DSM 601: STRATEGIC

MANAGEMENT
A summary by: Hope Louise Mwarome

THE CONCEPT OF
STRATEGY

Strategy is the
direction and
scope of an
organization
over the long
term, which
achieves
advantage in a
changing
environment
through its
configuration of
resources and
competences
with the aim of
fulfilling
stakeholder
expectations

Levels of strategy

corporate-level strategy, concerned with the overall

scope of an organisation and how value will be added to
the different parts (business units)of the organisation
Principal focus Effectiveness
Business strategy

which is about how the various businesses included in

the corporate strategy should compete in their
particular markets

Focus on the strategic Business Unit (SBU)

SBU-Part of the organization for which there is a distinct

market for goods and services

Note: Distinct markets require different strategies.

Functional (Operational) strategy which are concerned

with how the component parts of an organisation deliver
effectively the corporate- and business-level strategies in
terms of resources, processes and people

CONCEPT OF STRATEGY
contd
Strategic decisions are
about:
The long-term direction of
an organization
The scope of an
organizations activities
Gaining advantage over
competitors
Addressing changes in the
business environment
Building on resources and
competences
(capabilities)
Values and expectations
of stakeholders

Therefore they are likely

to:
Be complex in nature
Be made in situations of
uncertainty
Affect operational
decisions
Require an integrated
approach (both inside and
outside an organization)
Involve considerable
change

Characteristics

Business domain

Long term direction of an

organization

Company strategies are concerned

with:

How to grow the business

How to satisfy customers

Where are we going?

How to out compete rivals

Organizational vision

How to manage each functional

area

To develop requisite capabilities

How to achieve company

objectives

Strategic fit

Matching of the activities of an

organization to the environment.
Environment dependence

Competitive advantage
Basis for attracting customers

Cost leadership
Differentiation
Focus
- Positioning

Strategy

Strategy is partly proactive and partly

reactive

Proactive actions to improve performance

Reactions to unforeseen developments

STRATEGIC MANAGEMENT

Strategic management is defined as the

set of decisions and actions that result in the
formulation and implementation of plans
designed to achieve a companys objectives

4.

5.

6.

Strategic management -includes

understanding the strategic position of an
organization, making strategic choices for
the future and managing strategy in action.

It comprises nine critical tasks:

1.
Formulate the companys mission,
including broad statements about its
purpose, philosophy, and goals.
2.
Conduct an analysis that reflects the
companys internal conditions and
capabilities.
3.
Asses the companys external
environment, including both the
competitive and the general contextual
factors.

7.

8.

9.

Analyze the companys options by matching

its resources with external environment.
Identify the most desirable options by
evaluating each option in light of the
companys mission.
Select a set of long term objectives and
grand strategies that will achieve the most
desirable options.
Develop annual objectives and short-term
strategies that are compatible with the
selected set of long-term objectives and
grand strategies.
Implement the strategic choices by means of
budgeted resource allocations in which the
matching of tasks, people, structures,
technologies, and reward systems is
emphasized.
Evaluate the success of the strategic process
as an input for future decision making.

Strategic Management is about:

The future of organizations

The present posture of organizations

Developing superior strategy

Competent implementation of
strategy

STRATEGIC
MANAGEMENT contd
Benefits of Strategic Management

Allow synergy

Aid evaluation

Establish priorities

Reduce uncertainty

Minimize conflicts

Aid in the design of jobs

Measure of managerial performance

Providing direction

Framework for company actions

Adaptation to external change

Focus on strategic issues

Competitive advantage

Effective resource allocation

- Focus on key issues

Risks of strategic management