Strategic Management

Chapter 1
Introduction
Overview
Understand the basic framework for strategy analysis, including the overall
Session process and tools for assessing external forces and competitive advantage.
Objectives Able to define what a strategic issue is.

Able to distinguish between symptoms, causes and outcomes of strategic

issues.
Understand the process for the development and assessment of strategic
alternatives.
Understand the approaches, benefits & pitfalls for case discussion

Understand team dynamics and how to have a highly effective team.

What is Strategic
Management?

Strategic Management
• an ongoing process used by firms to set an
organizational vision, analyze the external, competitive,
and internal environments, and develop strategies for
success
 The Four 1. Directs the organization
toward overall goals and 2. Includes multiple
Key Aspects objectives – common
statements of vision,
stakeholders in decision
making

of Strategic mission & objectives

Management
3. Needs to incorporate 4. Recognizes trade-offs
short-term and long-term between efficiency and
perspectives effectiveness
Strategy in Strategic Management

A broad goal that an organization needs to Types of Strategies

achieve to be successful in the marketplace
Intended
Emergent
Realized
Unrealized
 Contemporary Critique of Strategic Management

High investment: Cost vs. Difficult to predict the future May limit ability to respond Strategic tools are limited Too driven to achieve results
Benefit to quick changes in the short term
business environment
 Strategic Management Process

Mission, Vision, Values

Assess firm performance, external and competitive environment, and internal firm environment
Develop SWOT analysis
Define strategic issue(s)
Formulate strategies that
Address the strategic issue(s)
Take advantage of firm’s strengths & opportunities
Mitigates firm’s weaknesses and threats
Implement successfully the strategies
 Summary of Strategy Framework

Analyze (A) Formulate (F) Implement (I) The traditional strategic

planning questions:
Where are we? Analysis
Where are we going? Vision
How are we going to get there? Strategies
 Our Framework

Strategic Management & Business Frameworks

& Tools Nature of the Process
Can be individual
Symptoms Key Issues Criterion
List of Alternatives
- Phenomenon - Causes need to - Rank alts upon
- Per issue
- Problems (?) address - Mutually excl?

Recs/Options
- Timelines, costs
Must be a collaboration: Review analyses, - Responsibilities
integrate & synthesize to understanding and - Fallback option
create meaning; Sense making
 STRATEGIC ISSUE – the primary, long-term
matter facing the organization, typically long-
term in nature, requires a significant commitment
of organizational attention and resources to
resolve, and is difficult/impossible to avoid. Is
likely the result of multiple causes.
Strategic What’s going on?

Issues What’s causing it?

What should we do?
 What is the On January 7, 2020, Tesla Inc. became the most valuable US automaker in history.
Strategic Valued at $81.39 billion, Tesla passed Ford Motor Company as most valuable.
Approximately two weeks later, Tesla passed Volkswagen to become the second most

Issue Facing
valuable car company worldwide. Still well behind Toyota, which has a $233 billion
market capitalization, Tesla’s growth is unprecedented in the automotive industry. Can
Tesla become number one worldwide?
Tesla? Despite tremendous growth, Tesla has its share of problems as well. Its founder, Elon
Musk, tweeted that the company’s stock price was too high; sending the stock
tumbling, the Model 3 lost Consumer Reports recommendations, and COVID-19
shutdowns of factories slowed production. These problems raise serious questions.
Will Elon’s Twitter use continue to cause problems? Are the quality problems going to
tank Tesla’s growth? Can Tesla emerge from the COVID-19 shutdown successfully?

The company faces stiff competition from automakers attempting to regain their
footholds in a highly aggressive market. Competitors are attempting to compete in the
same areas as Tesla. Porsche’s Taycan, a Tesla competitor, got a huge win with a
purchase from Bill Gates. As competitors continue to develop autonomous capabilities
and better electric batteries, will Tesla continue to dominate US auto markets?

NOTE: we cannot really determine the strategic issue(s) until we do the

 Strategic Alternatives

Resolve the strategic issue, all resolve the same issue, just in different ways
Address root causes – they do not address or mask symptoms
Are forward looking – don’t fix yesterdays problem
They are realistic – practically, ethically & economically viable
They can be implemented by the firm
Must be well developed and explained
Must be evaluated based on the key points identified in your analysis
Are almost always strategic, not tactical
 Strategic Recommendation

Is a grey-area decision – all alternatives have advantages Should be selected based on multiple criteria – strategic, You must be fully committed to the recommendation – it
and drawbacks, selecting which is best is business financial, technical, resource, implementability, etc. will likely be your responsibility to make it happen.
judgment (that said, some are clearly bad choices).
 Does it fix the causes of the issue?

Add value and be able to earn a profit

Criteria to • Add value increase price?

• Add value without increasing cost?
Evaluate
Alternatives Improve profitability?

Create a competitive advantage?

Feasible given constraints?

Alternatives Exercise
What is the strategic issue
facing ________ Criteria Alt # 1 Alt #2 Alt #3
What are three alternatives
(i.e., new actions /
initiatives) that the firm
might consider to resolve
this strategic issue? Which
would you recommend?

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