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Chapter 1

The Nature of Strategic Management

MOD 1

Strategic Management

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Opening case

Wal-mart

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Strategy is

A plan / course of action leading to a

direction.

It is related to companys activities.

It deals with uncertain future.

It depends on vision / mission of the

company to reach its current position.

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A Company's strategy is management

action plan for running the business and

conducting operations. It consists of the competitive moves

And business approaches that mangers are

employing to grow the business,

Attract and please customers,

Compete successfully,

Conduct operations and

Achieve the targeted levels of

organizational performance.

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BUSINESS STRATEGY

Business level strategy is lower-level than

corporate strategy that applies to a single

division or business unit.

strategic issues include pricing and

marketing strategies. Business-level

strategies are normally decided by mid-level managers who are responsible for the

business unit or division.

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Corporate-Level Strategy

Corporate strategy refers to all strategic

decisions that affect the firm as a whole.

Often, corporate-level strategies will have

an affect on several business units.

Corporate strategic issues include the

financial structure of the firm, mergers andacquisitions, and the allocation of

resources to individual business units.

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Why is strategic management

important?

Gives everyone a role

Makes a difference in performance levels

Provides systematic approach to

uncertainties

Coordinates and focuses employees

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Characteristics of Strategic

Management Co-ordinate and integrate business

activities.

Strengthens the competitive position.

Satisfies customers

Works towards achieving performance

targets.

Adaptive

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Aishah radiyullahu anha narrets that

rasulullah sallallahu alaihi wasallam

ordered us to treat people according to

their status.

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Strategic Management Process

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Missions vs. Strategic Visions A missionstatement

focuses on current

business activities --

who we are and whatwe do

Current product and

service offerings

Customer needs being

served

Technological and

business capabilities

Astrategic vision

concerns a firmsfuture

business path -- where we

are going Markets to be pursued

Future technology-

product-customer focus

Kind of company that

management is

trying to create

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Examples: Mission and Vision Statements

Ourv is ion: Getting to a billion connected computers

worldwide, millions of servers, and trillions of dollars ofe-commerce. Intels core miss ionis being the building

block supplier to the Internet economy and spurring

efforts to make the Internet more useful. Being

connected is now at the center of peoples computing

experience. We are helping to expand the capabilities

of the PC platform and the Internet.

Intel

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Strategic Management Process (Cont..)

Step 1: Identifying the organization's currentmission, objectives, and strategies

Mission: the firms reason for being

Who we are,

What we do, and

Where we are now

Goals: the foundation for further planning Measurable performance targets

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Step 2: Conducting an external analysis

The environmental scanning of specific and generalenvironments

Focuses on identifying opportunities and threats

Step 3: Conducting an internal analysis

Assessing organizational resources, capabilities,activities and culture:

Strengths (core competencies) create value for thecustomerand strengthen the competitive positionof the firm.

Weaknesses (things done poorly or not at all) canplace the firm at a competitive disadvantage.

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Step 4: Formulating strategies

Develop and evaluate strategicalternatives

Select appropriate strategies for alllevels in the organisation that

provide relative advantage overcompetitors

Match organizational strengths toenvironmental opportunities

Correct weaknesses and guardagainst threats

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Step 5: Implementing strategies

Implementation: effectively fittingorganizational structure and activities

to the environmentEffective strategy implementationrequires an organizational structurematched to its requirements.

Step 6: Evaluating results

How effective have strategies been?

What adjustments, if any, arenecessary?

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Relationship between companys

strategy and business models.

1st Assignment

Submission date 26-08-2013

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What kind of business shouldwe become?

Are we in the r ight f ields

Are there new competi tors

What strategies should we

pursue? How are our customerschanging?

Adapting to Change Key

Strategic Management

Questions

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Three levels of Strategy

Corporate Level Strategies

by CEO and Board of Directors

Horizon: long term

Focus on domain selection:

What business sectors to enter/invest ?

How should the resources be allocated across the

businesses ?

Corporate

Business

Functional

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Three levels of Strategy

Functional Level Strategies

By functional managers, e.g. marketing

managerShort Term

Focus on functional efficiency

Annual objectives & decisions within functional

areas

Improving efficiency within functional areas

Corporate

Business

Functional

Documents

MODULE 1 SM