Basic Concepts

in Strategic
Management

STRATEGIC MANAGEMENT & BUSINESS POLICY

11TH EDITION

What is Strategy?
A companys strategy consists of the set of
competitive moves and business
approaches that management is employing
to run the company
Strategy is managements game plan to
Attract and please customers
Stake out a market position
Conduct operations
Compete successfully
Achieve organizational objectives

Without a strategy the

organization is like a ship
without a rudder, going
around in circles.
Quote

Joel Ross and Michael Kami

Strategic Management Defined

Set of managerial
decisions and
actions that
determines the
long-run
performance of a
firm.

Strategic Management
Strategic management is the art and science
of formulating, implementing and evaluating
cross-functional decisions that will enable an
organization to achieve its objectives.
It is the process of specifying the organization's
objectives, developing policies and plans to
achieve these objectives, and allocating
resources to implement the policies and plans
to achieve the organization's objectives.

Highly Rated Benefits

Clearer sense of strategic vision

Sharper focus on strategic importance
Improved understanding of changing
environment

4 Phases of Strategic Management

1.
2.
3.
4.

Basic financial planning

Forecast-based planning
Externally-oriented planning
Strategic management

Basic Elements of the Strategic

Management Process

Strategic Management - Process

Environmental Scanning Defined

Monitoring, evaluation,
and disseminating
information from external
and internal environments
to key people in the firm

Environmental Variables

Environmental Scanning
SWOT Analysis

Strengths Weaknesses

Opportunities - Threats

Strategy Formulation
Development of long-range plans for
effective management of opportunities
and threats in light of corporate
Strengths and weaknesses

Strategy
Formulation

Mission Statement

Purpose / reason for organization

Promotes shared expectations
Communicates public image
Who we are; what we do; what we
aspire to

 Strategic Vision
A view of an organizations future
direction and business course; a
guiding concept for what the
organization is trying to do and to
become.

Organization Mission
Represents managements customized
answer to the question what is our
business and what will it be. A mission
statement broadly outlines the
organizations future direction and
serves as a guiding concept for what
the organization is to do and to become.

STRATEGY - Types
In
S t t e nd
ra e
te d
gy

Del
ibe

Unrealized
Strategy

rate

Stra

teg
y

Realized
Strategy

Sustained
Superior
Performance

Emergent strategy

Adapted from: Mintzberg, H. The Strategy Concept I: Five Ps for Strategy California Management Review. Volume 30 Number1, Fall 1987.

Hierarchy of
Strategy

3 Levels of Strategy
Corporate strategy
Formulated for the company as a whole

Business strategy
Formulated for each separate business unit

Functional strategy
Formulated by functional-area managers within
each business unit

What is Corporate Strategy?

Overall GAME PLAN for DIVERSIFIED company
Consists of
MOVES to establish business positions in different
industries
APPROACHES to managing group of businesses
company has diversified into

Tasks of Corporate Strategy

Making moves to achieve DIVERSIFICATION
Initiating actions to BOOST PERFORMANCE
of businesses company has diversified into
Finding ways to capture SYNERGY among
related business units
2 + 2 = 5 effects!
Establishing INVESTMENT PRIORITIES and
steering corporate resources into most
attractive business units

Corporate Strategy
Stability
Growth
Retrenchment

What Is Business Strategy?

GAME PLAN for ONE LINE OF BUSINESS
Central thrust is HOW to build and strengthen
firms long-term competitive position
Task separating POWERFUL from WEAK
business strategies is forging a series of moves
capable of producing
SUSTAINABLE COMPETITIVE ADVANTAGE

What Is Business Strategy?

Forming responses to changes in
Industry
Economy
Regulatory and political arena

Crafting competitive moves that lead to sustainable

competitive advantage
Uniting strategic initiatives of functional areas
Addressing strategic issues related to firms competitive
position and internal situation

Business Strategy
Competitive strategies
Cooperative strategies

Functional Strategies
GAME PLAN for running a particular
function within a business
Adds DETAIL to business strategy and governs HOW key
activities will be managed

A business needs as many functional strategies

as it has major functional activities
Roles of functional strategies

Provide SUPPORT for overall business

strategy
Specify HOW functional managers plan to
achieve functional area performance
objectives

Functional Strategy
Technological leadership
Technological followership

Operating Strategies
Concerns even narrower strategic approaches
for managing KEY OPERATING UNITS
Designed to achieve strategy-critical
performance targets of operating-level units
Add detail to overall business plan and
functional strategies but are of lesser scope

Strategic Decision
Making

Strategic Decisions
Rare
Consequential
Directive

Strategic
Decision
Making
Process

Mintzbergs Modes
Entrepreneurial mode
Adaptive mode
Planning mode
Logical incrementalism

Hambrick and Fredrickson Good

Strategy
5 Elements of Good Strategy
1.
2.
3.
4.
5.

Arenas
Vehicles
Differentiators
Staging
Economic logic

Please prepare
Mission,
Vision,
Objective
For a
Company
Of your
choice