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JKUAT CBD CAMPUS

HCBA 3110
STRATEGIC MANAGEMENT

Mr. Ismail Omar

Introduction and
General Overview

CONCEPT OF
STRATEGY

The concept of strategy has been much used and


often abused however it is:
Is a multi-dimensional concept
Has found application in all fields of study and life

A unifying (integrating) pattern of decisions a


common thread
Defines organization purpose goals, objectives and
priorities
Deals with organizational competitive advantage
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Strategy is about winning

Defining Strategy
Positioning of organization in the
environment
Defines obligations of the organization
to its stakeholders
Defines the business of the
organization product/market scope

Views of Strategy
Strategy is about the long term direction of an
Development
organization.
It is typically thought of in terms of major decisions
about the future.
However it is a mistake to conceive of organizational
strategy as necessarily developing through one-off major
changes.
This understanding brings us to focus on different views
of strategy development
As a strategic thinker how do we perceive this
development?

The strategic development of organizations is better


described and understood in terms of: Continuity
momentum

Once an organization has adopted a particular


strategy, it tends to develop from and within that
strategy
Rather than fundamentally changing direction
In other words in strategic development drastic
change is not desirable
Historical studies of organizations have shown that
there are usually long periods of relative continuity
At this point strategy remains unchanged or changed
incrementally
There are also periods of flux in which strategies
change but in not very clear direction.
Transformational change in which there is fundamental
change in strategic direction does take place but is
infrequent.

Patterns of Strategy Development

Continuity

Incremental

Flux

Transformational

This pattern of behaviour in strategy


development in organizations has become
known as punctuated equilibrium
It is the tendency of strategies to develop
incrementally with periodic
transformational
Change
A specific strategic move perhaps a
product launch
Significant investment decision
Strategic alliance
Acquisition

etc
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Gradual change in strategy makes a lot of sense


No organization could function effectively if it were
to undergo major revisions of strategy frequently
It is unlikely that the environment would change so
rapidly that this would be necessary.
Incremental change might therefore be seen as an
adaptive process to a continually changing
environment. What is referred to as strategic fit.
Environmental change may not always be gradual
enough for incremental change to keep pace.
If such incremental strategic change lags behind
environmental change , the organization may get
out of line with its environment and, in time, need
more fundamental, or transformational, change.
The transformational change tends to occur at times
when performance has declined sufficiently.

Strategists should be responsive to the


environment than being reactive
They should be innovative
See the best opportunities
Manage the threats
Monitor the rapid changes and align
their organizations to take advantage of
the available opportunities
Strategies should be proactive
Create new markets and transform the
strategic direction
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Intended and realized views


Intended Strategy
It is an expression of desired strategic direction
deliberately formulated or planned by managers
The implementation is also planned In terms of
resource allocation, structure, policy, procedures
etc
Strategy in this sense is deliberate, systematic
planned process of development and
implementation
Realized strategy
- It is the strategy actually being followed in practice
Sometimes what is intended is not achieved and
ends up in totally a different strategic objective
being realized.

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Strategy could also be imposed on an


organization
It could be imposed by an external agency such as
government, world bank, IMF, donors (development
partners) as has occurred in the deregulation of
industries in many countries; or by a parent company
on a subsidiary.
It could be that environmental conditions severely
limit the choices that managers can make or the
strategies they can follow.
For example , the cutting of costs may be forced by
recession or conditions in a commodity market and
may
mean that there is little opportunity to
follow strategies
substantially different from
those of other businesses in
that market.

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If strategy is regarded as the long-term direction of


the organization which develops over time, then it
can also be seen as the outcome of cultural and
Political processes.
The management of organizations depends a great deal on
the knowledge and experience of those involved.
This experience and ways of doing things are built up over
the years.
In organizations, managers typically reconcile different
views, based on experience, through negotiation or the
exercise of power; and this occurs within established ways
of doing things, or routines; that make up the culture of the
organization

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Strategy development routes

Strategy
as outcome
(of cultural
and
political processes)

Imposed
Strategy

4
1

Intended
Strategy

Realised
Strategy

Planned Implementation

2
Unrealized
Strategy

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STRATEGIC MANAGEMENT AND ITS


CHARACTER
Strategic
process:

Management

is

an

ongoing

- evaluates and controls the business and the


industries in which the company is involved
- assesses its competitors and sets goals and
strategies to meet all existing and potential competitors
- and then reassesses each strategy periodically
to determine
how it has been implemented and
whether it has
succeeded or needs replacement
- aimed at meeting changed circumstances, new
technology, new
competitors, a new economic
environment, or a new
social, financial, or political
environment.

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Strategic Management relates to positioning and


relating a firm to its environment in a way that will
assure continued success.
This requires application of various principles,
techniques and advanced tools in strategic
management
In the past focus on long-range planning assumed that
the future was not expected to be significantly different
from the past so extrapolation of history was sufficient
Strategic planning assumes the future is not expected
to be a resemblance of the past hence not
extrapolatable.
Strategic Management is about performance of
organization

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SM is a process concerned with the whole


organization
SM deals principally with organizational success
Success comes about when organizations are
aligned to their external environments
- Organizations are environment dependent and
environment serving
- Strategy is the link between organizations and their
environments

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THE NATURE AND VALUE OF


STRATEGIC MANAGEMENT
Strategic management is defined as the set of decisions
and actions that result in the formulation and
implementation of plans designed to achieve a
companys objectives.
It comprises nine critical tasks:
1.

Formulate the companys mission, including broad


statements about its purpose, philosophy, and goals.

2.

Conduct an analysis that reflects the companys


internal conditions and capabilities.

3.

Asses the companys external environment, including


both the competitive and the general contextual
factors.

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4. Analyze the companys options by matching its


resources with external environment.
5. Identify the most desirable options by evaluating each
option in light of the companys mission.
6. Select a set of long term objectives and grand
strategies that will achieve the most desirable options.
7. Develop annual objectives and short-term strategies
that are compatible with the selected set of long-term
objectives and grand strategies.
8. Implement the strategic choices by means of budgeted
resource allocations in which the matching of tasks,
people, structures, technologies, and reward systems is
emphasized.
9. Evaluate the success of the strategic process as an
input for future decision making.

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Benefits of Strategic Management

Allow synergy
Aid evaluation
Establish priorities
Reduce uncertainty
Minimize conflicts
Aid in the design of jobs

Measure of managerial performance

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Help stakeholders understand their role in


an organizations future
Facilitate decision making by managers
Strategy acts like a Radar of a ship-without
it an organization would drift aimlessly
toward some unknown destination
Gaps and overlaps in activities among
individuals and groups are reduced as
participation in strategy formulation clarifies
differences in roles.
Resistance to change is reduced
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Risks of strategic management


The time that managers spend on the strategic
management process may have a negative impact on
operational responsibilities
Managers must be trained to minimize that impact
by scheduling their duties to allow the necessary
time for strategic activities
If the formulators of strategy are not intimately
involved in its implementation, then the plan may not
work.
Strategic managers must be trained to anticipate and
respond to the disappointment of participating
subordinates over unattained goals and objectives.
Sensitizing managers to these possible negative
consequences and preparing them with effective
means of minimizing such consequences will greatly
enhance the potential of strategic planning.

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END

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