STRATEGIC

MANAGEMENT
REBECCA R. MAQUILING, CPA, MSA, DBA
 DEFINITIONS
STRATEGIC MANAGEMENT(SM) - is the organization’s
management of its overall long-term purposes (long-term aims/goals). 1

- It is the art and science of formulating, implementing, and evaluating

cross-functional decisions that enable an organization to achieve its
objectives.2

- The purpose of SM is to exploit and create new and different

opportunities for tomorrow.2

- It is all about gaining and maintaining competitive advantage.2

1 WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
2 DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE
ADVANTAGE APPROACH, CONCEPTS AND CASES
 STAGES OF STRATEGIC
1.
MANAGEMENT
Strategy formulation
2. Strategy implementation
3. Strategy evaluation

All 3 activities occur at three hierarchical levels in a

large organization:
1. corporate;
2. divisional or strategic business unit; and
3. functional. 2
2 DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE
ADVANTAGE APPROACH, CONCEPTS AND CASES
 LEVELS OF STRATEGIC
MANAGEMENT

Hill, C, Shilling,M, Jones, G, 2016 12th Ed. Strategic Management Theory An Integrated Approach
 Roles of Different Level Managers
1. CORPORATE-LEVEL MANAGERS - is to oversee the
development of strategies for the whole organization, including
defining the goals of the organization, and providing leadership
for the entire organization.
2. BUSINESS-LEVEL MANAGERS - is to translate the general
statements of direction and intent from the corporate level into
concrete strategies for individual businesses.
3. FUNCTIONAL-LEVEL MANAGERS - to develop
functional strategies in their areas that help fulfill the strategic
objectives set by business- and corporate-level general
managers.

Hill, C, Shilling,M, Jones, G, 2016 12th Ed. Strategic Management Theory An Integrated Approach
 STRATEGY
FORMULATION
- selecting strategies based on analysis of an organization’s
external and internal environment. 1
- includes:
Developing a vision and a mission;
Identifying an organization’s external opportunities and
threats;
Determining internal strengths and weaknesses;
Establishing long-term objectives;
Generating alternative strategies, and
Choosing particular strategies to pursue. 2
1HILL, C, SHILLING,M, JONES, G, 2016 12TH ED. STRATEGIC MANAGEMENT THEORY AN
INTEGRATED APPROACH
2DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE
 STRATEGY-
FORMULATION ISSUES
Include:
Deciding what new businesses to enter;
What businesses to abandon;
Whether to expand operations or diversify;
Whether to enter international markets;
Whether to merge or form a joint venture; and
How to avoid a hostile takeover.

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
 STRATEGY
IMPLEMENTATION
1. It is often referred to as the “action stage” and the most difficult
part of SM.
2. It requires a firm to:
a. establish annual objectives;
b. devise policies;
c. motivate employees; and
d. allocate resources so that formulated strategies can be
executed.

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
 STRATEGY
IMPLEMENTATION
Includes:
Developing a strategy-supportive culture;
Creating an effective organizational structure;
Redirecting marketing efforts;
Preparing budgets;
Developing and using information systems; and
Linking employee compensation to organizational performance.

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
 STRATEGY EVALUATION
To gather information about strategies to know when they are not
working well.
Three fundamental strategy-evaluation activities:
1. reviewing external and internal factors that are the bases for
current strategies;
2. measuring performance; and
3. taking corrective actions.

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
 MAIN COMPONENTS OF THE
STRATEGIC PLANNING
PROCESS

Hill, C, Shilling,M, Jones, G, 2016 12th Ed. Strategic Management Theory An Integrated Approach
COMPONENTS OF STRATEGIC
MANAGEMENT

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 STRATEGIC PLANNING

STRATEGIC PLANNING - is the sequencing of

strategic management decisions in advance by an
executive or senior management.
- It is a formal analytic process org.’s sequenced
framework/organizing design a long-term purpose.
- Simply: strategic planning =POST: Purpose,
Objectives, Strategy, and Tactics
- At its most complex: strategic planning = long-range
planning - examines trends to forecast future events.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

IMPLEMENTATION GAP

Henry Mintzberg - is the most

known critic of the effectiveness
of strategic planning;
-he argued that strategic plans
are changed during their
implementation as local strategy
emerges.
- meaning, there is an
implementation gap between what
a top level intends and what lower
levels actually achieve.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 STRATEGIC PLANNING
GOOD PRACTICE
The Baldrige Excellence Framework defines good strategic planning
practice in terms of a set of management principles (NIST):
1.  All tasks must be planned properly.
2.  Plans must be implemented so that people are working to these plans.
3.  Work must be monitored and progress must be reviewed.
4.  Necessary action must be taken to account for any deviation from the
plan.
5.  Organizations must have structures and management systems to
ensure the above work in practice.
6.  Everybody must be involved in these structures and systems.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 PURPOSE
PURPOSE- is the reason for the organization and its
overall goals; it is founded on belief - that it serves a
useful purpose.

There are three dimensions to how organizations

manage themselves as a collective entity – vision,
mission, and values.

Each offers a different role in strategic management for

clarifying organizational purpose (see Figure 2.1).
WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
 3 DIMENSIONS OF
ORGANIZATIONAL PURPOSE

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 VISION
VISION - is an organization’s desired future state;
- answers the question “What do we want to become?”
- should excite and motivate to urge people to stretch possibilities and rethink their work;
- needs to also be realistic;
- in its development, consider the organization’s external and internal environments;
- an envisioning process with participation of the important stakeholders.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 VISION STATEMENT
VISION STATEMENT - is the organization’s
statement of its desired future state or ideal;
- Typically, they are short and memorably ambitious
but not overblown;
Example: a simple ‘big idea’ - something very
different that will change an organization;
- should be a meaningful statement to guide
activities.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 MISSION & MISSION
STATEMENT
MISSION –is the purpose of the company or what it strives to do.2
Example: the mission of Google is to organize the world’s
information and make it universally accessible and useful.2

MISSION STATEMENT - explains why an organization exists, what it does

and how it adds stakeholder value.1
- With various styles and forms;1
- Careful - an organization should be able to live up to its claims. 1

1
WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
 MISSION & MISSION
STATEMENT
PETER DRUCKER – “Father of Modern Management”1;
- declares that the organization’s purpose must lie outside the
organization but inside society; he also stated that there is only one
description of a valid business intent : to build a customer. 1
- He says the prime task of strategic management is thinking
through the overall mission of a business - that is, of asking the
question “What is our business?”
This leads to:
 the setting of objectives,
 the development of strategies, and
 the making of today’s decisions for tomorrow’s results.2

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

1

2
DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE
ADVANTAGE APPROACH, CONCEPTS AND CASES
 VALUES
VALUES - are the organization’s statement of its
expected collective norms and behavior and will include
its overall core business methodologies and
management philosophies.1
- they are commonly seen as the bedrock of a
company’s organizational culture.2
- It should be communicated through a common
organizational culture which is shared by key managers
and employees. 1

1 WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

2HILL, C, SHILLING,M, JONES, G, 2016 12TH ED. STRATEGIC MANAGEMENT THEORY AN
 ORGANIZATIONAL
CULTURE
ORGANIZATIONAL CULTURE- as the shared basic
assumptions and beliefs learned from experience.
- These operate unconsciously and determine the taken-for-
granted perceptions everybody in an organization has of his
or her environment. (Edgar Schein, Organizational Culture
and Leadership, 1985).

ESTABLISHED CULTURE - is typically organization-

specific, thus provides unique ways of working and strategic
resources which underpin its competitive advantage. It is
necessary to build any required changes to an organizational
culture gradually over time.
WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
 MAJOR GOALS
“A goal is a precise, measurable, desired future state
that a company attempts to realize.”

Four main characteristics of a well-constructed goals:

They are precise and measurable.

They address crucial issues.
They are challenging but realistic.
Well-constructed goals also provide a means by which
the performance of managers can be evaluated.
HILL, C, SHILLING,M, JONES, G, 2016 12TH ED. STRATEGIC MANAGEMENT THEORY AN
INTEGRATED APPROACH
Some of the areas in which a company might establish its goals and
objectives are:
1. Profitability (net profit)
2. Efficiency (low costs, etc)
3. Growth (increase in sales etc)
4. Shareholder wealth (dividends etc)
5. Utilization of resources (return on investment)
6. Market leadership (market share etc)
 STRATEGIC PLAN

STRATEGIC PLAN - is, in essence, a company’s

game plan.

A strategic plan results from tough managerial

choices among numerous good alternatives, and
it signals commitment to specific markets,
policies, procedures, and operations in lieu of
other, “less desirable” courses of action.

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
BALDRIGE REQUISITES OF
A GREAT STRATEGIC PLAN
In addition to these management principles, Baldrige specifies that a strategic
plan should have
1.  A defined strategy,
2.  Action plans derived from this strategy,
3.  An awareness and recognition of the differences between short- and
longer-term plans,
4.  An approach for developing strategy based on an organization’s external
environment and internal strategic resources,
5.  An approach for implementing action plans that considers an
organization’s key processes and performance measures, and
6.  An approach for monitoring and evaluating organizational performance in
relation to the strategic plan.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 STRATEGY
STRATEGY – is an organization’s overall method/approach to
achieve its long-term aim/goal.1
- is a set of related actions that managers take to increase their
company’s performance. 2

2 PERSPECTIVES:1
 Outside-in perspective
 Inside-out perspectives

While leaders must have an eye on what is happening in the world, the other eye
should have a clear view of day-to-day operations – getting the mix right is
absolutely essential. 1
1 WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
2HILL, C, SHILLING,M, JONES, G, 2016 12TH ED. STRATEGIC MANAGEMENT THEORY AN
 STRATEGISTS
STRATEGISTS - are the individuals most responsible for the
success or failure of an organization.

- They have various job titles, such as chief executive officer,

president, owner, chair of the board, and entrepreneur.

-should be highly adaptive and great models.

Strategists differ in their attitudes, values, ethics, willingness to take risks,

concern for social responsibility, concern for profitability, concern for short-run
DAVID,
versusF,long-run
DAVID F aims,
2017 16and
TH
ED. STRATEGIC style.
management MANAGEMENT A COMPETITIVE ADVANTAGE
APPROACH, CONCEPTS AND CASES
 SOME FUNCTIONS OF
STRATEGISTS
Help the company gather, analyze, and organize
information;
Track industry and competitive trends;
Develop forecasting models and scenario analyses;
Evaluate corporate and divisional performance;
Spot emerging market opportunities;
Identify business threats, and
Develop creative action plans.
DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE
APPROACH, CONCEPTS AND CASES
 TIME SPENT ON
ORGANIZATIONAL
ACTIVITIES

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 INTUITION AND
ANALYSIS
Strategic management is based on integrating
intuition and analysis in decision making.

Choosing an intuitive or analytic approach to

decision making is not an either-or proposition.

The strategic-management process is aimed at

allowing organizations to adapt effectively to change
over the long run.
DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE
APPROACH, CONCEPTS AND CASES
 EXAMPLES OF KEY STRATEGIC-
MANAGEMENT QUESTIONS
“What kind of business should we become?”
“Are we in the right field(s)?”
“Should we reshape our business?”
“What new competitors are entering our industry?”
“What strategies should we pursue?”
“How are our customers changing?”
“Are new technologies being developed that could put us
out of business?”

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
 STRATEGIC CHANGE

STRATEGIC CHANGE - transformational

change; for the organization to be in a new level
of performance.
- Company energy and resources must be focused on few realistically
manageable strategic goals.
- So, the direction of change is guided by a strategy that is designed to
achieve a vision of a future state.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 STRATEGIC CHANGE

SUBSTANTIAL STRATEGIC CHANGE –

normally episodic.

-Otherwise, the organization’s purpose and

strategy to achieve it should be stable enough to
have consistent basis for decision-making. When
circumstances are stable, it is through progress
that strategic change takes place.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 CONTINUOUS
IMPROVEMENT
CONTINUOUS CHANGE – incremental; to
maintain and increase productivity and customer value.

PRINCIPLE: Focus on the company’ core value-

creating areas.

ASSESSMENT: To see if firm is still fit for its

purpose – use key performance indicators (KPIs) with
strategies and targets, ex. business plan.

WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT

 COMPETITIVE
COMPETITIVE ADVANTAGE
ADVANTAGE - any activity a firm does
especially well compared to activities done by rival firms, or any
resource a firm possesses that rival firms desire.2

Example: Apple has virtually no manufacturing facilities of its

own while rival Sony has 57 electronics factories. Having fewer
fixed assets has enabled Apple to remain financially lean.2

COMPETITIVE STRATEGY – makes one organization perform

better than its competitor; is achieved by creating unique value;
should be a sustainable strategy over time.1
1 WITCHER, B. 2020, ABSOLUTE ESSENTIALS OF STRATEGIC MANAGEMENT
2 DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE
ADVANTAGE APPROACH, CONCEPTS AND CASES
 HOW TO GAIN AND SUSTAIN COMPETITIVE
ADVANTAGES

DAVID, F, DAVID F 2017 16TH ED. STRATEGIC MANAGEMENT A COMPETITIVE ADVANTAGE

APPROACH, CONCEPTS AND CASES
SOME FAMOUS, STRATEGIC-
PLANNING–RELEVANT
QUOTES
“If you want to win, do the ordinary things better than
anyone else does them day in and day out.”
—Chuck Noll

“Try not to do too many things at once. Know what you

want, the number one thing today and tomorrow.
Persevere and get it done.”
—George Allen