Basic Concepts

of Strategic
Management

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Basic Concepts of Strategic Management

Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national
markets

Electronic Commerce
Use of the Internet to conduct business
transactions
Basis for competition on a more strategic level rather
than traditional focus on product features and costs

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Basic Concepts of Strategic Management

Electronic Commerce -- Trends

Forcing company transformation

Market access & branding changing
disintermediation of traditional
distribution channels
Balance of power shift to consumer
Competition changing

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Basic Concepts of Strategic Management

Electronic Commerce -- Trends

Pace of business increasing

Internet purchasing beyond traditional
boundaries
Knowledge key asset source of
competitive advantage

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Strategic Management Defined

Set of managerial decisions and actions

that determines the long-run performance
of a firm.

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Basic Concepts of Strategic Management

4 Phases of Strategic Management

1.
2.
3.
4.

Basic financial planning

Forecast-based planning
Externally-oriented planning
Strategic management

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Basic Concepts of Strategic Management

Highly Rated Benefits

Clearer sense of strategic vision

Sharper focus on strategic importance
Improved understanding of changing
environment

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Basic Concepts of Strategic Management

Not Always a Formal Process

Where is the organization now? (not

where do we hope it is)
If no changes are made, where will the
organization be in 1,2,5 or 10 years?
What specific actions should
management undertake?
What are the risks and payoffs?

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Basic Concepts of Strategic Management

Basic Elements of the Strategic

Management Process

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Environmental Scanning Defined

Monitoring, evaluation, and disseminating

information from external and internal
environments to key people in the firm

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Basic Concepts of Strategic Management

Environmental
Variables

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Environmental Scanning

SWOT Analysis

Strengths Weaknesses

Opportunities - Threats

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Strategy Formulation

Development of long-range plans for

effective management of opportunities
and threats in light of corporate
strengths and weaknesses

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Strategy Formulation

Mission Statement

Purpose/reason for organization

Promotes shared expectations
Communicates public image
Who we are; what we do; what we
aspire to

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Organizational Adaptation

Organization fit with environment

Theory of population ecology

Institution theory
Strategic choice perspective
Organizational learning theory

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Organizational Adaptation

Strategic flexibility

Demands long-term commitment to

development of critical resources

Demands firm become a learning

organization

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Learning Organizations

An organization skilled at creating,

acquiring, and transferring
knowledge and at modifying its
behavior to reflect new knowledge
and insights

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Learning Organizations

4 Chief Activities

Systematic problem solving

New approach experimentation
Learning from experiences
Intra-organization knowledge transfer

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Basic Concepts of Strategic Management

Hierarchy of
Strategy

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Goals & Objectives

Corporate Goals/Objectives
Profitability (net profit)
Growth
Resource utilization (ROE, ROI)
Market leadership

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Basic Concepts of Strategic Management

3 Types of Strategy
Corporate strategy
Business strategy
Functional strategy

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Basic Concepts of Strategic Management

Corporate Strategy
Stability
Growth
Retrenchment

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Basic Concepts of Strategic Management

Business Strategy
Competitive strategies
Cooperative strategies

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Basic Concepts of Strategic Management

Functional Strategy
Technological leadership
Technological followership

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Basic Concepts of Strategic Management

Strategic
Decision-Making
Process

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Strategic Decision Making

Strategic Decisions
Rare
Consequential
Directive

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Strategic Decision Making

Mintzbergs Modes
Entrepreneurial mode
Adaptive mode
Planning mode
Logical incrementalism

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Hambrick and Fredrickson Good Strategy

5 Elements of Good Strategy

1.
2.
3.
4.
5.

Arenas
Vehicles
Differentiators
Staging
Economic logic

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