Strategic Management

Mahmud A. Shareef
Professor
Post Doctoral (McMaster University), PhD
(Business Administration, Carleton University, Ottawa,
Canada), M. Engg. (Structural Engg., Carleton
MBA (IBA, Dhaka University),
University, Canada),
B.Sc. Engg. (Civil Engg., BUET)
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 Management Concept

This course integrates

 Theoretical Concept of Management and

 Applied Concept of Strategy

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 Management Concept
In this course, we will

• Explore the meaning of organisational strategy

and Investigate the processes by which strategy is
formulated within the organisation.

• Summarise the strength, weakness, opportunity,

and threat related issues and relate this to the
issue of strategy through a self-assessment
activity.

• Generic Strategies and Strategy for Diversification

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 Management Concept
• Analyse various concepts of strategy and
critically consider which is more appropriate
to your organisation.

• Organizational Capability and Promote

Strategy

• Corporate Culture and Leadership

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 What is Business Strategy?
• Organization has a limited set of resources (e.g.
time, people, money, physical resources) and they
must decide how to use those resources.

• Example: You have the following resources:

– $500,000
– A building
– 10 employees
– A patent on a new product A

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 What is Business Strategy?
Strategy is deciding

what the organization is going to do

how it will use its resources to capitalize on

maximum benefits

gain competitive advantage and

fulfill objectives

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 Examples of Strategies
• Strategy 1: buy equipment and other required assets with the
money and use resources including human resources to
manufacture product A.

• Strategy 2: Outsource the production of product A and use

the resources including human resources to market and
distribute the product.

• Strategy 3: Sell patent to a larger firm, sell resources, fire

employees, and do other business

• Example: once the organization decides that it wants to be a

manufacturer of product A, there are many decisions that
must be made about how to profitably manufacture product A
and gain competitive advantage.
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 Strategy
• Strategy is the process by which individuals
and organisations make choices about
scarce resources so as to satisfy wants over
time in an environment of uncertainty. They
are aided in this process by market and non-
market forces.
• A strategy is defined as a pattern of
purposes, policies, programmes, actions,
decisions, or resource allocations that
focuses essentially on deciding on what the
organization is trying to do, what it is trying
to become within its business environment.
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 Strategy
•A company’s strategy is its overall
and long term action plan for
outperforming its competitors and
achieving superior profitability
•

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 WHAT DO WE MEAN BY STRATEGY?
• What is our present situation?
– Business environment and industry conditions
– Firm’s financial and competitive capabilities
• Where do we want to go from here?
– Creating a vision for the firm’s future direction
• How are we going to get there?
– Crafting an action plan for heading the firm in the
intended direction
 WHAT IS STRATEGY ABOUT?
• Strategy is all about How:
● How to attract and please customers.
● How to compete against rivals.
● How to position the firm in the marketplace.
● How best to respond to changing economic
and market conditions.
● How to capitalize on attractive opportunities
to grow the business.
● How to achieve the firm’s performance targets.
 STRATEGY AND COMPETITORS
• Strategy is about competing differently from
rivals—
● Doing what they don’t do or doing it better!
● Doing what they can’t do!
● Doing things in ways that attract customers
and set a firm apart from its rivals.
● Doing things in a manner calculated to
produce a competitive edge over rivals.
 Strategic Decisions
• Strategic decisions address questions such
as:
– What products or services will be provided?
– Will we focus on providing low cost
goods/services?
– Will we focus on providing unique
goods/services?
– Where will we sell our goods/services?
– To whom?

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 Strategic Decisions
A good strategy will take into account
–Resources (people, money, knowledge,
technology, reputation, power, materials,
etc.).
–Existing barrier
–Market competition
–Overall vision, mission, and objectives of
the company. 

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 Competitive Advantage
• What makes strategy difficult is that most
business environments are competitive.
Need to try to "second guess" the
competition.

• Competitive advantage: what sets the firm

superior from the rest of its competitors.

• Basis for competition: cost (Walton), quality

(Sony), variety (Chadni Chalk for clothes),
level of service (Singapore Airlines),...
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 Competitive Advantage
Require meeting customer needs either
more effectively (with products or
services that customers value more
highly) or more efficiently (by
providing products or services at lower
cost).

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 Strategic Management
– Strategic management is a means of understanding
strategic position of organisation; formulating courses of
action, evaluating them and choosing between them; as
well as planning how choice of strategy can be put into
effect and managing resultant changes

– It is art and science of formulating, implementing, and

evaluating cross-functional decisions that enable an
organization to achieve desired goals

• Strategic management process

– The process by which managers choose a set of
strategies that will allow a company to achieve superior
performance 17
 Implications: Strategic Management Processes

• A Manager needs to understand:

– Strategic direction reflecting organizational goal

– Formulation processes
– Strategic change

• Managing strategic change means managing

changes to the realised strategy - not just the
intended strategy.
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 Steps of Strategic management
Task 1: Select the corporate Vision and Mission
Task 2: Setting Objectives
Task 3: Select strategies that build on the organization’s
strengths and correct its weaknesses in order to take
advantage of external opportunities and counter external
threats
 Analyze the external competitive environment to identify
opportunities and threats
 Analyze the organization’s internal environment to identify its
strengths and weaknesses

Task 4: Implement the strategy

Task 5: Evaluating performance, monitoring new development,
and initiating corrective actions

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 Task 1: Vision and Mission
• Vision: Develop a vision statement is the first
step in strategic planning
• It answers: What do we want to become in future?
• Ultimate Picture

• The Boeing Company in 2016:

– “People working together as a global enterprise for
aerospace leadership”

• Microsoft:
– “To empower people through great software, any time,
any place, on any device”
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 Task 1: Vision and Mission
• ‘animating the dream’. These statements
offer aspirations about the future strategic
direction of the organisation and are often
incorporated in Mission statements.

• In this stage the organisation is developing

a view of what it should look like once its
strategies are achieved and developed to
their full potential.

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 Task 1: Vision and Mission

• Mission: defined in the mission statement

which is a broad declaration of the overriding
purpose.
– Mission statement identifies product, customers
and how firm differs from competitors.

• It answers: What is our business?

• A description or declaration of why a

company is in operation
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 Task 1: Vision and Mission

• Provides the framework or context within

which strategies are formulated
• What company is trying to achieve over
medium to long term
A. Defining the business: seeks to identify our
customers and the needs we can and should
satisfy.
• This also pinpoints competitors.
B. Establishing major goals: states who will
compete in the business.
• Should stretch the organization to new heights.
• Goals must also be realistic and have a time period in
which they are achieved. 23
 Guiding principles for Mission
• It takes years not months
• True consensus is necessary within the top
team
• Action is a better communicator than words
• Top team visibility is essential
• Top team continuity helps
• Strategy and Values should be formulated
together
• Management should focus on the link between
behaviour and values.
• Make the mission inspirational but not
unrealistic 24
 Mission Statements
North South University
•Produce highly skilled manpower, visionary
professional leaders and responsible and enlightened
citizens.

•In addition to creation and dissemination of

knowledge, its mission includes promotion of
humanism and peace through higher education.

•As a social institution, NSU endeavors to induce

changes for betterment of the society as a whole
through public services, and through promotion of
ethical behavior and social justice. 25
Abell’s Framework for Defining the Business

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 Task 2:Setting Objectives
 What the specific targets and results you
want to achieve
Characteristics of setting objectives
• Time horizon: refers to how far in the future
the objective applies.
– Long-term plans are usually 5 years or more.
– Intermediate-term plans are 1 to 5 years.
• Corporate and business level plans specify long and
intermediate term.
– Short-term plans are less than 1 year.
• Functional plans focus on short to intermediate term.

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 Task 2:Setting Objectives
Object must be SMART
 S= Specific
 M= Measurable
 A= Achievable
 R= Reasonable
 T= Time bound

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 Task 3: Strategy Formulation
• Formulating strategy: managers analyze current
situation and develop strategies needed to achieve
the mission.
• Objective is the end result and strategy is the
means to achieve that
• Strategy formulation answers
– concentrate a single business or build diversification
– target broad range of customers or specific segment
– Product superiority or low cost
– Respond to changing buyer preference
– React to emerging market

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 Planning & Strategy Formulation

Corporate-level strategy
develop a plan of action
maximizing long-run value

SWOT analysis
identifies strengths & Business-level strategy
weaknesses inside the a plan of action to take
firm and opportunities advantage of opportunities
& threats in the and minimize threats
environment.

Functional-level strategy
a plan of action improving
department’s ability to
create value
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 Task 4:Strategy Implementation
• Implementing strategy: managers must
decide how to allocate resources between
groups to ensure the strategy is achieved.
– Building an organization capable to carry out
the strategy
– Allocate resources
– Establish strategy supported policy
– Motivating people
– Leading

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 Developing an Effective Implementation Process
• Developing a document is not enough. For strategy
to be realised there are some considerations:
– Individuals, teams etc. must know their roles and
responsibilities
– action plans have to be developed
– timescale has to be considered (a planning cycle might
develop).
– resources have to be committed, particularly to training
– communication processes have to be developed (and
these have to be effective)
– Review and monitoring procedures have to be considered
(This may involve, performance indicators, benchmarking)
– Accountability procedures must be put in place
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 Task 5:Evaluating

Establish standards of performance, goals, or

• The process is 1.targets against which performance is evaluated.
on going. But
remember,
new strategies 2. Measure actual performance
emerge and
some old ones
Compare actual performance
are discarded 3. against chosen standards
whilst others
remain.
4. Evaluate results and take corrective action
when the standard is not being achieved.
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 Steps of Strategic management
• Suppose you want
to start a new • Vision: Develop a
pharmaceutical disease free
business Bangladesh

• Mission: Drugs
with better quality
and reasonable price • Objective: We
must be available for want to capture 10%
all people at anytime market share in
anywhere Bangladesh for all
drugs on an average
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 Strategy and Competitive Advantage

• Competitive advantage
– A firm’s profitability is greater than the
average profitability for all firms in its industry

• Sustained competitive advantage

– A firm maintains competitive advantage for a
number of years

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Strategy and Competitive Advantage

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