• 1.

Introduction To Strategic
Management
Topic 1
• 1.1. Strategic Management: Background
and History
• 1.2. Strategic Management: Definition
• 1.3. Strategic Management Process
• 1.4. Strategic Management Model
• 1.5. Basic Element in Strategic
Management: Direction (Vision and
Mission)
1.1 Strategic Management: Background and
History

Bracker, J. (1980). The historical

development of the strategic
management concept. Academy of
management review, 5(2), 219-224.
 1.2 STRATEGIC MANAGEMENT:
DEFINITION
 Defining Strategic Management
a set of managerial decisions
Strategic and actions that determines
Management the long-run performance of a
corporation
• Strategic management involves:
– Analysis
• Strategic goals (vision, mission, strategic objectives)
• Internal and external environment
– Decisions - Formulation
• What industries should we compete in?
• How should we compete in those industries?
– Actions – Implementation of strategy
• Allocate necessary resources.
• Design the organization to bring intended strategies
to reality.
 strategy
• Strategy - Set of related actions that managers take to increase their
company’s performance.
• Strategic leadership - Creating competitive advantage through effective
management of the strategy-making process.

– Strategy formulation - Selecting strategies based

on analysis of an organization’s external and
internal environment.
– Strategy implementation - Putting strategies into
action.
• Key attributes of strategic management:
– Directs the organization toward overall goals and objectives.
– Includes multiple stakeholders in decision making.
– Needs to incorporate short-term and long-term perspectives.
– Recognizes trade-offs between efficiency and effectiveness.

Stakeholders = individuals, groups, and organizations that have a stake in the success of
the organization. These include owners (shareholders in a publicly held corporation),
employees, customers, suppliers, and the community at large.
Efficiency = performing actions at a low cost relative to a benchmark, or “doing things
right.” Effectiveness = tailoring actions to the needs of an organization rather than wasting
effort, or “doing the right thing.”
 Effective vs. Efficient

https://www.youtube.com/watch?v=xBbqY9
ol9Rc
Effective vs. Efficient
 BUSINESS MODEL

• Business model - Conception of how strategies

should work together as a whole to enable the
company to achieve competitive advantage.
• Deals with how a company:
– selects, acquires, and keeps its customers.
– defines and differentiates its product offerings.
– creates value for its customers.
– produces goods or services and delivers to the market.
– increases productivity and lowers costs.
– organizes its resources and activities.
1.3 STRATEGIC
MANAGEMENT
PROCESS
 A formal strategic management process

1. Select the corporate mission and goals.

2. Analyze the organization’s external competitive environment; identify
opportunities and threats.
3. Analyze the internal operating environment; identify strengths and
weaknesses.
4. Select organizational strategies that:
– build on strengths and correct weaknesses.
– are consistent with the mission and major goals.
– are congruent and constitute a viable business model.

5. Implement the strategies.

1.4 STRATEGIC
MANAGEMENT
MODEL
STRATEGIC MANAGEMENT MODEL
 Information and Knowledge

The main difference between information and

knowledge is that Information means the investigated,
revised, and processed data of something.

While knowledge is the useful information gained

through experience or learning.
Basic Model of Strategic management consists
Strategic of four basic elements:

Management
Internal and external
environmental scanning

Strategy formulation

Strategy implementation

Evaluation and control

BASIC ELEMENTS OF THE STRATEGIC
MANAGEMENT PROCESS
Basic Model of • Environmental Scanning
– the monitoring, evaluating
Strategic and disseminating of
Management information from the
external and internal
environments to key people
within the organization
– SWOT analysis: simple way
to conduct environmental
scanning
 Strategy Formulation
(1 of 3)

Based on strategy analysis, strategy formulation is

developed at several levels.
• Business-level strategy  how to compete in a given
business to attain competitive advantage
• Corporate-level strategy  what businesses to compete
in; how businesses can be managed to achieve
synergy
• International strategy  what strategies are needed as
the business ventures beyond its national boundaries
• Entrepreneurial initiatives  how can businesses create
new value
 Strategy Formulation
(2 of 3)

Formulating business-level strategy

• Successful firms develop bases for sustainable
competitive advantage through:
• Cost leadership and/or
• Differentiation, as well as
• Focusing on a narrow or industrywide market segment.

Formulating corporate-level strategy

• Addresses a firm’s portfolio (or group) of businesses
• What business or businesses should we compete in?
• How can we manage this portfolio of businesses to create
synergies?
 Strategy Formulation
(3 of 3)

Formulating international strategy

• What is the appropriate entry strategy?
• How do we go about attaining competitive
advantage in international markets?

Entrepreneurial strategy and competitive

dynamics
• How do we recognize viable opportunities?
• How do we formulate effective strategies?
 Strategy Implementation

Strategy implementation takes action to implement

the formulated strategy.
• Ensure proper strategic control systems.
• Establish an appropriate organizational design,
coordinating & integrating activities within the firm.
• Coordinate activities with suppliers, customers,
alliance partners.
• Leadership ensures organizational commitment to
excellence & ethical behavior.
• Promote learning & continuous improvement.
• Act entrepreneurially in creating new opportunities.
 Strategy Implementation

Strategic control & corporate governance

• Informational control
• Monitor & scan the environment
• Respond effectively to threats & opportunities

• Behavioral control
• Proper balance of rewards & incentives
• Appropriate cultures & boundaries (or constraints)

• Effective corporate governance

Basic Model of • Evaluation and control

Strategic – a process in which corporate

activities and performance results
Management are monitored so that actual
performance can be compared with
desired performance

1-25
 1.5 Basic Element in Strategic
Management: Direction (Vision
and Mission)

Mission Vision Objectives

purpose or reason for the describes what the results of planned activity
organization’s existence organization would like to
become
An organization’s mission is the purpose or reason for the organization’s existence. Some people like to
consider vision and mission as two different concepts: Mission describes what the organization is now; vision
describes what the organization would like to become. Objectives are the end result of planned activity. They
should be stated as action verbs and tell what is to be accomplished by when and quantified if possible.
 Components of a Mission statement
• Mission
– Purpose of the company, or a statement of what the company
strives to do.
• Vision
– Articulation of a company’s desired achievements or future state.

• Values
– Statement of how employees should conduct themselves and their
business to help achieve the company mission.
• Major goals
– Goal: Precise, measurable, desired future state that a company
attempts to realize.
 Formulating a mission
Defining the Business

Hill, Strategic Management, 13e. © 2020 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or part. 28
Hill, Strategic Management, 13e. © 2020 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or part.
Hill, Strategic Management, 13e. © 2020 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or part.