Strategic

Management -
Chapter 1 -
Strategic
Management
Overview

IBM Program
Learning Objectives

1. The essence and definitions of strategy, strategic management, and

competitive advantage.
2. The four key attributes of strategic management and the three principal
and interrelated activities of the strategic management process.
3. The vital role of corporate governance and stakeholder management in the
strategic management process and the long-term success of all
organizations.
4. The importance of social responsibility, including environmental
sustainability, and how it can enhance a corporation’s innovation strategy.
5. The key environmental forces that create unpredictable change and call for
a greater strategic management perspective throughout the organization.
6. How an awareness of a hierarchy of strategic goals can help an organization
achieve coherence in its strategic direction.

IBM Program 2
Strategy without tactics is the slowest route to victory.
Tactics without strategy is the noise before defeat.
Sun Tzu
He was a Chinese general, military strategist, writer and philosopher who lived in
the Eastern Zhou period of ancient China. Sun Tzu is traditionally credited as the
author of The Art of War, an influential work of military strategy that has
affected Western and East Asian philosophy and military thinking.

IBM Program 3
IBM Program 4
Competitive Advantage

A condition or circumstance that puts a

company in a favorable or superior business
position.

IBM Program 5
Competitive Advantage

IBM Program 6
Strategic Management Concepts

Strategic management consists of the analyses, decisions, and actions an

organization undertakes to create and sustain competitive advantages.
Competitive advantage, in turn, is what makes a company’s offerings superior to
those of its competitors.

Key Attributes of Strategic Management:

● Directs the organization toward overall goals and objectives
● Includes multiple stakeholders in decision making
● Incorporates short-term and long-term perspectives
● Recognizes trade-offs between efficiency and effectiveness

IBM Program 7
Diagnosing a strategy

IBM Program 8
Developing a strategy

IBM Program 9
Strategic Management Process

IBM Program 10
IBM Program
Strategic Management Process
Analysis
● Strategic goals (vision,
mission, strategic
objectives)
● Internal and external
environment of the firm

Decisions
● What industries should
we compete in?
● How should we compete
in those industries?

Actions
● Allocate necessary
resources
● Design the organization
to bring intended
strategies to reality
IBM Program 12
●

Stakeholders vs Shareholders

Stakeholder
A stakeholder has a vested
interest in your business or a
project. This type of stakeholder
does not typically have a
financial stake in your business.
Shareholder
A shareholder has a financial
interest in a business or
project. Often a shareholder is
a partial owner.

Money
……. is the differentiator between a stakeholder and a shareholder.

IBM Program 13
The different types of stakeholders
Each of the types of stakeholders in a business are categorized in 3 ways:
● Internal or external
● Primary or secondary
● Direct or indirect
Internal stakeholders are, as the
name suggests, stakeholders
that exist inside a business.
These are stakeholders who are
directly affected by a project.
External stakeholders are those
who have an interest in the
success of a business but do not
have a direct affiliation with the
projects at an organization.
Primary stakeholders have
the highest level of interest in
the outcome of a project
because they are directly
affected by the outcome.
They actively contribute to a
project.
Secondary stakeholders also
help to complete projects,
but on a lower, general level.
These types of stakeholders
help with administrative
processes, financial, and legal
matters.
Direct stakeholders are involved
with the day-to-day activities with
a project. Employees can be
considered direct stakeholders as
their daily tasks revolve around
projects at a business.
Indirect stakeholders pay
attention to the finished project
outcome rather than the process
of completing it. Indirect
stakeholders concern themselves
with things like pricing, packaging,
and availability.
IBM Program 14
IBM Program 15
What if you were… (3 groups)
…. a Project Manager in charge of
implementing wind turbines in a fairly remote
and quiet area an hour away from a major
urban area.

You know you will have stakeholders that will

be in favor of your project and some
absolutely against.

Identify the stakeholders and estimate the

weight of their influence in favor or against
your project.

Present it to the class!

IBM Program 16
Who is the most important stakeholder?
“A business enterprise has two basic functions: marketing and innovation.

If we want to know what a business is, we have to start with its purpose. And the purpose
must lie outside the business itself. In fact, it must lie in society, since a business enterprise is
an organ of society. There is only one valid definition of business purpose: to create a
customer.

The customer is a foundation of a business and keeps it in existence. The customer alone
gives employment. And it is to supply the customer that society entrusts wealth-producing
resources to the business enterprise.

Because it is the purpose to create a customer, any business enterprise has two – and only
two – basic functions: marketing and innovation. These are the entrepreneurial functions.
Marketing is the distinguishing, the unique function of the business.

ACTION POINT: Find out what needs your customers want fulfilled today. Determine how well
your products are meeting the needs of your customers. That is the purpose of business.” –
Peter F. Drucker ( Austrian-born American management consultant, educator, and author, whose writings
contributed to the philosophical and practical foundations of the modern business corporation.)
IBM Program 17
What is Corporate Social Responsibility?
Companies have believed for years that their only responsibility was a financial
one---maximizing value for shareholders. Corporate social responsibility (CSR) is a
new idea, one in which the corporate sector incorporates social and environmental
concerns in its strategies and plays a more responsible role in the world.

Definition:
● the expectation that businesses or individuals will strive to improve the overall
welfare of society
● policies and operating practices that enhance the competitiveness of a company
and simultaneously advance the economic and social conditions in which it
operates

Requires:
● Managers must take active steps to make society better
● Socially responsible behaviour changes over time
● A focus on the ‘Triple Bottom Line’ / 3Ps

IBM Program 18
Corporate Social Responsibility
Changing Corporate Social
Responsibility Trends
Corporate Social Responsibility in
Activism by millennials and all generations
Action will also influence changing trends in CSR.
You can expect to see companies taking a
public stand against on-the-job harassment
1. Reducing carbon footprints and discrimination thanks to the #metoo
2. Improving labor policies movement. Diversity in the workplace will
3. Participating in fairtrade continue to expand embracing people of all
4. Charitable giving races, genders, cultures, disabilities, and
5. Volunteering in the community sexual orientations.
6. Corporate policies that benefit the
environment Companies will also find their own voices to
7. Socially and environmentally conscious speak out against social injustice and policy
investments changes that will negatively impact the
environment. Even policies to protect privacy
can become part of the CSR trends we will
see as more and more data breaches
threaten personal information.

IBM Program 19
IBM Program 20
Business cases - Pick one of the following, take 10
minutes to read the article and I will select a student
to present to the class
1. Google CSR
2. Burger King CSR
3. Costco CSR
4. Toyota CSR
5. Apple CSR
6. Home Depot CSR
7. Harley Davidson CSR
8. Microsoft CSR
IBM Program 21
Strategic Management Perspective

Key driving forces increasing the need for strategic perspective and
involvement:
● Globalization
● Technology
● Intellectual capital

These forces are:

● Interrelated
● Accelerating the rate of change and uncertainty

IBM Program 22
Coherence in Strategic Direction Company vision
Mission Statements
Company vision
● Inspiring/Overarching Strategic Objectives
● Driven by/evokes passion
● States the organization’s: Values / Aspiration / Goals

Mission statements
● Purpose of the company and basis of competition and competitive
advantage
● More specific than vision
● Focused on the means by which the firm will compete

Strategic objectives
● Operationalize the mission statement
● Provide guidance on how the organization can fulfill or move toward the
“higher goals”
● Measurable, Specific, Appropriate, Realistic and Timely
● Yardstick for rewards and incentives

IBM Program 23
The mission is the “what” and the
“how,” and the vision is the “why.”

IBM Program 24
Mission statement: To create the most compelling car
company of the 21st century by driving the world’s
transition to electric vehicles.

Vision statement: To accelerate the world’s transition to

sustainable energy.

IBM Program 25
Mission statement: Create groundbreaking sports
innovations, make our products sustainably, build a
creative and diverse global team, and make a positive
impact in communities where we live and work.

Vision statement: Bring inspiration and innovation to

every athlete* in the world.

IBM Program 26
Mission and vision statement: Build the best product,
cause no unnecessary harm, use business to inspire and
implement solutions to the environmental crisis.

IBM Program 27