Chapter Outline

 Five Tasks of Strategic Management

 Developing a Strategic Vision and Mission
 Setting Objectives
 Crafting a Strategy
 Implementing and Executing the Strategy
 Evaluating Performance and Initiating
Corrective Adjustments
 Why Strategic Management Is a Process
 Who Performs the Tasks of Strategy?
 Benefits of “Thinking and Managing
Strategically”
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 Thinking Strategically:
The Three Big Strategic Questions

1. Where are we now?

2. Where do we want to go?
 Business(es) to be in and market
positions to stake out?
 Buyer needs and groups to
serve?
 Outcomes to achieve?
3. How do we get there?
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 What Is Strategy?
 A company’s strategy consists of the set of
competitive moves and business approaches that
management is employing to run the company
 Strategy is management’s “game plan” to
 Attract and please customers

 Stake out a market position

 Conduct operations

 Compete successfully

 Achieve organizational objectives

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 What Is a Business Model?
 A company’s business model addresses “How do we make
money in this business?”
 Is the strategy that management is pursuing capable of
delivering good bottom-line results?
 Do the revenue-cost-profit economics of the company’s
strategy make good business sense?
 Look at the revenue streams the
strategy is expected to produce
 Look at the associated cost structure
and potential profit margins
 Do the resulting earnings streams and
ROI indicate the strategy makes sense and that the
company has a viable business model?
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 Why Are Strategies Needed?

To proactively To mold the

shape how a independent actions
company’s and decisions of
business will managers and
be conducted employees into a
coordinated,
company-wide
game plan

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 Figure 1-1: The Five Tasks
of Strategic Management
Task 1 Task 2 Task 3 Task 4 Task 5

Develop a Monitor,
Craft a Implement
Strategic Evaluate,
Set Strategy and
Vision and Take
Objectives to Achieve Execute
and Corrective
Objectives Strategy
Mission Action

Revise as Revise as Improve/ Improve/ Recycle

Needed Needed Change Change as Needed

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 Characteristics of a Strategic Vision
 A roadmap of a company’s
future
 Future technology-product-
customer focus
 Geographic and product
markets to pursue
 Capabilities to be developed
 Kind of company that
management is trying to
create

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 Missions vs. Strategic Visions
 A mission statement  A strategic vision
focuses on current concerns a firm’s future
business activities -- business path --
“who we are and “where we are going”
what we do”  Markets to be pursued
 Current product and  Future technology-
service offerings product-customer
 Customer needs focus
being served  Kind of company that
 Technological and management is
business capabilities trying to create

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 Types of Objectives Required

Financial Objectives Strategic Objectives

Outcomes focused on Outcomes focused on
improving financial improving long-term,
performance competitive business
position

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 Crafting a Strategy

 Involves deciding how to

 Respond to changing
buyer preferences Our strategy
 Respond to new will be . . .
market conditions
 Grow the business over
the long-term
 Achieve performance
targets
 Outcompete rivals
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 Figure 1-2: A Company’s Strategy is
Partly Planned and Partly Reactive

Company
Experiences,
Know-how,
Resource Actual
Strengths and Compan
Weaknesses, y
and Strategy
Competitive
Capabilities

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 Figure 1-3: Understanding a Company’s
Strategy -- What to Look For
Actions to diversify Actions to outcompete rivals

Actions to strengthen Responses to

resources & changing external
capabilities circumstances
Pattern
of Actions
How functional Actions to alter
That Define
activities are geographic
managed Strategy coverage
Efforts to pursue Actions to merge or
new opportunities or acquire rival companies
defend against threats
Actions to form strategic
alliances and collaborative
partnerships
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 Figure 1-4: Strategic Approaches to
Preparing for Future Market Conditions
Company Approaches
Reactive/Follower Proactive/Leader
Future Market Conditions

Aggressively
Rapid Keep from being
Revolutionary altering strategy to
swamped by the
Change make waves and
waves of change
drive change

Anticipating
Revising strategy
Gradual change and
(hopefully in time)
Evolutionary initiating strategic
to catch the waves
Change actions to ride the
of change
crest of change
Source: Adapted from Derek F. Abell, “Competing Today While Preparing for Tomorrow,” Sloan Management Review 40, No. 3 (Spring 1999), p. 75.

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 What is a Strategic Plan?

Where firm is headed --

Strategic vision and
business mission

Short and long term performance

targets -- Strategic and
financial objectives

Action approaches to achieve

targeted results -- A
comprehensive strategy
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Strategy Implementation and Execution

Strategy implementation and

execution is an action-oriented,
“make-it-happen” process involving
people management, developing
competencies and capabilities,
budgeting, policy-making, motivating,
culture-building, and leadership

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 Characteristics of the
Strategic Management Process
 Need to do the five tasks never goes away
 Boundaries among the five tasks are blurry
 Strategizing is not isolated from other
managerial activities
 Time required comes in lumps and spurts
 The big challenge: To get the best strategy-
supportive performance from employees,
perfect current strategy, and improve strategy
execution

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 Strategic Management Principle

A board of director’s role in the

strategic management process is to
critically appraise and ultimately
approve strategic action plans and to
evaluate the strategic leadership skills
of the CEO and others in line to
succeed the incumbent CEO.
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