strategy comes from the
Basic Greek strategos, which refers to a military
Concept generalship and it combines stratos (the army)
s of SM and ago (to lead). Therefore, the history of
strategic planning began in the military.
 When the term strategy is used in military
Evolution sense, it refers to action that can be taken in the
of SM: light of action taken by the enemy.
Dominant  Strategy is converted into tactics when actual
Themes contact with enemy is made.
(Grant,
2016)

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 1. Strategists
Basic 2. Vision statement
Concept
3. Mission statement
s of SM
4. External Os & Ts
5. Internal Ss & Ws
6. Long Term Objectives
Key
7. Strategies
Terms
8. Competitive Advantage
in SM
9. Annual Objectives
10. Policies

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 Strategists: are individuals who are the most
Basic responsible for the success or failure of an
Concep organization.
ts of  Usually found in high levels of management
SM (CEO)
 Help organizations gather, analyze and
Key organize information
Terms  Track industry and competitive trends
in SM  Develop forecasting model
 Evaluate corporate and divisional
performance

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 Vision Statement
Basic  Answers the question: “What do we want to
Concepts become?”
of SM
 First step in strategic planning
 Many vision statements are a single sentence.
 Example of a Vision Statement
Key o “Our vision is to take care of your vision.”
Terms in
SM

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 Mission Statements
Basic  Mission statements are "enduring statements of
Concept purpose that distinguish one business from the
s of SM other similar businesses.
 A mission statement identifies the scope of a
Key firm's operations in product and market terms.
Terms  It addresses the basic question that faces all
in strategists: What is our business?
 A clear mission statement describes the values
SM
and priorities of an organization.

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 Basic Examples of mission statement
Concept o Microsoft's mission is to create software
s of SM for the personal computer that empowers
and enriches people in the workplace, at
school and at home.
o Microsoft's early vision of a computer on
Key every desk and in every home is coupled
Terms today with a strong commitment to
in SM Internet-related technologies that expand
the power and reach of the PC and its users.

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 External Opportunities & Threats
 Largely beyond the control of a single
Basic organization:
Concept
PESTEC trends & events that could significantly
s of SM
benefit or harm an organization in the future.
Key
P= represents political, legal & governmental
Terms S= Social, cultural & demographic factors.
in SM E= economic, T=technological, E=environment
C= competitive trends & coincidences.

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 Basic Internal Ss & Weaknesses
Concep Controllable activities that are performed
ts of
SM well or poorly relative to competitors: based
on functional / systematic analysis of
activities of a firm
Key Organizations strive to pursue strategies that
Terms capitalize on strengths and improve
in SM weaknesses.

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Basic Long-Term Objectives
Conce 
Results to be achieved at least over more than
pts of
one year in pursuing the organization’s
SM
mission.

Key
Terms 
State direction, aid in evaluation, create
in SM synergy, reveal priorities, focus coordination,
provide basis for effective management

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 Strategies
Basic 
Potential actions that require top
Concept
s of SM management decisions and large amounts of
firm’s resource commitment.
Mechanisms by which long-term objectives
are realized: geographic expansion,
Key diversification, acquisition, product
Terms development, market penetration,
in SM retrenchment, divestiture, liquidation, joint
venture

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 Basic
Concep Competitive Advantage
ts of  Strategic management is all about creating
SM
& sustaining competitive advantage.

 This term can be defined as anything that

Key
a firm does especially well compared to
Terms
rival firms.
in SM

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 Annual Objectives
Basic  Short-term milestones are necessary to achieve
Concep long-term objectives:
ts of  Represent the basis for allocating resources
SM
 Established at corporate, divisional, and
Key functional levels
Terms
in SM  Stated in terms of accomplishments for
different functional areas.

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 Policies
 It includes guidelines, rules, and procedures
Basic established to support efforts to achieve stated
Concept objectives: it guides the decision making and
s of SM address repetitive situations; it is established at
corporate, divisional, or functional levels; and
allow consistency & coordination within/
Key between different work units.
Terms in
SM
 Important in strategy implementation as the
means by which annual objectives will be
achieved.

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 Environmental
Scanning: SM Process Model
Gathering Strategy Strategy Evaluation
Information Formulation Implementation: & Control:
Developing Long- Putting Strategy Monitoring
Range Plans into Action Performance
1)Mission: Reason for 5)Programs
External Existence & Tactics
General Environment : 2)Objectives: Activities needed 8)Performance
PESTEC
Task Environment : What results to accomplish Actual Results
Industry Analysis to accomplish the a plan
when? 6)Budgets
Internal
Structure:
3)Strategies: Costs of the programs
Chain of Command Plan to
Culture:
Beliefs, Values,
achieve
Expectations Mission& 7)Procedures
Resources:
Objectives Sequence of steps
Assets, Skills,
knowledge, 4)Policies: Needed to do the job
competencies
Guidelines for
Decision Making

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  Proactive: helps orgs become more proactive
than reactive in shaping its own future; it allows
an organization to initiate and influence and thus
Basic to exert control over its own destiny.
Concep  Principal Benefit: Historically, the principal
ts of benefit of strategic management has been to help
SM orgs formulate better strategies through the use of
a more systematic, logical, and rational approach
for decision making.
 Communication: is a key to successful SM:
Benefits
enhanced comm= better understanding= greater
of commitment= mgrs+employees”on a mission” by
Engagi owning the strategy that is important for the future
ng in results.
SM
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 Financial Benefits
 More profitable and successful

Basic
 Significant improvements in sales,
Concept
profitability, and productivity
s of SM

Benefits of  Informed decisions with better anticipation of

the future
Engaging
in SM

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 Non-financial Benefits
Enhanced awareness of external threats
Understanding of competitors’ strategies
Basic Increased employees’ productivity
Conce
Reduced resistance to change
pts of
Clear performance-reward relationships
SM
Order and discipline to the firm
Benefits View change as an opportunity
of
Engaging
in SM

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 Ten reasons often given for poor or no SP in a firm :
 No formal training in SM
 No understanding of the benefits of SM
Basic
 No monetary rewards for doing planning
Concep
 No punishment for not planning
ts of
 Too busy “firefighting” to plan ahead
SM
 View planning as a waste of time
Why
 Laziness; effective planning takes time and effort
Some
 Content with current success; failure to realize that
Firms Do
success today is no guarantee for tomorrow
No
 Overconfidence
Strategic
 Prior bad experience with SP done
Planning?
sometime/somewhere

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  Using to gain control over decisions & resources
 Doing only to satisfy regulatory requirements
Basic  Moving hastily from mission to strategy formulation
Concep  Failing to communicate to employees
ts of  Intuitive decisions by the top Mgrs that conflict with
formal plan
SM
 If top mgt is not supportive of process
 Failing to use as standard for performance measurement
 Delegating SP to a “planner” rather than involving all
managers
Pitfalls  Failing to involve key employees
in SP  Failing to create collaborative environment
 Viewing SP as unnecessary or unimportant exercise

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  Failing to follow certain guidelines in conducting SM
can foster criticisms of the process & create problems
for the org.
Basic  Even, the most technically perfect strategic plan will
Concept serve little purpose, if it is not implemented well.
s of SM  Change comes through implementation
& evaluation, not through the plan.
 SM must be a self-reflective learning process that
familiarizes managers and employees in the organization
with key strategic issues and feasible alternatives for
Guideline resolving those issues.
s for the  Words supported by numbers, rather than numbers
supported by words, should represent the medium for
Effective explaining strategic issues & organ’l responses.
SM  A key role of strategists is to facilitate continuous
organizational learning and change.
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17 Guidelines for the Strategic-Planning Process to Be Effective
1. It should be a people process more than a paper process.
2. It should be a learning process for all managers and employees.
3. It should be words supported by numbers rather than numbers supported by words.
4. It should be simple and non-routine.
5. It should vary assignments, team memberships, meeting formats, and even the
planning calendar.
6. It should challenge the assumptions underlying the current corporate strategy.
7. It should welcome bad news.
8. It should welcome open-mindedness and a spirit of inquiry and learning.
9. It should not be a bureaucratic mechanism.
10. It should not become ritualistic, stilted, or orchestrated.
11. It should not be too formal, predictable, or rigid.
12. It should not contain jargon or arcane planning language.
13. It should not be a formal system for control.
14. It should not disregard qualitative information.
15. It should not be controlled by “technicians.”
16. Do not pursue too many strategies at once.
17. Continually strengthen the “good ethics is good business” policy.
Adapted from Lenz R.T. 1987. Managing the evolution of the strategic planning process. Business Horizons 30 (1): 3 cited in David F.R. 2011

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  Many of the concepts & theories of business strategy
have their antecedents in military strategy. The term
Basic strategy derives from the Greek word strategia,
Concepts meaning “generalship.” However, the concept of
of SM strategy did not originate with the Greeks: Sun Tzu’s
Comparin classic, The Art of War, from about 500 BC is regarded
g as the first treatise on strategy. Military strategy &
Business business strategy share a number of common concepts
& and principles, the most basic being the distinction
military between strategy and tactics. Strategy is the overall
strategy plan for deploying resources to establish a favorable
position; a tactic is a scheme for a specific action.
Whereas tactics are concerned with the maneuvers
necessary to win battles, strategy is concerned with
winning the war (cited in Grant, 2016)

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Basic
Concepts of
 Other Similarities:
SM
o A key aim of both business & military strategy is
Comparin to gain competitive advantage.
g o Both organizations try to use their own strengths to
Business exploit the competitors’or opponents’ weaknesses.
& military o In both cases, strategy involves a significant
strategy
commitment of resources.
o Success in both cases is the product of continuous
attention to changing external & internal conditions &
the formulation & implementation of insightful
adaptations to those conditions.
o Both strategies must adapt to change & constantly be
improved to be successful.

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 o Information systems that provide data on
opponents’ or competitors’ strategies & resources
Basic
are vital for both orgs.
Concep
 Differences:
ts of
o A fundamental difference is that a business strategy
SM
is formulated, implemented & evaluated with an
assumption of competition, whereas a military
strategy is based on an assumption of conflict.
Comparin o The objective of war is (usually) to defeat the
g Business enemy. The purpose of business rivalry is seldom
& so aggressive: most business enterprises seek to
coexist with their rivals rather than to destroy them.
Military
Strategy

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 • What is a SM Case?
 It describes the org’s E&I conditions & raises
issues concerning the firm’s vision, mission,
Basic
strategies, objectives & policies.
Concept
 Most of the information in a SM case is
s of SM
established fact, but some may be opinions,
judgments & beliefs.
 SM cases are more comprehensive than those you
may have studied in other courses.
SM Case
Analysis  SM cases are written to show practice in applying
SM concepts. The case method for studying SM is
often called learning by doing.

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 o Guidelines for Preparing Case Analyses:
 The need for practicality
Basic
Concepts  The need for justification
of SM  The need for realism
 The need for specificity
 The Need for Originality
 The Need to Contribute
SM Case o
The case Method Versus lecture approach
Analysis o
Preparing a Written case analysis
o Making an Oral Presentation

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 • The End!

Basic • Thank you for the attention!

Concepts
of SM
• I wish you a success in career
& life!!

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