Chapter 1

The Nature of Strategic Management

Strategic Management:
Concepts & Cases

Course coordinator
Prof. Begum Khaleda Khanam

Ch 1 -1
Strategic Management –
Defined

Art & science of formulating,

implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve its
objectives

Ch 1 -2
Strategic Management

In essence, the strategic plan is a

company’s game plan

Ch 1 -3
Strategic Management
achieves a firm’s success
through integration ––

Management Marketing

Finance/Accounting Production/Operations

Research & Development MIS

Ch 1 -4
Prime Task of
Strategic Management

Peter Drucker: -- Think through the

overall mission of a business. Ask
the key question: “What is our
Business?”

Ch 1 -5
Strategic Management is
Gaining and Maintaining
Competitive Advantage

“Anything that a firm does especially

well compared to rival firms”

Ch 1 -6
Key Terms

Strategists – Firm’s success/failure

Vision Statement –
What do we want to become?

Mission Statement –
What is our business?

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Key Terms

Opportunities and Threats (External)

 Largely beyond the control of a single

organization

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 Key Terms
Opportunities & Threats (External)
General
Global
Analysis of Trends:
• Economic
• Social Industry
• Cultural Environment

• Demographic/Environmental
• Political, Legal, Governmental Competitor
Environment
• Technological
• Competitors
Technological
Environment
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Key Terms

Strengths & Weaknesses (Internal)

 Controllable activities performed especially

well or poorly

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Key Terms

Strengths & Weaknesses (Internal)

Typically located in functional areas of the firm

• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems

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Key Terms

Long-term Objectives

 Mission-driven pursuit of specified results

more than one year out

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Key Terms

Strategies

 Means by which long-term objectives are

achieved

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Key Terms

Strategies
Some Examples
• Geographic expansion
• Diversification
• Acquisition
• Market penetration
• Retrenchment
• Liquidation
• Joint venture

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Key Terms

Annual Objectives

 Short-term milestones that firms must

achieve to attain long-term objectives

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Key Terms

Policies

 Means by which annual objectives will be

achieved

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Strategic Management Model

Strategic Management Process

 Dynamic & Continuous

 More formal in larger organizations

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Strategic Management Model

1. Identify Existing --

• Vision
• Mission
• Objectives
• Strategies

Ch 1 -18
Strategic Management Model

2. Audit external environment

3. Audit internal environment
4. Establish long-term objectives
5. Generate, evaluate & select
strategies
6. Implement selected strategies
7. Measure & evaluate performance

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Benefits of Strategic
Management

• Proactive in shaping firm’s future

• Initiate and influence firm’s activities

• Formulate better strategies
•Systematic, logical, rational

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Benefits of Strategic
Management

Financial Benefits

• Improvement in sales
• Improvement in profitability
• Productivity improvement

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Benefits of Strategic
Management

Non-Financial Benefits

• Improved understanding of competitors strategies

• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities

Ch 1 -22
Benefits of Strategic
Management (Greenley)

1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives

Ch 1 -23
Benefits of Strategic Management
(Greenley – cont’d)

6. Effective allocation of time & resources

7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
11. Encourages favorable attitude toward change
12. Provides discipline and formality to the
management of the business

Ch 1 -24
Why Some Firms Do No
Strategic Planning

Poor reward structures

Fire-fighting
Waste of time
Too expensive
Laziness
Content with success

Ch 1 -25
Why Some Firms Do No
Strategic Planning

Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion

Ch 1 -26
Guidelines for effective strategic management

1. Keep the strategic management process as simple and non-

routine as possible

2. The system should be a process of fostering learning and action

3. Avoid routinized behavior and stimulate creativity

4. If strategy is not working, managers must desperately know it

5. Build a corporate culture in which the role of strategic

management and its essential purposes are understood

6. Attend to psychological, social and political dimensions and also

administrative procedures

Ch 1 -27
 Comprehensive strategic management model

External
Audit

Chapter 3

Long-Term Generate, Implement Implement Measure &

Vision
Objectives Evaluate, Strategies: Strategies: Evaluate
&
Select Mgmt Issues Marketing, Performance
Mission
Strategies Fin/Acct,
R&D, CIS
Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9
Chapter 2

Internal
Audit

Chapter 4

Ch 1 -28