Strategic Management Process: an

Overview

• Why do some firms succeed while others

fail?

• What is strategy?

• What is the strategic management process?

 Strategic Planning

Steps in the strategic planning process:

− Selection of mission and goals
− External environment analysis
− Internal environment analysis
− Strategy selection
− Strategy implementation
− Strategy evaluation
 Selection of
mission and goals

Mission
− Sets out why the organisation
exists and what it should be doing
Major goals
− Specify what the organisation hopes
to fulfill in the medium to long term
Secondary goals
− Are objectives to be attained that lead to
superior performance
 External environment analysis

• Identify strategic opportunities and threats

in the organisation’s operating environment
• There are three interrelated external
environments:
− Immediate or industry environment
− National environment
− Macroenvironment
 Internal environment analysis

• Identify strategic strengths and weaknesses

within the organisation
• There are three major concepts that relate
to the internal environment:
− Competencies
− Resources
− Capabilities
 Strategy selection

• SWOT analysis generates strategy

alternatives

• Strategic choice involves evaluation of

strategy alternatives

• Choice of strategy alternatives at business-

level, functional-level, corporate-level and
global
 Business-level strategy

• How an organisation chooses to position

itself in the marketplace to gain a
competitive advantage may be based upon

− Cost leadership
− Differentiation
− Market niche focus
 Functional-level strategy

• Focus is on improving the effectiveness

within a company at an operational level
such as
− Manufacturing
− Marketing
− Materials management
− Research and development
− Human resources
 Corporate-level strategy

• What businesses an organisation should be

in to maximise long-term profitability and
could consider
− Vertical integration
− Diversification
− Strategic alliances
− Acquisitions
− New ventures
− Business portfolio restructuring
 Global strategy

• Achieving a competitive advantage via

participation in the global marketplace
through

− Multidomestic strategy
− International strategy
− Global strategy
− Transnational strategy
 Strategy implementation

• Designing organisational structure

• Designing control systems

• Matching strategy, structure and controls

• Managing strategic change

 Strategy evaluation

• Feedback loop

• Formal evaluation process

• Evaluation and feedback provide

information on when and why change needs
to take place
 Strategic leadership

• Strategic leadership is the ability to

articulate a strategic vision for all or part of
the organisation and to motivate others to
follow that vision
 Strategic leadership

• Vision, eloquence (persuasiveness) and

consistency
• Commitment
• Being well informed
• Willingness to delegate
• Astute(intelligent) use of power (build consensus,
show commitment publicly, ability to push by piecemeal)

• Emotional intelligence (self regulation, self awareness,

motivation, empathy, social skills)
 Strategy as an
emergent process

• Strategy making in an unpredictable world

− Creates the necessity for flexible strategic
approaches
• Strategy making by lower-level managers
− Strategy evolves through autonomous
action
 Strategy as an
emergent process

• Serendipity (luck) and strategy

− Accidental discoveries and coincidences
can have dramatic effects on strategic
direction
• Intended and emergent strategies
− Realised strategies are combinations of
intended and emergent strategies
 Intended and emergent strategies

 Source: Reprinted from ‘Strategy Formation in an Adhocracy,’ by Henry Mintzberg

and Alexandra McGugh, published in Administrative Science Quarterly, Vol. 30,
No. 2, June 1985, by permission of Administrative Science Quarterly.
Intended and emergent strategies

(continued)

The strategic management process for

intended and emergent strategies
Intended and emergent strategies
(cont.)

The strategic management process for

intended and emergent strategies
 Strategic planning in practice

• Planning under uncertainty

− Scenario planning for dynamic
environmental change
• Ivory tower planning
− Lack of contact with operational realities
− The importance of involving operating
managers
− Procedural justice in the decision-making
process
 Strategic planning in practice

• Planning for the present:

− Recognition of the static nature of the
strategic fit model
• Strategic Intent
− Active management process that focuses
on the achievement of stretch goals that
develop the organisation’s resources and
capabilities
 Improving strategic
decision making

• Cognitive biases systematically influence

the rationality of decision makers- leads to
decision making errors
 Improving strategic
decision making (cont.)

Five well-known cognitive biases

 Biases
• Priority hypothesis bias – due to having
strong beliefs about certain variables
• Reasoning analogy – using simples
analogies to address complex problems
• Representativeness- generalize from small
sample
• Illusion of control – overestimating one’s
ability to control
• Group Think
 Groupthink and
strategic decisions

• Pitfalls of groupthink
− Fail to question underlying assumptions
− Coalesce around a single person or policy
− Filter out conflicting information
− Develop after-the-fact rationalisations
− Have an emotional (nonobjective)
commitment to an action
 Read

• Devil’s advocacy & Dialectic inquiry