BJTH3123

STRATEGIC
MANAGEMENT
IN
TECHNOLOGY

Salmah Omar
1 UUM
STML,
CHAPTER 1: OBJECTIVES/ LEARNING OUTCOMES

1. Describe the strategic-management process.

2. Define and give examples of key terms in
strategic management.
3. Discuss the nature of strategy formulation,
implementation, and evaluation activities.
4. Describe the benefits of good strategic
management.
5. Discuss how a firm may achieve sustained
competitive advantage.
6. Define vision and mission.

2
 “Without a strategy the
organization is like a
ship without a rudder,
• What is strategy? going around in
circles…”
(Joel Ross and Michael
Kami)

3
 DEFINING STRATEGIC MANAGEMENT
Strategic management
– The art and science of formulating,
implementing, and evaluating cross-functional
decisions that enable an organization to
achieve its objectives (Fred R. David, 2015)
– Focus on Integrating
• Management
• Marketing
• Finance
• Production/operations
• R&D
• Technology & Information system

4
 STRATEGIC MANAGEMENT
• “Strategic management is an ongoing process that:
– assesses the business and the industries in which the
company is involved;
– assesses its competitors and sets goals and
strategies to meet all existing and potential
competitors;
– and then reassesses each strategy regularly
…to determine how it has been implemented and
whether it has succeeded or needs replacement by a
new strategy to meet changed circumstances, new
technology, new competitors, a new economic
environment., or a new social, financial, or political
environment.” (Lamb, 1984)
5
 STRATEGIC MANAGEMENT
• …“it is a set of decisions and actions taken by the top
management* which will determine the performance of the
organization in the long term**. Basically, it involves
decisions and actions related to strategy formulation,
strategic implementation and strategic evaluation and
control”.

• ....strategic management of technology ....to integrate

technology as core competencies in the strategic
management process of the organization.

• * Especially during the strategy formulation and strategic evaluation

stage.
• ** Relative to the type of industries.

6
 WHY STRATEGIC MANAGEMENT?

• ...HAS BECOME A CRITICAL REQUIREMENT

IN MANAGING TODAY’S ORGANIZATIONS.
– Organizations operate in an environment
which is highly competitive - complex, highly
demanding and fast changing – resulted
from Globalization ....High magnitude
and speed of technological changes...

7
 STRATEGIC PLANNING VS. STRATEGIC
MANAGEMENT

 Strategic Planning Process focuses on formulation

and selection of strategies and followed by the
development of strategic implementation plans.
 …while Strategic Management Process involves
Strategic Planning Process plus strategic
evaluation and making corrective actions when
changes are needed.

8
 A COMPREHENSIVE STRATEGIC MANAGEMENT
MODEL
Ethics & Social Responsibility

Perform
External
Audits
Implement
Implement Strategies –
Generate, Mktg, Fin, Measure and
Establish Strategies –
Develop M-V Evaluate and Evaluate
Long term Management Acc, R&D and
Statements Select Performance
Objectives Issues MIS Issues
strategies

Perform
Internal
Audits

Strategy
Strategy Formulation Strategy Implementation Evaluation

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Strategy Formulation

Vision & Mission

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

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Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action

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Key Terms in Strategic Management
• Competitive advantage
• Strategists
• Vision and mission statements
• External opportunities and threats
• Internal strengths and weaknesses
• Long-term objectives
• Strategies
• Annual objectives
• Policies

Ch 1 -13
13
Strategic Management is
Gaining and Maintaining
Competitive Advantage

“Anything that a firm does especially

well compared to rival firms”

14
 Key Terms: COMPETITIVENESS

•“ Competitiveness” is one of the terms that has

emerged strongly in the new era of globalization. It
describes the economic strength of countries or the
position of a certain company with respect to its
competitors in the marketplace.

…competitiveness of the nation is the ability of

a country to produce goods and services, under
free and equal market conditions, that pass the
test of the international market, and at the same
time ensure long-term growth of living
standards.
15
 INDICATORS OF COMPETITIVENESS

• At the macro level, the competitiveness of

nations reflects the standard of living of their
citizens.
• National competitiveness is a consolidation of
the micro-level performances of companies and
individuals - the true agents of economic growth

16
 INDICATORS OF COMPETITIVENESS

• Standard of living
– Standard of living crowns the competitiveness
pyramid because it is the ultimate objective of a
capitalist, free-market economy.
– Standard of living, perhaps, the central indicator of
national competitiveness.
– The Index measure standard of living as GDP per
capita.
– It tracks both long-term and latest-year growth in
standard of living, as well as standard of living levels
using purchasing power parities.

171995.
Source : Council on Competitiveness,
 INDICATORS OF COMPETITIVENESS

• Trade
– Exports are dependent on national rates of
productivity and national levels of investment in
products and processes of production.
– Growth rates and levels of exports can be a
significant indicator of national competitiveness.
– Useful indices include growth in exports of
manufactured products, merchandise goods and
services, as well as trade balances.
– Exchange rates and their impact on the growth of
exports should also be traced.

181995.
Source : Council on Competitiveness,
 INDICATORS OF COMPETITIVENESS

• Productivity
– Productivity is the efficiency with which goods and
services are produced and provided.
– It is largely determined by previous investment and by
the quality and performance of the workforce,
technological innovation, the quality of plant and
equipment, and the effectiveness with which these
factors of production are utilized.
– As such, productivity is both a determinant and an
indicator of national competitiveness.

191995.
Source : Council on Competitiveness,
 INDICATORS OF COMPETITIVENESS

• Investment
– Investment is the fundamental building block of current
and future economic activity and is, therefore, at the base
of the Council’s competitiveness pyramid.
– Investment is also the fundamental determinant of national
competitiveness.
– The Index defines investment to include both “hard”
assets, such as private-sector expenditure on
factories and equipment, as well as “soft” assets, such as
public-and private-and private-sector spending on R&D
and public-sector expenditure on education.
– Useful indices includes information on patents - a key
indicator of the success of civilian R&D efforts-and national
savings rates-a key determinant of investment.

201995.
Source : Council on Competitiveness,
 COMPETITIVENESS OF FIRMS

• National competitiveness
– National competitiveness is largely dependent on the
competitiveness of firms within the nation’s
boundaries.
– A firm’s competitiveness is dependent on its ability to
provide goods and services to the marketplace more
efficiently than others involved in its arena.
• This depends on the company’s ability to exploit
ideas and resources in a timely, cost-effective
manner in order to accomplish desired goals and
objectives and to create products or services for its
customers that meet or exceed their demands and
satisfaction.

21
To become or to remain competitive firms must be able to:

1. Develop a culture in which the value of technology as a strategic

competitive weapon is fully appreciated.
2. Understand the dynamics of the process of technological
innovation.
3. Monitor and forecast technological changes.
4. Develop and adopt effective methodologies to measure the
impact of new technologies on their business.
5. Facilitate the implementation of new technologies of their
operations and built the infrastructure necessary for migrating
from one technology to another.
6. Prepare, train, and hire the proper workforce to implement the
new technology.
7. Develop an organizational structure that permits effective and
efficient implementation of technological changes.
8. Develop an appropriate reward system for employees and
managers.

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Strategists

Gather Information

Analyze Information

Organize Information

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Vision and Mission Statements

Vision Statement –
What do we want to become?

Mission Statement –
What is our business?

24
Key Terms: VISION

A statement that describes the

organization in the future – what will
happen to our organization (x) years from
now?
Example…to be world class

Agreement on the basic vision for which the

firm strives to achieve in the long run is
critically important to the firm’s success.

25
 A Good Vision Statement must be …
• … a shared vision and acceptable by all
members.
• “A vision is a realistic, credible, attractive future
for your organization – it is something that is Consistent
inspiring and empowering for all stakeholders in with mission
the organization”. and values
• “Every journey has a destination. The vision Feasible and
statement captures the destination of planning achievable
and implementation process, providing Verifiable
organization with an inspiring glimpse of where Inspirational
you are trying to lead them through.”
• “To motivate others to follow you through the
journey, the vision statement must be clear and
compelling, creative yet realistic”.

26
 A Good Vision Statement will…
• …describe the areas of leadership or distinctive
competence that the organization aspires to achieve.
• i.e.
– World class education system
– Cutting edge technology
– Low cost provider

• UUM:
“Universiti Pengurusan yang TERKEMUKA”
The Eminent Management University

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 VISION KILLERS

• Tradition
• Fear of ridicule
• Stereotypes of people, conditions, roles and
governing bodies
• Complacency of some stakeholders
• Fatigued leaders
• Short-term thinking
• “Nay Sayers”

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 Key Terms: MISSION
STATEMENT
Statement about the core purpose of
the existence of the organization–
“who are we, what is our business”
and “why do we exists”.
• Distinguishes one firm from another
• Declares the firm’s reason for being

David Packard 1960

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(Hewlett-Packard)
MISSION STATEMENT

Also referred to as:

•Creed statement
•Statement of purpose
•Statement of philosophy
•Statement of business principles

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 MISSION STATEMENT
…looks at the core reason behind the existence of
the organization …raison d’être.
It goes beyond the reason just to make profit for
the stakeholders.
It is something that can give direction and
motivates members of the organization to give
their utmost commitment and carry out their jobs
excellently ..110% commitment..
“A group of people gets together and exists as an
institution that we call a company so they are able to
accomplish something collectively that they could not
accomplish separately – they make a contribution to
society…. Do something which is of value.”

David Packard 1960

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(Hewlett-Packard)
Importance of Mission
Benefits from a strong mission

Unanimity of Purpose

Resource Allocation
Mission
Organizational Climate

Focal point for work

structure

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 a) Purpose Statement

Mission statement describes “what are to be

achieved by the organization; why do we exist …In
the context of the existence of the focused target
group”.

- The statement of existence supposed to have

2 items:
i) indicator that indicate ‘change’
e.g. To eradicate “poverty”
ii) ‘identification’ of things or situation that
we wish to change or the ultimate
objectives that we wish to achieve…with
burning desires! e.g. Poverty

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Example of statement that can describes the reason for
existence:
•“to eradicate poverty”
•“to improve the standard of living of..”
Note:
In defining the reason for existence, it is important for us
to focus on the OUTCOMES/RESULTS rather than
METHODS.

Example:-
“to eradicate poverty” NOT providing jobs, giving subsidies
etc..
(Methods will be described in another part of the mission
statement…the part that describe ‘methods/approach’).
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b) Statement about the Target
Group/Customers and their Needs and Wants.

Mission statement will also address “who

are our target groups/customers and what
are their needs and wants that we need
to fulfill”.

35
 9 Elements of Mission Statement

2.Products
1.Customers Services 3.Markets

4.Technology
9.Employees Mission
Elements
5.Survival
Growth
8.Public Profit
Image
7.Self-Concept 6.Philosophy
Refer pg. 166

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Mission Statement Example & Critique

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 AN EFFECTIVE MISSION STATEMENT

Valid for a long Inspire Change

period of time. Easy to be
Example:- understood and
3M communicated
- Mission “To resolve unresolved
statements problems innovatively”.
supposed to be
written so as it can AirAsia
- Something that is
“Everyone can fly”. simple and catchy (not
stand for a long
necessarily short).
period of time… Wall – Mart
“Give ordinary folks the
chance to buy the same
things as rich people”.

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 AN EFFECTIVE MISSION STATEMENT
 Broad in scope
 Generate strategic alternatives
 Not overly specific
 Reconciles interests among diverse
stakeholders
 Finely balanced between specificity &
generality
Arouse positive feelings & emotions
Motivate readers to action
Generate favorable impression of the
firm
Reflect future growth
Provide criteria for strategy
selection
Basis for generating &
evaluating strategic options
Are dynamic in nature
Less than 250 words in length
Include the 9 elements
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 EXAMPLES OF MISSION STATEMENT
UUM: “Merealisasikan UUM sebagai Pusat
Kecemerlangan Pembelajaran dan Pengajaran,
Penyelidikan, Penerbitan Dan Perundingan yang
Terkemuka Dalam Bidang Pengurusan Secara
Berterusan Demi Menghasilkan Modal Insan yang
Mampu dan Beriltizam Membangunkan Negara dan
Kemanusiaan”
Merck: To preserve and improve human life
3M: To solve unsolved problems innovatively.
Wall-Mart: To give ordinary folks the chance to buy the
same things as rich people.

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Walt Disney: To make people happy

Hewlett-Packard: To make technical contributions for the

advancement and welfare of humanity

Marriott: To make people away from home feel that they are
among friends and are really wanted

Sony: To experience the job of advancing and applying technology

for the benefit of the public

Mary Kay: To give unlimited opportunity to women

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Social Policy & Mission

Social policy should be integrated in all

strategic-management activities.

Mission should convey the social

responsibility of the firm.

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External Opportunities and Threats

Analysis of Trends
– Economic
– Social
– Cultural
– Demographic/Environmental
– Political, Legal, Governmental
– Technological
– Competitors

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External Opportunities and Threats

Basic Tenet of Strategic Management

Take advantage of
External Opportunities

Strategy Formulation

Avoid/minimize impact of
External Threats

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Internal Strengths and Weaknesses

Controllable activities performed

especially well or poorly

Determined relative to competitors

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Internal Strengths and Weaknesses

• Typically located in functional areas of the firm

– Management
– Marketing
– Finance/Accounting
– Production/Operations
– Research & Development
– Management Information Systems

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Internal Strengths and Weaknesses

Assessing the Internal Environment

Financial Ratios

Performance Measures
Internal Factors
Industry Averages

Survey Data

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Long-Term Objectives

Specific results that an organization

seeks to achieve in pursuing its basic
mission

Long-term means more than one year

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Long-Term Objectives

• Essential for ensuring the firm’s success

– Provide direction
– Aid in evaluation
– Create synergy
– Reveal priorities
– Focus coordination
– Provide basis for planning, organizing,
motivating, and controlling

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 STRATEGY

• At the firm level, management must develop a strategy

for competing. The question frequently asked is, on what
basis can a firm compete? The answer follows the most
fundamental principle in business: Competitiveness can
be achieved by providing VALUES to the customer.
• This implies setting a strategy by which a firm can
achieve a favorable position in the marketplace. This call
for the development of a strategic planning blueprint.

50
Strategies

Means by which long-term objectives

are achieved

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Strategies
• Examples
– Geographic expansion
– Diversification
– Acquisition
– Product development
– Market penetration
– Retrenchment
– Divestiture
– Liquidation
– Joint venture

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Annual Objectives

Short-term milestones that firms must

achieve to reach long-term objectives

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Policies

 Means by which annual objectives will be achieved

 Includes guidelines, rules, procedures, and
methods establish to support efforts to achieve
stated objectives.

54
 Key Terms: VALUES
… a set of beliefs that been shared together by all
members of the organization – demonstrated by their
behaviors while carrying out their everyday tasks.
• “Timeless – principles that guide an
organization”.
• “An organization’s values make an open
proclamation about how it expects everyone to
behave.”

55
EXAMPLES OF ORGANIZATIONAL CORE VALUES

J.W Marriott
“Take care of Marriott people and they will take care
of Marriott guests”.

Southwest Airlines… Herb Kelleher (CEO)

‘The values of maintaining a sense of humor and
having fun at your job….”.

56
EXAMPLES OF ORGANIZATIONAL CORE VALUES

General Electric (GE)

Having a passion for excellence and hating
bureaucracy
Being open to ideas from anywhere and
committed to working things out
Living quality and driving cost and speed for
competitive advantage
Having the self-confidence to involve everyone
and behaving in a boundless fashion

57
General Electric (GE) Core Values

Creating a clear, simple, reality-based vision and

communicating it to all constituencies
Having enormous energy and the ability to energize
others
Stretching, setting aggressive goals, and rewarding
progress, yet understanding accountability and
commitment
Seeing changes as opportunity, not threat
Having global brains and building diverse and
global teams

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EXAMPLES OF ORGANIZATIONAL CORE VALUES

Nordstrom
Service to the customer above all else
Hard work and individual productivity
Never being satisfied
Excellence in reputation; being part of
something special

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 EXAMPLES OF ORGANIZATIONAL CORE VALUES

Walt Disney
No cynicism
Nurturing and promulgation of “wholesome
American values”
Creativity, dreams, and imagination
Fanatical attention to consistency and detail
Preservation and control of the Disney
magic

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 Shared Values for “Tom’s of Maine”

WE BELIEVE that human beings and nature have inherent

worth and deserve our respect.

WE BELIEVE in products that are safe, effective and made

of natural ingredients.

WE BELIEVE that our company and our product are unique

and worthwhile, and that we can sustain these genuine
qualities with an ongoing commitment to innovation and
creativity.

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WE BELIEVE that we have a responsibility to cultivate the
best relationships possible with our co-workers, customers,
owners, agents, suppliers and our community.

WE BELIEVE in providing employees with a safe and

fulfilling work environment, and an opportunity to grow and
learn.

WE BELIEVE that our company can be financially

successful while behaving in a socially responsible and
environmentally sensitive manner.

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63
 VALUE (Inventory)

Public Contact Personal Accomplishment Independence

Cooperation Working Alone Helping Others

Helping Society Competition Affiliation

Making decisions Pressure Tranquility

Creativity Change / Variety Routine /Stability

Security Financial Reward Advancement

Fringe Benefits Status Expertise

Power / Authority Recognition Travel

Time / Freedom Physical Environment Physical Activity

Regular Hours Ethics /Moral Values Intellectual Stimulation

64
 In other words…
• Strategic Management is about gaining and maintaining
Competitive Advantages for the organization.
– …and sustaining them!
– Thru:
• Continually adapting changes in external trends
and events and internal capabilities, competencies
and resources,
• Effectively formulating, implementing and
evaluating strategies that capitalize upon the
above factors.

65
 Strategic Management

• Communication is a key to
successful strategic management

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Benefits of Strategic Management

67
 Benefits of Strategic Management

• Financial Benefits
• Businesses using strategic-management
concepts show significant improvement in
sales, profitability, and productivity compared
to firms without systematic planning activities
• High-performing firms seem to make more
informed decisions with good anticipation of
both short- and long-term consequences

681-68
 Benefits of Strategic Management

• Nonfinancial Benefits
– Enhanced awareness of threats
– Improved understanding of competitors’ strategies
– Increased employee productivity
– Reduced resistance to change
– Clearer understanding of performance-reward
relationship
– Enhanced problem-prevention capabilities

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• Nonfinancial Benefits (cont…)
• Increased discipline
• Improved coordination
• Enhanced communication
• Increased forward thinking
• Improved decision-making
• Increased synergy
• Effective allocation of time and resources

701-70
 Why Some Firms Do No Strategic Planning

• Lack of knowledge in • Laziness

strategic planning • Content with success
• Poor reward • Overconfidence
structures
• Prior bad experience
• Firefighting
• Honest difference of
• Waste of time opinion
• Too expensive

711-71
 Pitfalls in Strategic Planning
• Using strategic planning to gain control over decisions
and resources
• Doing strategic planning only to satisfy accreditation or
regulatory requirements
• Too hastily moving from mission development to strategy
formulation
• Failing to communicate the plan to employees, who
continue working in the dark
• Top managers making many intuitive decisions that
conflict with the formal plan

721-72
 Pitfalls in Strategic Planning
• Top managers not actively supporting the strategic-
planning process
• Failing to use plans as a standard for measuring
performance
• Delegating planning to a “planner” rather than involving
all managers
• Failing to involve key employees in all phases of
planning
• Failing to create a collaborative climate supportive of
change

731-73
 BUSINESS
VS
MILITARY STRATEGY

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 COMPARING BUSINESS AND
MILITARY STRATEGY

• A fundamental difference between military

and business strategy is that business
strategy is formulated, implemented, and
evaluated with an assumption of competition,
whereas military strategy is based on an
assumption of conflict.
• Both military conflict and business
competition are so similar that many
strategic-management techniques apply
equally to both.

751-75
 COMPARING BUSINESS AND
MILITARY STRATEGY (cont..)

• Alexander the Great once said:

“Greater is an army of sheep led by a lion, than an army of
lions led by a sheep”
• Both business and military organizations must adapt to
change and constantly improve to be successful.
• When Napoleon won, it because his opponents were
committed to the strategy of earlier war. When he lost
against Wellington, it was because he against enemies
who thought afresh, who were developing the strategies
not of the last war but of the next.

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 EXCERPTS FROM SUN TZU’S THE ART OF WAR WRITINGS

• War is a matter of vital importance to the state: a

matter of life or death, the road either to survival
or ruin. Hence, it is imperative that it be studied
thoroughly
• Know your enemy and know yourself, and in a
hundred battles you will never be defeated
• He who occupies the field of battle first and awaits
his enemy is at ease, and he who comes later is
weary.
• Skillful leaders do not let a strategy inhibit creative
counter-movement
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