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Strategic

1. Introduction to Strategic Management Strategic Management MBA 689.0 East Delta University MBA Program [email protected]

2. Contents [email protected] Overview of strategic management Strategy Strategic Management & tasks of Strategic Management Benefits of Strategic Management Strategic Management VS Other Types of Management Scope of Strategic Management Components of strategic management Levels of Strategy Dimensions of Strategic Decisions Components of Strategic Management model Core competencies Competitive advantages

3. Introduction [email protected] Strategy sprung from the need for people to defeat their enemies. Key military conflicts and events have shaped the understanding of strategic management. Indeed, the word strategy has its roots in warfare. Strategist a person skilled in planning action or policy, especially in war or politics.

4. Strategy [email protected] The three aspects of Chandler definition are: 1. The determination of basic long-term goals and objectives. 2. Adaptation of courses of action to achieve these objectives. 3. Allocation of resources necessary for adopting courses of action. Strategy can be defined as the determination of the basic long term goals and objectives of an enterprise and the adaptation of the courses of action and the allocation of resources necessary for carrying out these goals.”

5. [email protected] During the press conference to announce NOKIA being. acquired by Microsoft, Nokia CEO ended his speech. saying this “we didn't do anything wrong, but. somehow, we lost”

6. What is Strategy? [email protected] Strategy is a course of action of a company – what it does, what it needs to do. Wal Mart , starting as a small town shop, has become the biggest retailer in the world. They have a winning strategy. General Motors , once an envy of the corporate world, struggles to sell. They need a winning strategy.

7. Elements of strategy [email protected] How to grow the business How to satisfy the customers How to out compete rivals How to respond to changing market conditions How to manage each functional piece of business How to meet strategic and financial objectives

8. Examples [email protected] Company A's strategy might be to become the cheapest provider in the smartphone market. Their managers then need to negotiate with suppliers to reduce the costs of the electronic components used in production. This is a tactic to achieve the set strategy. A company aims to expand its online sales channel. In that case, the IT strategy might detail the development of a new e-commerce platform, integrating inventory systems with the platform, and implementing cybersecurity measures to protect customer data.

9. Concept of Strategic Management [email protected] Once there were two company presidents who competed in the same industry. These two presidents decided to go on a camping trip to discuss a possible merger. They hiked deep into the woods. Suddenly they came upon a grizzly bear that rose up on its hind legs and snarled. Instantly the first president took off his knapsack and got out a pair of jogging shoes. The second president said, “Hey, you can’t outrun that bear”. The first president responded, “May be I can’t outrun the bear but I surely outrun you!” this story captures the notion of Strategic Management, which is to achieve and maintain competitive advantage.

10. Concept of Strategic Management [email protected] “Process of formulating , implementing & Evaluating strategies to accomplish long-term goals & sustain competitive advantage” Strategic Management always seeks to answer a simple and basic question “How and why do some firms out perform others”

11. Strategic management? [email protected] Samuel Certo and Paul Peter have rightly defined strategic Management as “a continuous, iterative process aimed at keeping an organization as a whole appropriately matched to its environment.” So we can obviously say that Strategic Management is a process that refers to the managerial process of forming strategic vision, setting objective, crafting a strategy, implementing and executing the strategy.  

12. Tasks of Strategic Management [email protected] Forming a strategic vision of where the organization is headed Setting objectives Crafting a strategy to achieve the desire outcomes Implementing and executing the chosen strategy efficiently and effectively Evaluating performance and initiating corrective adjustments

13. Components of Strategic Management [email protected] Company mission Internal environments External environment Strategic analysis and choice Long term objectives Generic and grand strategies Action plans and short-term objectives Functional tactics Policies that empower action Restructuring, reengineering and refocusing the organization Action plans and short-term objectives

14. Three Levels Of Strategy [email protected] Corporate Strategy Bisiness1 Bisiness2 Bisiness3 POM/ R&D Strategies Financial/ Accounting Strategies Marketing Strategies Human Relations Strategies Corporate level Business level Functional level

15. Three Levels Of Strategy [email protected] Corporate Level At the top this hierarchy is the corporate level, composed principally of a board of directors and administrative officers. They are responsible for the firms financial performance and for the achievement of the non financial goals, such as enhancing the firm’s image and fulfilling its social responsibilities. Business Level In the middle of the hierarchy is the business level, composed principally of business and corporate managers. These managers must translate the statements of direction and intent generated at the corporate level into concrete objectives and strategies for individual business units or SBU’s. Functional Level At the bottom of the decision making hierarchy is the functional level, composed principally of managers of product, geographic and functional areas. They develop annual objectives and short-term strategies in such are as production, operations, etc.

16. Core Competencies [email protected] A core competency is an effective weapon of strategic management, which is something a company does well relative to other internal activities. For achieving core competencies 4 characteristics are necessary: Rare Collection Non- Intangibility Non-substitutive Difficult to copy

17. Examples of Distinctive Capabilities [email protected] Sharp Corporation: Expertise in flat-panel display technology. Toyota: Low-cost, High-quality manufacturing capability & Short design-to-market cycles. Intel Corporation: Ability to design and manufacture ever more powerful microprocessors for PCs.

18. Competitive Advantage [email protected] Strategic management is all about gaining competitive advantage. The term can be defined as “Anything that a firm does especially well compared to the rival firms”. A firm must strive to achieve sustained competitive advantage by: Continually adapting to changes in external trends and events and internal capabilities, competencies and resources. And by Effectively formulating, implementing and evaluating strategies that capitalizes upon those factors.

19. Types of Competitive Advantage [email protected] Michael Porter identified two basic types of competitive advantage: Cost advantage Differentiation advantage

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