STRATEGIC MANAGEMENT

By Ma’am Heaven

WHAT IS THE DIFFERENCE BETWEEN STRATEGIC MANAGEMENT AND

STRATEGY?
"STRATEGIC MANAGEMENT" refers to the entire process of developing,
implementing, and evaluating an organization's strategies to achieve its goals.
“STRATEGY” is the specific plan or course of action chosen to achieve those
goals, essentially representing the "what" of the organization's direction,
whereas strategic management encompasses the "how" to execute that plan.
In Short, strategy is the plan, and strategic management is the process of
managing that plan.

The purpose of strategic

management is to exploit
and create new and
different opportunities for
tomorrow while long-range
planning tries to
optimize for tomorrow the
trends of today.
The purpose of strategic
management is to exploit
and create new and
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different opportunities for

tomorrow while long-range
planning tries to
optimize for tomorrow the
trends of today.
The purpose of strategic
management is to exploit
and create new and
different opportunities for
tomorrow while long-range
planning tries to
optimize for tomorrow the
trends of today.
The purpose of strategic management is to exploit (Make full use) and create new and
different opportunities for tomorrow while long-range planning tries to optimize for
tomorrow the trends of today.

THE 5 STAGES OF STRATEGY MANAGEMENT and HOW IT WORKS

1. Business objectives - Goal setting: Clarify and define the business's vision
and objectives

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In order to successfully frame your strategic cycle, you will need your company
mission, vision, and long-term business objectives. Start by revisiting the
essence of what your business is and what it aspires to be. Then think about
what goals could realistically advance these fundamental principles in the
medium term. From there, define clear, specific, and actionable business
objectives for your strategy cycle. You can set top-level objectives related to
growth, market position, or other business outcomes, providing a direction for
your strategic planning and execution.

Setting objectives:
 Growth: Determine your targets for revenue growth, market expansion, or
customer acquisition
 Market position: Decide on your desired market share or industry ranking
 Business outcomes: Define other key outcomes, such as product innovation,
operational efficiency, or customer satisfaction

2. Analysis / Analize the situation: Gather and analyze information about the
business and its environment.

Conduct a thorough analysis of your internal capabilities and external

environment. Quantive's solutions help you review your organization's
strengths and weaknesses and understand market opportunities and threats,
forming the foundation for effective strategies.

Internal analysis:
 Strengths: Identify your company’s core competencies and unique
advantages
 Weaknesses: Recognize areas where your company lacks capabilities or
resources

External analysis:
 Opportunities: Look for market trends, customer needs, and emerging
technologies that your company can capitalize on
 Threats: Be aware of competitive pressures, regulatory changes, and
economic fluctuations that could impact your business

3. Strategic Planning / Develop a strategy: Create a plan to achieve the

business's goals.

Create strategic plans based on insights from your analysis. Note that the
insights from your analysis may lead you to revisit your top-level goals for your
strategic cycle. Creating strategic plans from an analysis of your business
context is no easy fit. It requires you to frame your decisions and plans
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effectively. Various strategic frameworks exist to strengthen your strategic

decision-making. Quantive Strategy AI helps you evaluate different strategic
options and select the ones that best fit your business needs and resources,
drafting detailed plans and considering various scenarios.

Strategic planning process:

 Evaluate options: Consider various strategic pathways and assess their
potential impact
 Select strategies: Choose the strategies that align with your business
ambitions and leverage your strengths
 Draft plans: Develop detailed plans that outline the actions, timelines, and
resources required for execution
 Scenario planning: Anticipate possible future scenarios and prepare
contingency plans

4. Strategy evaluation / allocate resources / implementation: Put the plan into

action.
Execute your strategies with precision. This step involves putting plans into
action, coordinating efforts across departments, and managing resources
effectively. Ensure that your strategy implementation plan includes specific
actions, timelines, and responsible parties.

Execution framework:
 Action plans: Break down strategic plans into specific actions with clear
timelines and responsibilities
 Alignment: Ensure cross-departmental collaboration and communication
 Resource management: Allocate resources efficiently to support strategic
initiatives
 Monitoring: Keep track of progress and make adjustments as needed

5. Evaluation and optimization / Evaluate the result / Strategy monitoring:

Evaluate the plan's effectiveness and make adjustments
Regularly assess the performance of your strategies using metrics and KPIs.
Review progress towards goals, identify any issues or deviations, and make
necessary adjustments. This step helps you stay aligned with your objectives
and improve your strategic approach over time.

Evaluation Process:
 Performance metrics: Use KPIs to measure progress towards your goals
 Review: Conduct regular reviews to identify issues or deviations from the
plan
 Adjustments: Make necessary adjustments to optimize strategy execution
 Continuous improvement: Foster a culture of continuous improvement by
encouraging feedback and learning

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WHY IS STRATEGIC MANAGEMENT IMPORTANT?

Why it's important?

 Strategic management helps businesses gain a competitive edge
 It helps businesses respond to changes in the business environment
 It helps businesses maximize their performance and success
 What it includes building an annual strategy, planning organizational
structure, allocating resources, leading change initiatives, and
controlling processes and resources.

Strategic management is important because it helps organizations set goals,

adapt to change, and stay competitive. It also helps businesses allocate
resources efficiently and improve performance.

Review to the class: Why is strategic management important? (5 STAGES)

1. Set goals
Strategic management provides a structured way to set goals and
define a vision and mission.
2. Adapt to change
Strategic management helps organizations anticipate changes in their
environment and formulate strategies to respond.
3. Stay competitive
Strategic management helps organizations identify their strengths and
weaknesses, and capitalize on opportunities.
4. Improve performance
Strategic management helps organizations evaluate their performance
against their goals, and identify areas for improvement.
5. Allocate resources
Strategic management helps organizations allocate resources
efficiently, such as finances, human capital, and technology.

6. Develop strategic thinking

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Strategic management courses can help people develop their strategic

thinking skills.

Strategic Management exists for organizations to gain a competitive edge over

their competitors

WHAT IS PURPOSE OF STRATEGIC MANAGEMENT?

The purpose of strategic management is to help an organization achieve its
long-term goals and vision. It ensures that an organization's actions and
resources are aligned with its goals.

KEY TERMS IN STRATEGIC MANAGEMENT

A. Competitive Advantage
1. Competitive advantage is defined as anything that a firm does especially
well compared to rival firms.

2. Firms should seek a sustained competitive advantage by continually

adapting to changes in external trends and internal capabilities and
evaluating strategies that capitalize on those factors.

3. An increasing number of companies are gaining a competitive advantage

by using the Internet for direct selling and for communication with
suppliers, customers, creditors, partners, shareholders, clients, and
competitors who may be dispersed globally.

B. Strategists
1. Strategists are individuals who are most responsible for the success or
failure of an organization.

2. Strategists hold various job titles, such as chief executive officers,

president, owner, chair of the board, executive director, chancellor, dean,
or entrepreneur.

3. Strategists help an organization gather, analyze, and organize

information. They track industry and competitive trends, develop
forecasting models and scenario analyses, evaluate corporate and
divisional performance, spot emerging market opportunities, identify
business threats, and develop creative action plans.

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C. Vision and Mission Statements

1. Vision statements answer the question: “What do we want to become?”

2. Mission statements are “enduring statements of purpose that distinguish

one business from other similar firms. A mission statement identifies the
scope of a firm’s operations in product and market terms.” It addresses
the basic question that faces all strategists: “What is our business?” It
should include the values and priorities of an organization.

D. External Opportunities and Threats

1. External opportunities and external threats refer to economic, social,
cultural, demographic, environmental, political, legal, governmental,
technological, and competitive trends and events that could significantly
benefit or harm an organization in the future.

2. Opportunities and threats are largely beyond the control of a single

organization, thus the term external.

3. To survive in a global economic recession, firms must be aware of the

new opportunities and threats that have surfaced as a result.

4. A basic tenet of strategic management is that firms need to formulate

strategies to take advantage of external opportunities and to avoid or
reduce the impact of external threats.

5. The process of conducting research and gathering and assimilating

external information is called environmental scanning or industry
analysis.

E. Internal Strengths and Weaknesses

1. Internal strengths and internal weaknesses are an organization’s

controllable activities that are performed especially well or poorly.

2. Identifying and evaluating organizational strengths and weaknesses in the

functional areas of a business is an essential strategic-management
activity.

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3. Strengths and weaknesses are determined relative to competitors and may

be determined by both performance and elements of being.

F. Long-Term Objectives
1. Objectives can be defined as specific results that an organization seeks to
achieve in pursuing its basic mission.

2. Long term means more than one year.

3. Objectives state direction, aid in evaluation, create synergy, reveal

priorities, focus coordination, and provide a basis for effective planning,
organizing, motivating and controlling activities.
4. Objectives should be challenging, measurable, consistent, reasonable,
and clear.

G. Strategies
1. Strategies are the means by which long-term objectives will be achieved.
Business strategies may include geographic expansion, diversification,
acquisition, product development, market penetration, retrenchment,
divestiture, liquidation, and joint venture.

2. Strategies currently being pursued by Best Buy, Levi Strauss, and New
York Times Company are described in Table 1-1.

H. Annual Objectives
1. Annual objectives are short-term milestones that organizations must
achieve to reach long-term objectives.

2. Like long-term objectives, annual objectives should be measurable,

quantitative, challenging, realistic, consistent, and prioritized.

I. Policies
1. Policies are the means by which annual objectives will be achieved.
Policies include guidelines, rules, and procedures established to
support efforts to achieve stated objectives.

2. Policies are most often stated in terms of management, marketing,

finance/accounting, production/operations, research and
development, and computer information systems activities.

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3. Because smoking is a huge burden on companies worldwide, some

firms are implementing policies to curtail smoking. Table 1-2 gives a
ranking of the countries by percentage of people who smoke.

BENEFITS OF STRATEGIC MANAGEMENT

The principle benefit of strategic management has been to help organizations

formulate better strategies through the use of a more systematic, logical, and
rational approach to strategic choice. Communication is a key to successful
strategic management. The major aim of the communication process is to
achieve understanding and commitment throughout the

organization. It results in the great benefit of empowerment. More and more

organizations are decentralizing the strategic-management process. Figure 1-2
illustrates the benefits of engaging in strategic planning.

A. Financial Benefits

1. 1.Research indicates that organizations using strategic-management

concepts are more profitable and successful than those that do not.

2. High-performing firms tend to do systematic planning to prepare for

future fluctuations in the external and internal environments. Firms with
planning systems more closely resembling strategic-management theory
generally exhibit superior long- term financial performance relative to
their industries.

B. Nonfinancial Benefits

1. Besides helping firms avoid financial demise, strategic management

offers other tangible benefits, such as an enhanced awareness of external
threats, an improved understanding of competitors’ strengths, increased
employee productivity, reduced resistance to change, and a clearer
understanding of performance-reward relationships.

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2. In addition to empowering managers and employees, strategic

management often brings order and discipline to an otherwise
floundering firm.

3. Greenley stated that strategic management offers these benefits:

a. It allows for identification, prioritization, and exploitation of
opportunities.
b. It provides an objective view of management problems.
c. It represents a framework for improved coordination and control of
activities.
d. It minimizes the effects of adverse conditions and changes.
e. It allows major decisions to better support established objectives.
f. It allows more effective allocation of time and resources to
identified opportunities.
g. It allows fewer resources and less time to be devoted to correcting
erroneous or ad hoc decisions.
h. It creates a framework for internal communication among
personnel.
i. It helps integrate the behavior of individuals into a total effort.
j. It provides a basis for clarifying individual responsibilities.
k. It encourages forward thinking.
l. It provides a cooperative, integrated, and enthusiastic approach to
tackling problems and opportunities.
m. It encourages a favorable attitude toward change.
n. It gives a degree of discipline and formality to the management of a
business.

Exercise / Assignment
WHY SOME FIRMS DO NO STRATEGIC PLANNING?
Some reasons for poor or no strategic planning are as follows:
Lack of knowledge or experience
Poor reward structures


Fire fighting


Waste of time


Too expensive


Laziness


Content with success



Fear of failure


Overconfidence


Prior bad experience



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Self-interest
Fear of the unknown


Honest difference of opinion



Suspicion



PITFALLS IN STRATEGIC PLANNING

Some pitfalls to watch for and avoid in strategic planning are provided below:

• Using strategic planning to gain control over decisions and resources

• Doing strategic planning only to satisfy accreditation or regulatory
requirements
• Too hastily moving from mission development to strategy formulation
• Failing to communicate the plan to employees, who continue working
in the dark
• Top managers making many intuitive decisions that conflict with the
formal plan
• Top managers not actively supporting the strategic-planning process
• Failing to use plans as a standard for measuring performance
• Delegating planning to a “planner” rather than involving all managers
• Failing to involve key employees in all phases of planning
• Failing to create a collaborative climate supportive of change
• Viewing planning to be unnecessary or unimportant
• Becoming so engrossed in current problems that insufficient or no
planning is done
• Being so formal in planning that flexibility and creativity are stifled

GUIDELINES FOR EFFECTIVE STRATEGIC MANAGEMENT

A. Failure to Follow Certain Guidelines in Planning Can Cause Problems

1. An integral part of strategy evaluation must be to evaluate the quality of

the strategic- management process. Issues such as “Is strategic
management in our firm a people process or a paper process?” should be
addressed.

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2. An important guideline for effective strategic management is open-

mindedness. A willingness to consider new information, viewpoints,
ideas, and possibilities is essential.

3. Strategic decisions require trade-offs such as long-range versus short-

range considerations or maximizing profits versus increasing
shareholders’ wealth.

4. Subjective factors such as attitudes toward risk, concern for social

responsibility, and organizational culture will always affect strategy-
formulation decisions, but organizations must remain as objective as
possible.

Note: Edit the 5 stages that was tackled before.

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