STRATEGIC MANAGEMENT

Prepared by: Prof. Rebecca T. Gorospe

STRATEGIC MANAGEMENT
• Defined as the art and science of formulating, implementing and
evaluating cross functional decisions that enable an organization to
achieve its objectives.
• Strategic management is the management of an organization’s
resources to achieve its goals and objectives.
• The term strategic management is sometimes used synonymously with
the term strategic planning.
• involves setting objectives, analyzing the competitive environment,
analyzing the internal organization, evaluating strategies, and ensuring
that management rolls out the strategies across the organization.
Cont. Strategic Management

•The purpose of strategic management is to exploit

and create new and different opportunities for
tomorrow long-range planning.
STRATEGIC PLANNING
• Originated in 1950s and
• was very popular between mid 1960s and mid-1970s. During these
years, strategic planning was widely believed to be the answer for
all problems.
• is an organization's process of defining its strategy, or direction,
and making decisions on allocating its resources to pursue this
strategy.
IMPORTANT QUESTIONS TO ANSWER IN
DEVELOPING A STRATEGIC PLAN
Five stages of strategic management
process
Five stages of strategic management
process
assessing the organization's current strategic direction; identifying and
analyzing internal and external strengths and weaknesses
formulating action plans;
executing action plans; and
evaluating to what degree action plans have been successful and making changes when
desired results are not being produced.
 Clarify Your Vision (Goal Setting)
This stage consists of identifying three key facets:
1. Define both short- and long-term objectives.
2. Identify the process of how to accomplish your objective.
3. Customize the process for your staff, give each person a task with
which he can succeed.
• Keep in mind during this process your goals to be detailed,
realistic and match the values of your vision.
 Gather and Analyze Information
• In this stage, gather as much information and data relevant to
accomplishing your vision.
• The focus of the analysis should be on understanding the needs
of the business as a sustainable entity, its strategic direction and
identifying initiatives that will help your business grow.
• Make sure to identify both the strengths and weaknesses of your
organization as well as any threats and opportunities that may
arise along the path.
 Strategy Formulation
• Determine what resources the business currently has that can
help reach the defined goals and objectives.
• The issues facing the company should be prioritized by their
importance to your success.
• Include deciding what new businesses to enter, what businesses to
abandon, how to allocate resources, whether to expand operations or
diversify, whether to enter international markets, whether to merge
or form a joint venture.
 Strategy Implementation
• This is the action stage of the strategic management process. Everyone
within the organization must be made clear of their responsibilities and
duties, and how that fits in with the overall goal.
• Requires a firm to establish annual objectives, revise policies,
motivate employees, and allocate resources so that formulated
strategies can be executed.
• The challenge of implementation is to stimulate managers and
employees throughout an organization to work with pride and
enthusiasm toward achieving stated objectives.
 Strategy Evaluation and Control
• include performance measurements, consistent review of
internal and external issues and making corrective actions
when necessary.
• Managers desperately need to know when particular strategies are not
working well; strategy evaluation is the primary means for obtaining
information.
 THREE FUNDAMENTAL STRATEGY
EVALUATION ACTIVITITIES:
1. Reviewing external and internal factors that are the bases for
current strategies.
2. Measuring performance.
3. Taking corrective actions.
Integrating Intuition and Analysis

•Based on past experiences, judgment, and feelings,

most people recognize that intuition is essential to
making good strategic decisions.
People used Intuition and Analysis
• William Duran, who organized GM, was described by Alfred Sloan as a
man who would proceed on a course of action guided solely, by some
intuitive flash or brilliance. He never felt obliged to make an engineering
hunt for the facts.
• Albert Einstein acknowledged the importance of intuition when he said,
I believe in intuition and inspiration. At times I feel certain that I am right
while not knowing the reason. Imagination is more important than
knowledge, because knowledge is limited whereas imagination embraces
the entire world.
• Most organizations can benefit from strategic management, which
is based upon integrating intuition and analysis in
decision making. Analytical thinking and intuitive thinking
complement each other.
• Operating from the I’ve already made up to my mind don’t bother me
with the facts mode is not management by intuition; it is management
by ignorance. Drucker says, I believe in intuition only if you
discipline it.
• Artists, who make a diagnosis but don’t check it out with the facts,
are the ones in medicine who kill people, and in management kill
businesses.
 NINE KEY TERMS IN STRATEGIC
MANAGEMENT
1. COMPETITIVE ADVANTAGE – Anything that a firm does
especially well compared to rival firms. When a firm can do
something that rival firms cannot do, or owns something that rival
firms desire, that can represent a competitive advantage.
Ways in Sustaining Competitive Advantage
a. Continually adapting to change.
b. Effectively formulating, implementing and evaluating
strategies.
2. STRATEGISTS – Are the individuals who are most responsible
for the success or failure of an organization.
- Help an organization gather, analyze, and organize
information.
3. VISION AND MISSION STATEMENT – Vision statement
answers the question “what do we want to become?” Developing a
vision statement is often considered the first step in strategic
planning, preceding even development of a mission statement.
Mission statement are enduring statements of purpose that distinguish
one business from other similar firms.
4. EXTERNAL OPPORTUNITIES AND EXTERNAL THREATS –
Refers to economic, social, cultural, demographic,
environmental, political, legal, governmental, technological, and
competitive trends and events that could significantly benefit or
harm an organization in the future.
Opportunities and Threats that Face many Firms
• Availability of Capital
• Marketing moving rapidly to the internet.
• Global markets offer highest growth in revenues.
• Too much debt can crush even the best firms.
• Layoffs are rampant.
5. INTERNAL STRENGTHS AND WEAKNESSES – Are an
organization’s controllable activities that are performed
especially well or poorly.
6. LONG-TERM OBJECTIVES – Objectives defined as specific
results that an organization seeks to achieve in pursuing its basic
mission. Long term means more than one year.
* Objectives are essential for organizational success because they state
direction; aid in evaluation; create synergy; reveal priorities; focus
coordination; and provide a basis for effective planning, organizing,
motivating and controlling activities.
7. STRATEGIES – Are the means by which long-term objectives will
be achieved.
Potential actions that require top management decisions and large amounts of the
firm’s resources.
8. ANNUAL OBJECTIVES – Are short-term milestones that
organizations must achieve to reach long-term objectives.
Like long-term objectives, annual objectives should be measurable, quantitative,
challenging, realistic, consistent and prioritized.
8. POLICIES – Are the means by which annual objectives will be achieved.
Include guidelines, rules, and procedures established to support effective
to achieve stated objectives. Are guides to decision making and address
repetitive or recurring situations.