Strategic Management

Dr. Amr el-baradie

 Course Objectives

• Understand the benefits of strategic management.

• Understand the basic model of strategic management and its
components.
• Understand strategic decision-making modes.
• Identify aspects of an organization’s environment that are most
strategically important.
• Conduct an industry analysis to understand the competitive forces
that influence the intensity of rivalry within an industry.
• Scan resources to determine their fit with a firm’s strategy.
• Formulate and implement the appropriate strategy for all levels of
the organizations.
• Understand the impact of stakeholders on strategic decision making.

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 Course Outline

• Part ONE – Introduction to Strategic Management and

Business Policy
• Chapter 1 – Basic Concepts of Strategic Management
• Chapter 2 – Corporate Governance
• Part TWO – Scanning the Environment
• Chapter 4 – Environmental Scanning and Industry Analysis
• Chapter 5 – Organizational Analysis and Competitive Advantage
• Part THREE – Strategy Formulation
• Chapter 6 – Strategy Formulation: Business Strategy
• Chapter 7 – Strategy Formulation: Corporate Strategy
• Chapter 8 – Strategy Formulation: Functional Strategy and Strategic
Choice

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 Course Outline

• Part FOUR – Strategy Implementation and Control

• Chapter 9 – Strategy Implementation: Global Strategy
• Chapter 10 – Strategy Implementation: Organizing and
Structure
• Chapter 11 – Strategy Implementation: Staffing and
Directing
• Chapter 12 – Evaluation and Control

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 Textbook

Concepts in Strategic Management and

Business Policy
Globalization, Innovation, and Sustainability

Wheelen – Bamford – Hunger – Hoffman

Fifteenth Edition
© Pearson Education Limited 2018

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 Grades

Term Project 15%

Mid Term Exam 35%
Final Exam 50%
Total 100%

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Basic Concepts of Strategic
Management
Chapter 1

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 Learning Objectives

• Understand the benefits of strategic management.

• Explain how globalization and environmental
sustainability influence strategic management.
• Understand the basic model of strategic
management and its components.
• Identify some common triggering events that act as
stimuli for strategic change.
• Understand strategic decision-making modes.
• Use the strategic audit as a method of analyzing
corporate functions and activities.

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 Chapter Outline

• The Study of Strategic Management

• Globalization and Environmental Sustainability:
Challenges to Strategic Management
• Theories of Organizational Adaptation
• Creating a Learning Organization
• Basic Model of Strategic Management
• Initiation of Strategy: Triggering Events
• Strategic Decision Making
• The Strategic Audit: Aid to Strategic Decision-
Making
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The Study of Strategic
Management

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 The Study of Strategic Management

•Strategic Management – a set of managerial

decisions and actions that determines the
long-run performance of a corporation.
•Strategic Management includes:
• Internal and external environment scanning.
• Strategy formulation.
• Strategy implementation.
• Evaluation and control.

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 Phases of Strategic Management

Phase 1: Basic financial planning

Phase 2: Forecast-based planning

Phase 3: Externally oriented strategic

planning

Phase 4: Strategic management

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 Benefits of Strategic Management

• The attainment of an appropriate match, or “fit,”

between an organization’s environment and its
strategy, structure and processes has positive
effects on the organization’s performance.
• Strategic planning becomes increasingly important
as the environment becomes more unstable.
• Clearer sense of strategic vision for the firm.
• Sharper focus on what is strategically important.
• Improved understanding of a rapidly changing
environment.
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Globalization, Innovation, and
Sustainability: Challenges to
Strategic Management

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 Globalization, Innovation, and Sustainability:
Challenges to Strategic Management
• Globalization has changed the way modern
corporations do business due to the integrated
internationalization of markets and corporations.
• Innovation describes new products, services, methods
and organizational approaches that allow the business
to achieve extraordinary returns.
• Sustainability refers to the use of business practices to
manage the triple bottom line, which involves:
• the management of traditional profit/loss;
• the management of the company’s social responsibility; and
• the management of its environmental responsibility.

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Theories of Organizational
Adaptation

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 Theories of Organizational Adaptation

• Population ecology – once an organization is

successfully established in a particular environmental
niche, it is unable to adapt to changing conditions.
• Institution theory – organizations can and do adapt to
changing conditions by imitating other successful
organizations.
• Strategic choice perspective – not only do organizations
adapt to a changing environment, but they also have
the opportunity and power to reshape their
environment.
• Organizational learning theory – an organization
adjusts defensively to a changing environment and uses
knowledge offensively to improve the fit between itself
and its environment.
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Creating a Learning Organization

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 Creating a Learning Organization

•Strategic flexibility – the ability to shift from

one dominant strategy to another; and
requires:
• Long-term commitment to the development and
nurturing of critical resources.
• Learning organization – an organization skilled at
creating, acquiring and transferring knowledge
and at modifying its behavior to reflect new
knowledge and insights.

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 Creating a Learning Organization

•Organizational learning is a critical component

of competitiveness in a dynamic environment.
•Learning organizations are skilled at four main
activities:
• Solving problems systematically.
• Experimenting with new approaches.
• Learning from their own experiences and past history
as well as from the experiences of others.
• Transferring knowledge quickly and efficiently
throughout the organization.

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Basic Model of Strategic
Management

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 Basic Model of Strategic Management

•Strategic management consists of four basic

elements:
• Environmental scanning.
• Strategy formulation.
• Strategy implementation.
• Evaluation and control.

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Basic Model of Strategic Management

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 Environmental Scanning

•Environmental scanning – the monitoring,

evaluating and disseminating of information
from the external and internal environments
to key people within the organization.
•This is done mainly through carrying a SWOT
analysis:
• S – Strengths (Internal)
• W – Weaknesses (Internal)
• O – Opportunities (External)
• T – Threats (External)

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Environmental Variables

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 Strategy Formulation

• Strategy formulation – process of investigation, analysis and

decision making that provides the company with the criteria for
attaining a competitive advantage.
• Includes defining the competitive advantages of the business
(Strategy), crafting the corporate mission, specifying achievable
objectives and setting policy guidelines.
• Mission – the purpose or reason for the organization’s existence.
• Vision – describes what the organization would like to become.
• Objectives – the end results of planned activity.
• Policy – a broad guideline for decision making that links the
formulation of a strategy with its implementation.

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 Strategy Formulation

• Strategy – forms a comprehensive master approach

that states how the corporation will achieve its mission
and objectives. It maximizes competitive advantage:
• 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.
• 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.
• 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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Strategy Formulation

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 Strategy Implementation

• Strategy implementation – a process by which

strategies and policies are put into action through the
development of programs, budgets and procedures.
• A program or a tactic is a statement of the activities or steps
needed to support a strategy. A program or tactic makes a
strategy action-oriented.
• A budget is a statement of a corporation’s programs in terms of
dollars. Used in planning and control, a budget lists the
detailed cost of each program.
• 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.
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 Evaluation and Control

• Evaluation and control – a process in which

corporate activities and performance results are
monitored so that actual performance can be
compared with desired performance.
• Performance – the end result of organizational
activities. It includes the actual outcomes of the
strategic management process.
• Feedback/Learning process – revise or correct
decisions based on performance.

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Initiation of Strategy: Triggering
Events

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 Initiation of Strategy: Triggering Events

•Triggering event – something that acts

as a stimulus for a change in strategy
and can include:
•New CEO.
•External intervention.
•Threat of change of ownership.
•Performance gap.
•Strategic inflection point.

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Strategic Decision Making

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 Strategic Decision Making

•Strategic decisions – deal with the long-term

future of an entire organization and have
three characteristics:
• Rare – Strategic decisions are unusual and
typically have no precedent to follow.
• Consequential – Strategic decisions commit
substantial resources and demand a great deal of
commitment from people at all levels.
• Directive – Strategic decisions set precedents for
lesser decisions and future actions throughout an
organization.

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Mintzberg’s Modes of Strategic Decision
Making

Entrepreneurial Adaptive

Logical
Planning
incrementalism

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 Mintzberg’s Modes of Strategic Decision
Making
•Entrepreneurial – Strategy is made by one
powerful individual. The focus is on
opportunities; problems are secondary. Strategy
is guided by the founder’s own vision of
direction and is exemplified by large, bold
decisions.
•Adaptive mode – Sometimes referred to as
“muddling through,” this decision-making mode
is characterized by reactive solutions to existing
problems, rather than a proactive search for
new opportunities.
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 Mintzberg’s Modes of Strategic Decision
Making
• Planning mode – This decision-making mode involves the
systematic gathering of appropriate information for situation
analysis, the generation of feasible alternative strategies, and the
rational selection of the most appropriate strategy. It includes
both the proactive search for new opportunities and the reactive
solution of existing problems.
• Logical incrementalism – A fourth decision-making mode can be
viewed as a synthesis of the planning, adaptive, and, to a lesser
extent, the entrepreneurial modes. In this mode, top
management has a reasonably clear idea of the corporation’s
mission and objectives, but, in its development of strategies, it
chooses to use “an interactive process in which the organization
probes the future, experiments and learns from a series of partial
(incremental) commitments rather than through global
formulations of total strategies.”

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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.
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 Decision-Making Process

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Strategic Decision-Making Process

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The Strategic Audit: Aid to
Strategic Decision Making

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The Strategic Audit: Aid to Strategic Decision
Making
•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

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