Course Code: MGT502

Course Title: STRATEGIC MANAGEMENT

Lecture 02: The Nature of Strategic Management

Department : Business Administration

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Contents
S. # Topics Page #
3
The Nature of Strategic Management:
3
1. Definition
4
2. On-Going Process
4
1 3. Shaping broad plans
5
4. Strategic goals
6
5. Internal and external environment
7
6. Nature of strategic decisions.

2 Strategic Managers: role and task 8-9

3 Strategic Planning and its benefits 10 - 12
4 Pitfalls in Strategic planning 13
5 References l Sources 114

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Reference No: 1 The Nature of Strategic
Management

Definition:

“The on-going process of formulating, implementing and controlling

broad plans guide the organizational in achieving the strategic goods
given its internal and external environment”(David, 2007, p.4)1 .

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Reference No: 2
The Nature Strategic Management

Interpretation:

1. On-going process:
Strategic management is a on-going process which is in existence
through out the life of organization.

2. Shaping broad plans:

First, it is an on-going process in which broad plans are firstly

formulated than implementing and finally controlled(David,2011,p.4)2

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Reference No: The Nature of Strategic Management

3. Strategic goals:

Strategic goals are those which are set by

top management. The broad plans are made
in achieving the goals.

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Reference No: The Nature of Strategic Management

4. Internal and external environment:

Internal and external environment generally set

the goals. Simply external environment forced
internal environment to set the goals and guide
them that how to achieve the goals?

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Reference No:3 Nature of strategic Decision.

• Strategic decisions require trade-offs such as long-range versus short-range consider-

ations or maximizing profits versus increasing shareholders’ wealth.
• There are ethics issues too. Strategy trade-offs require subjective judgments and
preferences. In many cases, a lack of objectivity in formulating strategy results in a loss
of competitive posture and profitability.
• Most organizations today recognize that strategic-management concepts and techniques
can enhance the effectiveness of decisions.
• Subjective factors such as attitudes toward risk, concern for social responsibility, and
organizational culture will also effect strategy formulation decision, but organizations
need to be as objective as possible in considering qualitative factors(David,2007, p.21) 3

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Reference No: Strategy Managers role and task.

Strategists:
• Strategists are the individuals who are most responsible for the
success or failure of an organization.
• Strategists have various job title, such as Chief executive Officer,
president, owner, chair of the board, executive director, chancellor,
dean, or entrepreneur.
“ All strategists have to be chief learning officers”
( Jay Conger, professor of organizational behavior at the London
business School)
.
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Reference No:4 Strategy Managers role and task.

• Strategists help an organization gather, analyze, and organize

information.
• They track industry and competitive trends, develop forecasting
models and scenario analysis, evaluate corporate and divisional
performance, sport emerging market opportunities, identify business
threats, and develop creating action plans.
• Strategic planner usually serve in a support or staff role
• The CEO is the most visible and critical strategic manager
(David,2007, pp10-11)4

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Reference No:
Strategic Planning and its Benefits

• Managers and employees become surprisingly creative and innovative

when they understand and support the firms[s mission, objectivess,
and strategies.
• A great benefits of strategy planning is the opportunity that the
process provide to empower individual.
• An increasing number of corporations and institutions are using
strategic management to make effective decisions.

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Reference No:5
Strategic Planning and its Benefits

• Financial Benefits:

• Businesses using strategic management concepts show significant improvement in

Sales, profitability, and productivity compared to firms without systematic planning
Activities.
• High performing firms tend to do systematic planning to prepare for future fluctuations in
their external and internal environments.
• Firms with planning systems more closely resembling strategic-management theory
generally exhibits superior long term financial performance relative to their industry.
(David,2007,p.17)5

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Reference No:6
Strategic Planning and its Benefits

• Nonfinancial Benefits:
1. It allows for identification, prioritization, and exploitation of opportunities.
2. It provides an objective view of management problems.
3. It represents a framework for improved coordination and control of activities.
4. It minimize the effects of adverse conditions and changes.
5. It allows major decisions to better support established objectives.
6. It creates a framework for internal communication among personnel.
7. It helps integrate the behavior of individuals into a total effort.
8. It encourages forward thinking.
9. It gives a degree of discipline and formality to the management of a business.
(David,2007,p.18)6
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Reference No:
Pitfalles in Strategic Planning

• Using strategic planning to gain control over decision and resources.

• Doing strategic planning only to satisfy accreditation or regulatory requirements.
• Too hastily moving from mission development to strategy formulation.
• Failing to communicate the plan to employees, who continue working in the
dark.
• Top managers making many intuitive decisions that conflict with the formal plan.
• Failing to use plans as a standard for measuring performance.
• Failing to involve key employees in all phases of planning.
• View planning as unnecessary or unimportant.

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References:
Fred R. David(2007), Strategic Management: concept and cases, eleventh (Eds),(p. 4) New Jersey,
Prentice Hall.
Fred R. David(2011), Strategic Management: concept and cases, 16th (Eds),(p. 4) New Jersey,
Prentice Hall.
Fred R. David(2007), Strategic Management: concept and cases, eleventh (Eds),(pp. 10-11) New
Jersey, Prentice Hall.
Fred R. David(2007), Strategic Management: concept and cases, eleventh (Eds),(pp. 17-18) New
Jersey, Prentice Hall.
Fred R. David(2007), Strategic Management: concept and cases, eleventh (Eds),(p. 21) New Jersey,
Prentice Hall.

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