introduction to strategic management

1. Chapter one: Introduction
By Mitku Assefa:
Wollo University, Management Department
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2.  The Word „strategy‟ is derived from the Greek
term strategos, meaning a carefully formulated
military plan of campaign.
 Strategic Management can be defined as the
process of formulating, implementing and
evaluating cross-functional decisions that
enable an organization to achieve its objective.
 Strategic Management is “The on-going
process of formulating, implementing and
controlling broad plans guide the
organizational in achieving the strategic goals
given its internal and external environment”.
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3.  Strategy is management‟s overall plan and actions
for deploying resources and skills taking into
consideration opportunities and threats in the
environment
 – to achieve it‟s mission, vision and objectives
 – to establish a favorable competitive position.

7.  Is a set of rules, guidelines, and procedures for
smooth functioning of the business
 Business policy defines the scope within which
subordinates in an organization can take decision.
 It permits the low-level management to deal with
the problem issues without consulting top-level
management every time for decision.
 Business policies are the guidelines developed by
an organization to govern its actions.
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8.  A policy is a broad guideline for decision making
that links the formulation of strategy with its
implementation.
Examples:
◦ • Maytag Company: Maytag will not approve any cost
reduction proposal if it reduces product quality in any
way.
◦ • 3M: Researches should spend 15% of their time
working on something other than their primary project.
◦ • GE: GE must be number one or two wherever it
competes.
◦ • Intel: Intel cannibalizes its own product line with better
products before a competitor does so.

9. Policy strategy
The blueprint of the
organizational activities
which are routine in nature
Concerned with those
new organizational
decisions
Deals with the daily
activities essential for
effective & efficient running
of the organization
Deals with organizational
strategic decision
-is what is, or what is not
done
The methodology used to
achieve a long term
objectives
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11. 1. Strategy formulation: It is the development
of long-range plans for the effective
management of environmental opportunities
and threats, in light of corporate strengths and
weaknesses (SWOT)
 includes developing a vision and mission
 identifying an organization external opportunities and
threats, in determining strengths and weaknesses
 generating alternative strategies and choosing particular
strategies to pursue
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12. It is a process by which strategies and policies are put
into action through the development of programs,
budgets, and procedures. This process might involve
changes within the overall culture, structure, and/or
management system of the entire organization
 establish annual objectives, policies
 motivate employees
 allocate resources
 preparing budgets,
 developing & utilization information system and
 linking employee compensation to organization
performance.
 Implementing strategy means mobilizing employees
and managers to put formulated strategies into
action.
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13. Deals with assessing the extent to which the
stated goals are being achieved or not.
Three fundamental activities are:
1. Examine the external & internal factors of
current strategies.
2 . Measuring performance
3. Taking correctly action
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15. 1. Competitive Advantage: anything that a firm
does especially well compared to rival firms.
When a firm can do something that rival firms
cannot do, or owns something that rival firms
desire, that can represent a competitive
advantage.
2. Strategists: Strategists are individuals who are
most responsible for the success or failure of
an organization. Strategists help an
organization gather, analyze, and organize
information.

16. 3. vision statement" which answers the question,
what do we want to become? Developing a
vision statement is often considered the first
step in strategic planning, preceding even
development of a mission statement.
4. Mission statements are "enduring statements
of purpose that distinguish one business from
other similar firms. A mission statement
identifies the scope of a firm's operations in
product and market terms.

17. 5. External opportunities and external threats:
refer to economic, social, cultural,
demographic, environmental, political, legal,
governmental, technological, and competitive
trends and events that could significantly
benefit or harm an organization in the future.
6. Internal strengths and internal weaknesses
are an organization's controllable activities that
are performed especially well or poorly. They
arise in the management, marketing,
finance/accounting, production/operations,
research and development, and computer
information systems activities of a business.

18. 7. Objectives can be defined as specific results
that an organization seeks to achieve in
pursuing its basic mission. Long-term
objectives represent the results expected
from pursuing certain strategies. Strategies
represent the actions to be taken to
accomplish long-term objectives.
8. Strategies are the means by which long-
term objectives will be achieved. Strategies
are potential actions that require top
management decisions and large amounts of
the firm's resources.

19. 9. Policies are the means by which annual
objectives will be achieved. Policies include
guidelines, rules, and procedures established
to support efforts to achieve stated objectives.
Policies are guides to decision making and
address repetitive or recurring situations.

20. Strategic management offers the following
benefits:
 It allows for identification, prioritization, and
exploitation of opportunities.
 It provides an objective view of management
problems.
 It represents a framework for improved
coordination and control of activities.
 It minimizes the effects of adverse conditions and
changes.
 It allows more effective allocation of time and
resources to identified opportunities.

21.  It creates a framework for internal
communication among personnel.
 It provides a basis for clarifying individual
responsibilities.
 It encourages forward thinking.

22.  The term ethics refers to accepted principles of
right or wrong that govern the conduct of a
person, the behavior of members of a
profession, or the actions of an organization.
 Business ethics are the accepted principles of
right or wrong governing the conduct of
business people
 It can be defined as principles of conduct within
organizations that guide decision making and
behavior.
 Good business ethics is a prerequisite for good
strategic management; good ethics is just good
business.

23.  A new wave of ethics issues related to:-
 product safety, employee health,
 sexual harassment, AIDS in the workplace,
 smoking, acid rain, affirmative action,
 waste disposal, employee privacy,
 inappropriate gifts, security of company
records, and
 layoffs has accented the need for strategists to
develop a clear code of business ethics.

24. 1. Strategy & strategic planning are dead
– Every organization needs the focus and direction
provided by its strategies and the strategic management
process
2. Strategy is strictly for top management
– Top management play a crucial role, but everyone in the
organization has a part to play.
3. Strategy is about planning
– Strategic management process shows that strategy is not
only about planning, but also about doing.
4. Strategy is stable and constant
– Organizations compete in dynamic environments.
Flexibility and change needed to respond to
environmental opportunities & threats, & strength and
weaknesses