STRATEGIC

MANAGEMENT
1.1What is strategy?
 It is the moves and approaches devised by management to
create value for the organization and its stakeholders and gain a
competitive advantage in the market
 It is basically an action plan to 1) attract and satisfy customers 2)
plan initiated to operate the business 3) compete against rival
firms 4) achieve organizational objectives and targets
The upper management is usually responsible for setting the overall strategy
of a business, but it is worth noting that these strategies can be derived
through consultation with lower-level management and employees as well.

1.2Now, what is strategic management?

Strategic management is the management of an organization’s
resources to achieve its goals and objectives.
It involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating
strategies and ensuring that management rolls out the strategies
across the organization.
The THREE Strategic management questions:

 Where are we now? That is the company's present situation

 Where do we want to go? The targeted market, buyers, and customers

  How do we get there? That’s where strategy come into play

Strategy is the overarching plan that provides direction and

purposes for an organization, while strategic management is the
ongoing process of making decisions and taking actions to translate
that strategy into reality. Strategic management involves activities
such as environmental analysis, goal setting, strategy formulation,
resource allocation, and implementation and performance
evaluation. It ensures that the organization remains on course to
achieve its strategic objectives and adapts to changing
circumstances when necessary.

1.3 Importance of Strategy

 Proactively shape how a company’s business will be conducted

A strategic plan allows an organization to anticipate events that are most likely to happen and
prepare accordingly. Through strategic planning, companies can anticipate certain unfavorable
scenarios before they happen and take necessary precautions to avoid them. And, if something ever
goes unfortunate, then the business already has something in place to ensure that they are able to
get back on track.

 Provide a sense of direction

It provides clearer goals to strive towards, and staffs know there are clear consequences for failing
to achieve these goals, where there may be rewards for success. Implementing clear strategies with
achievable but still ambitious goals means that members of staff know their responsibilities, and can
always be at their best.

 Efficiency

Implementing a strategy means that every single member of staff works towards the same goals and
points their efforts in the same direction. This means that management staff have a clear roadmap of
operations, providing a framework to apply resources in the right direction. As there are minimal
clashes between managers and the way they implement their resources, implementing a clear
strategy allows everyone to work in harmony, enabling the business to become more efficient. In
addition to accomplishing strategic goals, there are clear benefits to financial and productive
efficiency.
  Durability

Business can be a competitive and challenging world, varying from day to day with industry trends
and markets shifting constantly. Changes in customer demand, supply chains and internally staffing
may leave unprepared companies in a vulnerable position. By getting a cohesive strategy in place
for the long-term development of the business, companies are in the best possible position to
withstand tougher times, as there is a clear plan in place for the progression of the business.

1.4 But who is involved in Strategic Management?

1. Senior Corporate Executives

2. Managers of Subsidiary Business Units

3. Functional Area Managers

4. Operating Managers

1.5 Tasks of Strategic Management

There are 5 essential tasks and these are:

1. Developing strategic vision and mission

2. Setting objectives
3. Crafting tactics (strategy) to achieve those objectives
4. Implementing and executing the tactics
5. Evaluating, measuring performance, and taking corrective action

1. Developing strategic vision and mission

It involves deciding on the long-term view of where the company is going and this should be known to the
employees as well. This step is made up of both the vision and mission of the company. The mission of a
company is used to define why the organization exists. Often companies within the same industry might
have a quite similar mission3 statement. The vision is the management’s view of where the company is going.
This task is usually the responsibility of the CEO.

A mission statement defines a company's business and provides a clear view of what the company is trying to
accomplish for its customers. But managers also have to think strategically about where they are trying to
take the company. Management's concept of the business needs to be supplemented with a concept of the
company's future business characteristics and long-term direction. Management's view of the kind of
company it is trying to create and its intent to be in a particular business position represents a strategic vision
for the company. By developing and communicating a business mission and strategic vision, management
educates the workforce with a sense of purpose and persuasive reasons for the company's future direction.

2. Setting objectives
The purpose of setting objectives is to convert managerial statements of business mission and company
direction into specific performance targets, something the organization's progress can be measured by.

Objective-setting implies establishing performance targets. The objectives managers establish should ideally
include both short-term and long-term performance targets.

Objective-setting is required of all managers. Every unit in a company needs concrete, measurable
performance targets that contribute meaningfully toward achieving company objectives.

From company general objectives, two types of performance objectives are called for: financial objectives
and strategic objectives. Financial objectives are important because without acceptable financial
performance an organization risks being denied the resources it needs to grow and prosper.

Strategic objectives are needed to prompt managerial efforts to strengthen a company's overall business and
competitive position. Financial objectives typically relate to such measures as earnings growth, return on
investment, borrowing power, cash flow, and shareholder returns.

Strategic objectives, however, concern a company's competitiveness and long-term business position in its
markets: growing faster than the industry average, overtaking key competitors on product quality or
customer service or market share, achieving lower overall costs than rivals, boosting the company's
reputation with customers, winning a stronger foothold in international markets, exercising technological
leadership, gaining a sustainable competitive advantage, and capturing attractive growth opportunities.

Apple Computer
"To offer the best possible personal computer technology, and to put that technology in
the hands of as many people as possible."

3. Crafting a Strategy

Objectives are the "ends," and strategy is the "means" of achieving them. In effect, strategy is the pattern of
actions managers employ to achieve strategic and financial performance targets . The task of crafting a
strategy starts with solid analyses of the company's internal and external situation. Only when armed with
hard analysis of the big picture are managers prepared to make a sound strategy to achieve targeted
strategic and financial results.

Strategy is more than what managers have carefully set out in advance and intend to do as part of some
important strategic plan. New circumstances always emerge, whether important technological
developments, rivals' successful new product introductions, newly enacted government regulations and
policies, widening consumer interest in different kinds of performance features, or whatever. There's always
enough uncertainty about the future that managers cannot plan every strategic action in advance and pursue
their intended strategy without alteration.

Company strategies end up, therefore, being a composite of planned actions (intended strategy) and as-
needed reactions to unforeseen conditions ("unplanned" strategy responses). Consequently, strategy is best
considered as a combination of planned actions and on-the-spot adaptive reactions to fresh developing
industry and competitive events. The strategy-making task involves developing a game plan, or intended
strategy, and then adapting it as events occur.
 4. Strategy Implementation and Execution

The strategy-implementing function consists of seeing what it will take to make the strategy work and to
reach the targeted performance on schedule.
1. Building an organization capable of carrying out the strategy successfully.
2. Developing budgets that steer resources into those internal activities critical to strategic success.
3. Motivating people in ways that stimulate them to pursue the target objectives energetically and, if
need be, modifying their duties and job behavior to better fit the requirements of successful strategy
execution.
4. Creating a company culture and work climate useful for successful strategy implementation.
5. Performing best practices and programs for continuous improvement.

How much internal change is needed to put the strategy into effect depends on the degree of strategic
change, how much internal practices are on the wrong track from what the strategy requires, and how well
strategy and organizational culture already match. As needed changes and actions are identified,
management must supervise all the details of implementation and apply enough pressure on the
organization to convert objectives into results. Depending on the amount of internal change involved, full
implementation can take several months to several years.
 5. Evaluating Performance, Reviewing New Developments, and Initiating Corrective
Adjustments

None of the previous four tasks are one-time exercises. New circumstances call for
corrective adjustments. Long-term direction may need to be altered, the business
redefined, and management's vision of the organization's future course narrowed or
broadened. Performance targets may need raising or lowering in light of past experience
and future prospects. Strategy may need to be modified because of shifts in long-term
direction, because new objectives have been set, or because of changing conditions in the
environment.

The search for ever better strategy execution is also continuous. Sometimes an aspect of
implementation does not go as well as intended and changes have to be made. Progress is
typically uneven—faster in some areas and slower in others. Some tasks get done easily;
others prove difficult. Implementation has to be thought of as a process, not an event. It
occurs through the gross effects of many managerial decisions and many actions on the
part of work groups and individuals across the organization. Budget revisions, policy
changes, reorganization, personnel changes, reengineered activities and work processes,
culture— changing actions, and revised compensation practices are typical actions
managers take to make a strategy work better.

https://hoanamy.bizhat.com/thesis/stra_part2.htm

Why do Strategies Evolve?

 There is always an ongoing need to react to

 Shifting market conditions

 Fresh moves of competitors

 New technologies

 Evolving customer preferences

 Political and regulatory changes

 New windows of opportunity

 Crisis situation
What are the benefits of strategic thinking and a strategic approach to managing?

Strategic thinking helps a business plan, become more efficient, maximize strength and find the
most direct path towards achieving any objectives. The benefits of strategic thinking are
numerous. Here are a few of the reasons:

1. Strategic thinking simplifies the difficulties

Strategic thinking is really nothing more than planning on steroids. Strategic thinking takes
complex issues and long- term objectives, which can be very difficult to address, and breaks
them down into manageable sizes. Anything becomes simpler when it has a plan.

2. It prompts the business to ask the right questions

Direction- what should we do next? Why?

Organization- who is responsible for what? Who is responsible for whom? Do we have the
right people in the right places?

Cash- what is our projected income, expense, net? Can we afford it? How can we afford it?

Tracking- Are we on target?

Overall Evaluation- are we achieving the quality we expect and demand for ourselves?

Refinement- How can we be more efficient and more efficient?

3. Prompt customization

4. All good strategic thinkers

are precise in their thinking.
They try to match the
strategy to the
5. problem, because strategy
isn’t a one-size-fits-all
 proposition. Sloppy or
generalized thinking is
6. an enemy of achievement.
The intention to customize in
strategic thinking forces a
person to go
7. beyond vague ideas and
engage in specific ways to go
after a task or problem. It
sharpens the
8. mind.
All good strategic thinkers are precise in their thinking. They try to match the strategy to the
problem, because strategy isn’t a one-size-fits-all proposition. Sloppy or generalized thinking
is an enemy of achievement. The intention to customize in strategic thinking forces a person
to go beyond vague ideas and engage in specific ways to go after a task or problem. It
sharpens the mind.

4. Help prepare for uncertain tomorrow

5. Strategic thinking is
6. the bridge that links where
you are to where you want to
be. It gives direction and
credibility
7. today and increases your
potential for success
tomorrow.
Strategic thinking is the bridge that links the business where they are to where they want to
be. It gives direction and credibility today and increases their potential for success
tomorrow.

 Makes managers more alert to “winds of change, new opportunities, and threatening
developments”

 Unifies numerous strategy-related decisions and organizational efforts

 Creates a proactive atmosphere

 Promotes development of an evolving business model focused on bottom-line success

 Provides basis for evaluating competing budget requests

HELPS a COMPANY PREPARE FOR THE FUTURE