Strategic Management

Strategy in Action
Abdullah Sanusi
 "Even if you’re on the right track, you’ll get run
over if you just sit there.“ —Will Rogers

 "Planning. Doing things today to make us

better tomorrow. Because the future belongs to
those who make the hard decisions today.“ —
Eaton Corporation
Long term Objectives
 Represent the results expected from pursuing
certain strategies.
 Objectives should be quantitative, measurable,
realistic, understandable, challenging, hierarchical,
obtainable, and congruent among organizational
units.
 Commonly stated in terms such as growth in
assets, growth in sales, profitability, market share,
degree and nature of diversification degree and
nature of vertical integration, earnings per share,
and social responsibility.
Types of Objectives
Financial objectives include those associated
with growth in revenues, growth in earnings, higher
dividends, larger profit margins, greater return on investment,
higher earnings per share, a rising stock price, improved
cash flow, and so on;

Strategic objectives include things such

as a larger market share, quicker on-time delivery than rivals,
shorter design-to-market times than rivals, lower costs than
rivals, higher product quality than rivals, wider geographic
coverage than rivals, achieving technological leadership,
consistently getting new or improved products to market
ahead of rivals, and so on.
“Not Managing by Objectives”
 Managing by Extrapolation —“If it ain’t
broke, don’t fix it.”
 Managing by Crisis— a form of reacting
rather than acting.
 Managing by Subjective— built on the
idea that there is no general plan for which
way to go and what to do.
 Managing by Hope— luck and good
fortune are on our side
The Balanced Scorecard
 Developed in 1993 by Robert Kaplan and David
Norton
 The need of firms to “balance” financial measures
that are oftentimes used exclusively in strategy
evaluation and control with nonfinancial measures
such as product quality and customer service.
 Consistent with the notions of continuous
improvement in management (CIM) and total
quality management (TQM).
 SMART—Specific, Measurable, Achievable,
Realistic and Timely.
Processes in BCC
 Translating the vision—into strategies
 Communicating and linking—at all levels of the
company
 Business planning—integrating business plan with
financial plans
 Feedback and learning
TOWS Matrix—Generating Alternative
Strategies
Alternative Strategies
Integration strategies
Intensive strategies
Diversification strategies
Defensive strategies
Timing Strategies
Integration Strategies
Forward integration—gaining ownership
or increased control over distributors or retailers.
Backward integration—seeking
ownership or increased control of a firm’s
suppliers.
Horizontal integration—seeking
ownership or increased control over competitors.
Intensive Strategies
Market penetration—seeking increased
market share for present products or services in
present markets through greater marketing efforts.
Market development—introducing present
products or services into new geographic area
Product development—seeking
increased sales by improving present products or
services or developing new ones.
Diversification Strategies
Related diversification—adding new
but related products or services.
Unrelated diversification—adding
new unrelated products and services.
Defensive Strategies
Retrenchment—regrouping through cost and
asset reduction to reverse declining sales and
profit.
Divestiture—selling a division or part of an
organisation.
Liquidation—selling all of a company’s
assets, in parts, for their tangible worth.
Timing Strategies
First mover (pioneer)
Late movers
 Porter’s 5 Generic Strategies
GENERIC STRATEGIES
Cost Leadership Cost Leadership Focus

Type 1
SIZE OF MARKET

Large Type 3
Type 2

Small Type 3
Type 4
Type 5

Type 1: Cost Leadership—Low Cost Type 4: Focus—Low Cost

Type 2: Cost Leadership—Best Value Type 5: Focus—Best Value
Type 3: Differentiation
Issues in Generic Strategies
 Tactic—a specific operating plan that details how a strategy
is to be implemented (when, where and how).
 Dimensions of quality—performance, features,
reliability, conformance, durability, serviceability, aesthetics,
perceived quality.
 Risks of generic strategies—competitors imitate,
technology change, bases for cost leadership erode.
 Industry structure—fragmented industry (focus
strategy), consolidated industry (cost leadership or
differentiation).
 Hypercompetition—short product life cycle  difficult to
sustain a competitive advantage.
Means for Achieving Strategies
 Cooperation among competitors
 Joint venture/partnering
 Merger/acquisition
 Business-process outsourcing