|





 




 



 
 "
  #



 |$

| !
Strategic Management
 Ä e Nature and Value of strategic
Management
ã Corporate executives or execution of ones
personal affairs include:

ã Internal activities
ã C allenges posted by t e external
environment ( immediate and remote)
 Ä e Nature and Value of strategic
Management
ã Ä e Immediate external environment
includes:
ã Suppliers, Competitors, Increasingly scarce
resources, Government agencies and t eir
regulations and customers w ose preferences
often s ift inexplicably.
 Ä e Nature and Value of strategic
Management
ã Ä e Remote external environment includes:
ã Economic and social conditions, political
priorities and tec nological developments, all
of w ic must be anticipated, monitored,
assessed and incorporated on t e executives
decision making.
 Ä e Nature and Value of strategic
Management
ã Ä e analysis of t e external and internal
environment must corroborate and not be
subordinated nor be superceded by
͞requirements of it͛s stake olders͟ w ic are
often inconsistent. ( Since Human be avior is
dynamic)
ã Stake olders are: owners, top managers,
employees, communities, customers and
country.
 Ä e Nature and Value of strategic
Management
ã Hence, Managers ͞consciously use͟
management processes t at t ey feel will
position t e firm optimally in its competitive
environment by: ͞ Maximizing t e anticipation
of environmental c anges and of unexpected
internal and competitive demands͟
 Ä e Nature and Value of strategic
Management
ã Earn Profits͙
ã Perfect processes t at respond to increases in
t e size and number of competing firms
(MKÄG, HR)
ã Äo t e expanded role of t e government as a
buyer, seller, regulation and competitor in t e
free enterprise system (Economics, Finance)
 Ä e Nature and Value of strategic
Management
ã Ä e greater business involvement in t e
international trade ( H.R, HBO, Financial
management, Economics)
 Ä e Nature and Value of strategic
Management
ã Long-range planning, planning, programming,
budgeting and business policy were blended
wit increased emp asis on environmental
forecasting and external considerations in
formulating and implementing please.
ã Ä is all encompassing approac is known as
͞Strategic Management͟
 Strategic Management
ã Defined as t e set of decisions and actions
t at result in t e formulation and
implementation of plans designed to ac ieve
a company͛s objectives. It comprises nine
critical tasks:
 Nine Critical Strategic Management tasks

1. Formulate t e company's mission, including broad

statements about its purpose, p ilosop y, and
goals.
2. Conduct an analysis t at reflects t e company͛s
internal conditions and capabilities
3. Assess t e company's external environment.
Including bot t e competitive and t e general
contextual factors
4. Analyze t e company͛s options by matc ing its
resources wit t e external environment
 Nine Critical Strategic Management tasks

5. Identify t e most desirable options by evaluating

eac option in lig t of t e company͛s mission
6. Select t e long-term objectives and grand strategies
t at will ac ieve t e most desirable options
7. Develop annual objectives and s ort-term strategies
t at are compatible wit t e selected set of long
term objectives and grand strategies
 Nine Critical Strategic Management tasks

8. Implement t e strategic c oices by means of

budgeted resource allocations in w ic t e
matc ing of task, people. Structures and
tec nologies, and reward systems is
emp asized
9. Evaluate t e success of t e strategic process
as an input for future decision making
 Strategy

ã Large scale future oriented plans for

interacting wit t e competitive environment
to ac ieve company objectives
 Point is͙
ã Strategist Manage ( plan, Organize, Lead and
control) t e company's strategy. Ä is strategy
is a company͛s game plan͙ alt oug t e plan
does not precisely detail all future
deployments (of people, finances and
materials) IÄ DOES PROVDE A FRAMEWORK
FOR MANAGERIAL DECISIONS.
 Point is͙
ã A Strategy reflects a company͛s AWARENESS
of HOW, WHEN, and WHERE it s ould
compete. Against WHOM it s ould compete:
and for w at purpose it s ould perform
 Point is͙
ã In reality, College life in a particular
perspective is a competition and requires
strategy͙ ask your self͙
Are you aware HOW, WHEN, and
WHERE you s ould compete.
Against WHOM you s ould
compete: and for w at purpose
you s ould perform?
 Ä ree levels of Strategy
ã Corporate Level
ã Business level
ã Functional ( POM/R&d, Financial/Acct͛g
Marketing and Human Relations strategies))
 Ä ree levels of Strategy
%



&

i
   
 

 
 


     

  
   
   
      

 
!
" 

#
 



$% && && &

'
 #

(   )% & && &&

)

 
*   

(   $
 & && &&
 Ä ree levels of Strategy
ã Corporate-level decisions are often
c aracterized by greater risk, cost and profit
potential: greater need for flexibility and
longer time orizons
ã Ä is include, but are not limited to c oice of
businesses, dividend policies, sources of long
term financing and priorities for growt
 Ä ree levels of Strategy
ã Functional Level decision ͞implement͟ t e overall
strategy formulated at t e corporate and business
levels.
ã Ä ey involve operational issues and are relatively
s ort range and low risk.
ã Incur modest cost, because t ey depend on available
resources
ã Include branding, basic versus applied R&D, Ratio
analysis, close versus loose supervision.
 Ä ree levels of Strategy
ã Business-level decisions elp bridge decisions
at t e corporate and functional levels.
ã Ä ese decisions are less costly, less risky and
potentially profitable t an t e corporate-level
decisions, but more costly, risky and
potentially profitable t an functional level
decisions.
 Ä ree levels of Strategy
ã Business level decision include plant location,
market segmentation and geograp ic
coverage, and distribution c annels
 Ä e Strategic Management Process
1. Ä e Company Mission
ã Identifies t e scope of its operations
ã It describes t e company͛s product, market
and tec nological areas of emp asis in a way
t at reflects t e values and priorities of t e
strategic decision makers
 Ä e Strategic Management Process
ã It must express ow t e company intends to
contribute to t e societies t at sustain it. A
firms needs to set social and responsibility
aspirations for it self, just as it does in ot er
areas of corporate performance ( Social
responsibility and Et ics)
 Ä e Strategic Management Process
E.G
ã Downscaling as a corporate act as practiced by
Ayala corp. (sale of pure foods and BK) and
Samsung reflected a revised management
p ilosop y t at favored Specialization t ereby
c anging t e scope and direction of t e
organization ( Management and Org Be avior
management)
 Ä e Strategic Management Process
2. Internal Analysis
ã Ä e company analyzes t e quantity and t e
quality of t e company͛s financial, uman and
p ysical resources. It also assesses t e
strengt s and weaknesses of t e company͛s
management and organizational structure. (
Management, HR, HBO, Accounting, Finance)
 Ä e Strategic Management Process
ã Finally, it contrasts t e company͛s past success
and traditional concerns wit t e company͛s
current capabilities in an attempt to identify
t e company͛s future capabilities
 Ä e Strategic Management Process
3. External Environment
ã A firms external environment consists of all
t e conditions and forces t at affect its
strategic options and define its competitive
situation. Ä e strategic management model
s ows t e external environment as t ree
interactive segments: Remote, industry, and
operating environments.
 Ä e Strategic Management Process
4. Strategic Analysis and C oice
ã Ä e simultaneous assessment of t e external
environment and t e company profile enables
a firm to identify a range of possible attractive
interactive opportunities.
 Ä e Strategic Management Process
ã Ä ese opportunities include possible avenues
for investment, owever, ey must be
screened t roug t e criterion of t e
company mission to generate a set of possible
and desired opportunities.
 Ä e Strategic Management Process
ã Ä is screening process results in t e selection
of options from w ic strategic c oice is
made. Ä e process is meant to provide t e
combination of long term objectives and
generic and grand strategies to optimally
position t e firm in its external environment
to ac ieve t e company mission
 Ä e Strategic Management Process
ã Strategic analysis and c oice in single or
dominant product or service business center
around identifying strategies t at are most
effective in building sustainable competitive
advantages based on key value c ain activities
and competencies or t e firms core
competencies.
 Ä e Strategic Management Process
ã Multi business analysis on t e ot er and
focus on t e question of w ic combination of
businesses maximizes s are older value as a
guiding t eme during t eir strategic analysis
and c oice
 Ä e Strategic Management Process
5. Long-Äerm Objectives
ã Ä e results t e Organization seeks over a
multi year period.
ã Ä is includes profitability, return investment.
Competitive position, tec nological
leaders ip, productivity, employee relations,
public responsibility, and employee
development
 Ä e Strategic Management Process
6. Generic and Grand Strategies
ã Generic strategies are fundamental
p ilosop ical options for t e design of
strategies
ã Grand strategies is t e means by w ic
objectives are ac ieved.
 Ä e Strategic Management Process
ã Many businesses explicitly adopt one or more
generic strategies c aracterizing t eir
competitive orientation in t e marketplace.
ã Low cost, differentiation or focus strategies
define t ree fundamental options.
 Ä e Strategic Management Process
ã Enlig tened manages seek to create ways
t eir firm possess bot low cost and
differentiation competitive advantages as part
of t eir overall generic strategy.
ã Ä ey usually combine t is capabilities wit a
compre ensive plan by w ic t ey intend to
ac ieve t eir objectives in a dynamic
environment, t is is called t e Grand strategy.
 Ä e Strategic Management Process
Ä e 15 basic Approac es in grand strategizing
ã Concentration
ã Market development, product development,
innovation, orizontal or vertical integration, joint
venture, strategic alliances, consortia, concentric
diversification, conglomerate diversification,
turnaround, divestiture, bankruptcy and liquidation.
 Ä e Strategic Management Process
7. S ort-term objectives
ã Ä is are desired results t at provide specific
guidance for action during a period of one
year or less.
ã Ä ey must be logically consistent wit t e
firms long term objectives.
ã Includes s ort term marketing activity, raw
material usage, employee turnover, and sales
objectives among ot ers
 Ä e Strategic Management Process
8. Functional tactics
ã Ä ese are s ort term, narrow scoped plans
t at detail t e ͞means͟ or activities t at a
company
ã Äactics are specific actions t at needs to be
undertaken to ac ieve s ort term objectives,
usually by functional areas.
 Ä e Strategic Management Process
ã Ä ese tactical activities are purposed to elp
ac ieve sustainable competitive advantage at
t e functional level.
ã Ä ese includes but are not limited to an ad
campaign, an inventory reduction, and
introductory laon rate.
 Ä e Strategic Management Process
ã Managers ͞in eac business function͟ develop
tactics t at delineate t e functional activities
undertaken in t eir part of t e business and
usually include t em as a core part of t eir
action plan.
 Ä e Strategic Management Process
9. Policies t at empower action
ã Speed is a critical necessity for today͛s
competitive, global marketplace.
ã One way to en ance speed and
responsiveness is to force/allow decisions to
be made w enever possible at t e lowest
level of t e organization. ( HBO, H.R,
Management)
 Ä e Strategic Management Process
ã Policies are broad, precedent setting decisions
t at guide or substitute for repetitive or time
sensitive managerial decision making.
 Ä e Strategic Management Process
ã Creating t e policies t at guide or ͞pre-
aut orize͟ t e t inking, decisions and actions
of operating managers and t eir subordinates
in implementing t e business strategy is
essential for t e establis ing and controlling
t e on going operating process of t e firm in a
manner consistent wit t e firms strategic
objectives.
 Ä e Strategic Management Process
ã Policies increase managerial effectiveness by
standardizing routine decisions, and
empowering or expanding t e discretion of
managers and subordinates in implementing
business strategies.
 Ä e Strategic Management Process
ã Examples of t e nature and diversity of
company policies
ã A requirement t at managers ave purc ase
requests for items costing more t an $5,000
cosigned by t e controller
ã Ä e minimum equity position for all new
McDonald's franc ises
 Ä e Strategic Management Process
ã Ä e standard formula used to calculate return
on investment for 43 strategic business units
at G.E
ã Sears Employees aving t e rig t to waive
repair c arges to appliance customers t ey
feel ave been poorly served by t eir Sears
appliance
 Ä e Strategic Management Process
POINT SIR

ã At t is point managers ave maintained a

decidedly market oriented focus as t ey
formulate strategies and begin
implementation t roug action plans and
functional tactics.
 Ä e Strategic Management Process
POINT SIR
ã NOW, t e process takes an internal focus-
Getting t e work done effectively and
efficiently so as to make t e strategy
successful. Hence, t e need to implement
10. Restructuring, Reengineering and refocusing
t e Organization
 Ä e Strategic Management Process

ã Restructuring, Reengineering, and refocusing

t e Organization solves questions like
ã W at is t e best way to organize ourselves to
accomplis our ? ( Management Organizing
Function, HBO, Job analysis and Job Design)
 Ä e Strategic Management Process
ã W ere S ould leaders ip come from? ( Social
influence Power and Politics, leaders ip vs.
Management)
ã W at values s ould guide our daily activities,
W at s ould t e organization and its people
be like? ( Values, personality and Individual
be avior Organizational Culture, HBO, H.R)
 Ä e Strategic Management Process
ã How can we s ape rewards to s ape
appropriate action? ( motivation,
reinforcement etc)
 Ä e Strategic Management Process
ã W at is t e point?

ã Ä e intense competition in t e global

marketplace as made t is traditionally
͞internally Focused͟ set of questions-How t e
activities wit in t eir business are conducted-
recast t emselves wit unprecedented
attentiveness to t e market place
 Ä e Strategic Management Process
ã Downsizing, Restructuring and Reengineering (
Organizing function of management) are terms t at
reflect critical stages in strategy implementation
w erein managers attempt to recast t eir
organization.
ã Ä e Company͛s Structure, leaders ip, Culture,
Reward system may all be c ange to ensure cost
competitiveness and quality demanded by unique
requirements.
 Ä e Strategic Management Process
E.G of t e elements of t e strategic management
process at GM
ã Strategy was lower cost, increase efficiency, improve
designs and increase brand appeal.
ã Purpose, improve cas flow to cover for rising
pension cost
ã It ad to͙ improve operations, ire new executives
t at broug t product development and financial
controls. Employee committees broke down
bureaucracies and developed ways to reduce t e
time needed to develop new-concept ve icles
 Ä e Strategic Management Process
11. Strategic Control and Continuous
improvement
ã Strategic control is concerned wit tracking a
strategy as it is being implemented (even if
t e end result is years away), detecting
problems or c anges in its underlying
premises and making necessary adjustments
 Ä e Strategic Management Process
ã Continuous improvement is a form of strategic
control in w ic managers are encouraged to
be proactive in improving all operations of t e
firm.
Strategic Management

ð

 Strategic Management as a Process
ã A process is t e flow of information t roug
inter-related stages of analysis toward t e
ac ievement of an aim. And t e strategic
management process involves t e flow of
istorical, current and forecasted data on
operations and environment of a business.
 Strategic Management as a Process
ã Managers evaluate t is data in lig t of t e values and
priorities of influential individuals and groups called
͞stake olders.͟ t is interrelated stages are t e eleven
components discussed in t e previous slides.
ã Finally, t e aim of t e process is t e formulation and
implementation of strategies t at work, ac ieving
t e company͛s long term mission and near term
objectives.
 Strategic Management as a Process
ã Ä e importance of viewing Strategic
management as a process.
1. A c ange in one component affects several
or all t e ot er components, Ä e flow of
information is reciprocal. As a company can
c ange its mission statement because of
c anges in t e external environment
 Strategic Management as a Process
2. Strategy formulation and implementation are
sequential. Ä e process begins wit t e development
or reevaluation of t e company͛s mission. Followed
by t e assessment of t e company profile and
assessment of t e external environment. Ä en
strategic c oice, definition of long term objectives,
design of t e grand strategy, definition of s ort term
objectives, design of operating strategies,
institutionalization of t e strategy, and review and
evaluation
 Strategic Management as a Process
ã How do you Qualify t e rigidity (inflexibility or firmness) of
t e process?
1. A firms strategic posture may be re-evaluated in response
to c anges in an y of t e principal factors t at determine or
affect its performance.
ã E.g. entry by a Major new competitor, deat of a prominent
board member, replacement of t e CEO, and a downturn in
market responsiveness among ot ers. BUÄ, w at ever t e
cause of t e reevaluation mig t ave been t e Strategic
management process begins wit t e mission statement
 Strategic Management as a Process
2. Not every component of t e process requires
equal attention eac time planning activities
take place. (Stable vs unstable environments)
ã Objectives and strategies are updated eac
year but rigorous reassessment of t e initial
stages of strategic planning rarely is
undertaken at t is times.
 Strategic Management as a Process
3. Necessity of feedback from t e
institutionalization, review and evaluation to
t e early stages of t e process.
ã Feedback is t e analysis of post
implementation results t at can be used to
en ance future decision making.
 Strategic Management as a Process
4. Ä e strategic management process must be
regarded as a dynamic system
ã Dynamic means being c aracterized by
constantly c anging conditions t at affect
interrelated and interdependent strategic
activities
ã Ä us, t e need for continuous monitoring, and
critical anticipation and contingency planning.