This document discusses strategic management concepts including strategic analysis, selection, implementation, and Porter's generic strategy framework. Strategic analysis involves examining an organization's internal and external environment. SWOT analysis identifies internal strengths and weaknesses as well as external opportunities and threats. Strategic selection determines the best course of action based on strategic analysis. Implementation and management ensure proper resources and readiness to execute strategies. Porter's framework involves choosing low-cost or differentiation strategies with either broad or narrow scope.
2. STRATEGIC
ANALYSIS
The purpose of strategic analysis is to gather information. Making an
important decision about anything in business should come from adequate
and relevant information.
There are two main stages in strategic analysis:
Strategic analysis involves an examination of an organization’s
internal environment (internal analysis).
Strategic analysis is an examination of the organization’s external
environment (an external analysis).
4. SWOT
STATEMENT
SWOT statement
From Internal analysis:
the internal strengths and
weaknesses
Managers can often exert control
whereas with regard to the
opportunities and threats
From external analysis:
which influences represent
opportunitie
which influences are,or might
develop into, threats.
5. STRATEGIC
SELECTION
Taking the important information gathered from
the strategic analysis and using it to make an
intelligent and informed selection of the most
appropriate course of action for the future.
Selection begins with an examination of the
strategic analysis.
Generating a list of the options open to the
organization, paying particular attention to how
each option will address the key issues.
6. STRATEGIC
IMPLEMENTATION
AND
MANAGEMENT
The adequacy of the organization’s resource base
The readiness of the organization’s culture and structure to undertake the proposed
strategy
The management of any changes that are needed to implement the strategy
Deciding which, if any, growth or development paths to pursue
The readiness of the organization’s operations function to pursue the proposed
strategy and any quality issues that this discussion might throw up
The extent to which the organization positions itself in respect to its geographic
coverage and international presence
The impact that the strategy may have upon an organization’s internal or external
stakeholders.
Implementation involves taking into account the following:
8. WHAT IS STRATEGY
?
• This tends to imply something that is intentionally put in
train and its progress monitored from the start to a
predetermined finish.
A plan
• A ploy is generally taken to mean a short-term strategy. It
tends to have very limited objectives and it may be
subject to change at very short notice.
Ploy strategies
• Patterns of behaviour are sometimes unconscious,
meaning that they do not even realize that they actually
following a consistent pattern.
A ‘pattern of
behaviour’
• When the most important thing to an organization is how
it relates to, or is positioned with respect to, its
competitors or its markets
A position
strategy
• Changing the culture (the beliefs and the ‘feel’, the way
of looking at the world) of a certain group of people –
usually the members of the organization itself.
Perspective
strategies
9. CHANDLER’S
DEFINITION
COMPONENTS OF STRATEGY
The determination of the basic long-term goals concerns the conceptualization of
coherent and attainable strategic objectives.
The adoption of courses of action refers to the actions taken to arrive at the
objectives that have been previously set.
The allocation of resources refers to the fact that there is likely to be a cost
associated with the actions required to achieve the objectives.
10. DELIBERATE
AND
EMERGENT
STRATEGY
Mintzberg drew attention to the fact that some strategies are deliberate whereas
others are emergent.
• It is preconceived, premeditated and usually
monitored and controlled from start to finish. It
has a specific objective.
Deliberate strategy
(sometimes called
planned or
prescriptive
strategy) is meant to
happen.
• It does not have a preconceived route to success
BUT it may be just as effective as a deliberate
strategy.
• By following a consistent pattern of behaviour,
an organization may arrive at the same position
as if it had planned everything in detail.
Emergent strategy
has no specific
objective.
11. RESOURCES
Resource inputs are the inputs that are essential to the normal functioning
of the organizational process. An organization’s resource inputs fall into four
key categories:
• Money for capital investment and working capital; sources include shareholders,
banks, bondholders, etc.;
Financial resources
• Appropriately skilled employees to add value in operations and to support those
that add value (e.g. supporting employees in marketing, accounting, personnel,
etc.); sources include the labour markets for the appropriate skill levels required
by the organization;
Human resources
• Land, buildings (offices, warehouses, etc.), plant, equipment, stock for
production, etc.; sources include estate agents, builders, trade suppliers, etc.;
Physical (tangible)
resources
• Inputs that cannot be seen or felt but which are essential for continuing business
success, such as ‘know-how’, legally defensible patents and licences,
Intellectual
(intangible) resources
12. Strategy:
Thinking
Decisions
Leadership
and
Management
• can be viewed as a set of theories, frameworks, tools and techniques
designed to explain the factors underlying the performance of
organizations and to assist managers in thinking, planning and acting
strategically.
Strategic management
• relate to the ability of the leaders of an organization to look into its
future and to think creatively about its potential development.
Strategic thinking and
leadership
• Strategic learning is concerned with the processes by which leaders,
managers and organizations learn about themselves, their business and
environment.
Strategic thinking is
based upon strategic
learning.
• is vital to the development of the strategic knowledge upon which
superior performance is based (Nonaka, 1991).
Strategic learning
• centres on the setting of organizational objectives, as well as
developing and implementing plans designed to achieve these
objectives.
Strategic planning
14. MANAGEMENT
DECISIONS Management decisions within any organization can be
classified into three broad categories: strategic, tactical and
operational.
Strategic, tactical and operational decisions within an
organization differ from each other in terms of:
Focus
The level in the
organization at
which they are
made scope
Time horizon
Degree of
certainty or
uncertainty
Complexity
15. MANAGEMENT
DECISIONS
• Are concerned with the acquisition of sustainable competitive
advantage, which involves the setting of long-term corporate
objectives and the formulation, evaluation, selection and
monitoring of strategies designed to achieve those objectives.
Strategic
decisions
• Are concerned with how corporate objectives are to be met and
how strategies are implemented. They are dependent upon overall
strategy and involve its fine-tuning and adjustment.
• They are made at head of business unit, department or functional
area level and affect only parts of the organization.
Tactical
decisions
• Are concerned with the shorter-term objectives of the business
and with its day-to-day management.
• The procedures in a sales office are typical operational activities –
processing orders that have a tactical purpose in pursuit of the
overall strategy Where is a strategy actually carried out?
Operational
decisions
16. PORTER’S GENERIC STRATEGY
FRAMEWORK
Porter argued that an organization
must make two key decisions on its
strategy:
1. Should the strategy be one of
differentiation or cost leadership?
2. Should the scope of the strategy
be broad or narrow?
17. COST
LEADERSHIP
STRATEGY
There are several potential benefits of a cost leadership strategy:
The business can earn higher profits by charging a price equal to, or even
below, that of competitors because its unit costs are lower;
It allows the business the possibility to increase both sales and market share
by reducing the price to below that charged by competitors (assuming that
the product’s demand is price elastic in nature);
It allows the business the possibility to enter a new market by charging a
lower price than competitors;
It can be particularly valuable in a market where consumers are price
sensitive
It creates an additional barrier to entry for organizations wishing to enter
the industry.
18. DIFFERENTIATI
ON STRATEGY
The major benefits to a business of a successful differentiation
strategy are:
Its products will command a premium price;
Demand for its product will be less price elastic than that for
Competitors products;
Above average profits can be earned;
It creates an additional barrier to entry to new businesses
Wishing to enter the industry.
A business seeking to differentiate itself will organize its value
chain activities to help create differentiated products and to create a
perception among customers that these offerings are worth a higher
price.
19. Differentiation
can be
achieved in
several ways:
By creating products that are superior to competitors by virtue of
design, technology, performance, etc.;
By offering superior after-sales service;
By superior distribution channels, perhaps in prime locations
(especially important in the retail sector);
By creating a strong brand name through design, innovation,
advertising, etc.;
By distinctive or superior product packaging
20. FOCUS
STRATEGY
A focus strategy is aimed at a segment of the market for a product
rather than at the whole market or many markets.
A particular group of customers is identified on the basis of age,
income, lifestyle, sex, geographic location, some other
distinguishing segmental characteristic or a combination of these.
Within the segment a business then employs either a cost
leadership or a differentiation strategy.
The major benefits of a focus strategy are:
it requires a lower investment in resources compared to a
strategy aimed at an entire market or many markets;
it allows specialization and greater knowledge of the segment
being served;
it makes entry to a new market less costly and more simple.
21. A focus
strategy will
require
Identification of a suitable target customer group which forms a
distinct market segment;
Identification of the specific needs of that group;
Establishing that the segment is sufficiently large to sustain the
business;
Establishing the extent of competition within the segment;
Production of products to meet the specific needs of that group;
Deciding whether to operate a differentiation or cost leadership
strategy within the market segment.
22. CONCLUSION
Collaborative advantage through networks, strategic alliances and joint-
ventures can be an important source of competitive advantage.
For example, collaboration between Japanese car manufacturers such as
Toyota and their component suppliers, which involves the sharing of
information and objectives, is at the heart of just-in-time management
which, in turn, contributes significantly to Toyota’s competitive edge
