Chapter-1

Introduction to Strategic Management

 Introduction of the Course
• Strategic management is an advance course to pursue knowledge
about business strategies developed by the strategy makers at various
level to gain competitive advantages.
• This course is designed to develop a better understating about how to
develop business strategies based on business environment and
implement those strategies as well as finally control them.
• Under this course, there are several chapters including strategic
management, company mission, the external environment, internal
analysis, long-term objectives and strategies, multi-business strategy,
strategy implementation, strategy control and innovation and talent
management strategy.
 Strategy
A strategy reflects:
➢ a company’s awareness of how, when and where it should compete;
➢ against whom it should compete;and
➢ for what purpose it should compete.

A business strategy is a set of competitive moves and actions

that business uses to attract customers, compete successfully, strengthening
performance, and achieve organizational goals. It outlines how business should
be carried out to reach the desired ends.
 What is Management?
Conceptual Definition
Management is a process of getting things done through others.
Functional Definition
Management is a set of activities consisting of planning, organizing, leading
and controlling.

Management is the process of designing and maintaining an environment in which

individuals, working together in groups, efficiently accomplish selected aims.
H .W eihrich and H. Koontz
 Strategic Management
Strategic management is defined as the set of decisions and action that
result in the formulation and implementation of plan designed to
achieve company’s objectives.

Strategic management is a comprehensive and ongoing management process

aimed at formulating and implementing effective strategies; a way of
approaching business opportunities and challenges.
R.W.Griffin
 Strategic Management

• Strategic management is the process of strategic analysis of an

organization, strategy-focused objective-setting, strategy formulation,
strategy implementation, and strategic evaluation and control.
Benefits of Strategic Management
 Concepts and Issues related to Strategic
Management
• Organizational Philosophy
• Organizational philosophy establishes the relationship between the
organization and it’s stakeholders.
• It establishes the values and beliefs of the organization about what is
important in both life and business, how business should be conducted, its
view of humanity, its role in society, the way the world works, and what is
to be held inviolate.
• The guiding philosophy in an organization is usually formulated by the
owner or founder or the CEO.
• Creating a culture of inclusiveness and belonging where all are welcome.
• Exceeding customer expectations in everything we do and holding ourselves
accountable at every step.
• Embracing change and innovation and looking for new ways to grow our organization
and ourselves.
Organization Policy
• A policy is a broad guideline for decision making.
• It is a standing plan as it lasts relatively for a longer period of time.
• It specifies the organization’s response to a designated problem or
situation.
• Examples:
• Admission into undergraduate program will be granted only to students who
secure a minimum of 60% marks in the admission test (admission policy of a
university).
• A customer is required to pay a minimum down payment of 10% of the
purchase price (policy of a real estate company).
 Strategy vs. Policy
Strategy Policy

1. Strategy is a comprehensive plan, made to 1. Policy is the guiding principle, that helps the
accomplish the organizational goals. organization to take logical decisions.

2. It’s an action plan 2. Action principle

3. It is related to organizational moves and decisions for 3. Organizational rules for the activities which are
the situations which have not been encountered repetitive in nature.
previously.

4. Action oriented 4. Thought and Decision oriented

5. Formulation by the top Level Management and
Middle Level Management
6. It describes the methodology used to achieve the
target.
5. Formulation by the top Level Management
6. . It describes what should be done and what
should not be done.
 Strategic Planning
• Strategic planning is the art of creating specific business strategies,
implementing them, and evaluating the results of executing the plan,
in regard to a company’s overall long-term goals or desires.
• It is a concept that focuses on integrating various departments (such
as accounting and finance, marketing, and human resources) within a
company to accomplish its strategic goals.
• Strategic planning focuses on future.
• The term strategic planning is essentially synonymous with strategic
management.
 Strategic plans
• Strategic plans are prepared to cope with a number of issues such as
the:
• Industry and competitive conditions
• Expected actions of the key actors in the industry and
• Any obstacles to the success of the organization.
• Time span of strategic plan needs to be shorter, sometimes measured
in months (e-business).
 Strategic Map
Vision
Mission
Key Goals:
Goal-1:
Goal-2:
Key Objectives:
Objective-1:
Objective-2:
Key Strategies:
Strategy-1:
Strategy-2:

Format of a Strategy Map

 Competitive Strategy
• A competitive strategy is a set of policies and procedures that a
business uses to gain a competitive advantage in the market. It's the
process of identifying and executing actions that allow a business to
improve its competitive position.

• Examples of competitive strategy include differentiation strategy, low-

cost strategy and focus or market-niche strategy.
 Environmental Scanning

• Environmental scanning is often used interchangeably with ‘strategic

analysis’ which is the first element of strategic management. Hunger
and Wheelen define environmental scanning as ‘monitoring,
evaluating, and disseminating of information from the external and
internal environments to key people within the corporation.’
 Organizational Competence
• When the organization gain proficiency in the activity and can
constantly perform it well, we can claim that the organization has
achieved competence.
The Competency Level
DISTINCTIVE
Competence

CORE
Competence

Competence
 Core Competence
• Core competency of an organization is its essential skills.
• Core competency of an organization is a central value creating capability
of the organization.
• Core competencies emerge from a company’s experience, learned skills,
and focused efforts on performing one or more related value chain
components.
• For example, Toyota Motor Company of Japan is believed to have core
competencies in the design and manufacturing of car using just-in-time
philosophy.
• The total core competencies of Coca Cola can be summarized as strong
brand value, franchise network, cost controls, distribution network and
administrative control.
 Core Competence
• When we say that a company has a core competency in an area of
business activity, we mean that the company can do that activity
especially well in comparison to its competitors. Examples of core
competencies include:
• Manufacturing excellence
• Exceptional quality control
• Ability to provide better service
• Superior design capability
• Innovativeness in developing new products
• Mastery of an important technology
• A strong understanding of customer needs and tastes
• Company’s ability to create and commercialize new product.
 Distinctive Competencies
• Distinctive competencies is an essential requirement for achieving
competitive advantage.
• Any valuable activity of an organization can be called a distinctive
competence, it can be performed better than the competitors. It is
the highest level of competence in the sense that no competitors
have this level of proficiency.
• Example:
• Dhaka-based Haji Biryani’s special fragrance alone with unique
packaging.
• Cumilla Matrivandar’s unique ‘rasmalai’.
 Business Ethics
• Code of ethics is a written document that contains principles of
conduct to be used in decision making.

• Now-a-days it is widely believed that organizations should develop

written code of ethics to guide the employees in taking care of ethics
in their activities.
 Business Ethics
• Thompson and Strickland have prepared• Pricing, contracting, and billing.
a list of topics that organizations usually• Fairness in selling and marketing practices
cover in codes of ethics:
• Using inside information and securities
• Honesty and observance of law trading
• Conflicts of interest • Suppliers relationships and procurement
• Acquiring and using information about practices
others • Payments to obtain business
• Political activities
• Use of company assets, resources, and
property
• Protection of proprietary information
 Strategic Business Unit (SBU)
• A SBU is a relatively autonomous unit of a firm. In a diversified
company each business unit is an SBU.
• An SBU may be a division, product line or other profit center that can
be planned independently from the other business units of the
diversified company.
 Value Chain of Company
• The value chain of a company consists of the company’s primary and
support activities.

• The primary activities are involved with the physical creation of a

product, its distribution and marketing, and the after-sales service
related to the product.

• Specifically, we can say that the primary activities of a manufacturing

company include inbound logistics, operations/production, outbound
logistics, marketing, and service.
 Value Chain of Company

• The support activities are necessary for supporting the primary

activities to take place. They include company’s infrastructure, human
resource management, technological development, procurement,
finance, inventory, etc. Collectively, all these primary and support
activities constitute the value chain.
Strategic Management Process

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Theory of Strategic Decision Making Process
• According to Henry Mintzberg there are three
approaches of Strategic Decision Making. These are:
• 1. Entrepreneurial mode: in this mode of Strategic
Decision Making, the strategy developed by one
powerful individual.
• 2. Adaptive mode: this mode is characterised by reactive
solution to existing problems.
• 3. Planning mode: it involves the systematic gathering of
appropriate information for situation analysis, the
generation of feasible alternative strategies, and the
rational selection of appropriate strategy.

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Thank you