Strategic Management:Strategic Management:an overviewan overview

Session 1Civil Service College Dhaka

Presentation by

Dr. Muhammad G. SarwarEmail: sarwar_mg@yahoo.comCell: 01821443741

Presentation ContentsPresentation ContentsStrategic Management: course outlineStrategic Management: referencesWhat is Strategic Management?Stages of Strategic ManagementStrategic Management ModelBenefits of Strategic ManagementWhy Strategic Planning/Management

may fail?Strategic Management and Business

Ethics Guidelines for Effective Strategic

Management

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Strategic Management: course Strategic Management: course outlineoutlineSl. No.

Topic Title Session no.

1 Strategic Management: an overview 1

2 Strategy Formulation Designing Vision and Mission Statements 1• Setting Company/Organization Objectives

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• Internal Assessment 1

• External Assessment 1

• Strategy Analysis and Choice 1

4 Strategy Evaluation 1

4 Strategy Evaluation 1

5 Limitations of Strategic Management: why strategy may fail ?

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Strategic Management: Strategic Management: referencesreferencesFred R. David (2008), Strategic

Management: Concepts and Cases, 11th Edition, Prentice Hall

Arthur A. Thompson, Jr. (2010) Crafting and Executing Strategy: the quest for comparative, 16th Edition, McGraw Hill

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What is Strategic What is Strategic Management?Management?Strategic Management is an art and

science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives (Fred R. David, 2008).

Strategic Management is the approaches to grow, attract and please clients, compete successfully and achieve targeted levels of organizational performance (Arther A. Thompson, 2010)

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What is Strategic What is Strategic Management? (contd.)Management? (contd.)In ultimate analysis Strategic

Management is the Quest for Competitive Advantage.

4 most frequently used strategic approaches:◦Striving to be the industry’s low-cost

provider◦Outperforming rivals based on quality,

diversity, style, technology, value –added services etc

◦Focusing on a narrow market niche◦Developing capability that rivals can’t

easily imitate.6

What is Strategic What is Strategic Management?Management?(contd.)(contd.)

Strategic Management focuses onIntegrating management,Production/operation.Financing/accounting,Marketing,Research & development,MIS

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Strategic Management vs. Strategic Management vs. Strategic PlanningStrategic PlanningThe term ‘Strategic Management’

is mostly used in academia, whereas the term ‘Strategic Planning’ is mostly used in business world.

Strategic Management refer to strategy formulation, implementation and evaluation.

Strategic Planning refer only to strategy formulation.

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Stages of Strategic Management

Strategic Management process consists of 3 stages:

1.Strategy formulation,2.Strategy implementation, and3.Strategy evaluation.

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Strategy formulationStrategy formulation

Strategy formulation includes:Developing a vision and mission

statementsIdentifying organization’s external

opportunities and threatsIndentifying internal strengths and

weaknessesEstablishing long-term objectivesGenerating alternative strategiesChoosing particular strategies.

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Strategy formulation Strategy formulation (contd.)(contd.)

Strategy formulation involves questions like:

What new businesses to enter ?What businesses to abandon ?How to allocate resources to attain

goals and targets?Whether to expand existing production

capacity or diversify !Whether to enter international market !Whether to merge or form a joint

venture !How to avoid a hostile takeover ?

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Strategy implementationStrategy implementation

Strategy implementation is the ‘action stage’ of Strategic Management. It requires:

Setting annual objectivesDevise policies to attain set

objectivesMotivate employees to achieve

objectivesAllocating resources for achieving

objectives12

Strategy evaluationStrategy evaluation

Strategy evaluation is the final stage of strategic management. 3 strategy evaluation activities:

1.Reviewing external and internal factors that are the basis of current strategies,

2.Measuring performance, and3.Taking corrective actions.

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Strategic Management ModelStrategic Management Model

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Strategy as a Blend of Strategy as a Blend of Proactive Initiatives and Proactive Initiatives and Reactive AdjustmentsReactive Adjustments

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Management Strategy vs. Management Strategy vs. Business ModelBusiness ModelAn Organization's management strategy

relates broadly to its competitive initiatives and action plan to attain the set objectives.

Business model focus on how the business will generate revenues sufficient to cover cost, produce attractive profits and return on investment.

A business model is the story line of the Management how the strategy will be a moneymaker.

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Historical Development of Historical Development of Strategic ManagementStrategic ManagementHistory of Strategic Planning began in the

military.Word ‘Strategy’ comes from Greek word

‘Straegos’, that refers to military general and combines ‘stratos’ (army) and ‘ago’ (to lead).

Both Military Strategy and Business Strategy focus how to use their own strengths to exploit enemy’s / competitor’s weaknesses.

Fundamental difference between Military Strategy and Business Strategy is that Military strategy is based on the assumption of ‘Conflict’, whereas Business Strategy is based on the assumption of ‘Competition’.

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Historical Development of Historical Development of Strategic Management Strategic Management (contd.)(contd.)Strategic Management as an

academic discipline started to develop in the 1950s. Most influential pioneers were: Alfred Chandler, Philip Selznick, Igor Ansoff and Peter Drucker.

Alfred Chandler developed the idea of coordinating the various aspect of management under one all-encompassing strategy.

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Historical Development of Historical Development of Strategic Management Strategic Management (contd.)(contd.)Philip Seznick introduced the idea of

matching organization’s internal factors with the external environmental circumstances.

Igor Ansoff developed a strategy grid that compared market penetration strategies, product development strategies, market development strategies, horizontal and vertical integration and diversification strategies.

Peter Drucker developed the theory of management by objectives (MBO) that involve the entire organization in setting objectives.

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Benefits of Strategic Benefits of Strategic ManagementManagement

Financial Benefits:Strategic management make organization

more profitable and successful Nonfinancial Benefits:Objective view of management problemsFramework for improved coordinationIdentify, prioritize and exploit opportunitiesEncourage forward thinkingEncourage favorable attitude toward

change

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Why Some Firms Do No Why Some Firms Do No Strategic Planning ?Strategic Planning ?Poor Reward StructureFire FightingContent with SuccessOverconfidencePrior Bad ExperienceFear of FailureWaste of Time

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Why Strategic Why Strategic Planning/Management may fail?Planning/Management may fail?

Strategic planning to satisfy regulatory requirement,

Top management not actively supporting the strategic planning process

Failing to involve key employees in all phases of strategic planning

Becoming so engrossed in current problems that insufficient planning is done

Failing to communicate the strategy to employees who continue working in dark

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Strategic Management and Strategic Management and Business EthicsBusiness EthicsAll Strategy formulation,

implementation and evaluation decisions have ethical ramifications.

Good Business Ethics is a prerequisite for good strategic Management.

Business Ethics is defined as principles of conduct within organization that guide decision making and behavior, like harming the natural environment is unethical.

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Strategic Management and Strategic Management and Business Ethics (contd.)Business Ethics (contd.)

A strategy can’t be considered ethical just because it is legal,

To meet the standard of being ethical, a strategy must pass moral scrutiny,

To be ethical a strategy must not be shady, unconscionable, injuries to others or unnecessarily harmful to the environment.

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Guidelines for Effective Guidelines for Effective Strategic ManagementStrategic Management

Effective Strategic Management is open-mindedness; a willingness and eagerness to consider new information, new viewpoints, new ideas, and new possibilities.

Strategic Management is a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues.

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ThanksThanks

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