2. What is Strategic
Management
 Strategic Management is what managers do to
develop the organization’s strategies.
 Strategies are the plans for how the organization will
do whatever its in business to do, how it will
compete successfully, and how it will attract and
satisfy its customers in order to achieve its goal.
Stephen P. Robbins and Mary Coulter, “Management Eleventh Edition”, 2012

3. Why is Strategic
Management Important?
There are three reasons
 The most significant one is that it can make a
difference in how well an organization performs
 The fact that managers in organizations of all types
and sizes faces continually changing situations
 Organizations are complex and diverse

4. Strategic Management
Process
External Analysis
•
Opportunities
•
Threats
Identify the
organization’s current
mission, goals, and
strategies
SWOT Analysis
InternalAnalysis
•
Strengths
•
Weaknesses
Formulate
Strategies
Implement
Strategies
Evaluate
Results

5. Components of a Mission
Statement
Components
Questions
Customers
Who are the firm’s customers?
Markets
Where does the firm compete geographically?
Concern for survival,
growth, and profitability
Is the firm committed to growth and financial stability?
Philosophy
What are the firm’s beliefs, values, and ethical
priorities?
Concern for public image
How responsive is the firm to societal and
environmental concerns?
Products or services
What are the firm’s major products or services?
Technology
Is the firm technologically current?
Self-concept
What are the firm’s major competitive advantage and
core competencies?

6. Corporate Strategies
 Corporate Strategy is one that determines what
business a company is in or wants to be in, and
what it wants to do with those businesses.

7. Types of Organizational
Strategies
Multibusiness
Corporation
Corporate
Strategic
Business Unit
1
Competitive
Functional
Research and
Development
Strategic
Business Unit
2
Strategic
Business Unit
3
Manufacturing
Marketing
Human
Resources
Finance

8. What are the Types of
Corporate Strategy?
The three main types of corporate strategies are:
 Growth
 Stability
 Renewal

9. How Are Corporate
Strategies Managed?
High
Low
Low
Anticipated Growth Rate
High
Market Share
Stars
Question
Marks
Cash
Cows
Dogs

10. Competitive Strategies
 A competitive strategy is a strategy for how an
organization will compete in its business(es).
 When an organization is in several different
business, those single business that are
independent and that have their own competitive
strategies are referred to as strategic business units
(SBUs)

11. The Role of Competitive
Advantage
 Competitive advantage is what sets an organization
apart – that is, its distinctive edge.
 That distinctive edge can come from the
organization’s core competencies by doing
something that others cannot do or doing it better
that others can do it.

12. Quality as a Competitive
Advantage
 Emphasis on quality is still important today
 If implemented properly, quality can be a way for an
organization to create a sustainable competitive
advantage
 That’s why many organizations apply quality
management concepts

13. Sustaining Competitive
Advantage
 Every organization has resources (assets) and
capabilities (how work gets done)
 Not every organization is able to effectively exploit its
resources and to develop the core competencies that can
provide it with a competitive advantage
 It’s not enough simply to create a competitive advantage
 The organization must be able to sustain that advantage

14. Five Forces Model
Threat of New
Entrants
New
Entrants
Bargaining
Power of Buyers
Suppliers
Bargaining
Power of
Suppliers
Intensity of
Rivalry
Among
Current
Competitors
Buyers
Threat of
Substitutes
Substitutes

15. Choosing a Competitive
Strategy
 Cost Leadership Strategy is when an organization competes on
the basis of having the lowest costs (costs or expenses, not
prices) in its industry
 Differentiation Strategy is when an organization competes by
offering unique products that are widely valued by customers
 Focus Strategy involves a cost advantage (cost focus) or a
differentiation advantage (differentiation focus) in a narrow
segment or niche
 Stuck in the middle is what happened if an organization can’t
develop a cost or a differentiation advantage
 Functional Strategy is the strategy used by an organization’s
various functional departments to support the competitive
strategy

16. The Need for Strategic
Leadership
 Strategic Leadership is the ability to anticipate,
envision, maintain flexibility, think strategically, and
work with others in the organization to initiate
changes that will create a viable and valuable future
for the organization

17. Effective Strategic Leadership
Determining the organization’s
purpose or vision
Exploiting and maintaining the
organization’s core
competencies
Establishing appropriately
balanced organizational
controls
Emphasizing ethical
organizational decisions and
practices
Effective
Strategic
Leadership
Reframing prevailing views by
asking penetrating questions
and questioning assumptions
Creating and maintaining
organizational relationships
Developing the organization’s
human capital
Creating and sustaining a
strong organizational culture
J.P.Wallman, 2010

18. The Need for Strategic
Flexibility
 Strategic Flexibility is the ability to recognize major
external changes, to quickly commit resources, and
to recognize when a strategic decision isn’t working

19. Developing Strategic
Flexibility
 Encourage leadership unity
 Keep resources fluid
 Have the right mindset
 Monitoring and measuring results
 Open about disclosing and sharing negative information
 Have multiple alternatives
 Lear from mistakes
Y.L. Doz and M. Kosonen, 2010

20. Important Organizational
Strategies for Today’s
Environment
Three strategies that are important in today’s
environment:
 E-Business Strategies
 Customer Service Strategies
 Innovation Strategies

21. E-Business Strategies
 Use e-business strategies to develop a sustainable
competitive advantage
 A cost leader can use e-business to lower cost in a
variety ways
 A differentiator needs to offer products or services that
customers perceive and value as unique
 A focuser targets a narrow market segment with
customized products and common interest
 A clicks-and-bricks strategy is an important e-business
strategy

22. Customer Service
Strategies
 Having effective customer communication system is
an important customer service strategy
 An organization’s culture is important to providing
excellent customer service

23. Innovation Strategies
 The organization is going to focus their innovation efforts
on basic scientific research, product development, or
process improvement
 Two types of innovation strategies
 Innovation emphasis, is focus on process development
 Innovation timing, is focus on becoming first mover
 First mover is an organization that’s first to bring a
product innovation to the market or to use a new process
innovation

24. First-Mover
Advantages
Disadvantages
Reputation for being innovative and
industry leader
Uncertainty over exact direction
technology and market will go
Cost and learning benefits
Risk of competitors imitating
innovations
Control over scarce resources and
keeping competitors from having
access to them
Financial and strategic risks
Opportunity to begin building
customer relationships and
customer loyalty
High development costs