Strategic Management

• Strategic management is the study of why some firms

outperform others.
• How to create a competitive advantage in the market place that
is unique, valuable, and difficult to copy
• “Total organization” perspective, integrating across
functional areas.
• Two perspectives of leadership: romantic view and
external control perspective.
• Strategies put together an understanding of the
external environment with an understanding of internal
strengths and weaknesses.

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 Definition of Strategic Management

Strategic management consists of the analysis,

decisions, and actions an organization
undertakes in order to create and sustain
competitive advantages (Dess, Lumpkin, &
Eisner, Strategic Management: Creating
Competitive Advantage, 3rd Ed., p. 9).

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 Definition of Strategic Management

• Analysis
• Strategic goals (vision, mission, strategic objectives)
• Internal and external environment of the firm
• Decisions
• What industries should we compete in?
• How should we compete in those industries?
• Actions
• Allocate necessary resources
• Design the organization to bring intended strategies
to reality

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 Attributes of Strategic Management

• Directs the organization toward overall goals

and objectives.
• Includes multiple stakeholders in decision
making.
• Needs to incorporate short-term and long-term
perspectives.
• Recognizes trade-offs between efficiency and
effectiveness.

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 Mintzberg’s Views of Strategy

• Plan - consciously intended course of action

• Ploy - maneuver to outwit opponent
• Pattern - consistency in behavior
• Position - location in environment
• Perspective - way of perceiving the world

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 Forms of Strategy

• Formal versus informal - associated with size of

firm and stage of development. Mintzberg’s
distinction between entrepreneurial and
planning mode.
• Intended versus realized - intended strategies
are the plans managers develop; realized
strategies are the actions that actually take
place over time.

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 Forms of Strategy

Source:H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and

Emergent,” Strategic Management Journal 6 (1985), pp. 257-72.

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 Strategic Management Process

• Analysis
• Hierarchy of goals
• Analysis of external and internal environments
• Formulation
• What business(es) should we be in?
• For each, what is the basis for competitive
advantage (low cost, differentiation, focus)?
• Implementation
• Functional tactics
• Culture and organization structure

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 Coherence in Strategic Direction

Company vision
• Massively inspiring
Company vision
• Overarching
• Long-term
• Driven by and evokes passion
• Fundamental statement of the
organization’s
• Values
Hierarchy of Goals
• Aspiration
• Goals

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 Coherence in Strategic Direction

Mission statements
• Purpose of the company Company vision
• Basis of competition and
Mission statements
competitive advantages
• More specific than vision
• Focused on the means Hierarchy of Goals
by which the firm will
compete

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 Coherence in Strategic Direction

Strategic objectives
• Operationalize the Company vision
mission statement
Mission statements
• Measurable, specific,
appropriate, realistic, Strategic objectives
timely, challenging,
resolve conflicts that Hierarchy of Goals
arise, and yardstick for
rewards and incentives

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 Levels of Strategy

CEO Corporate-level
DIsney Corporation

Studio Entertainment Parks & Resorts Consumer Products Media Networks

Business-level
Walt DIsney Pictures Touchstone Pictures... Disneyland... Disney Stores... ABC Network...

Manager
Functional-level
Operations Marketing Finance...

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 Does Strategic Planning Pay Off?

• Original research showed mixed results. Planning

might not pay off for firms in static or turbulent
environments or for small firms.
• Miller and Cardinal’s (1994) meta-analysis found that
strategic planning affects firm growth and profitability.
In particular, they found that:
• Planning  performance link true for formal and informal
planning.
• Planning  performance link even stronger in turbulent
environments.
• Firm size unrelated to effectiveness of planning.

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