Strategic Management

Introducing the Concepts

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Learning Outline

 Why is strategic management important?

 What is strategic management?
 Who’s involved with strategic management?
 Strategic management in today’s world

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 Why is Strategic Management
Important?

 It gives a role to everyone in an organization to

manage strategically.
 It helps the organization perform well.
 It helps the organization to effectively cope with
the uncertainties in the external and internal
environment.
 It helps to coordinate various functions and
activities

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What is Strategic Management

Strategy
Vs.
Strategic Management

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Definition of Strategy

Goal-directed decisions and

actions in which its capabilities
and resources are matched with
the opportunities and threats in its
environment

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Strategy involves

 Organization’s goals
 Goal-directed actions
 Matching key internal strengths with
external opportunities and threats

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Definition of Strategic Management

The process of analyzing the

current situation, developing
appropriate strategies, putting those
strategies into action and
evaluating, modifying, or changing
those strategies as needed

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Strategic Management Entails:
 Planning
 Organizing
 Implementing
 Controlling

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Basic Activities of Strategic
Management Figure 1.1

Situation Strategy
Analysis Formulation

Strategy Strategy
Evaluation Implementation

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Characteristics of Strategic
Management

Interdisciplinary
Four aspects
that set apart External focus
Strategic Internal focus
Management
Future direction

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 Strategic Management in Action Figure 1.2

Analyzing Deciding Putting Evaluating and

Current on Strategies Changing
Situation Strategies in Action Strategies
Situation Strategy Strategy Strategy
Analysis Formulation Implementation Evaluation

Organizati Externa
onal l
Chapte Chapter FunctionalCompetitive
Context Analysi 3
r2 Chapter 5Chapter 6
s
Interna
l Corporate
Chapter
Analysi 4 Chapter 7
s
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The Strategic Management Process

Situation Analysis entails scanning and evaluating

 Organizational context

 External environment

 Organizational environment

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Levels of Strategies Figure 1.3

Corporate
What direction are we going and
what business(es) are we in or do we
want to be in?

Competitive:
How are we going to compete in
our chosen business(es)?

Functional
What resources and capabilities do
we have to support the corporate and
competitive strategies?

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The Strategic Management Process

Strategy Implementation
 Putting the organization’s various strategies
into action

Strategy Evaluation
 Evaluating how the strategy has been
implemented as well as the outcomes of the
strategy
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 Looking at Strategic Management’s
Past

Strategy’s Military Roots

 Battlefield strategies to gain an edge on the enemy
 Exploit enemy’s weak spots
 Attack enemy where most vulnerable
Academic Origins of Strategic Management
 Mainstream economic theory
 Scientific management (Taylor)
 Bureaucratic organizations (Weber)
 Administrative functions/open systems (Barnard)
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 Looking at Strategic Management’s
Past

The 1960s
 Strategic management established as separate
field, basic concepts established
The 1970s and 1980s
 Process researchers (“how” strategy is
formed)
 Content researchers (“what” of a strategic
decision)
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Misconceptions about strategy and
strategic management

 Strategy is strictly for top management

 Strategy is about planning
 Strategy is stable and constant
 Strategic management outlines
ultimate destination & route

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 Who’s Involved with Strategic
Management?

 Board of Directors
 Elected representatives of stockholders

 Play significant role in corporate governance

 Top Management Team

 Ultimately responsible for every decision and action of every
organizational employee
 Act as strategic leaders

 Other Strategic Managers and Organizational Employees

 Responsible for strategy implementation and evaluation

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 Typical Board Responsibilities Table 1.1

 Review and approve strategic goals and plans

 Review and approve organization’s financial standards and policies
 Ensure integrity of organization’s financial controls and reporting
system
 Approve an organizational philosophy
 Monitor organizational performance and regularly review
performance results
 Select, evaluate, and compensate top-level managers
 Develop management succession plans
 Review and approve capital allocations and expenditures
 Monitor relations with shareholders and other key stakeholders
Other responsibilities may be assigned depending on the unique culture
and needs of the organization

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Effective Strategic Leadership Involves
Figure 1.5

Determining
Organization
al Purpose or
Vision

Establishing Exploiting and

Appropriately Maintaining
Balanced Core
Controls Effective Competencies
Strategic
Emphasizing Leadership
Ethical Developing
Decisions Human
and Capital
Practices
Creating and
Sustaining
Strong
Organizational
Culture
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 Strategic Management in Today’s
World
 Three important issues affecting strategic
management in today’s world
 Globalization
 Corporate governance
 E-business

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Corporate Governance

 Corporate governance is the determination of the

broad uses to which organizational resources will be
deployed and the resolution of conflicts among the
myriad participants in organizations
 Sarbanes-Oxley Act of 2002 – a U.S. federal law
designed to protect investors by improving the
accuracy and reliability of corporate disclosures

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Chapter One Takeaways

 Why strategic management is

important
 Strategic management:
characteristics, process, activities
 Who is involved and what they do

Questions
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