Lecture 1

Strategic Management

Syed Muhammad
 Topics of the lecture
• Define what is meant by
• Strategy
• strategic management
• Explain corporate, business and operational strategies
• Distinguish strategic management from operational
management
• Understand the basic vocabulary of strategy
• Different approaches to strategy
• Some strategic concepts
– The cultural web
– The paradigm
– Strategic fit and stretch
 What is strategy?
• Long term direction (Dell transformation)
• Scope of an organization’s activities (boundaries)
• Strategic fit with the business environment
• Creating opportunities by building on an organization’s
resources and competence (Competitive advantage)
• Strategy affected not only by environmental forces and
capabilities but also by the values and expectations of
the people who have power in around the
organization (stakeholders, Michael Dell)
 Characteristics of strategic
decisions
• They are about the long term
• They are about the achievement of some objectives
• They are about the defining what the organization is as well
as what it does
• They are about creating a relationship b/w the organization
and the environment. Fit.
• They are about identifying and committing resources. Stretch
• Once made strategic decisions are hard to reverse
• Above all they are important. They influence other decisions
 Origin and definition
• Strategy has a military origin – about winning
– not the battle but the war
• Strategy is the pattern of objectives, purposes
or goals and major policies and plans for the
achieving these goals, stated in such as way as
to define what business the company is, or to
be in and the kind of company it is or is to be
Kenneth Andrews: the concept of Strategy
The role of the leader – the CEO – is paramount
 Strategy
“Strategy is the direction and scope of an
organization over the long term, which
achieves advantages in a changing
environment through its configuration of
resources and competences with the aim of
fulfilling stakeholder expectations”
Johnson et al (2006)
 Strategic decisions
Strategic Decisions are about:
• The long-term direction of an
organization
• The scope of an organization’s
activities
• Gaining advantage over
competitors
• Addressing changes in the
business environment
• Building on resources and
competences (capability)
• Values and expectation of
stakeholders
Therefore they are likely to:
• Be complex in nature
• Be made in situations of
uncertainty
• Affect operational decisions
• Require an integrated
approach (both inside and
outside an organization)
• Involve considerable change
Johnson et al (2006)
 Strategy involves
• Long term vision
• Overall size and scope
• An integrated approach
– Combining all business disciplines
• Sustainable competitive advantage
• Change and innovation
• Partnership and alliances
 Levels of strategy
• Corporate level strategy: is concerned with the overall purpose
and scope of an organization and how value will be added to the
different parts (business units) of the organization
• Business-level strategy: is about how to compete successfully in
particular markets ( A strategic business unit SBU is a part of an
organization for which there is a distinct external market for
goods or services that is different from another SBU)
• Operational strategies: are concerned with how the component
parts of an organization deliver effectively the corporate and
business level strategies in terms of resources, processes and
people
 Strategic Terms
• Mission – purpose defined by values and expectations of stakeholders (Be
healthy and fit)
• Vision – what we would like to be (To run the London Marathon)
• Goal – general strategic objectives (Lose weight and strengthen muscles)
• Objective – specific outcome. Quantified (lose 5K by 1 Sep and run Marathon
next year)
• Competitive advantage – core competence, unique resources (Proximity to
fitness centre, a successful diet)
• Strategy – decisions taken about the long-term direction (exercise regularly,
compete in marathons locally, stick to appropriate diet)
• Tactics – shorter term decisions taken within the strategy (Join running club)
• Control – how well are we doing. Can we get it back on track (monitor weight,
KMs run and measure times, if progress satisfactory, do nothing otherwise
consider other strategy )
 The role of strategy
• To improve business performance
• The failure of a company is the failure of its
managers to make the right strategic decisions
over time
• Management weakness have been identified
as the cause of poor competitiveness of UK
firms
(DTI report 2003 presented by Michael Porter)
 Strategic Management
• The scope of strategic management is greater than
the that of any one area of operational management.
• Concerned with complexity arising out of ambiguous
and non-routine situations with organization wide
rather than operation-specific implication
• Strategic management has three main elements:
– Strategic position
– Strategic choice
– Strategy into action
 Strategic Management
• Strategic position: is concerned with the impact on
strategy of the external environment, an organization's
strategic capability (resources and competences) and the
expectations and influence of stakeholders
• Strategic choices: involve understanding the underlying
bases for future strategy at both business unit and
corporate levels and the options for developing strategy in
terms of both the directions and methods of development
• Strategy into action: is concerned with ensuring that
strategies are working in practice