STRATEGIC

MANAGEMENT
LECTURE 1

Dr. Mahmoud El Damaty

Consultant Surgeon
AUC & AASTMT Instructor
Course Contents
Lecture 1: Introduction to Strategic
Management
Lecture 2: Organization Governance
Lecture 3: Organization Sustainability,
Responsibility, Transparency and
Disclosure
Lecture 4: External Environment Analysis
Lecture 5: Internal Environment Analysis
Lecture 6: Strategy Formulation
Lecture 7: Types of Strategies
Lecture 8: Performance Evaluation and
Improvement
Lecture 9: Key Performance Indicators

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Lecture One
• Introduction to Strategic
Management

• Reference: Strategic Management

and Business Policy, Thomas L.
Wheelan & J. David Hunger

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Introduction
Strategic Management: a set of managerial decisions and actions that determines the
long-run performance of a corporation.

It includes:
1. Environmental Scanning
2. Strategy Formulation
3. Strategy Implementation
4. Performance Evaluation

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Strategy
• The word “strategy” derives from the Greek word stratçgos; which derives from two
words: - "stratos" – meaning army. "ago" – which is the ancient Greek for
leading/guiding/moving.
• Strategy is not planning.
• Strategy deals with competitive situation in an uncontrolled environment.
• Planning deals with situations in a controlled environment.

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Strategy
• it is:
"A style of thinking; a conscious and deliberate process; an intensive implementation
system; the art of ensuring future success."

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Benefits of Strategic
Management
• Clearer sense of strategic vision for the firm
• Sharper focus on what is strategically important
• Improved understanding of a rapidly changing environment
• Improved organizational performance
• Achieves a match between the organization’s environment and its strategy, structure
and processes
• Important in unstable environments

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1. Environmental scanning
It is the monitoring, evaluating and disseminating of information from the external
and internal environments to key people within the organization

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2. Strategy Formulation
The development of long-range plans for the effective management of environmental
opportunities and threats in light of organizational strengths and weaknesses (SWOT)

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Basic elements of strategy
• Vision- describes what the organization would like to become
• Mission- the purpose or reason for the organization’s existence
• Objectives- the end results of planned activity
• Strategies- form a comprehensive master plan that states how the corporation will
achieve its mission and objectives
• Policies- the broad guidelines for decision making that links the formulation of a
strategy with its implementation

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Vision
Vision without Action is a Daydream, Action without Vision is a Nightmare.

• Future State
• Brief and Memorable
• Descriptive
• Inspiring and Challenging

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Vision
• “Our vision is to create a better every-day life for many people.” – IKEA
• “To become the world’s most loved, most flown, and most profitable airline.” –
Southwest Air
• “Toyota will lead the way to the future of mobility, enriching lives around the world
with the safest and most responsible ways of moving people.”
• “McDonald's vision is to be the world's best quick service restaurant experience.”

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Mission statement
• What is our purpose?
• Describes current state
• Timeline is 2-5 Years
• Based on our distinctive competencies
• Tends to focus on Core Business

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Mission statement
• “Our business idea supports our vision by offering a wide range of well-designed,
functional home furnishing products at prices so low that as many people as
possible will be able to afford them.” – IKEA
• “McDonald's brand mission is to be our customers' favorite place and way to eat and
drink. Our worldwide operations are aligned around a global strategy called the Plan
to Win, which center on an exceptional customer experience – People, Products,
Place, Price and Promotion. We are committed to continuously improving our
operations and enhancing our customers' experience.”

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Objectives
Objectives: Mission-driven pursuit of specified results.
• Provide direction
• Aid in evaluation
• Focus coordination
• Basis for planning, motivating, and controlling

An example of an objective is “to increase the firm’s profitability in 2019 by

10% over 2018.”

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Objectives
Some of the areas in which a corporation might establish its objectives are:
• Profitability (net profits)
• Efficiency (low costs, etc.)
• Growth (increase in total assets, sales, etc.)
• Reputation (being considered a “top” firm)
• Contributions to employees (employment security, wages, diversity)
• Market leadership (market share)
• Technological leadership (innovations, creativity)
• Survival (avoiding bankruptcy)
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Strategies
• A strategy of a corporation forms a comprehensive master plan that states how the
corporation will achieve its mission and objectives.
• The typical business firm usually considers three types of strategy: corporate,
business, and functional.

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Strategies
1. Corporate strategy describes a company’s overall direction in terms of its general
attitude toward growth and the management of its various businesses and
product lines.
2. Business strategy usually occurs at the business unit or product level, and it
emphasizes improvement of the competitive position of a corporation’s products
or services in the specific industry or market segment served by that business unit.
3. Functional strategy is the approach taken by a functional area to achieve
corporate and business unit objectives and strategies by maximizing resource
productivity.

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Policy
• A policy is a broad guideline for decision making that links the formulation of a
strategy with its implementation.
• Companies use policies to make sure that employees throughout the firm make
decisions and take actions that support the corporation’s mission, objectives, and
strategies.

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3. Strategy implementation
• Strategy implementation is a process by which strategies and policies are put into
action through the development of:
Programs
Budgets
Procedures

• This process might involve changes within the overall culture, structure, and/or
management system of the entire organization.

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Programs
• A program is a statement of the activities or steps needed to accomplish a single-use
plan. It makes a strategy action oriented.
• It may involve restructuring the corporation, changing the company’s internal
culture, or beginning a new research effort.
• An example is a set of programs used by automaker BMW to achieve its objective of
increasing production efficiency by 5% each year:
(a) shorten new model development time from 60 to 30 months,
(b) reduce preproduction time from a year to no more than five months,
(c) build at least two vehicles in each plant so that production can shift among models
depending upon demand.
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Budgets
• A budget is a statement of a corporation’s programs in terms of money.
• Used in planning and control, a budget lists the detailed cost of each program.
• The budget thus not only serves as a detailed plan of the new strategy in action, it
also specifies through financial statements the expected impact on the firm’s
financial future.

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Procedures
• Procedures, sometimes termed Standard Operating Procedures (SOP), are a system
of sequential steps or techniques that describe in detail how a particular task or job
is to be done.
• They typically detail the various activities that must be carried out in order to
complete the corporation’s program.

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4. Performance evaluation
The process in which corporate activities and performance results are monitored so
that actual performance can be compared to desired performance.

• Performance: the end result of organizational activities

• Feedback Process: revise or correct decisions based on performance

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Strategic Decision
Strategic decision making focuses on the long-run future of the organization

Characteristics of strategic decision making include:

• Rare
• Consequential
• Directive

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Strategic Decision Making Process
1. Evaluate current performance results
2. Review corporate governance
3. Scan and assess the external environment
4. Scan and assess the internal corporate environment

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Strategic Decision Making Process
5. Analyze strategic (SWOT) factors
6. Generate, evaluate and select the best alternative strategy
7. Implement selected strategies
8. Evaluate implemented strategies

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Strategic Audit
• Strategic audit provides a checklist of questions, by area or issue, that enables a
systematic analysis to be made of various corporate functions and activities

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THANK YOU
drdamaty@aucegypt.edu

Dr. Mahmoud Mohamed El Damaty

+201222850959