STRATEGIC MANAGEMENT (1)

Muhammad Nazim Bin Abd Rahman

Senior Programme Coordinator
Strategic Management Programme
National Institute of Public Administration (INTAN)
Public Service Department

Updated June 2010

Strategic Management (1)
Outline (1)
1. What is ‘Strategy’?
2. Five ‘P’s for Strategy
3. Types of Strategy [Hierarchical / Miscellaneous /
Mintzberg & Waters categories]
4. Definitions of Strategic Management
5. Pros and Cons of Strategic Management?
6. Four Elements / Phases in Strategic Management
Process
7. Link between Strat. Thinking,
Strat. Planning and Strat. Mgmt.
Strategic Management (1)
Outline (2)
8. Strategic Analysis Definition,
Essential
9. Strategy Formulation Questions To
10. Strategy Implementation / Execution Be Answered
& Suggested
11. Strategy Evaluation Strategic
Tools
12. Summation + Conclusion + Q & A
Session
13. Suggested Reading & Viewing
What is ‘Strategy’?
Almost everyday we hear the word
‘strategy’ being used. One comes to
wonder… what is it exactly?
What is ‘Strategy’?
Strategy =
i. A plan of actions designed to achieve a
particular goal
ii. Originated from the Greek word ‘strategos’
meaning ‘the art of the general’ or ‘general’s
view’ which refer to the act of maneuvering
troops into position, deployment of troops
before the enemy is actually engaged
iii. Answers the question of: “What are the ends we
seek and what are the means to achieve them?”
iv. 5P = A plan, a ploy, a pattern, a position and a
perspective (Henry Mintzberg)
Five ‘P’s for Strategy

Five ‘P’s for Strategy

by Henry Mintzberg
Some interesting quotes on ‘Strategy’
1. “Strategy is when you are out of
ammunition, but keep on firing so
that the enemy won’t know”
(Unknown)

2. “Strategies are the means by

which long-term objectives
will be achieved ” (Fred David,
2007)

3. “Strategy is essentially, a way

of channeling resources to
achieve a goal” (Nigel
Nicholson, 2004)
Types of Strategy (Hierarchical Category)
Types of Strategy [1]
Type of Definition Example
Strategy
1 International Strategy which  In 1999 EU strategy to create a
/Regional involves the single European Currency (As
cooperation of of 2009, 13 out of 27 EU
multiple nations countries are using Euro)
usually within a  ‘ASEAN’ strategy on widening
particular cooperation to become
continent or ‘ASEAN + 3’
region
‘ASEAN’ strategy on widening cooperation to
become ‘ASEAN + 3’
Types of Strategy [2]
Type of Definition Example
Strategy
2. National The main - Introducing Vision 2020 in
strategies of a 1991
particular nation - Introducing 6 National Key
Result Area (NKRA) in 2009

Malaysia that is a
fully developed
nation by the year
2020
Example of Malaysian National
Strategy
Our Prime Minister during MAPPA XI on 9 March 2010 has introduced:

1. 1Malaysia: People 1. Inculcating Creativity

first, Performance Now and Innovation
2. Government 2. The Importance of
Transformation Fast Action and
Programme Decision Making
3. New Economic Model 3. The Value of Integrity
4. The 10th Malaysia Plan
4. Value for Money
 
Example of Malaysian National
Strategy
Y.A.B Perdana Menteri semasa Majlis Perdana Perkhidmatan Awam
(MAPPA XI) pada 9 Mac 2010 telah menengahkan:

1. Gagasan 1Malaysia: 1. Pembudayaan

Rakyat Didahulukan, Kreativiti dan Inovasi
Pencapaian 2. Kepentingan dalam
Diutamakan Kepantasan
2. Program Transformasi Bertindak dan
Kerajaan Membuat
3. Model Ekonomi Baru Keputusan
4. Rancangan 3. Nilai Integriti
Malaysia Ke 10 4. Nilai untuk Wang
 
Types of Strategy [3]
Type of Definition Example
Strategy
3. Industry / Strategy which - In 2005 Malaysia established a
Sectoral is focused on a National Biotechnology Policy
particular which provides a comprehensive
industry or framework to guide biotechnology
sector in a development efforts in the country
particular nation
Types of Strategy [4]
Type of Definition Example
Strategy
4. Organisation Strategy - UPM offering development services
/ Company / which guides in the field of agriculture and
Corporate the particular biotechnology + offering agriculture-
organisation based entrepreneur programmes for
to achieve its those interested in order to achieve
goals one of its goals that is strengthening
the U’s position as The Center of
Excellence for Agricultural Education
and Research
Types of Strategy [5]
Type of Definition Example
Strategy
5. Business Certain organisations are - Ministry of Energy, Green
/ Service involve in more than one Technology and Water has
business or services. For separate strategies for energy,
each business or service, it green technology and water in
is wise to have specific order to achieve the goals for
strategies. the whole organisation.
Types of Strategy [6]
Type of Definition Example
Strategy
6. Functional Specific strategy for each - Each functions in the
function that exists in the organisation, such as HR,
business or service of a Finance, Logistics and others
particular organisation need to have its own
strategies to ensure goals
achievement.
Types of Strategy [Miscellaneous]
Mintzberg & Waters (1985)
Categorization of Strategy

Mintzberg & Waters (1985) taken from MINTZBERG, H., AND WATERS, J. 1985. “Of strategies, deliberate and
emergent.” Strategic Management Journal 6, 3, 257-272.
A Classic Example of Emergent
Strategy
A classic example of
embracing
emergent strategy
when the situation
or circumstances
have changed could
be seen in the
“Honda Success
Story”
Definitions of Strategic Management (1)
“Strategic Management is the process by
which an organisation manages the
formulation and implementation of its
strategy”
Mason Carpenter & William Sanders (2006)
“Strategic Management consist of
analysis, decisions and actions an
organisation undertakes in order to
create and sustain competitive
advantages”
Gregory Dess, Tom Lumpkin & Alan Eisner (2008)
Definitions of Strategic Management (2)
“Strategic Management is the art and
science of formulating, implementing and
evaluating cross-functional decisions that
enable an organisation to achieve its
objectives”
Fred R. David (2007)

“Without a strategy, an
organisation is like a ship without a
rudder, going around in circles. ”
Joel Ross and Michael Kami (1973)
Definitions of Strategic Management (3)
Why is Strategic Management
so important? [The Arguments for Strategic Mgmt ] (1)
Proponents of Strategic Management argues that Strategic
is of utmost important due to the following reasons:
Strategic Management -
1. Sets direction and focuses effort;
2. Ensures a more concerted and coordinated effort;
3. Ensures better and faster decision making;
4. Shortens the learning curve period;
5. Increases stakeholders confidence;
6. Reduces wastage;
7. Ensure limited resources are put to good use;
8. Help organisations achieve their intended goals
and uncover opportunities along the way;
Why is Strategic Management
so important? [The Arguments for Strategic Mgmt ] (2)
9. Ensures organisational survival;
10. Measures organisation’s
performance so that the necessary
corrective and preventive actions
and continuous improvement efforts
could be made;
11. Helps shape the desired future;
12. Encourages better participation;
13. Encourages the process of ‘kaizen’
or continuous improvement
14. Helps achieve and maintain
competitive advantage (Best
illustrated by the story of “Two CEO
and the Bear.”)
The Story of “Two CEO and The Bear”

CEO ‘A’ CEO ‘B’ + THE BEAR

“Two CEO and the Bear” (1)
Once there were two CEOs of two
companies which competed in the same
automotive industry.

These two CEOs decided to go on a

camping trip to discuss a possible
merger. They hiked deep into the woods
and stumble into a cave. It was already
late in the evening so they decided to
have a rest and set up their tent in the
cave.

As they came nearer to the cave they

hear a deep growl and saw a big grizzly
bear. The bear growl and rose on its hind
legs at the mouth of the cave.
“Two CEO and the Bear” (2)
Instantly, CEO ‘A’ took off his knapsack
and got out a pair of jogging shoes. So
CEO ‘B’ said, “Hey! You can’t outrun
that bear. He is fast and furious!”

CEO ‘A’ responded, “Maybe I can’t

outrun that bear, but I could surely
outrun you!”
The Arguments Against Strategic Management
Although strategic management has its
benefits we should also be aware of some of
its potentially damaging effects. These
include:
 
i.Organisation may become rigid and inflexible
in decision making which contradicts the
original intended strategy even though the
situation and also the environment show that
the original intended strategy needs to be re-
evaluated

ii. The potential for ‘groupthink’ whereby

there may be no peripheral vision to open up
for other possibilities. A given strategy can
become too heavily embedded in the fabric of
the organisation
The Four (4) Elements/Phases in
Strategic Management Process
Link between Strategic Thinking, Strategic
Planning & Strategic Management (1)

Strategic Thinking is a thinking skill in ‘seeing’ issues, problems and

opportunities in a larger and broader perspective and being able to understand
the inter-relation of all the elements involved so that the best course of action
could be formulated to achieve the desired goals
Connection between Strategic Thinking,
Strategic Planning & Strategic Management (2)

Strategic Planning is the combination of strategic

analysis and strategy formulation
Connection between Strategic Thinking,
Strategic Planning & Strategic Management (2)

Strategic Management is the process of analyzing, formulating,

implementing and evaluating various strategies in order to achieve
organisation’s goals
Strategic Management Process

Strategic Management
Process consist of:

• Strategic Analysis
• Strategy Formulation
• Strategy
Implementation
• Strategy Evaluation
Strategic Analysis Strategic
Analysis

Strategic Analysis = process of gathering,

analyzing, and communicating internal as well
as external information in order to formulate
organisational strategies.
Strategic Analysis search to find the answer
for these questions –
“Where is the organisation now, at the
present?”
“What are the vision, mission and objectives
held by the organisation at this particular
moment?”
“What are the internal and external information
that need to be considered before revising our
goals and formulate our strategies?”
“Who
are the stakeholders involved?”
“What are the stakeholder’s views on the
matter?”
Strategic Analysis (2) Strategic
Analysis

The following are strategic tools

that could be used during the
Strategic Analysis phase:
i. Re-evaluating the present VMO
ii. SWOT Analysis
iii. PESTEL Analysis
iv. McKinsey 7S
iv. Stakeholders Analysis
v. Media Research
vi Inventory of Vital Resources
vii Establishing KRA
Re-evaluating the present VMO Strategic
Analysis

In order to have a clear sense of where Vision = The desired mental image
we are and where we would like to be, it of the future
is wise to re-evaluate the present
Vision, Mission and Objectives (VMO) Mission
= The main goals of the
If the VMO ’s are still relevent, proceed organisation
with it. If not, formulate a new one = The purpose why the
organisation exist

Objective = A specific sets of

targets to operationalize the mission
SWOT Analysis Strategic
Analysis

The general idea of SWOT

analysis is to help
organisation to formulate
strategies so that
organisations could:
i. Build on its strength
ii. Try to remedy the
weaknesses or work
around them
iii. Take advantage of the
opportunities presented by
the environment
iv. Protect itself from threats
PESTEL Analysis Strategic
Analysis

For this particular

external environment
analysis, we try to
uncover whether these
six (6) variable – Political,
Economy, Social,
Technology, Environment
and Legal could give
significant impact to the
running of the
organisation and the
achievement of its goals
McKinsey 7S Analysis (1) Strategic
Analysis

McKinsey 7S helps to
ensure that all parts of
your organization work
in harmony

It is a very useful tools

to guide organisation
change initiatives

It is also very useful in

troubleshooting which
part is at fault when
organisation initiatives
failed
McKinsey 7S Analysis (2) Strategic
Analysis

The 7S are:

Strategy: the plan devised to maintain and build competitive advantage over
the competition.

Structure: the way the organization is structured and who reports to whom.

Systems: the daily activities and procedures that staff members engage in to
get the job done.

Shared Values: the core values of the company that are evidenced in the
corporate culture and the general work ethic.

Style: the style of leadership adopted.

Staff: the employees and their general capabilities.

Skills: the actual skills and competencies of the employees working for the
company.
The Stakeholders Analysis (1) Strategic
Analysis

The
Using this strategic tool All the PM
organisations need to Malaysian GLC’s
All the
identify & list down all People
The Investors
the organisations’ Minister
stakeholders of The
The Finance Media
Treasury
Rank them in the order Is this list of
of importance All the GLCs Khazanah’s Nasional
Customers stakeholders
complete?
And for each of them
All the
formulate suitable Staffs at Khazanah’s
strategies to handle Khazanah Board of
them and GLC’s Directors
The Stakeholders Analysis (2) Strategic

– Example of A Model Analysis

Media Research (1) Strategic
Analysis

In this day and age, the need for Media Research is very important because
media acts as the agent of public perception. Public perception, the way
people think and the way people make everyday decisions are easily based
and influenced by the media
Magazines
It is extremely important that Vlogs
TV
organisations carry out a
detailed media research to Newspapers Internet
Applications
know which way all the Blogs

various media are ‘leaning’ Twitter

towards. Is it positive or Web Portal

Books
negative in regards to the Facebook
business of the organisation? YouTub Film
Radio e
Inventory of Vital Resources Strategic
Analysis

Organisation have
High Superb Sufficient
to take a full Quality Leadership Budget
inventory of all the Workforce
vital resources
organisation needs The Right
Expertise
Unlimited Attitude
so that its intended Motivation through out
strategies could run or Drive the
Organisation
smoothly until its Time
completion hence, Information
ensuring A Worthwhile
Goals and a Conducive
organisation’s S.M.A.R.T.E.R. Suitable External &
success Objectives Policies & Internal
Guidlines Environment
Integrity
Energy
Establishing Key Result Area (KRA) Strategic
Analysis

Realizing that in Malaysia is a Reducing

order to achieve good example Crime
organisational goals, where by we
it is wise that the have the Six (6)
organisations effort NKRA to guide Raising The
Combating
and limited the effort, the Corruption
Living Standards
resources are strategies and of Low-Income
Citizens
focused on its the usage of
important target our vital Widening Improving
Access to
area. Hence, Key resources in our Education
Infrastructure
in Rural Areas
Result Area (KRA) quest for
must be established National Upgrading
success Public
Transport
Strategy Formulation (1) Strategy
Formulation

Strategy Formulation = the process of

finding the best and most suitable
strategy to implement so that the
organisations goals are met.

Strategy Formulation search to find

the answer for these questions –
i. “In view of where the
organisation is at the moment, how can
we ensure that the organisation
becomes the organisation that we want
it to be?”
ii. “What is the best possible way
for the organisation to move from its
current situation to its intended
destination?”
Strategy Formulation (2) Strategy
Formulation

The following are strategic tools that

could be used during the strategy
formulation phase:
i. Benchmarking against the best
organisation in regards to the achievement
of the desired goals
ii Best Practices Analysis
iii. Organisation-Environment
Compatibility Analysis
iv. McKinsey 7S Analysis
v. Media Research
vi. Establishing Key Performance
Indicators (KPIs) with respect to Key Result
Areas (KRAs) that have been agreed upon
vii. Formulating Blue Ocean Strategy
Benchmarking Strategy
Formulation

Benchmarking allows organisations to

compare their performance to other "like"
businesses / services / industries and
identify areas in which they could do better
to emulate

However the are those who are against

benchmarking due to the simple reasons
that the ‘benchmarkee’ will always be a
step behind those being benchmarked
upon
Best Practice Analysis Strategy
Formulation

Best Practice
Analysis = the
process of analyzing,
developing and
following a standard
way of doing things
that multiple
organizations have
been successful in
doing especially in
the area of
management, policy
setting, and software
systems
Organisation-Environment Strategy
Formulation
Compatibility Analysis

Organisation

External
Environment
McKinsey 7S Analysis & Strategy
Formulation
Media Research
Establishing Key Performance Strategy
Formulation
Indicators (KPIs)
Establishing Key Performance Indicators
(KPIs) with respect to Key Result Areas
(KRAs) that have been agreed upon and the
strategies being formulated

It is a tool to measure the

performance of the
organisation in regards to
the goals it has set up.

Whatever Key
Performance Indicators
are selected, they must
reflect the organization's
goals, they must be key to
its success and they must
be quantifiable
(measurable)

Formulating Blue Ocean Strategy
Based on a study of 150
strategic moves in more
than thirty industries, W.
Chan Kim and Renee
Mauborgne argue that
tomorrow’s leading
companies will succeed not
by battling competitors, but
by creating “blue oceans” of
uncontested market space
ripe for growth
Strategy
Formulation
Organisations could also adopt the
Blue Ocean Strategy tools in order to
achieve organisations goals. Blue
Ocean tools and frameworks includes
Value Innovation; Red vs Blue;
Strategy Canvas; 4 Actions
Framework; ERRC Grid; PMS Map;
BEC/BUM; 3 Tiers Noncustomers;
Sequence of BOS; 4 Hurdles to
Execution; Fair Process and Tipping
Point Leadership
Strategy Implementation (1)
Strategy
Implementation

Strategy Implementation = process of implementing all the intended

strategies and ensuring the quality of its execution.
Strategy Implementation search to find the answer for these
questions –
“Is the strategy implementation on track as what was formulated?”
“What is the course of action that we should take if we encounter
shortfalls or opportunities along the way? ?”
“Have we measure the impact of our strategy implementation
correctly?”
Strategy Implementation (2)
Strategy
Implementation

The following are strategic

tools that could be used during
the strategy implementation
phase:
i. Monitor diligently Key
Performance Indicators (KPIs)
with regard to Key Result Areas
(KRAs)
ii. Use Gantt Chart as a
monitoring device
iii. Use Statistical Analysis
as an indicator
iv. Monitor the Complaint
and Feedback Channel
v. Media Research
 Strategy
Monitor KPI with regards to KRA Implementation

Monitor all the

KPIs with
regards to
KRA.
Readjust the
strategies,
programmes
or plan of
actions if the
need arises
 Strategy
Use Gantt Chart Implementation

A Gantt chart is a type of bar

chart that illustrates a project
schedule. Gantt charts
illustrate the start and finish
dates of the critical elements
of the project in the form of
work breakdown structure
Example of Gantt Chart
Strategy
Implementation
 Strategy
Use Statistical Analysis Implementation

Use statistical analysis to monitor the implementation

of the strategies

A good and timely statistical data would help

tremendously the decision making process during
strategy implementation
Monitor the Complaint and Strategy
Implementation
Feedback Channel
During strategy
implementation it is
wise to monitor the
complaint and
feedback channel

Whether it is the
formal complaint
channel or there is a
crowd picketing
beyond the fences, all
should be closely
monitored and solved
 Strategy
Media Research Implementation

Again, Media
Research is also
important during
Strategy
Implementation in
order to gauge
whether the
stakeholders have
a positive or
negative reaction
towards the
organisations
strategies
Strategy Evaluation (1)
Strategy
Evaluation

Strategy Evaluation = process

of evaluating the effectiveness
of the intended strategies in
achieving organisation goals
Strategy Evaluation search to
find the answer for these
questions –
“How successful is the
strategy?”
“If in the end, the goals are not
met, what are the course of
action that we will take to
ensure success?”
“If it is a success, how could we
improve on it? How could we
replicate it for other goals?
Strategy Evaluation (2)
Strategy
Evaluation

The following are strategic

tools that could be used during
the strategy implementation
phase:
i. Comparing End Results
with KPIs in regard to the KRAs
ii. Comparing ‘Planned
Timeline’ vs. ‘Real Timeline’ in the
Gantt Chart
iii. Stakeholders’ Feedback
iv. Media Research
v. Statistical Analysis
vi. Rewards and Recognition
Comparing End Results with Strategy

KPIs in regard to the KRAs

Evaluation

In the end of Strategy

Implementation, all results must be
compared to KPIs in regard to the
KRAs

If, the goals are not met,

corrective action must be taken

If, it is a success, continuous

improvement initiatives should be
triggered and the successful
strategies should be replicated to
other goals
Gantt Chart’s Planned vs. Strategy

Real Timeline
Evaluation

From the Gantt Chart, the real timeline should not overshot the
planned timeline in regards to the duration of the strategies or the
programmes
Stakeholder’s Feedback Strategy
Evaluation

The feedbacks
from various
stakeholders
must be
gathered,
analyzed and
acted upon
wisely
Media Research and Strategy

Statistical Analysis
Evaluation

Once again, Media Research and

Statistical Analysis could be used as
tools to correctly evaluate the
successfulness of organisations
strategies
Rewards and Strategy

Recognition
Evaluation

Quantity & Quality of the Rewards &

Recognition received by the
Organisation could be a tool to
assess the strategies executed
Summation of what we have learned so far …
Conclusion: Excerpt from “The
Art of War”
If you know the enemy and know
yourself, you need not fear the result
of a hundred battles.

If you know yourself but not the

enemy, for every victory you gained,
you will also suffer a defeat.

If you know neither the enemy nor

yourself, you will succumb in every
battle.

- Sun Tzu
Q&A Session

Is there any questions or concepts that needed clarification?

Suggested Reading & Viewing for the Topics of
Strategic Management
1. All recently published
Strategic Management text
book
2. Sun Tzu – The Art of War
3. Website:
www.mindtools.com
4. Mintzberg, Ahlstrand &
Lampel (2005) – “Strategy
Bites Back”
5. Mintzberg, Ahlstrand &
Lampel (1998) – “Strategy
Safari”
6. Website:
www.transformation.gov.my
Thank You

Muhammad Nazim Bin Abd. Rahman

Strategic Management Programme
National Institute of Public Administration (INTAN) All the best for the
future. May all of us
nazim@intanbk.intan.my
reached the desired
Tel: 03-2084 7378 destination…
Updated: June 2010
Lastly, remember that …

is always within our grasp!