Strategic Management

Governance and
Leadership

Lecture 1 (Basic Concepts-Strategic

Management)
February 13, 2017
 What is Strategy

 A plan or course of action or a set of decision/rules making a

pattern or creating a common thread(line).
 A pattern or common thread related to the organization's
activities which are derived from the policies, objectives and
goals.
 Concerned with pursuing those activities which move an
organization - from its current position to a planned future
position
 Concerned with the resources necessary for implementing a
plan or a predetermined course of action.
 Plan: options and planning how to deliver them. PEST Analysis- external macro-
environment that affects all firms. P.E.S.T. is an acronym for the Political,
Economic, Social, and Technological factors of the external macro-
environment). , SWOT Analysis and Brainstorming)
 Ploy (better of competitors, by plotting to disrupt, dissuade, discourage, or
otherwise influence them, can be part of a strategy. Eg telecom company
may take patents not allowing others. Tools = Futures Wheel (A futures wheel as
described by Jerome C. Glenn. The Futures wheel is a method for graphical
visualization of direct and indirect future consequences of a particular change
or development. ... The Futures Wheel is a way of organizing thinking and
questioning about the future – a kind of structured brainstorming) Impact
Analysis and Scenario Analysis
 Pattern: take note of the patterns you see in your team and organization. Then,
ask yourself whether these patterns have become an implicit/understood-
unspoken part of your strategy; and think about the impact these patterns
should have on how you approach strategic planning. Tools: USP Analysis-
unique selling proposition, Core Competence Analysis can help you with this
and may be VRIO Analysis (resource or capability to determine its competitive
potential: the question of Value, the question of Rarity, the question of
Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability
to exploit the resource or capability).
 Position: how you decide to position yourself in the marketplace.-sustainable.
 Perspective: The choices an organization makes about its strategy rely heavily
on its culture – just as patterns of behavior can emerge as strategy, For
instance, an organization that encourages risk-taking and innovation from
employees might focus on coming up with innovative products as the main
thrust behind its strategy.
 Elements of Strategy
 purpose or mission;
 policies;
 objectives or goals;
 strengths and weaknesses;
 opportunities and threats;
 key decisions;
 capabilities or competences;
 planning and scheduling;
 implementation;
 sustainable competitive advantage.
 Purpose or Mission
This is, in effect, a statement of why the company exists. Company
statements of purpose tend to fall into three groups:
 The purpose is to create shareholder value.
 The purpose is to meet the– employees, customers, suppliers and the
community needs and expectations of all the stakeholders as well as
investors.
 The purpose is of a higher order in that it is aspirational and idealistic,
or challenging and inspiring.
 Policies
Policies are guiding rules or principles that are regarded as an integral
part of the Government/Organizations ‘success model’; that is to say,
they are practices or ways of doing things, often long established,
that are seen as indispensable parts of the organizational formula for
achieving a sustainable competitive advantage.

Objectives or Goals
These terms tend to be used interchangeably. Strategic objectives are
normally ones to be achieved over the medium to long term. They
may be financial such as a certain increase in earnings per share or
nonfinancial such as a percentage increase in market share. In
theory they should be capable of being quantifiable and hence
susceptible to measurement.
Opportunities and Threats
 An important part of the strategic process is the identification of
opportunities in the market-place. These are then matched with the
company’s capabilities. The competitive environment is also scanned for
potential threats to the competitiveness of the business.

Key Decisions
 Strategic decisions are ones that are of fundamental importance to the
Government/Organizations, but will not prove to have been right or wrong
for some considerable time.
 Capabilities or competences

These are the distinctive competences that are difficult for

competitors to copy and which are linked to the achievement of a
competitive advantage in a particular area.

Implementation
A sound strategy is of little value if implementation is weak.
Implementation begins with planning and scheduling. It involves
Strategic management and its context decisions about such things
as organization structure, the allocation of resources and the level
of risk that is acceptable. It also involves leadership as well as
managerial skills, particularly when particular strategy involves major
organizational change.
 Sustainable competitive
advantage

 This is what the strategy is designed to achieve – a position in the

market such that the company is not only able to earn a higher profit
margin than its competitors, but is able to sustain that position over a
significant period of time.
 Evolution of Strategic Management
• Strategic management as a term and concept is not new. The term was first
used in the 1970’s and it meant that a staff of strategic planners more or less
thought up strategic programs and then tried to sell them to decision makers.
• In the 1990’s the view of strategic planning and strategic management is much
different. Goodstein, Nolan, and Pfeiffer’s definition of strategic planning
takes us away from the notion that strategic planning is a staff job and focuses
us more on a process that requires the senior leaders of an organization to set
its strategic direction. ...
• “The process by which the guiding members of an organization envision
its future and develop the necessary procedures and operations to achieve
that future.” (Goodstein, Nolan, and Pfeiffer, 1992)
• “What we think, know, or believe in is, in the end, of little consequence.
The only consequence . . . is what we do.” (Haines, 1995): Stephen G.
Haines an American organizational theorist developed 12
Volumes
 Strategic Management
Definitions
1. Strategic management is the process of assessing the organization and its
environment in order to meet the long-term objectives of the organization.
2. Strategic Management is basically process which can be used to determine
the mission, vision, values, goals, objectives, roles and responsibilities,
timelines, etc.
3. Organizations exist for a purpose. The mission is articulated in a broadly
defined but enduring statement of purpose that identifies the scope of an
organization’s operations and its offerings to affected groups and entities.
Most organizations of a significant size or stature have developed a formal
mission statement.
4. Strategic management is a broader term than strategy and is a process that
includes top management’s analysis of the environment in which the
organization operates prior to formulating a strategy, as well as the plan for
implementation and control of the strategy.
 Basic Difference b/w
Management and Strategic
Management
Management
Getting work done through
people." That's the classic business
school definition of 'management.'
Strategic Management
"Setting goals and objectives for an
enterprise (a business or company
in most cases)." Usually a small
group of executives--or the owner--
of a company or other enterprise
sets down a mission statement
consisting of goals and objectives
that company seeks to attain and
by which that orgz will be
"managed."
 Functions of Strategic Management
1.It provides a dual approach to problem solving. Firstly, it exploits
the most effective means to overcome difficulties and face
competition. Secondly, it assists ill the deployment of scarce
resources among critical activities.
2. It focuses attention upon changes ill the organizational set up,
administration of organizational process affecting behavior and the
development of effective leadership.
3. It offers a technique to manage changes. The management is
totally prepared to anticipate, respond and influence to look at
changes. It also offers a different way of thinking.
4. It furnishes the management with a perspective whereby, the
latter gives equal importance to present and future opportunities.
5. It provides the management with a mechanism to cope with
highly complex environment characterized by diversity of cultural,
social, political and competitive forces.
 Strategic Planning
 Strategic planning involves analyzing competitive opportunities
and threats, as well as the strengths and weaknesses of the
organization, and then determining how to position the
organization to compete effectively in their environment.