What is Strategy/ Strategic Management?

It is the foundation of success in international

Business

Chapter 2

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Lecture and reflection highlights

• What is a business?
• What is an (business) environment?
• What is management?
What is Strategy? – it is deciding what the company
will do and not do!!!
• What is Strategic Management?
• Why Are Strategies Needed? (To be proactive in
dealing with S, W, O, T in a sustainable way instead of
fire fighting approach)
• Basic Model of STM
• Five Tasks in Strategic Management – see slide
• The diamond Model of Strategy
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 Just to get started…

- What is an organization?
- What is a business?
- What is an (business) environment?
- What is management?
- What is strategy?
- What is strategic management?

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“Without a strategy the organization is like a
ship without a rudder, going around in
circles.”
Joel Ross and Michael Kami

“Quote”

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.
 What is Strategy?
• A company’s strategy consists of the set of competitive
moves and business approaches that management is
employing to run the company.
• Strategy is management’s “game plan” to
• Attract and please customers
• Stake out a market position
• Conduct operations
• Compete successfully
• Achieve organizational objectives

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What is Strategy…?

• Strategy is a series of goal directed plans and

actions that align an organization’s skills and
resources with the opportunities and threats in
its environment
• A strategy is an integrated and coordinated set of
commitments and actions designed to exploit core
competencies and gain a competitive advantage.

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Strategic Management –Defined
Art & science of formulating, implementing, and
evaluating, cross functional decisions that enable
an organization to achieve its objectives

A set of managerial decisions and actions that

determines the long run performance of an
organization

A formula of success

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Why Are Strategies Needed?
To proactively To mold the
shape how a independent actions
company’s and decisions of
business will managers and
be conducted employees into a
coordinated,
companywide game
plan

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Benefits of Strategic Management:
• Clearer sense of strategic vision for the firm
• Sharper focus on what is strategically important
• Improved understanding of a rapidly changing
environment
• Improved organizational performance
• Achieves a match between the organization’s
environment and its strategy, structure and processes
• Important in unstable environments (what if analysis)
• Strategic thinking
• Organizational learning

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Benefits of Strategic Management

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Benefits of “Strategic Thinking” and a “Strategic Approach” to Managing

Guides entire firm regarding “what it is we are trying to do and to

achieve”
Makes managers more alert to
“winds of change, new opportunities,
and threatening developments
Unifies numerous strategy related
decisions and organizational efforts
Creates a proactive atmosphere
Promotes development of an evolving business model focused on
bottom-line success
Provides basis for evaluating competing
budget requests
HELPS A COMPANY PREPARE FOR THE FUTURE!
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 Integrating Intuition & Analysis
The strategic management process attempts to
organize quantitative and qualitative information
under conditions of uncertainty
Intuition is based on:
Past experiences
Judgment
Feelings
Intuition is useful for decision making in conditions of:
 Great uncertainty
 Little precedent
 Highly interrelated variables
 Several plausible alternatives

STRATEGIC MANAGEMENT Ch 1 12
Initiation of Strategy- What may trigger a strategy?

Triggering event: something that acts as a stimulus for

a change in strategy and can include:

• New CEO
• External intervention
• Threat of change of ownership
• Performance gap
• Etc…

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Some Strategic management/process models from
various books

see next slides

They are similar

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Five Tasks in Strategic Management

1. External (OT) and Internal (SW) Environmental

Analysis
2. Strategy Formulation
3. Strategy Analysis and Choice
4. Strategy Implementation
5. Evaluation and Control
The above five elements are also known as the basic Elements of Strategic
Management

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The Diamond Model- the elements of good strategy
• Strategy scholars Donald Hambrick and
Arenas
James Fredrickson propose that a good
strategy has five elements, providing
answers to five questions
Staging Economic
Vehicles
logic

Differentiators

STRATEGIC MANAGEMENT Ch 5 19
 The Diamond Model
1. Arenas: Where will we be active? - Focus area of your business
e.g selling ivory in China

2. Vehicles: How will we get there? - how will you carryout the business

e.g. Legally exporting it from Africa

3. Differentiators: How will we win in the marketplace? – what makes your

business different/unique

e.g. offering Quality ivory harvested in animal friendly way – in a responsible way
4. Staging: What will be our speed and sequence of moves? - mainly timing
e.g. , how often will you export and how many units

5. Economic logic: How will we obtain our return - ROI

e.g. premium price for the unique quality we offer, for example)

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