Name: Javeria Raees

Roll Num: 22
Subject: Strategic Management
Course Instructor: Dr. Ali Askari
Topic: Summary of Chapter 1: The Nature of Strategic Management
Department: arachi !niveristy "usiness School
Class: "S #
Date: 12
th
August 2$1%
1
The Nature of Strategic Management:
&he chapter 'egins (ith the case of McDonal)s that sho(e) up an increase of *#$$
million in 2$$# of her revenue (hile most of the firms struggle) to keep their )oors open.
&he secret of this gro(th has 'een foun) to 'e long term strategy of play an) (in. +ere
(e across the concept of strategic management, (hich is to achieve an) maintain
competitive a)vantage. -t means to a)opt the a'ility to outrun your competitor. Strategic
management can 'e )efine) as the art an) science of formulating, implementing an)
evaluating cross.functional )ecisions that ena'le an organi/ation to achieve its o'0ectives.
Strategic management em'races the (orking of all )epartments interrelate) to achieve
collective gains such as marketing, finance, accounting, pro)uction, operation, research
an) )evelopment, an) information system to achieve organi/ational success. &he terms
strategic planning an) strategic management can 'e use) interchangea'ly1 ho(ever,
sometimes strategic management refers to the collective process of formulation,
implementation an) evaluation (hile strategic planning refers to only strategic
formulation. &he goal of strategic planning is to e2ploit an) create ne( an) )ifferent
opportunities for tomorro(. A strategic plan results from tough managerial choices
among numerous an) goo) alternatives.
Stages of strategic management:
Strategic formulation
Strategic -mplementation
Strategic evaluation
Strategic formulation inclu)es )eveloping a vision an) mission, i)entifying an
organi/ational e2ternal opportunities an) threats1 )etermining internal strength an)
(eaknesses, esta'lishing long.term o'0ectives generating alternative strategy an)
choosing particular strategies to pursue.
Strategy implementation re3uires a firm to esta'lish annual o'0ective, )evise policies,
motivate employees an) allocate resources so that formulate) strategies can 'e
e2ecute). Strategy implementation is also kno(n as the action stage comprises of
mo'ili/ing employees an) managers to put formulate) strategy into action. &his stage
nee)s personnel )iscipline, commitment an) sacrifice.
Strategy evaluation is the final stage, (hich consists of three activities:
1. Revie(ing internal an) e2ternal factors that are 'ases for the current strategy.
2. Measuring performance.
4. &aking creative action.
Strategy evaluation is necessary 'ecause success to)ay is not guarantee) for success
tomorro(.
2
Most people think intuition is helpful in making )ecisions 'ase) on past e2perience,
kno(le)ge an) feelings, (hile certain organi/ations in0ect their intuition an) 0u)gment
into analytical thinking.
Adapting to Change:
&o survive every organi/ation shoul) strive an) a)apt to change. &he strategic
management process is 'ase) on the 'elief that organi/ations shoul) continually monitor
internal an) e2ternal events an) tren)s so that timely changes can ' ma)e as nee)e).
Ke terms in strategic management:
Competiti!e ad!antages:
Competitive a)vantages can 'e )efine) as anything a firm )oes especially (ell compare)
to rival firms, a firm can achieve comparative a)vantage 'y:
1. Continually a)apting to changes in e2ternal tren)s an) events an) internal
capa'ilities, competencies an) resources
2. 5ffectively formulating, implementing an) evaluating strategies that capitali/e
upon the factors.
Strategists:
Strategists are the in)ivi)uals (ho are most responsi'le for success or failure of an
organi/ation. Strategists help an organi/ation gather, analy/e an) organi/e information.
"ision and mission statement:
Mission statements are en)uring statements of purpose that )istinguish one 'usiness from
other similar firms. A mission statement is constant remin)er to its employee6s pf (hy the
organi/ation e2ists an) (hat the foun)ers envisione) (hen they put their fame an)
fortune at risk to 'reathe life into their )reams.
7ision statement is consi)ere) as the first step in strategic management ans(ering the
3uestion (hat )o (e (ant to 'ecome.
#$ternal opportunit and threat
-t refers to economic, social, cultural, )emographic, environmental, political, legal,
governmental, technological an) competitive tren)s an) events that coul) significantly
'enefit or harm an organi/ation in the future.
4
Internal strength and %ea&ness:
-nternal strength an) (eaknesses are an organi/ation6s controlla'le activities that are
performe) especially (ell or poorly. &hey mat arise in the management, marketing,
finance8accounting, pro)uction8operations, an) research8)evelopment an) M-S activities
of a 'usiness.
'ong(term objecti!es:
9'0ectives can 'e )efine) as specific results that an organi/ation seeks to achieve in
pursuing its 'asic mission. :ong.term o'0ectives are of generally for more than one year.
9'0ectives shoul) 'e challenging, measura'le, consistent, reasona'le an) clear.
Strategies:
Strategies are means through (hich longterm o'0ectives can 'e achieve). -t may
comprise of potential actions that re3uire top management )ecision an) large amount of
firm6s resources.
Annual )bjecti!es:
Annual o'0ectives are the short term milestones that organi/ation must achieve to reach
long.term o'0ective, they must 'e ma)e at corporate, )ivisional an) functional level in a
large organi/ation.
*olicies:
;olicies are the means 'y (hich annual o'0ectives (ill 'e achieve). ;olicies inclu)e
gui)elines, rules an) proce)ures esta'lishe) to support efforts to achieve state)
o'0ectives. ;olicies are gui)es to )ecision making an) a))ress repetitive or recurring
situation.
Strategic management model:
%
Strategic management mo)el e2plains:
<here are (e no(=
<here )o (e (ant to go=
+o( are (e going to get there=
+enefits of Strategic management:
Strategic management allo(s an organi/ation to 'e more proactive than reactive in
shaping its o(n future. Communication is the key to successful strategic
management. &he process is learning, helping, e)ucating an) supporting activity, not
merely a paper shuffling activity among top e2ecutive.
,inancial and Non(financial benefits:
"usinesses using strategic management concept sho(s a significant increase in
sales, profita'ilty an) pro)uctivity. "esi)e that it can also helps in an enhance)
a(areness of e2ternal threats, an improve) un)erstan)ing of competitors strategies,
increase) employee pro)uctivity, re)uce) e2istence to change an) clear performance
re(ar) relationship.
-h do some firms do not strategic planning.
Some of the follo(ing factors )iscourage the firms to avoi) strategic planning:
:ack of kno(le)ge, ;oor re(ar) structure, fear of (aste of time, to avoi) too much
e2pense, )ue to la/iness, over confi)ence an) suspicions etc.
*itfalls in Strategic planning:
Strategic planning )oes not provi)e a rea)y to use prescription for success instea) it takes
the organi/ation through a 0ourney an) offers a frame (ork for a))ressing 3uestion an)
pro'lem solving.
>
5nhance)
Communication
a. )ialogue
'. participation
Deeper8-mprove)
!n)erstan)ing
a .of other6s vie(
'. of (hat the firm
is planning
?reater
communication
a. to achieve o'0ective
'. to implement
strategies
c. to (ork har)
&he result
All managers
an) employees
in a mission to
help the firm
succee)
/uidelines to Strategic *lanning process:
-t shoul) 'e people process more than paper process, it shoul) 'e simple an) learning
process for all the employees it shoul) (elcome 'a) ne(s, open.min) ness an) shoul)
not 'e very rigi) an) formal, one shoul) not pursue many strategies at once, shoul) not
)isregar) 3ualitative information an) practice goo) ethics is goo) 'usiness policy.
Comparing +usiness and Militar strateg:
&he (or) strategy comes from the ?reek (or) strategos, (hich refers to military general
an) com'ines stratos @the armyA an) ago @to lea)A.
Conclusion:
-t is kno(n an) accepte) fact that people an) organi/ations that plan ahea) are much
more likely to 'ecome (hat they (ant to 'ecome than those (ho )o not plan at all.
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