Strategic Management

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Modul ke:

Fakultas Types of Strategies

Ekonomi dan
Bisnis
Program Studi
Manajemen
Dr. Adi Nurmahdi MBA
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What is Strategic Management?

The set of decisions and actions that result

in the formulation and implementation of
plans designed to achieve a company’s
objectives.
 Critical Tasks of Strategic Management

1. Formulate the company’s mission

2. Conduct internal analysis
3. Assess the company’s external environment
4. Analyze company’s options
5. Identify most desirable options
6. Select long-term objectives and grand strategies
7. Develop annual objectives and short-term
strategies
8. Implement the strategic choices
9. Evaluate success of the strategic process
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 What is Strategy?

• Large-scale, future-oriented plan for

interacting with the competitive
environment to achieve objectives
• Company’s “game plan”
• Framework for managerial decisions

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 Dimensions of Strategic Decisions

• Strategic issues
• Require top-management decisions
• Require large amounts of the firm’s resources
• Often affect the firm’s long-term prosperity
• Are future oriented
• Usually have multifunctional or multibusiness
consequences
• Require considering the firm’s external
environment
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 Three Levels of Strategy

1. Corporate level
2. Business level
3. Functional level

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Exhibit 1-3: Single-business Firms

Corporate/
business level

Functional Level
POM/R&D Financial/ Marketing Human
strategies accounting strategies relations
strategies strategies
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Ex 1-3: Multiple business Firms

Corporate
strategies

Business Level
Business 2 Business 3
Business 1

Functional Level
Financial/ Human
POM/R&D Marketing
accounting relations
strategies strategies
strategies strategies
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Ex 1-4: Hierarchy of Objectives and Strategies

Strategic Decision Makers

Ends Means Board of Corporate Business Functional

(What is to be (How is to be achieved) Directors Managers Managers Managers
achieved)
Mission, including
Goals and
philosophy   
Long-term
objectives
Grand strategy   
Annual objectives Short-term strategies
and policies
  

Note:  indicates a principal responsibility;  indicates a secondary responsibility

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Characteristics of Strategic Management

Decisions

Greater risk,cost,
and profit potential

Corporate-level Greater need for

decisions flexibility

Longer time horizons

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Characteristics of Strategic Management

Decisions (contd.)

Implement overall strategy

Involve action-oriented
Functional- operational issues
level
decisions Are relatively short range
and low risk

Incur only modest costs

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Characteristics of Strategic Management

Decisions (contd.)
Bridge decisions at
corporate and functional
levels

Are less costly, risky, and

Business-level potentially profitable than
decisions corporate-level decisions

Are more costly, risky, and

potentially profitable than
functional-level decisions
 Formality in Strategic Management

• Definition
• Degree to which participants, responsibilities,
authority, and discretion in decision making are
specified
• Forces affecting degree of formality
• Size of organization
• Predominant management styles
• Complexity of environment
• Production process
• Problems
• Purpose of planning system

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 The Strategy Makers
• The ideal strategic management team
includes
• Chief executive officer (CEO)
• Product managers
• Heads of functional areas
• The strategic management team obtains
input from
• Planning staff
• Lower-level management and supervisors
• Role of CEO
• Provides long-term direction
• Assumes ultimate responsibility for firm’s success
• Solicits guidance from Board of Directors
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Benefits of Strategic Management

Enhances the firm’s ability to prevent problems

Emphasizes group-based strategic decisions likely to be based on
best available alternatives
Improves employees’ understanding of the productivity-reward
relationship
Reduces gaps/overlaps in activities among employees as their
participation clarifies differences in roles

Resistance to change is reduced

 Risks of Strategic Management

• Time involved may negatively impact

operational responsibilities of
managers
• Lack of involvement of strategy
makers in strategy implementation
may result in shirking of responsibility
for strategic decisions
• Potential disappointment of
employees over unattained
expectations requires managerial time
and training
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Ex 1-6:
Strategic
Company mission
Management
and social
Process
responsibility

Possible?
External
Internal analysis
environment
Desired?

Strategic analysis and choice

Long-term
Generic and grand strategies
objectives

Short-term objectives; Policies that

Functional tactics
reward systems empower action

Restructuring, reengineering
and refocusing the organization
Legend Strategic control and
Major impact continuous improvement
Minor impact
 Components of the Strategic
Management Model
• Company Mission
• Specifies unique purpose of company
• Identifies scope of operations
• Describes product, market, and technological
areas of emphasis
• Reflects values and priorities of decision makers
• Expresses approach to social responsibility efforts
• Internal Analysis
• Depicts quantity and quality of company’s
financial, human, and physical resources
• Assesses company’s strengths and weaknesses
• Contrasts past successes and concerns with
current capabilities to identify future capabilities

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 Components of the Strategic
Management Model (contd.)

• External Environment
• Consists of all conditions and forces affecting
firm’s strategic options and define its competitive
situation
• Includes three interactive segments – remote,
industry, and operating environments
• Strategic Analysis and Choice
• Involves simultaneous assessment of external
environment and company profile
• Incorporates screening process based on mission
to generate possible and desired opportunities
• Results in selection of options from which a
strategic choice is made

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 Components of the Strategic
Management Model (contd.)

• Long-term Objectives
 Profitability
 Return on investment
 Competitive position
 Technological leadership
 Productivity
 Employee relations
 Public responsibility
 Employee development

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 Components of the Strategic
Management Model (contd.)

• Generic Strategies
• Low cost
• Differentiation
• Focus
• Grand Strategies
• Comprehensive, general plan of major
actions through which the firm intends
to achieve its long-term objectives in a
dynamic environment

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 Components of the Strategic
Management Model (contd.)

• Action Plans and Short-Term Objectives

• Translate generic and grand strategies into
“action”
• Identify specific functional tactics to be taken in the
near term
• Establish a clear time frame for completion
• Creates accountability
• Specify one or more immediate objectives as
outcomes of the action

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 Components of the Strategic
Management Model (contd.)

• Functional Tactics
• Involve identifying activities unique to the
function to help build competitive advantage
• Specify detailed statements of “means” to be
used to achieve short-term objectives
• Policies that Empower Action
• Include broad, precedent-setting decisions that
substitute for repetitive or time-sensitive decision
making
• Often increase managerial effectiveness by
empowering discretion of subordinates in
implementing strategies

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 Components of the Strategic
Management Model (contd.)

• Restructuring, Reengineering, and

Refocusing the Organization
• Involves an internal focus – getting work done
efficiently and effectively to make the strategy
work
• Downsizing, restructuring and reengineering
reflect the critical stage in strategy
implementation wherein managers attempt to
recast their organization.

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 Components of the Strategic
Management Model (contd.)

• Strategic Control and Continuous

Improvement
• Control
• Tracks a strategy during implementation
• Detects problems
• Involves making necessary adjustments
• Continuous improvement
• Provides another approach to strategic control
• Allows an organization to respond more
proactively and timely to rapid developments

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 Implications of Viewing Strategic
Management as a Process

 Changes in any one component will affect

other components
 Strategy formulation and implementation are
sequential
 Necessity of feedback from
institutionalization, review, and evaluation to
early stages of process
 Need to regard it as dynamic, involving
constant changes in interdependent strategic
activities
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 Daftar Pustaka
Fred R David, Strategic Management, 15 Editio, 2017
Mudrajad Kuncoro, Strategi Bagaimana Meraih Keunggulan
Kompetitif, Jakarta: Erlangga, 2006
Michael A. Hitt, R.Duane Ireland, Robert E. Hoskisson, Strategic
Management, 11 Edition, 2012
Terima Kasih
Dr. Adi Nurmahdi, MBA