STRATEGIC MANAGEMENT

The Nature of Strategic Management

Objectives:

 Describe strategic-management process.

 Explain the need for integrating analysis and intuition

in strategic management.

 Define and give examples of key terms in strategic

management.
Selected Notable Quotes

“Most of us fear change. Even when our

minds say change is normal, our
stomachs quiver at the prospect. But for
strategists and managers today, there is
no choice but to change.”
-Robert Waterman Jr.
Overview of Strategic Management

Revenues:
2007- 22.7 Billion USD
2008- 23.5 Billion USD

“Most Admired Company in the

World” in terms of Management and
Performance (Fortune Magazine)

“We do so well because our strategies

have been so well planned out.” -Jim
Skinner, CEO

Strategic plan: “PLAN to WIN”

What is Strategic Management
STRATEGIC MANAGEMENT- art and science of
formulating, implementing, and evaluating cross
functional decisions that enable an organization to
achieve its objectives.
What is Strategic Management
STRATEGIC MANAGEMENT- focuses on integrating
What is Strategic Management
STRATEGIC MANAGEMENT STRATEGIC PLANNING

Strategy Formulation Strategy Formulation

Strategy Implementation
Strategy Evaluation
Stages of Strategic Management
STRATEGIC MANAGEMENT PROCESS consists of three
(3) stages:
 Stages of Strategic Management
STRATEGIC MANAGEMENT PROCESS

 Developing a vision and mission

 SWOT Analysis
 Establishing long-term objectives
 Generating alternatives strategies
 Choosing particular strategies to pursue
 Stages of Strategic Management
STRATEGIC MANAGEMENT PROCESS

 Establish annual objectives

ACTION STAGE
 Devise policies
 Motivate employees
 Allocate resources
 Developing strategy-supportive culture
 Creating effective organizational structure
 Redirecting marketing efforts
 Preparing budgets
 Developing and utilizing information systems
 Linking employee compensation to organizational
performance
 Stages of Strategic Management
STRATEGIC MANAGEMENT PROCESS

 Reviewing external and internal factors that are

bases for current strategies
 Measuring performance
 Taking corrective actions

Success today is no guarantee of

success tomorrow!
Stages of Strategic Management
 Stages of Strategic Management
The prime task of Strategic Management is thinking
through the overall mission of the business:

“What is our business?”

Setting of
objectives
Development of
strategies Making decisions
today for
tomorrow’s results
 Integrating Intuition and Analysis
“In God we trust. All others bring data.” –E. Deming
Intuition- essential to making good strategic decisions.
“I believe in intuition and inspiration. At times I feel
certain that I am right while not knowing the reason.
Imagination is more important than knowledge, because
knowledge is limited, whereas imagination embraces the
entire world.” –Albert Einstein
 Integrating Intuition and Analysis
I’ve-already-made-up-my-mind-don’t-bother-me-with-the-
facts mode is not management by intuition; it’s
management by ignorance.
 Adapting to Change
Firms, like organisms, must be “ADEPT at
ADAPTING” or they will not survive.
Key Terms in Strategic Management

 Competitive Advantage
 Strategists
 Vision and Mission Statements
 External Opportunities and Threats
 Internal Strengths and Weaknesses
 Long-Term Objectives
 Strategies
 Annual Objectives
 Policies
Key Terms in Strategic Management

 Competitive Advantage
 “Anything that a firm does
especially well compared to
rival firms.”

 Ex: Having less fixed assets

than rival firms in a global
recession
Key Terms in Strategic Management

 Strategists
 Individuals who are most
responsible for the success or
failure of an organization.
 CEO, President, Owner, Chair
of the Board, Executive
Director, Chancellor, Dean,
Entrepreneur
 Help an organization to gather,
analyze, and organize
information.
Key Terms in Strategic Management

 Vision and Mission Statements

 “What do we want to become?”

 First step in strategic planning

 Enduring statements of purpose that distinguish one

business from other similar firms
 What is our business? Values and priorities of an org.
 Key Terms in Strategic Management

 Opportunities and Threats (External)

 Refer to economic, social, cultural,
demographic, environmental, political,
legal, governmental, technological,
and competitive trends and events that
could significantly benefit or harm an
organization
Key Terms in Strategic Management

 Strengths and Weaknesses (Internal)

 Organization’s controllable activities
that are performed especially well
or poorly
Key Terms in Strategic Management

 Long-Term Objectives
 Objectives- specific results that an
organization seeks to achieve in
pursuing its basic mission
 Long-term means more than one
year
 State direction, aid in evaluation,
focus coordination
 Objectives should be challenging,
measurable, consistent, reasonable,
and clear
Key Terms in Strategic Management

 Strategies
 Means by which long-term objectives
will be achieved
 Geographic expansion, diversification,
acquisition, product development,
market penetration, retrenchment,
divestiture, liquidation, and joint
ventures
 Potential actions that require top
management decisions and large
amount of resources
Key Terms in Strategic Management

 Annual Objectives
 Short-term milestones that
organizations must achieve to reach
long-term objectives
 Measurable, quantitative, challenging,
realistic, consistent, and prioritized
 Established in corporate, divisional, and
functional levels
 Represent the basis for allocating
resources
Key Terms in Strategic Management

 Policies
 Means by which annual objectives will
be achieved
 Guidelines, rules, and procedures
established to support efforts to achieve
stated objectives
 Guides to decision making and address
repetitive or recurring situations.
Strategic Management Model