Strategic
Management
An Introduction to Strategy
by
Khursheed Yusuf
Learning Outline
What is strategic management?
Why is strategic management
important?
Who is involved with strategic
management?
Strategic management today
2
A definition of strategy
Goal-directed decisions and actions in
which capabilities and resources are
matched with the opportunities and
threats in the environment.
3
Military influences in strategy
“Strategos” referred to a general in
command of an army
The art of the general
By 450 B.C. it came to mean managerial skill
By 330 B.C. it referred to the skill of employing forces
to overcome positions to create a system of global
governance
4
Recent influences in strategy
1960s (Strategy and structure; Corporate
Strategy)
• 1963 Harvard business conference leads to
SWOT analysis
• BCG founded in 1963 “strategy boutique”
• Created the portfolio analysis
• Stars, dogs, cash cows, question marks
1980s (Porter’s 5 forces)
1990s (Resource based view of the firm)
5
Why is strategic management
important?
Gives everyone a role
Makes a difference in performance levels
Provides systematic approach to
uncertainties
Coordinates and focuses employees
6
Why Strategy?
To change, an organization needs
Strong Platform
Vision
Leadership
Strategic Management
Political Management
7
Strategy vs. Strategic
Management
Strategy Strategic
A series of goal- management
directed decisions Analyze current
and actions situation
matching an Develop
organization’s appropriate
skills and strategies
resources with the
Put strategies into
opportunities and action
threats in its
Evaluate, modify,
environment or change
strategy
8
Strategy vs. Strategic
Management
Strategy involves Strategic
Organization’s management
goals Planning
Goal-oriented
action
Organizing
Related decisions Implementing
and actions Controlling
Internal strengths
External
opportunities and
threats
9
Basics of Strategic
Management
Four aspects that set strategic
management apart
Interdisciplinary
• Capstone of the Business degree
External focus
• Competition
Internal focus
Future direction
10
Strategic Management
Process
Analyzing Deciding Putting Evaluating and
Current on Strategies Changing
Situation Strategies in Action Strategies
Situation Strategy Strategy Strategy
Analysis Formulation Implementation Evaluation
External
Analysis
Chapter 2 Chapter 3 Functional Competitive
Chapter 5 Chapter 6
Internal
Analysis Corporate
Chapter 4 Chapter 7
11
Strategic Management
Process
Situation Analysis
Scanning & evaluating context
Internal and External environments
Strategy formulation
Functional
Competitive
Corporate strategies
12
Strategic Management
Not always a formal process:
Where is the organization now? (Not where do we
hope it is!)
If no changes are made, where will the
organization be in 1 year, 2 years, 5 years, 10
years?
What specific actions should management
undertake? What are the risks and payoffs
involved?
13
Levels of strategy
Corporate
What direction are we going and
what business(es) are we in or do we
want to be in?
Competitive:
How are we going to compete in
our chosen business(es)?
Functional
What resources and capabilities do
we have to support the corporate and
competitive strategies?
14
Strategic Management
Process
Strategy implementation
Process of putting strategies into
action
Consider implementation at each level
Strategy evaluation
Was the strategy effective?
“Close the loop”
15
Who does strategy?
The Role of the Board of Directors
Elected representatives of the company’s stockholders
Legally obligated to represent and protect stockholder’s
The Role of Top Management
Responsible for decisions and action of every employee
Providing effective leadership
Other Organizational Employees
Implement— put the strategies into action and monitor
performance
Evaluate—do the actual evaluations and take necessary
actions
16
The Role of the Board of
Directors
Review and approve strategic goals and plans
Review and approve organization's financial
standards and policies
Approve an organizational philosophy
Monitor organizational performance and
regularly review performance results
Select, evaluate, and compensate top-level
managers
Develop management succession plans
Monitor relations with shareholders and other
key stakeholders
17
Who is on the board of
directors?
Chairman of the board
Chief Executive officer (CEO)
President
Chief Operating officer (COO)
Other C’s
Chief Financial officer
Chief Information officer
Inside board members
Outside board members
18
The Role of Top
Management
Determining
Organizational
Purpose or Vision
Establishing Exploiting and
Appropriately Maintaining
Balanced Controls Core Competencies
Effective
Strategic
Leadership
Developing
Emphasizing Human Capital
Ethical Decisions
and Practices Creating and
Sustaining Strong
Organizational Culture
19
Strategic Management
Principle
Effective strategy-making
begins with a vision of where
the organization needs to
head!
20
Elements of a Strategic Vision
Use the mission statement as a
starting point
Develop a strategic vision that
spells out a course to pursue
Communicate the vision in a
clear and exciting manner
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Characteristics of a
Mission Statement
Defines current business activities
Highlights boundaries of current
business
Conveys
Who we are,
What we do, and
Where we are now
22
Characteristics of a
Mission Statement
Company specific, not generic —so
as to give a company its own identity
A company’s mission is not to
make a profit !
The real mission is always—“What
will we do to make a profit?”
23
Examples of Missions
Microsoft
Corporation
Empower people through great
software anytime, anyplace,
and on any device.
24
Examples of Missions
Otis Elevator
Our mission is to provide any
customer a means of moving people
and things up, down, and sideways
over short distances with higher
reliability than any similar enterprise in
the world.
25
Characteristics of a
Strategic Vision
Charts a company’s future strategic
course
Defines the business makeup for 5
years (or more)
Specifies future technology-
product-customer focus
26
Communicating the Vision
An exciting, inspirational vision
Challenges and motivates workforce
Arouses strong sense of organizational
purpose
Induces employee buy-in
Galvanizes people to live the business
27
Value of a Well-Conceived
Strategic Vision and Mission
Crystallizes long-term direction
Reduces risk of rudderless
decision-making
Conveys organizational
purpose and identity
Keeps direction-related actions of lower-
level managers on common path
Helps organization prepare for the future
28
Characteristics of Strategic
Intent
Indicates firm’s intent to stake out a
particular position over the long-term
Involves establishing - ”big, audacious
goal”
Signals relentless commitment to winning
29
Examples
General Electric
• All businesses are held to a standard of
being #1 or #2 in their industries as well
as achieving good business results
John F. Kennedy
• Put a man on the moon and return safely
by the end of the decade
30
Crafting a Strategy
An organization’s strategy deals with
How to make the strategic vision a reality
and achieve target objectives
The game plan for
• Pleasing customers
• Conducting operations
• Building a sustainable competitive advantage
31
Take Aways
Strategy has become more important
• Information, technology, globalization
Key ideas in the strategy making process
Mission (who are we)
Vision (where do we want to go)
Strategic intent / (major goal)
Strategy (specific plan at different levels)
Ethics (code of conduct or values)
Linkage & communication are important
Avoid mission creep!
32
Take Aways
Where strategy came from?
Strategic Management Process?
Who makes strategy and who is
involved in the process?
33
