STRATEGIC MANAGEMENT:

Strategic management process: looking for

key problems
Perttu Huusko
Strategy process
VISION
BUSINESS
ENVIRONMENT Success receipy:
- resources?
- Innovations?
- Modifying the game?
COMPETITION - Competitional ability?
- Efficiency?

CUSTOMERS
GROWTH OF COMPANY
EFFICENCY AND PRODUCTIVITY
PUBLIC SECTOR: EFFECTIVENESS
MISSION
UNDERSTANDING WHERE WE ARE
WHAT KIND OF WOLRD WE ARE LIVING
- Customer needs
RESOURCES - Competitor abilities
Development of business environment

STRATEGIC MANAGEMENT
PROCESS (Hitt et all.):
”the full set of commitments,
decisions, and actions firms take
to achieve strategic
competitiveness and earn above
– average returns”
Strategic management process (Hitt, Ireland &
Hoskinsson 2019)
• Strategic management inputs
• Competitiveness: I/O – models
• External environment: PESTEL, SWOT, competition analysis
• Internal organization: Resources, core competencies
• Strategic actions: strategy formulation
• Business strategy
• Corporate strategy
• Merger and acquisition, International strategy and Cooperative strategy
• Strategic actions: Strategy implementation
• Corporate covernance
• Organization structure
• Strategic leadership
• Strategic entrepreneurship
Above average returns – The I/O – model
(Hitt et all.)
The external environment: general and industry environment, competition

An attractive industry: above average returns

Strategy formulation: strategy suitable for industry

Assets and skills needed to implement chosen strategy

Strategy implementation: actions for effective implementation

Superior returns: average above returns

 Resource based models of above average returns
(Hitt et all.)

Resources (strengths and weaknesses)

Capabilities to perform better than competitors

Competitive advantage – what creates competitive advantage

An attractive industry – opportunities match with resources

Strategy formulation and implementation

Superior returns
External and internal environment
(See analysis – slides in this course)
• External: PESTEL – analysis, scenarios and competition (e.g. Five fources)
• Internal: Firm’s resources and core competencies

To understand where the world is going

To understand where the particular industries are going
What is our position compared to that development
In which competition we are in
How should we compete
SWOT – analysis as a synthesis of external and internal environments
Business strategy
• To differiante our firm from competitors
• Who will be served, what needs will be served, how needs are
served
• Consumer markets
• Industrial markets
• Customer relationships
• Business models
• Generic strategies
Generic strategies (Porter 1985)
• Cost leadership: scale advantage
• Mass market strategy
• ”Something for all”
• Low price

• Differentiation
• Added value to customer
• One ore more customer segments
• Higher price

• Niche
• Specialization to one customer segment: knowing the needs
• Higher quality – higher price
Corporate strategy
• Actions a firm takes to gain competitive advantages by
managing a group of different businesses
• BCG – analysis
• Value chain analysis (Porter 1985)
• Diversification: many business areas and customer segments
• Vertical integration: acquiring businesses upstream or
downstream in value chain
• Horizontal integration: support activities renieved
Value Chain
Different strategies (Hitt et all.)
• Mergers and acquisition
• To acquire other businesses
• Fusions
• Market power, entry barriers and cost of new product development

• International strategy
• To internationalize to the new markets
• Licencing, exporting, strategic alliances, acquisitions, subsidiaries
• foreign direct investments

• Cooperative strategy
• Strategic alliances, networks
 Strategy implementation

• Implementation: how to take strategy from plan to action

• Implementation principles
• Added value to customer
• Aims
• Finance and economic results
• Culture of the organization
• Core competencies
• Implementation activities
• Objective – Action – Measurement – Responsibilities
• Prioritization, timing and emphasis
• Resources
• Making sure strategy is implemented (Risk management)
• Strategy communication
Implementation activities (Kamensky 2008)

OBJECTIVES ACTIONS MEASUREMENTS RESPONSIBILITIES

The level of wanted

What is needed to results:
Results and - Turnover Who is doing:
be done: - Organizational
outcomes: - tasks, processes - Profit
- sales, profit - ALSO - Customer structure
- quality - Roles and
RESOURCES satisfaction
- Key success responsibilities
indicators
Prioritization, timing and emphasis
• Always something is more important
• What is the order and emphasis of activities
• What kind of timing is needed
Resources
• Human resources
• expertise, amount of people needed

• Economic results
• Sales
• Profit margin
• Investments needed
• Assets needed

• Finance
• Finance needed
• The quality of finance
Making sure strategy is implemented
(Risk management)
• Analyzing potential risks to avoid strategic failure
• To make sure strategy is really implemented
• Back up – plan
• Action plans
• Strategic control, communication and education
• Operative management controls
• Unit objectives
• Personal objectives
• Situation analysis
• Control
• Reporting
• Connection of salary and compensation systems
Strategy communication
• The aim is to get personnel to understand, commit and apply the
strategy
• Strategy skills: analysis, objectives, priorization, action plans to
practise, interactions
• Communications:
• Up down – top down
• Stakeholders
• Strategic goals
• Strategic concepts – do you understand the strategy
Implementation (Hitt et all.)
• Implementation options
• Corporate covernance

• Organization structure

• Strategic leadership

• Strategic entrepreneurship
Identifying strategic problems: what you have to do?
• Strategic objectives: vision

• Strategic positioning: customer, competition, business environment, resources

• Improving efficiency

• (Creating new)

• Resources