Comprehensive Strategic-Management Model

Comprehensive Strategic-Management Model

1. Dr. Muhammad Faisal , Ph.D (HRM), contact: 0333-5377388

2. Strategic Management Textbook Strategic Management: Concepts: Competitiveness and Globalization - 9 th Edition, Michael A. Hitt, R. Duane Ireland, Robert E. Hoskisson. Contemporary Strategic Management Case Studies , 6 th Edition, Robert Grant Reference Books Concepts in Strategic Management and Business Policy , 12 th Edition, Wheelen, Thomas L., Hunger, J. David The Blackwell Handbook of Strategic Management , 1 st Edition. M.A. Hitt, R.E. Freeman and J.S. Harrison

3. Strategic Management LECTURE - ONE

4. Strategic Management US President Donald Trump won over Hillary Clinton, through his Effective Strategies “Strategy” wins over “ Experience”

5. Strategic Management CEOs from the big three American automaker asked the Congressional leaders for bailout monies, without showing up a clear strategic plan . The CEOs were sent home with instructions to develop a clear strategic plan for the future. As Austan Goolsbee , one of President Obama’s top economic advisers, viewed it: Asking for a bailout without a convincing business plan was crazy; “If the three auto CEOs need a bridge, it’s got to be a bridge to somewhere, not a bridge to nowhere. In this Strategic Management course, we would expand our understanding on how to develop a clear strategic plan and a bridge to somewhere rather than nowhere.

6. Strategic Management Doing Great in a Weak Economy During the period of Global recession (2007-2008), most firms were struggling (to survive, laying off employees, closing restaurants, and reducing expansion plan). Whereas, McDonald’s continued to increase its revenues from $ 22.7 billion in 2007 to $ 23.5 billion in 2008. McDonald’s net income nearly doubled during that time from $ 2.4 billion to $ 4.3 billion. Source: “McDonald’s Seeks Way to Keep Sizzling,” Wall Street Journal (March 10, 2009) McDonald’s achieved this through: Well planned strategies; Offering low prices, expanded menu items, extending hours and improved drive-through windows to increase sales, thus attracting millions of new customers; Spent $ 2.1 billion to remodel many of its 32,000 restaurants and build new ones.

7. 1996 – Apple Inc. was floundering; stock prices had plunged 1997 – Steve Jobs became permanent CEO Reduced Apple’s 350 development projects to 50 and then to 10 Released iMac, iPod, iTunes and iPhone Apple stock rose more than 9,000 percent and market value increased by $ 150 billion 1980 - Chrysler from the verge of bankruptcy Lee Iacocca, new CEO Plea to US Congress, resulted in federally guaranteed loans of $ 1.5 billion for Chrysler Restructured management, laid off workers, negotiated concessions from suppliers, creditors and unions Chrysler became profitable in 1982 and paid back its loans in three years 1999/2000 - Yahoo's ad sales were dropping; company morale was low. 2001 - Terry Semel joined as Yahoo ! CEO Shifted company's focus to distributing media and user-generated content through channels such as Yahoo News, Yahoo Finance and Flickr. Within one year, Yahoo earned $ 43 million in revenue ( $ 93 million loss previous year) Yahoo increased its revenue nearly nine-fold and created $ 30 billion in shareholder value 1981 - Harley Davidson had U.S. market share of 15% and reported a loss of $ 15 million. Facing steep competition from Japanese motorcycle manufacturers, such as Honda 1989 - Richard Teerlink stepped in as CEO Turned the company's focus to increasing quality, improving service to customers and dealers, and producing world-class heavyweight motorcycles Recovered its U.S. market share to 50 percent and posted annual sales of more than $ 1.7 billion Strategic Management – Inspiring Stories

8. Strategic Management Strategy could be described as an expression of the intentions of the organization – what it means to do and how the business means to ‘get from here to there’. Wickens (1987) Strategy is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. (Chandler, 1962) Strategy involves the constant search for ways in which the firm’s unique resources can be redeployed in changing circumstances. ( Rumelt , 1984) Strategy is the direction and scope of an organization over the longer term, which matches its resources to its changing environment, and in particular, to its markets, customers and clients to meet stakeholder expectations. (Johnson and Scholes, 1993 )

9. Strategic Management CONCEPT OF STRATEGY

10. Strategic Management Competitive advantage arises out when a firm creates value for its customers. Firms select markets in which they can excel and become a moving target to their competitors by continually improving their position. Michael Porter (1985) Importance of differentiation offers a product or service ‘that is perceived industry-wise as being unique ’, and focus – seeing a particular buyer group or product market ‘more effectively or efficiently than competitors who compete more broadly’. Well-known framework of three generic strategies includes innovation , quality and cost leadership . Organizations use these to gain competitive advantage. Competitive advantage stems in the long term. Firms build ‘ core competences ’ which are superior to its rivals, when it learns faster and applies its learning more effectively than its competitors.

11. Strategic Management While a firm enjoys competitive advantage, however others will be able to copy its product and/or service. Alternatively, a firm enjoys sustained competitive advantage , when competitors cannot imitate . Distinctive capabilities are those characteristics that cannot be replicated by competitors or can only be imitated with great difficulty. An important feature that confers superiority over others (Quinn, 1980). Reproducible capabilities are those that can be bought or created by any company with reasonable management skills, diligence and financial resources. Most technical capabilities are reproducible. Distinctive capabilities or core competences describe what the organization is specially or uniquely capable of doing. Key capabilities can exist in such areas as technology , innovation , marketing , delivering quality , and making good use of human and financial resources . If a company is aware of what its distinctive capabilities are, it can then concentrate on using and developing them without diverting its effort into less rewarding activities .

12. Strategic Management Most distinctive capability is represented by the knowledge, skills, expertise and commitment of the employees of the organization. This provides the basis for the philosophy of strategic human resource management and human capital management. Four criteria have been proposed by for deciding whether a resource can be regarded as a distinctive capability or competency: value creation for the customer, rarity compared to the competition, non-imitability and non-substitutability. Barney (1991)

13. Strategic Management The strategic intent sequence has been defined as: 1. a broad vision of what the organization should be; 2. the organization’s mission ; 3. specific goals , which are operationalized as: 4. strategic objectives . Miller and Dess (1996) The leadership position the organization wants to attain and establish a clear criterion on how progress towards achievement will be measured. Hamel and Prahalad (1989) It could be a very broad statement of vision or mission and/or it could more specifically spell out the goals and objectives to be attained over the longer term.