STRATEGIC MANAGEMENT

TOPIC ONE: STRATEGIC

MANAGEMENT OVERVIEW
1.1 Meaning of Strategic Management
1.1 MEANING OF STRATEGIC MANAGEMENT
 Strategicmanagement is defined as the set
of decisions (let say desire to undertake
environment scanning/to expand the
business) and actions (set
objectives/goals/mission) that result in
the formulation and implementation of
plans designed to achieve a company’s
objectives (increase market share).
1.1 MEANING OF STRATEGIC MANAGEMENT
 Strategicmanagement can also be defined as
the art and science of formulating,
implementing, and evaluating cross-functional
decisions that enable an organization to
achieve its objectives.

 Itis about managing strategically as well as

planning, so although the planning part may
still be important, it is only a component.
1.1 MEANING OF STRATEGIC MANAGEMENT
 Strategic planning tended to focus on the
‘hard’ aspects of the external environment, and
was concerned with markets and the products
to supply them. It was about the formulation
of strategy rather than its implementation.
 Strategic management includes the internal
elements of organisation, such as style,
structure and climate, it includes
implementation and control, and consideration
of the ‘soft’ elements of the environment. It is
about the management of the total
organisation, in order to create the future.
1.1 MEANING OF STRATEGIC MANAGEMENT
 Among the key words in strategic management
is the concept of strategy. The word strategic is
derived from the word strategy which is a
specific pattern/blue print of decisions actions
(to grow, to differentiate, to enter new
market) that managers take to achieve
organization’s goals.
 For most if not all organization, an overriding
goal is to achieve superior performance. Thus a
strategy can often be defined precisely as the
specific patterns of decisions and actions that
managers take to achieve superior
organizational performance.
1.2 NATURE OF STRATEGIC MANAGEMENT
• Increased challenges in both companies
microenvironment and macro-environment make
firms to adopt strategic management approach.
• Micro-environment- it includes various
actors eg, competitors (quality products, low
prices), suppliers (supply availability, supply
quality, supply shortages or delays, labour
strikes), increasingly scarce resources,
government agencies and their ever more
numerous regulations (protecting customers,
environment and labour), and customers
whose preferences often shift and change without
notice.
1.2 NATURE OF STRATEGIC MANAGEMENT
• The remote external environment comprises
economic (inflation, lending rate) and social
conditions (population growth/decline),
migration, cultural issues) , political priorities
(ruling party’s manifesto) , and technological
developments (pace of changes, cost of
technology, availability of technology), all of
which must be anticipated, monitored, assessed,
and incorporated into the executive’s decision
making.
1.2 NATURE OF STRATEGIC MANAGEMENT
MICROENVIRONMENT FORCES
1.2 NATURE OF STRATEGIC MANAGEMENT
MACRO-ENVIRONMENT FORCES
1.2 NATURE OF STRATEGIC MANAGEMENT
 To deal effectively with such forces and
everything that affects the growth and
profitability of a firm, executives employ
management processes(such as strategic
management in this case) that they feel
will position it optimally in its competitive
environment by maximizing the
anticipation of environment changes and
of unexpected internal and competitive
demands.
1.3 FEATURES OF STRATEGIC MANAGEMENT
i. Strategic management is an all-encompassing
approach with increased emphasis on
environmental forecasting and external
considerations in formulating and
implementing plans.
ii. Strategic management deals with future-
oriented non-routine situation. It is an
approach adopting proactive posture involving
taking of actions before things happen.
1.3 FEATURES OF STRATEGIC MANAGEMENT
iii. Strategic management is an executive
function of decision making performed by
corporate executives and managers at all
levels of the organization.
iv. Strategic management deals primarily with
long-term issues that may or may not have an
immediate effect. For example, investing in the
education of the company's work force may
yield no immediate effect in terms of higher
productivity. Still, in the long run, their
education will result in higher productivity,
and therefore enhanced profits.
1.3 FEATURES OF STRATEGIC MANAGEMENT
v. Strategic management helps managers find
new sources of sustainable competitive
advantage. Executives that apply the
principles of strategic management in their
work continuously try to deliver products or
services cheaper, produce greater customer
satisfaction and make employees more
satisfied with their jobs.
vi. Managing the organization in a strategic
fashion requires that the interests of
shareholders be put at the heart of all issues.
1.3 FEATURES OF STRATEGIC MANAGEMENT
Whether the question at hand is expansion into a new
market or negotiating mergers and acquisitions,
shareholder value should be at the core at all times.
vii. Strategic management require large amount of
resources which are required in the execution of
strategic issues. The resources include people, physical
assets and money.
1.4 LEVELS OF STRATEGIC MANAGEMENT
 As we said earlier strategic management
involve the uses of strategy in order to
position the organization into a posture of
adapting to various environmental forces.
As it involve decision making, there is a
hierarchy with different levels of
deliberation.
 At the top of the hierarchy is the corporate
level comprised principally of a board of
directors and the chief executive and
administrative officers.
1.4 LEVELS OF STRATEGIC MANAGEMENT
• They are responsible for the firm’s financial
performance and for the achievement of
nonfinancial goals, such as enhancing the
firm’s image and fulfilling its social
responsibilities.
• In a multi business firm, corporate level
executives determine the business in which
the firm should be involved-setting missions.
• They also set objective and formulate
strategies that span the activities and
functional areas of these businesses.
1.4 LEVELS OF STRATEGIC MANAGEMENT
• In the middle of the decision making hierarchy is
the business level, composed of 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 divisions, or Strategic
Business Units (SBUs).
• These managers determine how the firm will
compete in the selected product-market arena.
• They strive to identify and secure the most
promising market segment within the arena.
1.4 LEVELS OF STRATEGIC MANAGEMENT
 At the bottom of the decision making
hierarchy is the functional level,
composed principally of managers of
product, geographic, and functional
areas (marketing, finance, HR, R&D,
Engineering).
 They develop annual objectives and short
term strategies in such areas as production,
operations, research and development,
finance and accounting, marketing and
human relations.
1.4 LEVELS OF STRATEGIC MANAGEMENT
 However, their principal responsibility is to
implement or execute the firm’s strategic
plans.
 These managers address issues such as
efficiency and effectiveness of production
and marketing systems, the quality of
customer services, and the success of
particular product and services in
increasing the firm’s market share
(functional strategies).
1.4 LEVELS OF STRATEGIC MANAGEMENT
1.4 LEVELS OF STRATEGIC MANAGEMENT