>> Strategic Management

Defined: Strategic
management is the art,
science and craft of
formulating, implementing
and evaluating crossfunctional decisions that will
enable an organization to
achieve its long-term
objectives. Strategic
management seeks to
coordinate and integrate the

should build to help a

company achieve its mission
>>Strategic Management
Process
Strategy formulation
-Concurrent with this
assessment, objectives are
set. These objectives should
be parallel to a timeline; some
are in the short-term and
others on the long-term.
-Performing a situation

to benchmarks and best

practices, evaluating the
efficacy and efficiency of the
process, controlling for
variances, and making
adjustments to the process as
necessary.
Strategy Evaluation
-Measuring the effectiveness
of the organizational strategy,
it's extremely important to
conduct a SWOT analysis to

Competition and competitive

advantage
-If a company has a sustained
competitive advantage, it is
likely to gain market share
from its rivals and thus grow
its profits more rapidly than
those of rivals. In turn,
competitive advantage will
also lead to higher profit
growth than that shown by
rivals.

activities of the various

functional areas of a business
in order to achieve long-term
organizational objectives
The Mission: A companys
mission describes what the
company does. For example,
the mission of Kodak is to
provide customers with the
solutions they need to
capture, store, process,
output, and communicate

analysis, self-evaluation and

competitor analysis: both
internal and external; both
micro-environmental and
macro-environmental.
-These objectives should, in
the light of the situation
analysis, suggest a strategic
plan. The plan provides the
details of how to achieve
these objectives.

figure out the strengths,

weaknesses, opportunities
and threats (both internal and
external) of the entity in
question.
-In corporate strategy,
Johnson and Scholes present
a model in which strategic
options are evaluated against
three key success criteria:
-Suitability (would it work?)
-Feasibility (can it be made to

-The key to understanding

competitive advantage is
appreciating how the
different strategies managers
pursue over time can create
activities that fit together to
-make a company unique or
different from its rivals and
able to consistently
outperform them.
-Superior Performance &
Competitive Advantage:

imagesanywhere, anytime.
Vision: The vision of a
company lays out some
desired future state; it
articulates, often in bold
terms, what the company
would like to achieve. Nokia,
the worlds largest
manufacturer of mobile
(wireless) phones, has been
operating with a very simple
but powerful vision for some

Strategy Implementation
-Assigning responsibility of
specific tasks or processes to
specific individuals or groups
-Allocation and management
of sufficient resources
(financial, personnel, time,
technology support)
Establishing a chain of
command or some alternative
structure (such as cross
functional teams)

work?)
-Acceptability (will they work
it?)
>>Competition and
competitive advantage
-Competition is a rough andtumble process in which only
the most efficient and
effective companies win out.
It is a race without end. To
maximize shareholder value,
managers must formulate and

-the source of competitive

advantage is found firstly in
the ability of the organization
to differentiate itself from its
competitors and secondly by
operating at a lower cost and
hence at greater profit.
-Therefore, the superior
performances and
competitive advantage are
located at value advantage
and productivity advantage

time: If it can go mobile, it

will! This vision implied that
not only would voice
technology go mobile but also
a host of other services based
on data.
Values: The values of a
company state how managers
and employees should
conduct themselves, how they
should do business, and what
kind of organization they

-When implementing specific

programs, this involves
acquiring the requisite
resources, developing the
process, training, process
testing, documentation, and
integration with (and/or
conversion from) legacy
processes
-It also involves managing the
process. This includes
monitoring results, comparing

implement strategies that

enable their companies to
outperform rivals and give
them a competitive
advantage.
-A company has a sustained
competitive advantage when
its strategies enable it to
maintain above-average
profitability for a number of
years.

>>Types of strategies
Strategies can be divided into
four main categories:
1. Functional-level strategies
are directed at improving the
effectiveness of operations
within a company, such as
manufacturing, marketing,
materials management,
product development, and
customer service.
2. Business-level strategies

encompass the businesss

overall competitive theme,
the way it positions itself in
the marketplace to gain a
competitive advantage, and
the different positioning
strategies that can be used in
different industry settings, for
example, cost leadership,
differentiation, focusing on a
particular niche or segment of
the industry, or some

Define and differentiate its

product offerings.
Deliver those goods and
services to the market.
Acquire and keep
customers.
Organize activities within
the company.
Lower costs.
Achieve and sustain a high
level of profitability.
Grow the business over

that do lead to high

performance
-Vision, eloquence and
consistency: strong leaders
seem to have a vision of
where the organization should
go, are eloquent enough to
communicate
-Commitment: Strong leaders
demonstrate their
commitment to their vision by
action and works, and they

following psychological
makeup/ characteristics
- Self-awareness
-Self-regulation
-Motivation
-Empathy
-Social skills
>>Cognitive biases and
strategic management
-When we make decisions, we
tend to fall back n certain
rules of thumb, or heuristics,

combination of these.
3. Global strategies address
how to expand operations
outside the home country to
grow and prosper in a world
where competitive advantage
is determined at a global
level.
4. Corporate-level strategies
answer the primary questions:
What business or businesses
should we be in to maximize

time.
>> A Model of the Strategic
Planning Process
The formal strategic planning
process has five main steps:
1. Select the corporate
mission and major corporate
goals.
2. Analyze the organizations
external competitive
environment to identify
opportunities and threats.

often lead by example

-Being well informed:
Effective strategic leaders
develop a network of formal
and informal sources who
keep them well informed
about what is going on within
their company
-Willingness to delegate and
empower: High performance
leaders are skilled at effective
delegation to avoid being

that help us to make sense

out of a complex and
uncertain world. However,
they lead to severe and
systematic errors in the
decision making process. They
seem to arise from a series of
cognitive biases in the way
that human decision makers
process information and reach
decisions. Due to cognitive
biases many managers make

the long-run profitability and

profit growth of the
organization. How should we
enter and increase our
presence in these businesses
to gain a competitive
advantage
>>Business Model:
A business model is a kind of
mental model, or gestalt, of
how the various strategies
and capital investments made

3. Analyze the organizations

internal operating
environment to identify the
organizations strengths and
weaknesses.
4. Select strategies that build
on the organizations
strengths and correct its
weaknesses in order to take
advantage of external
opportunities and counter
external threats.

overloaded with
responsibilities. They also
recognize it as a tool of
motivation
- The astute use of Power:
three ways of using astute
power-i) strategic leaders
must play the power game
with skill and attempt to build
consensus for their ideas
rather than use of their
authority to force, ii) should

poor strategic decisions

>> A number of cognitive
biases are as following
-Prior hypothesis bias
-Reasoning by analogy
-Techniques for improving
decision making
-Devils advocacy
-Escalating commitment
-Biased representativeness
-Dialectic inquiry

by a company should fit

together to generate aboveaverage profitability and
profit growth.
A business model
encompasses the totality of
how a company will
Select its customers.
Create value for its
customers.
Configure its resources.
Produce goods or services.

5. Implement the strategies.

>> Strategic Leadership and
Decision making
Strategic leadership refers
to a managers ability to
articulate a strategic vision for
the company, or part of the
company, and to motivate
subordinates and develop a
high performing organization
>>Some major characteristics
of a good strategic leader

not commit themselves

publicly to detailed strategic
plans or precise objectives
since unexpected
contingencies require
adaptation and iii) effective
leaders must possess the
ability to push through
programs in a piecemeal
fashion.
-Emotional intelligence: a
strong leader must have the