WELCOME TO:

DEVELOPMENT PLANNING
&
STRATEGIC MANAGEMENT

Credit hours: 3

01/25/2023 1
 Notable Quote !
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p l ac e to — J oe l R o ss a
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All organizations seek answers for three questions

A) Where are we now?

.
B) Where do we want to go?

c) How do we get there?

This course tries to answer these questions

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 CHAPTER I

1. Overview of Strategic Management

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 Term Definitions

• In ancient Greek, ‘stratos’ was the term for the army and so in military
terms, ‘strategy’ referred to ‘the act of the general’.

• So, the origins of ‘strategy’ – the ‘art of the general’ – comes from the
military arena –“The Art of War”

01/25/2023 5
Views and Opinions Expressed by Leading thinkers in the Field of
Business Strategy

• Chandler defined strategy as: “The determination of the basic long-term

goals and objectives of an enterprise and the adoption of the courses of action
and the allocation of resources necessary for carrying out these goals.”

• Note that Chandler refers to three aspects:

Determination of basic long-term goals and objectives,
Adoption of courses of action to achieve these objectives, and
Allocation of resources necessary for adopting the courses of action
 Cont’d

• Andrew defines strategy as: “The pattern of objectives, purpose, goals, and the major
policies and plans for achieving these goals stated in such a way so as to define what
business the company is in or is to be and the kind of company it is or is to be”.

• This definition refers to the ‘business definition’, which is a way of stating the current
and desired future position of company, and the objectives, purposes, goals, major
policies and plans required to take the company from where it is to where it wants to be.
 Cont’d

• Igor Ansoff explained the concept of strategy as: “The common thread
among the organization’s activities and product markets…that defines the
essential nature of business that the organization was or planned to be in
future”.
• Ansoff has stressed on the commonality of approach that exists in diverse
organizational activities including the products and markets that define
the current and planned nature of business.
 Cont’d

• Glueck defined strategy precisely as: ”A unified, comprehensive and

integrated plan designed to assure that the basic objectives of the
enterprise are achieved”.

• ‘Unified’ means that the plan joins all the parts of an enterprise together;
‘comprehensive’ means it covers all the major aspects of the enterprise,
and ‘integrated’ means that all parts of the plan are compatible with each
other
 Cont’d

• Mintzberg defines strategy as: “a pattern in a stream of decisions and

actions”. Mintzberg distinguishes between intended strategies and
emergent strategies.

• Intended strategies refer to the plans that managers develop, while

emergent strategies are the actions that actually take place over a period
of time.

• In this manner, an organization may start with a deliberate design of

strategy and end up with another form of strategy that is actually realized.
 Cont’d…

• Alfred Chandler Jr. suggests that: strategy is;

“the determination of the basic-long term goals and objectives of an enterprise, and
the adoption of courses of action and the allocation of resources necessary for carrying
out these goals”.

• Porter relates strategy to the success or failure of a company

“obtaining a competitive position or series of competitive positions that lead to
superior and sustainable financial performance”.

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 Cont’d

Generally:
• Strategy is organization's pattern of response to its environment over a period of time to achieve its goals
and mission.
• strategy is “A unified, comprehensive and integrated plan design to assure that the basic objectives of the
enterprise are achieved.”
• Strategy is the company’s long-term plan for how it will balance its internal strengths and weaknesses with
its external opportunities and threats to maintain a competitive advantage.

• Strategy is "the determination of basic long term goals and objective of an enterprise and the adoption of
the courses of action and the allocation of resources necessary for carrying out these goals
 .

• Strategy nowadays is a big stuff.

• The defeat of Nazi Germany was arguably due to a dire strategy by the

leader of fighting a war on two fronts –west(USA, UK) and east

(Rusia)-so while the armed forces were highly skilled and had

technological superiority the strategy was a huge mistake

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Hierarchy of Strategy

01/25/2023 1-14
 a) Corporate level strategy
• Corporate level strategy concerned with the issue that are corporate
responsibilities like identifying the overall goals of the corporation, the type
of business in which the corporation should be involved & the way in which
business will be integrated & managed.

• Corporate strategies typically fit within the three main categories of stability,
growth, and retrenchment

• Corporate level strategic managers include: CEO, other senior executives,

BODs, corporate staffs, etc
 cont’d

• Corporate strategy seek to develop a synergies by sharing and coordinating

staff and investing financial resources across business units so that the
corporate whole is greater than the some of its individual business unit parts

• Corporation is responsible for creating value through their business by

managing their portfolio of business
 b) Business unit level strategy

• Business strategy is the managerial game plan for a single strategic

business unit
• Strategic business unit may be a division, product line, or other profit centre
that can be planned independently from the other business units of the firm
• At the business units level, strategic issues are less about the coordination
of operating units and more about developing and sustaining a competitive
advantage for goods and services that are produced
• Business strategies may fit within the two overall categories, competitive
and cooperative strategies
 c) Functional strategy
• is the approach taken by a functional area to achieve corporate and business
unit objectives and strategies by maximizing resource productivity.
• A business’s marketing strategy, production strategy, finance strategy,
customer service strategy, and human resource strategy should be in sync
rather than serving their own narrower purposes
 Functional units of an organization are involved in higher level strategies
by providing inputs to business unit level and corporate level strategy like
information on resources & capabilities
 Once the higher level strategy is developed, the functional units translate it
in to action plan that each department must accomplish for the strategy to
succeed
 It is concerned with developing and nurturing a distinctive competence to
provide a company or business unit with a competitive advantage
 Strategic Management –Defined

 Art & science of formulating, implementing, and

evaluating, cross-functional decisions that enable an
organization to achieve its objectives.

01/25/2023 Ch 1 -19
 …….Strategic Management
• SM is “aset of managerial decisions and actions that determines the long-
run performance of an organization”

Strategic Management includes:

 Internal and external environment scanning
 Strategy formulation
 Strategy implementation
 Evaluation and control

• Thus, the study of strategic management emphasizes the monitoring and

evaluating of external opportunities and threats in light of a corporation’s
strengths and weaknesses
 ………Strategic management(SM)
SM is a continuous process of strategic analysis, strategy creation,

implementation and monitoring, used by organizations with the purpose of

achieving and maintaining a competitive advantage

“SMincludes understanding the strategic position of an organization, making strategic

choices for the future & managing strategy in action.

SM is the process of specifying the organization’s objectives, developing policies, & plan
to achieve these objectives, & allocating resources to implement the policies and plans to
achieve the organization’s objectives.

“SM is defined as the process by which managers of the firm analyze the internal & external

environments for the purpose of formulating strategies and allocating resources to develop a

competitive advantage in an industry that allows for the successful achievement of organizational goal
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Strategic
. management answers the following 3
questions:

Where is the organization at the moment?(Environment

assessment)

Where does it want to go?(setting objectives)

How it will get there?(setting strategy)

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 Contd…

• Where are we now? (Environment analysis)

Must consider the company’s:

 Market position and the competitive pressures it confronts

Its resources strengths and capabilities,

Its competitive shortcomings

The appeal its products and services have to customers, and

Its current performance.

01/25/2023 1-23
 Contd..

• Where do we want to go? (Setting Objectives)

• Deals with the direction in which management believes the company should
be headed in light of the company’s present situation and the winds of
market change – i.e.
-New markets and customer groups that the company should be adding,
-The improvements in competitive market position the company is aiming for, and
-The geographic scope and product line makeup of the company’s business in the
years to come.

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Strategic Management Process/model/elements
There are three stages in strategic management process;
1. Environment Scanning
2. Strategy formulation
3. Strategy implementation
4. Strategy evaluation

01/25/2023 Ch 1 -25
strategic management model
 Cont’d
Environmental Scanning: is the monitoring, evaluating and disseminating of
information from the external and internal environments to key people within the
organization
• Strategy formulation: includes developing a vision & mission, identifying an
organization’s external opportunities & threats, determining internal strengths &
weaknesses, establishing long-term objectives, generating alternative strategies, &
choosing particular strategies to pursue
and setting policy guidelines.
Mission
• the purpose or reason for the organization’s existence

Vision
• describes what the organization would like to become

Objectives
• the end results of planned activity
 Cont’d

Strategies- form a comprehensive master plan that states how the corporation will
achieve its objectives and mission. It maximizes competitive advantage and
minimizes competitive disadvantage.
Policies- the broad guidelines for decision making that links the formulation of a
strategy with its implementation
Strategy implementation: the process by which strategies and policies are put
into action through the development of:
 Programs
 Budgets
 Procedures

NB: the strategic-management process does not end when the firm decides what
strategy or strategies to pursue. There must be a translation of strategic thought
into strategic action.
 Cont’d
Evaluation and Control: Strategy evaluation is the final stage in the
strategic management process.
• Management desperately needs to know when particular strategies are not
working well; strategy evaluation is the primary means for obtaining this
information. All strategies are subject to future modification because
external and internal forces are constantly changing.
• Performance: the end result of organizational activities
• Feedback/Learning Process: revise or correct decisions based on
performance
• Strategists do not go through the process in a lockstep fashion. Generally
there is a give and take among hierarchical level.
 Need & Benefits of Strategic Management

Strategic mgt gives guidelines to employees regarding what organizations expecting

them to do.
Assist organizations to be pro-active rather than reactive
Assist managers in getting a holistic approach
Enhances coordination
 Assist business organizations in influencing environment & put control on its
fate/destiny
 makes the organization work in a systematic manner.
 motivates organizations to have positive attitude towards change
 Can improve Business profits

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 Why some managers failed to have strategy?
Some firms do not engage in strategic planning. Some reasons for poor or no strategic planning are as follows:
• Too Expensive—some organizations are culturally opposed to spending resources
• Poor Reward Structures—when an organization assumes success, it often fails to reward success. Where failure occurs,
then the firm may punish. In this situation, it is better for an individual to do nothing (and not draw attention) than risk
trying to achieve something, fail, and be punished
• Fire-fighting—an organization can be so deeply embroiled in crisis management and fire-fighting that it does not have time
to plan.
• Waste of Time—some firms see planning as a waste of time since no marketable product is produced. Time spent on
planning is an investment.
• Laziness—People may not want to put forth the effort needed to formulate a plan
• Content with Success—particularly if a firm is successful, individuals may feel there is no need to plan because things are
fine as they stand. But success today does not guarantee success tomorrow.
• Lack of accuracy- Future is unpredictable
 Cont’d

• Fear of Failure—by not taking action, there is little risk of failure unless a problem is urgent and
pressing. Whenever something worthwhile is attempted, there is some risk of failure.
• Overconfidence—as individuals amass experience, they may rely less on formalized planning. Rarely,
however, is this appropriate. Being overconfident can bring demise. Forethought is rarely wasted and is
often the mark of professionalism.
• Prior Bad Experience—People may have had a previous bad experience with planning, where plans
have been long, cumbersome, impractical, or inflexible. Planning, like anything, can be done badly.
• Fear of the Unknown—People may be uncertain of their abilities to learn new skills, their aptitude with
new systems, or their ability to take on new roles.
• Honest Difference of Opinion—People may sincerely believe the plan is wrong. Different people in
different jobs have different perceptions of a situation.