PowerPoint Presentation

to accompany
 Chapter 1

The Nature and Scope of

Strategic Management
 Objectives

define strategic management

recognise the contribution to strategic management made by
early theorists
outline Mintzbergs 5 Ps of strategy
identify Porters key contributions to strategy
understand the basic activities and processes used in strategic
management
describe the philosophy of adaptation to a changing environment
that underlies the practice of strategic management
outline how the principles underlying strategic management can
be applied to all types of organisation
Strategic Planning Framework
Strategy analysis

New challenges/ Ongoing

issues operational
issues

Project Business
plans improvement
plan

New Ongoing
Investments investments

FINAL STRATEGIC PLAN

overall resource requirements
and scheduling
 Early Military Strategists

Sun Tzu
Chinese military strategist
Art of War definitive military strategy
document written over 2000 years ago
Gained popularity as business strategy
handbook in late 1980s and 1990s
 Early Military Strategists

Carl Von Clausewitz

Nineteen-century Prussian military strategist

recognised Strategy forms the plans of the War and to

this end it links together the series of acts which are to
lead to the final decision, and that
In strategy everything is very simple, but not on that
account very easy
 Clausewitz Model of Strategy

Theory Should explain rather than prescribe

Principles Are deductions based on the spirit and sense of

a law. They are universal but not absolute

Rules Rest on the truth but allow for exceptions

Methods Refer to the means that are developed to carry

out the business (eg operating instruction
manuals). Once again, these are not absolute
but allow for exceptions.

Table 1.2
 Craft to Factory

Changing production methods and

scientific management

Adam Smith The Wealth of Nations

Frederick Winslow Taylor
Frank and Lillian Gilbreth
 Administrative theories

Max Weber Bureaucracy

Henri Fayol Human relationships

Maslow Human relationship

movement
Henri Fayol (1841-1925): 14 Principles (p.12)

Division of work
Authority
Discipline
Unity of Command
Unity of Direction
Subordination of individual interests to the general interest

Remuneration
Centralisation
Scalar chain (line of authority)
Order
Equity
Stability of tenure of personnel
Initiative
Esprit de corps
Contemporary Theories/ists

Michael E. Porter five forces

Resource based view of the firm

Henry Mintzberg 5 Ps of strategy:

Plan, Ploy, Pattern, Position, Perspective
Contemporary Theories/ists
Threat of
New
Entrants

Rivalry
Bargaining Bargaining
Power of among
Power of
Existing
Suppliers Buyers
Competitors

Threat of
Substitute
Products

Michael E. Porter's 5 forces framework

 Definition of strategic management

The process of identifying, choosing and

implementing activities that will enhance the
long-term performance of an organisation by
setting direction, and by creating ongoing
compatibility between the internal skills and
resources of the organisation, and the
changing external environment within which it
operates.
 What is strategic management?

It is a process which is oriented towards

the long term and deals with:
different time horizons
future options
new projects
existing operations
 Strategy

Concerns:
organisational context

managing the interface between an

organisation and its external environment
 Strategic management

occurs at different organisational levels

corporate
competitive
operational

develops and controls organisational scope

improves organisational effectiveness

 Strategic management

concentrates on core competencies

determines organisational risk profile

 Strategic management

creates patterns of investment

blends projects and processes

creates sustainable competitive

advantage (SCA)
 What successful strategic
management requires

Successful strategic management requires:

innovation
a broad knowledge of the organisation
initiation by senior managers
strong leadership
 Language of strategic
management

Strategy refers generally to the concepts used

in this management discipline.

Strategic planning refers to the use of these

concepts to develop a plan of action.

Strategic management refers to the analysis

and practice of strategy including the
implementation of strategic plans.
 Public sector application

corporatisation and privatisation of key

areas

push for increased efficiency and

effectiveness