Chapter 1

THE STRATEGY
MAKING PROCESS

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 NOTABLE QUOTES
Plans are less important than planning
 (Dele McConkey)

Without a strategy, an organization is like a ship without a rudder, going

around in circles, it’s like a tramp; it has no place to go.
(Ross and Kaml)

“Maybe I can’t outrun that bear, but I surely can outrun you”

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 OBJECTIVE OF THIS
CHAPTER
Competitive advantage and superior performance
Strategic manager
Strategy making process
Strategy as an emergent process
Strategy planning in practice
Strategy decision making
Strategy leadership

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SOME QUESTIONS BEFORE
WE START?
Why do some firms succeed while other fails?

How to manage millions of customers ?

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WHAT IS STRATEGY?
Strategy
 A set of actions that managers take to increase their company’s performance relative
to industry rivals.

 Low price
 Buy 1 get 1 free
 Employees Training
 Economies of scale

Company strategy >>>superior performance >>>>competitive advantage

Successful Strategy = Competitive Advantage

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SUCCESSFUL STRATEGY =
COMPETITIVE ADVANTAGE
A strategy is implemented to create a competitive
advantage over other companies

Superior performance is when one company’s profitability

is greater than the average profitability for all firms in the
industry

Profitability– return that company makes on the capital

invested in the enterprise.
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Efficient logistics ----------------------cost saving
Effective information system ------cost saving

Cost saving leads to lower prices

Lower prices leads to profitability of IMTIAZ and WALMART

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APPLE IPAD AIR VS.
COMPETITORS
PRODUCT
DIVERSIFICATION
Lightness: The iPad Air is lighter, thinner than competitors.
Display Quality: The Retina display is visually superior to
competing tablets.
Software: Apple highlights both the base iOS and the bundled Apple
software as being better than what competitors offer.
Engineering: Apple seldom fails to highlight its superior
engineering and material quality than competitors.
Ease of Use: Since Apple makes both the hardware and software, it
often emphasizes its products’ ease of use.

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 COMPETITIVE ADVANTAGE
VS
SUSTAINED COMPETITIVE
ADVANTAGE

CA: The advantage over rivals achieved when a company’s

profitability is greater than the average profitability of all firms in its
industry.

SCA: The competitive advantage achieved when a company is able

to maintain above average profitability for a number of years.

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STRATEGIC MANAGERS
 General Managers
Bear responsibility for overall performance
 Functional Managers
Supervise a particular function (task, activity, or operation)

Multidivisional companies:
 A company that competes in several different businesses
and has created a separate, self-contained division to
manage each of them.
 e.g. PGC, Super Asia, Master, etc.
 In multidivisional companies, three level of management
 Corporate level
 Business level
 Functional level

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 CORPORATE MANAGER/GENERAL
MANAGERS
CORPORATE MANAGERS OVERSEE
STRATEGY FOR WHOLE COMPANY
Consists of CEO, senior executives, BOD and Corporate staff
Role of these are decision making within organization, Defining goals of
the organization, allocating resources among the businesses, formulating
and implementing strategies and provide leadership for the entire
organization.

Example of General Electric - GE

 Wide range of businesses e.g. Lighting equipment ; motor and transportation
equipment; turbine generators, construction and engineering services, medical
systems, aerospace, aircraft engine and financial services.

Role of GE-CEO: setting overall strategic goals, allocating resources

among businesses, where we invest,
All for maximize corporate profitability
Not responsibility to develop strategies for individual business areas such
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as financial services, turbine generators, aero space DR. AAMAR ILYAS SAHI
 BUSINESS MANAGER/GENERAL
MANAGERS
BUSINESS MANAGERS LEAD THE STRATEGY FOR THEIR
SELF-CONTAINED DIVISION
competitive strategies refer to business level manager
Principal business level manager is head of division.

Strategic roles: translate the general statements come from corporate level
into concrete strategies for individual business.

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 FUNCTIONAL LEVEL MANAGERS
FUNCTIONAL MANAGERS ARE RESPONSIBLE FOR ONE
ORGANIZATIONAL ACTIVITY
responsible for specific business functions or operations such as human
resources, purchasing, marketing, customer services.

To develop functional strategies in their area that Help fulfill the strategic
objectives

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STRATEGY MAKING
PROCESS
Select the corporate mission statement and major goals
Analyze the external competitive environment to identify strategic
opportunities and threats in the operating environment
Analyze the internal competitive environment to pinpoint the
strengths and weaknesses of the organization
Select the strategy- contingent upon findings in steps 1, 2, 3
Implement the strategy at every level of the company
The feedback loop helps managers evaluate the success of the
strategy. Strategic planning is ongoing.

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DEFINING STRATEGIC
MANAGEMENT
Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives.

The term strategic management in this text is used

synonymously with the term strategic planning.

The purpose of strategic management is to exploit and create

new and different opportunities for tomorrow; long-range
planning, in contrast, tries to optimize for tomorrow the
trends of today
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STAGES OF STRATEGIC
MANAGEMENT

The strategic-management process consists of

three stages:
 strategy formulation,
 strategy implementation, and
 strategy evaluation

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 Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

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 Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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 Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions

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Benefits of Strategic
Management

Financial Benefits

• Improvement in sales
• Improvement in profitability
• Productivity improvement

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Benefits of Strategic
Management

Non-Financial Benefits

• Improved understanding of competitors strategies

• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities

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 DISCUSSION TOPIC

Some firms do not engage in strategic planning, and some firms do

strategic planning but receive no support from managers and
employees.

You discuss some reasons for poor or no support for strategic

planning

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HOME TASKS
Who are the major competitors of your college or university? What
are their strengths and weaknesses? What are their strategies? How
successful are these institutions compared to your college?

Reading 1 is already uploaded in your portal.

Reading 1 will be discuss in next session.

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 ?

Thanks

11/21/20 DR. AAMAR ILYAS SAHI