Introduction to Strategic

Management and Planning

Jan T.L. Yap

CKNet Indonesia
Malang, 3 April 2017
 Learning Objectives

By the end of this lecture, participants should be

able to:
1. Explain the functions of management;
2. Define and explain strategy and strategic
management;
3. Explain why strategic management is important;
4. Explain the strategic management process;
5. Describe the levels of organizational strategies;
6. Discuss the misconceptions about strategy and
strategic management.
 Outline

• What is Strategy?
• What is Strategic Management?
• Why is Strategic Management important?
• Who is involved with Strategic Management?
• What is Strategic Planning?
• What is the difference between Strategic Management
and Strategic Planning?
• The Components of Strategic Planning.
• The Process of Strategic Planning
What is strategy?
And Why?
 A definition of Strategy

Goal-directed decisions and actions in

which capabilities and resources are matched
with the opportunities and threats in the
environment.
 Why Strategy?

To change, an organization needs

– A Vision;
– Leadership;
– Strategic Management;
– Policy Management.
Strategic Management
 What is Strategic Management?

Strategic Management is the comprehensive collection

of ongoing activities and processes that organizations use
to systematically coordinate and align resources
and actions with a mission, vision and strategy throughout
an organization.

Strategy Execution is basically synonymous with Strategy

Management and leads to the systematic implementation
of a strategy.

“Big picture” view of an

organization influenced by
its external environment
 Strategy vs. Strategic Management

Strategy: Strategic Management:

A series of goal-directed – Analyze current situation;

decisions and actions
matching an organization’s
capabilities and resources
with the opportunities and
threats in its environment.
– Develop appropriate
strategies;
– Put strategies into action;
– Evaluate, modify, or
change strategy.
 Strategy vs. Strategic Management

Strategy involves Strategic Management

– Organization’s goals, – Planning
– Goal-oriented action, – Organizing
– Related decisions – Implementing
and actions,
– Internal strengths, – Controlling
– External opportunities
and threats.
 Basics of Strategic Management

Four aspects that set strategic management apart:

– Inter-disciplinary
• Capstone of the Business;
– External focus
• Competition;
– Internal focus
• Capacity;
– Future direction
• Vision.
Why is Strategic Management important?

• Gives everyone a place and role in the strategic

system;
• Makes a difference in performance levels,
“knowing what you’re doing” and often implies
having a strategic plan;
• Provides systematic approaches to uncertainties;
• Coordinates and focuses employees to achieve
organisation’s goals.
 Strategic Management Process

On-going and continuous cycle of

• Establishing a Mission, Vision and Strategic Objectives;
• Environmental or External Analysis;
• Internal Analysis;
• Strategy Formulation;
• Strategy Implementation;
• Control and Performance Evaluation.
 The Strategic Management Process

Internal
Analysis

Strategy Strategy Strategic

Mission,
Formul- Implem- Eval. &
Vision &
ation entation Control
Objectives

Environ.
Analysis
 Strategic Management Process

Analyzing Deciding Putting Evaluating and

Current on Strategies Changing
Situation Strategies in Action Strategies

Situation Strategy Strategy Strategy

Analysis Formulation Implementation Evaluation

Mission External
Vision Analysis Functional Competitive

Internal Corporate
Analysis

15
 Strategic Planning

Those who fail to plan, plan to fail.

 What is Strategic Planning?

Strategic Planning is a management activity in anticipation of a

changing environment to
• set priorities, focus energy and resources, strengthen
operations;
• ensure that employees and other stakeholders are working
toward common goals;
• establish agreement around intended outcomes/results; and
• assess and adjust the organization’s direction in response to a
changing environment.

Effective strategic planning articulates not only where an

organization is going and the actions needed to make progress,
but also how it will know if it is successful.
 Who does strategy?

▪ Board of Directors
▪ Elected representatives of the company’s stockholders;
▪ Legally obligated to represent and protect stockholder’s.
▪ Top Management
▪ Responsible for decisions and action of every employee;
▪ Providing effective leadership.
▪ Other Organizational Employees
▪ Implement— put the strategies into action and monitor
performance;
▪ Evaluate—do the actual evaluations and take necessary
actions.
 The Role of Top Management

Determining
Organizational
Purpose or Vision

Establishing Exploiting and

Appropriately Maintaining
Balanced Controls Core Competencies

Effective
Strategic
Leadership
Developing
Emphasizing Human Capital
Ethical Decisions
and Practices Creating and
Sustaining Strong
Organizational Culture
Mission and Vision
Elements of a Strategic Vision

Use the mission statement as a

starting point

Develop a vision that spells out a

course to pursue

Communicate the vision in a

clear and exciting manner
Characteristics of a Mission Statement

• Defines current business activities

• Highlights boundaries of current business
• Conveys
– Who we are,
– What we do, and
– Where we are now.

Reason to exist!
Characteristics of a Mission Statement

• Company specific, not generic —so as

to give a company its own identity;
• A company’s mission is not to make
a profit !
• The real mission is always—“What
will we do to make a profit?”
 Examples of Missions

Microsoft
Corporation

Empower people through great

software any-time, any-place,
and on any device.
 Examples of Missions

Otis Elevator

Our mission is to provide any

customer a means of moving people
and things up, down, and sideways
over short distances with higher
reliability than any similar enterprise in
the world.
Strategic Management Principle

Effective strategy-making
begins with a vision of
where the organization
needs to head!
 A Vision goes beyond the Mission
Statement

• Charts a company’s future strategic course;

• Defines the business makeup for 5 years (or more);
• Specifies future technology-product-customer focus.
 Examples of Mission & Vision
Southwest Airlines: 2003
– Mission: To provide high quality service at a
lower price in the airline industry.
– Vision: Opening air travel to a wider group
of leisure travelers while infusing the
organization with a sense of fun.

Apple Computer: 1990?

– Mission: To bring the best personal
computing products and support to
consumers around the world.
– Vision: One person, one computer.
 Sell your vision

It is important to make sure other individuals

understand the purpose and future gains of
the strategic change.
 Communicating the Vision

An exciting, inspirational vision

– challenges and motivates workforce;
– arouses strong sense of organizational purpose;
– induces employee buy-in;
– galvanizes people to live the business.
 Value of a Well-Conceived Vision and
Mission

• crystallizes long-term direction;

• reduces risk of rudderless decision-making;
• conveys organizational purpose and identity;
• keeps direction-related actions of lower-level
managers on common path;
• helps organization prepare for the future.
Strategy Formulation
 Crafting a Strategy

• An organization’s strategy deals with

– How to make the Vision a reality and
achieve target objectives;
– The game plan for
• Pleasing customers,
• Conducting operations,
• Building a sustainable competitive advantage.
 Levels of strategy

Corporate
What direction are we going and what business(es)
are we in or do we want to be in?

Competitive
How are we going to compete in our chosen
business(es)?

Functional
What resources and capabilities do we have to
support the corporate and competitive strategies?
Three Levels of Strategy in Organizations
 Environmental Analysis

• Involves the evaluation of the business

environment of the organization.
– All external influences that impact a
company’s decision and performance.

• Environment of firm classified by

proximity into
(1) Macro-environment; and
(2) Micro-environment or task environment.
 Environmental Analysis

• The macro-environment consists of

– The international/national economy; changes
in demographic structures; social and political
trends; technology; and the natural
environment.

• The micro-environment consists of

– The industry environment such as competitors,
suppliers, customers; unions and employees;
owners and shareholders, etc.
 Internal Analysis

• Involves the evaluation of the inventory of the firm’s

resources and capabilities.
• Resources/Capabilities can be classified as:
– Tangible resources: Financial or physical assets,
– Intangible resources: brand name, reputation
(product & firm), organizational culture, etc.
– Capabilities or competencies: managerial
ability, specialized skill & knowledge base of
employees, etc.
 Strategy Formulation

• The strategy formulation process

– involves designing a course of action for
addressing strategic issues facing the firm
after going through the external and internal
evaluation processes.
• Actual strategy of a company involves:
– Planned or Intended Actions (Deliberate &
purposeful actions).
– Reactive or Emergent Actions (As-need
reactions to unanticipated events in firm’s
micro and macro environments).
 Strategy Formulation

• Strategy formulation is concerned with the following

parts of a company:
– Corporate (whole company) -- Corporate
strategies: Deals with businesses company wants
to be in & how to manage those businesses
– Businesses -- Competitive strategies: How to
compete in specific business or industry
– Functional areas -- Functional strategies: short
goal-directed decisions & actions of an
organization’s various functional departments.
Implementing the Strategy
Strategic Objectives
Control and Evaluation
 Strategy Implementation

• Strategy implementation is the process of

putting a company’s various strategies into
action
– development of programs, policies, budgets &
procedures.
• It can take several months to years to
complete;
• Most difficult part of the strategy process;
• The job of implementing strategy involves
managers at all levels
 Strategic Objectives

Objectives are yardsticks for tracking a company’s

strategic performance or end result.
– Financial Performance Objectives (e.g.,
ROA, ROI, ROE, Dividend growth, Stock
price, etc.).

– Operational Performance Objectives (e.g.,

market share, growth, innovation leader,
customer service, community &
environmental responsibility, etc.)
 Tools for Putting Strategy into Action
Environment
Organization
Leadership
 Persuasion
 Motivation
 Culture/values

Structural Design
 Organization Chart Human Resources
 Teams  Recruitment/selection Performance
Strategy  Transfers/promotions
 Centralization
Decentralization,  Training
 Facilities, task design  Layoffs/recalls

Information and Control Systems

 Pay, reward system
 Budget allocations
 Information systems
 Rules/procedures
Source: Adapted from Jay R. Galbraith and Robert K. Kazanjian, strategy Implementation: Structure, Systems and Process, 2d ed. (St. Paul, Minn.: West, 1986), 115,
Used with permission.
 Control & Evaluation

• Process by which desired outcomes

(mission, vision, & objectives) are
compared with realized outcomes to
determine if there are gaps.
• Initiate corrective actions by monitoring
changes in environment - competitor
actions, new market opportunities,
customer needs & expectations.
Take Aways
 Recapitulation

• Strategy has become more important

• Information, technology, globalization.
• Key ideas in the strategy making process
– Mission (who are we);
– Ethics (code of conduct or values);
– Vision (where do we want to go);
– Strategic intent (major goal);
– Strategy (specific plan at different levels);
• Linkage & communication are important.
 The 4 Key Elements

• Mission

• Values

• Vision

• Strategy
 Strategic Management Process

Scan External Identify Strategic

Environment – Factors –
National, Opportunities,
Global Threats Implement
Strategy via
Evaluate Formulate Changes in:
Current Mission, Define new Strategy – Leadership
SWOT Mission culture,
Goals, Corporate,
Strategies Goals, Grand Business, Structure, HR,
Strategy Functional Information &
control
Scan Internal systems
Identify Strategic
Environment – Core
Factors –
Competence,
Strengths,
Synergy, Value
Weaknesses
Creation
Thank you