Strategic Management: an overview

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Strategic Managementan overview

• Session 1
• Civil Service College Dhaka
• Presentation by
• Dr. Muhammad G. Sarwar
• Email sarwar_mg_at_yahoo.com
• Cell 01821443741

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Presentation Contents

• Strategic Management course outline
• Strategic Management references
• What is Strategic Management?
• Stages of Strategic Management
• Strategic Management Model
• Benefits of Strategic Management
• Why Strategic Planning/Management may fail?
• Strategic Management and Business Ethics
• Guidelines for Effective Strategic Management

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Strategic Management course outline
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Strategic Management references

• Fred R. David (2008), Strategic Management
  Concepts and Cases, 11th Edition, Prentice Hall
• Arthur A. Thompson, Jr. (2010) Crafting and
  Executing Strategy the quest for comparative,
  16th Edition, McGraw Hill

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What is Strategic Management?

• Strategic Management is an art and science of
  formulating, implementing and evaluating
  cross-functional decisions that enable an
  organization to achieve its objectives (Fred R.
  David, 2008).
• Strategic Management is the approaches to grow,
  attract and please clients, compete successfully
  and achieve targeted levels of organizational
  performance (Arther A. Thompson, 2010)

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What is Strategic Management? (contd.)

• In ultimate analysis Strategic Management is the
  Quest for Competitive Advantage.
• 4 most frequently used strategic approaches
• Striving to be the industrys low-cost provider
• Outperforming rivals based on quality,
  diversity, style, technology, value added
  services etc
• Focusing on a narrow market niche
• Developing capability that rivals cant easily
  imitate.

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What is Strategic Management?(contd.)

• Strategic Management focuses on
• Integrating management,
• Production/operation.
• Financing/accounting,
• Marketing,
• Research development,
• MIS

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Strategic Management vs. Strategic Planning

• The term Strategic Management is mostly used in
  academia, whereas the term Strategic Planning
  is mostly used in business world.
• Strategic Management refer to strategy
  formulation, implementation and evaluation.
• Strategic Planning refer only to strategy
  formulation.

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Stages of Strategic Management

• Strategic Management process consists of 3
  stages
• Strategy formulation,
• Strategy implementation, and
• Strategy evaluation.

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Strategy formulation

• Strategy formulation includes
• Developing a vision and mission statements
• Identifying organizations external opportunities
  and threats
• Indentifying internal strengths and weaknesses
• Establishing long-term objectives
• Generating alternative strategies
• Choosing particular strategies.

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Strategy formulation (contd.)

• Strategy formulation involves questions like
• What new businesses to enter ?
• What businesses to abandon ?
• How to allocate resources to attain goals and
  targets?
• Whether to expand existing production capacity or
  diversify !
• Whether to enter international market !
• Whether to merge or form a joint venture !
• How to avoid a hostile takeover ?

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Strategy implementation

• Strategy implementation is the action stage of
  Strategic Management. It requires
• Setting annual objectives
• Devise policies to attain set objectives
• Motivate employees to achieve objectives
• Allocating resources for achieving objectives

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Strategy evaluation

• Strategy evaluation is the final stage of
  strategic management. 3 strategy evaluation
  activities
• Reviewing external and internal factors that are
  the basis of current strategies,
• Measuring performance, and
• Taking corrective actions.

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Strategic Management Model
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Strategy as a Blend of Proactive Initiatives and
Reactive Adjustments
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Management Strategy vs. Business Model

• An Organization's management strategy relates
  broadly to its competitive initiatives and action
  plan to attain the set objectives.
• Business model focus on how the business will
  generate revenues sufficient to cover cost,
  produce attractive profits and return on
  investment.
• A business model is the story line of the
  Management how the strategy will be a moneymaker.

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Historical Development of Strategic Management

• History of Strategic Planning began in the
  military.
• Word Strategy comes from Greek word Straegos,
  that refers to military general and combines
  stratos (army) and ago (to lead).
• Both Military Strategy and Business Strategy
  focus how to use their own strengths to exploit
  enemys / competitors weaknesses.
• Fundamental difference between Military Strategy
  and Business Strategy is that Military strategy
  is based on the assumption of Conflict, whereas
  Business Strategy is based on the assumption of
  Competition.

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Historical Development of Strategic Management
(contd.)

• Strategic Management as an academic discipline
  started to develop in the 1950s. Most influential
  pioneers were Alfred Chandler, Philip Selznick,
  Igor Ansoff and Peter Drucker.
• Alfred Chandler developed the idea of
  coordinating the various aspect of management
  under one all-encompassing strategy.

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Historical Development of Strategic Management
(contd.)

• Philip Seznick introduced the idea of matching
  organizations internal factors with the external
  environmental circumstances.
• Igor Ansoff developed a strategy grid that
  compared market penetration strategies, product
  development strategies, market development
  strategies, horizontal and vertical integration
  and diversification strategies.
• Peter Drucker developed the theory of management
  by objectives (MBO) that involve the entire
  organization in setting objectives.

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Benefits of Strategic Management

• Financial Benefits
• Strategic management make organization more
  profitable and successful
• Nonfinancial Benefits
• Objective view of management problems
• Framework for improved coordination
• Identify, prioritize and exploit opportunities
• Encourage forward thinking
• Encourage favorable attitude toward change

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Why Some Firms Do No Strategic Planning ?

• Poor Reward Structure
• Fire Fighting
• Content with Success
• Overconfidence
• Prior Bad Experience
• Fear of Failure
• Waste of Time

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Why Strategic Planning/Management may fail?

• Strategic planning to satisfy regulatory
  requirement,
• Top management not actively supporting the
  strategic planning process
• Failing to involve key employees in all phases of
  strategic planning
• Becoming so engrossed in current problems that
  insufficient planning is done
• Failing to communicate the strategy to employees
  who continue working in dark

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Strategic Management and Business Ethics

• All Strategy formulation, implementation and
  evaluation decisions have ethical ramifications.
• Good Business Ethics is a prerequisite for good
  strategic Management.
• Business Ethics is defined as principles of
  conduct within organization that guide decision
  making and behavior, like harming the natural
  environment is unethical.

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Strategic Management and Business Ethics (contd.)

• A strategy cant be considered ethical just
  because it is legal,
• To meet the standard of being ethical, a strategy
  must pass moral scrutiny,
• To be ethical a strategy must not be shady,
  unconscionable, injuries to others or
  unnecessarily harmful to the environment.

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Guidelines for Effective Strategic Management

• Effective Strategic Management is
  open-mindedness a willingness and eagerness to
  consider new information, new viewpoints, new
  ideas, and new possibilities.
• Strategic Management is a self-reflective
  learning process that familiarizes managers and
  employees in the organization with key strategic
  issues and feasible alternatives for resolving
  those issues.

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Thanks