Introduction to Strategic Management

By Dr Nazrul Islam

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-1

Preview
Overview Strategic Planning Model Strategic Managers & Leadership Strategy as an Emergent Process Strategic Planning in Practice Improving Strategic Decision Making

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-2

The Main Components of the Strategic Planning Process

FIGURE 1.1
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-3

Introduction
What is strategy?
 An action a company takes to attain superior

performance.

What is the strategic management process?
 The process by which managers choose a set of

strategies for the enterprise to pursue its vision.

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-4

Strategic Planning
Missions and Goals

(Continued) • A Basic Strategic Planning Model

Figure 1.1: Basic Strategic Planning Process

External Analysis - Opportunities and Threats Internal Analysis - Strengths and Weaknesses Selection of Appropriate Strategies

Implementation of Strategies

Let’s Look More Closely at Each Step . . .
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-5

Mission and Goals
Mission
 Sets out why the organization

exists and what it should be doing.

Major goals
 Specify what the organization hopes

to fulfill in the medium to long term.

Secondary goals
 Are objectives to be attained that lead to superior

performance.
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-6

External Analysis
Identify strategic opportunities and threats in the operating environment.

Immediate (Industry)

Macroenvironment

National

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-7

Internal Analysis
Identify strengths
 Quality and quantity of resources available
 Distinctive competencies

Identify weaknesses
 Inadequate resources
 Managerial and

organizational deficiencies

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-8

Strategic Planning
SWOT and Strategic Choice

(Continued)

Weaknesses

Opportunities

Strengths

Threats

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-9

Strategic Planning
SWOT and Strategic Choice
(Continued)

(Continued)

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-10

Business-Level Strategies
Cost leadership
 Attaining, then using the lowest total cost basis as a

competitive advantage.

Differentiation
 Using product features or services to distinguish the

firm’s offerings from its competitors.

Market niche focus
 Concentrating competitively on

a specific market segment.
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-11

Functional-Level Strategies
Focus is on improving the effectiveness of operations within a company.
 Manufacturing  Marketing

 Materials management
 Research and development  Human resources

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-12

Global-Level Strategies
Multidomestic / Miltinational International Global Transnational

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-13

Four Basic Strategies
High
Global Strategy Transnational Strategy

Cost pressures Low
International Strategy Multinational Strategy

Low

High Pressures for local responsiveness

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-14

Corporate-Level Strategies
Vertical integration Diversification Strategic alliances Acquisitions New ventures

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-15

Strategy Implementation
1. Designing organizational structure 2. Designing control systems
 Market and output controls  Bureaucratic controls  Control through organizational culture
Structure

or Clan control  Rewards and incentives

Controls

3. Matching strategy, structure, and controls
 Congruence (fit) among strategy,

structure, and controls

Strategy

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-16

Strategic Planning
• Designing Organizational Structure

(Continued)

Strategy Implementation

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-17

Managing Strategic Change
The only constant is change. Success requires adapting strategy and structure to a changing world. The feedback loop in Corporate strategic planning.
Operational Business

Functional
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-18

Strategic Managers
General managers
 Responsible for the overall (strategic) performance

and health of the total organization.

Operations managers
 Responsible for specific business

functions or operations.

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-19

Strategic Managers for All Levels

FIGURE 1.2
Copyright © 2001 Houghton Mifflin Company. All rights reserved. 1-20

Strategic Leadership
1. 2. 3. 4. Vision and consistency Commitment to the vision Being well informed Willingness to delegate and empower 5. Smart use of power 6. Emotional intelligence

Copyright © 2001 Houghton Mifflin Company. All rights reserved.

1-21