What is a strategy

• art of troop leader; office of general, command, generalship.

• is a high level plan to achieve one or more goals under conditions of

uncertainty. In the sense of the "art of the general", which included

several subsets of skills including "tactics", siege craft, logistics etc.

• A strategy describes how the ends will be achieved by the means.

 McDonald's Corporation
When most firms were struggling in 2008, McDonald’s increased its
revenues from $22.7 billion in 2007 to $23.5 billion in 2008. Headquartered
in Oak Brook, Illinois McDonald’s net income nearly doubled during that
time from $2.4 billion to $4.3 billion—quite impressive. Fortune magazine
in 2009 rated McDonald’s as their 16th “Most Admired Company in the
World” in terms of their management and performance. McDonald’s added
650 new outlets in 2009 when many restaurants struggled to keep their doors
open.
 McDonald's Corporation
This is in stark contrast to most restaurant chains that are struggling to survive,
laying off employees, closing restaurants, and reducing expansion plans.
McDonald's restaurants are in 120 countries. Going out to eat is one of the first
activities that customers cut in tough times. But McDonald’s top management
team says everything the firm does is for the long term. McDonald’s for several
years referred to their strategic plan as “Plan to Win.” This strategy has been to
increase sales at existing locations by improving the menu, remodeling dining
rooms, extending hours, and adding snacks.
 Strategic Management
 Art & science of formulating, implementing, and evaluating, cross-
functional decisions that enable an organization to achieve its objectives.

 Strategic management provides overall direction to an enterprise and

involves specifying the organization's objectives,

developing policies and plans to achieve those objectives, and then
allocating resources to implement the plans.
 Importance of strategic management
 It guides the company to move in a specific direction. It defines organization’s goals and
fixes realistic objectives, which are in alignment with the company’s vision.
 It assists the firm in becoming proactive, rather than reactive, to make it analyze the actions
of the competitors and take necessary steps to compete in the market, instead of becoming
spectators.
 It acts as a foundation for all key decisions of the firm.
 It attempts to prepare the organization for future challenges and play the role of pioneer in
exploring opportunities and also helps in identifying ways to reach those opportunities.
 It ensures the long-term survival of the firm while coping with competition and surviving
the dynamic environment.
 It assists in the development of core competencies and competitive advantage, that helps in
the business survival and growth.
 Barriers to strategic management
 Lack of Leadership

 Lack of Systems

 Limited Manpower to Complete Tasks

 Inadequate Resources and Funding

 Lack of commitment

 Focusing on the present at the expense of the future

 inability to plan or inadequate planning

 Stages in strategic management
 Strategy formulation

 Strategy implementation

 Strategy evaluation
Ch 1
-8
Key Terms

Strategists – Firm’s success/failure

Various Job Titles:

• Chief Executive Officer (CEO)

• Chief Strategy Officer (CSO)
• President
• Owner
• Board Chair
• Executive Director

Copyright 2005 Prentice Hall

 Not Managing by Objective

 Strategists should avoid the following alternative ways of “not

managing by objectives.”
 Managing by Extrapolation – “If it ain’t broke (if you don not have
problem), don’t fix it.”
 Managing by Crisis – The true measure of a good strategist is the
ability to fix problems
 Managing by Subjectives – “Do your own thing, the best way you
know how.”
 Managing by Hope – The future is full of uncertainty and if first you
don’t succeed, then you may on the second or third try.
 Pakistan strategic challenges
 Class activity/ discussion.
 Stake holders strategy
Internal stake holders External stake holders

 Customers
 Employees
 Suppliers
 Stock holders  Creditors
 Board members  Communities
 Government
 Media
 Unions
 Stake holders impact analysis
 Identify Stakeholders

 Identify stakeholders interest

 Identify opportunities and threats

 Identify social responsibilities

 Economic, legal, Ethical and philanthropic

 Address stake holders concern

 Pitfalls to Avoid in Strategic Planning

 Using to gain control over decisions & resources

 Doing only to satisfy regulatory requirements

 Moving hastily from mission to strategy formulation

 Failing to communicate to employees

 Intuitive decisions that conflict with formal plan

 Top management not supportive of process

© 2001 Prentice Hall

 Pitfalls to Avoid in Strategic Planning
(Cont’d)

 Failing to use as standard for performance measurement

 Delegating to a “planner” vs. involvement of managers

 Failing to involve key personnel

 Failing to create collaborative environment

 Formality that stifles creativity and flexibility

© 2001 Prentice Hall

Business Ethics & Strategic Planning

Defined:
 Principles of conduct within organizations that guide
decision making and behavior

 Good business ethics is a prerequisite for good strategic

management

 Good ethics is just good business!

© 2001 Prentice Hall

 Business Ethics & Strategic Planning
(Cont’d)

 Strategists responsible for high ethical principles

 All strategic processes have ethical ramifications

 Formal codes of ethics are in place for many businesses

 Internet privacy emerging as ethical issue of immense

proportions

© 2001 Prentice Hall

 Business Ethics & Strategic Planning
(Cont’d)
Business actions always unethical include:

 Misleading advertising
 Misleading labeling
 Environmental harm
 Poor product or service safety
 Padding expense accounts
 Insider trading
 Dumping flawed products on foreign markets
© 2001 Prentice Hall
 Why Some Firms Do No Strategic Planning

 Lack of knowledge of strategic planning

 Poor reward structures

 Fire fighting

 Waste of time

 Too expensive

 Laziness
 Why Some Firms Do No Strategic Planning
(continued)
 Fear of failure

 Overconfidence

 Prior bad experience

 Self-interest

 Fear of the unknown

 Honest difference of opinion