Strategic Management

Introductory Lecture
Usama Bin Iqbal
MBA W
Lecture # 2
 Can You
Start A
Business???

Can You Run

Can You
Rule the
Business???
WHY Strategic Management
The global economic recession has created a business world today more
complex than ever.
 Thousands of businesses have vanished, and consumers have become
extremely price sensitive and reluctant purchasers of products and
services.
 Very tight credit markets, high unemployment, and millions of new
entrepreneurs have also changed the business landscape.
Business world have witnessed thousands of liquidations, bankruptcies,
divestitures, mergers, alliances, and partnerships.
Corporate scandals highlighted the need for improved business ethics
and corporate disclosure of financial transaction.
 Downsizing, rightsizing, and reengineering contributed to a
permanently altered corporate landscape.
Special Note to Students
The course will allow you to function as the owner or chief
executive officer of different organizations.
You will be to make strategic decisions and to justify those
decisions through oral and written communication.
 An organization’s very survival is often at stake. The overall
importance of strategic decisions makes this course
especially exciting and challenging.
No matter how hard employees work, an organization is in
real trouble if strategic decisions are not made effectively.
Doing the right things (effectiveness) is more important
than doing things right (efficiency).
Always Remember
The rationale for your strategic decisions will be more
important than the actual decision, because no one
knows for sure what the best strategy is for a particular
organization at a given point in time.
Hanjin Shipping Case Study
Amogst World Top Brand
Trillion of Dollar Investment
Korean Shipping Line.
Got Bankrupt
Stuck in Middle of Sea
Crew Got Arrested
Stakeholder and Shareholder problems
Owners Exempted yet willing to serve and save
Thousand’s of Containers

 6
“Notable Quotes”
If we know where we are and something about how we
got there, we might see where we are trending—and if
the outcomes which lie naturally in our course are
unacceptable, to make timely change.“ ------ Abraham
Lincon
"Without a strategy, an
organization is like a ship
without a rudder, going
around in circles. It’s like
a tramp; it has no place
to go."
—Joel Ross and Michael
Kami
“Notable Quotes”
Most of us fear change. Even when our minds say
change is normal, our stomachs quiver at the prospect.
But for strategists and managers today, there is no
choice but to change.“ —Robert Waterman Jr.
If a man takes no thought about what is distant, he
will find sorrow near at hand. He who will not worry
about what is far off will soon find something worse
than worry.“ —Confucius
Without Management you can live = Nobody
With Management you may only survive = Everybody
With Strategic Management the glory is Yours. =
Somebody
The word strategy comes from the Greek word
strategos, which refers to a military general and
combines stratos (the army) and ago (to lead).
The history of strategic planning began in the military.
What is Strategic Management
Once there were two company presidents who competed in
the same industry. These two presidents decided to go on a
camping trip to discuss a possible merger. They hiked deep
into the woods. Suddenly, they came upon a grizzly bear
that rose up on its hind legs and snarled. Instantly, the first
president took off his knapsack and got out a pair of
jogging shoes. The second president said, “Hey, you can’t
outrun that bear.” The first president responded, “Maybe I
can’t outrun that bear, but I surely can outrun you!” This
story captures the notion of strategic management, which
is to achieve and maintain competitive advantage.
Definitions
Strategic management can be defined as the art and science of
formulating, implementing, and evaluating cross-functional
decisions that enable an organization to achieve its objectives..
Strategic management focuses on integrating management,
marketing, finance/accounting, production/operations,
research and development, and information systems to
achieve organizational success.
The purpose of strategic management is to exploit and create
new and different opportunities for tomorrow; long-range
planning, in contrast, tries to optimize for tomorrow the
trends of today.
Strategic Planning and Strategic
Management
Corporate use the word Strategic Planning and
Academics use Strategic Management
The term strategic planning originated in the 1950s
and was very popular between the mid-1960s and the
mid-1970s.
During these years, strategic planning was widely
believed to be the answer for all problems.
But with some problems and failures in forecast now
firms believe on strategic management as it covers and
monitors all aspects.
A goal is a broad primary outcome.
A strategy is the approach you take to achieve a goal.
An objective is a measurable step you take to achieve
a strategy.
 A tactic is a tool you use in pursuing an objective
associated with a strategy.
Stages of Strategic Management
The strategic-management process consists of three
stages:
strategy formulation,
Strategy implementation
Strategy evaluation.
Stages of Strategic Management
Strategy formulation includes developing
Vision and Mission,
Identifying an organization’s external opportunities
and threats
Determining internal strengths and weaknesses,
Establishing long-term objectives, generating
alternative strategies, and choosing particular
strategies to pursue.
Stages of Strategic Management
Basically Strategy formulation issues include
deciding what new businesses to enter,
what businesses to abandon,
how to allocate resources,
whether to expand operations or diversify,
whether to enter international markets,
whether to merge or form a joint venture, and how to
avoid a hostile takeover.
Stages of Strategic Management
 Strategy-formulation decisions commit an organization to
specific products, markets, resources, and technologies
over an extended period of time.
Strategies determine long-term competitive advantages.
 For better or worse, strategic decisions have major
multifunctional consequences and enduring effects
on an organization.
Top managers have the best perspective to understand fully
the ramifications of strategy-formulation decisions; they
have the authority to commit the resources necessary for
implementation
Stages of Strategic Management
Strategy implementation requires a firm to
establish annual objectives,
devise policies,
motivate employees,
allocate resources so that formulated strategies can be executed.
Strategy implementation includes developing a strategy-supportive culture,
creating an effective organizational structure,
redirecting marketing efforts,
Preparing budgets,
developing and utilizing information systems
linking employee compensation to organizational performance.
Strategy implementation often is called the “action stage” of strategic
management.
Stages of Strategic Management
Strategy evaluation is the final stage in strategic management.
Managers desperately need to know when particular strategies are not working
well; strategy evaluation is the primary means for obtaining this information.
Three fundamental strategy-evaluation
activities are
(1) reviewing external and internal factors that are the bases for current
strategies,
(2) measuring performance,
(3) taking corrective actions.
Strategy evaluation is needed because success today is no guarantee of success
tomorrow!
Success always creates new and different problems; complacent organizations
experience demise.
Stages of Strategic Management
Strategy formulation, implementation, and evaluation
activities occur at three hierarchy-
corporate, divisional or strategic business unit, and
functional.
 Most small businesses and some large businesses do
not have divisions or strategic business units; they have
only the corporate and functional levels.
Integrating Intuition and Analysis
 Edward Deming once said, “In God we trust. All others bring data.”
 Strategic Management is defined as an objective, logical, systematic approach
for making major decisions in an organization.
 Based on past experiences, judgment, and feelings, most people recognize that
 intuition is essential to making good strategic decisions.
 Some managers and owners of businesses profess to have extraordinary
abilities for using intuition alone in devising brilliant strategies.
 Albert Einstein acknowledged the importance of intuition when he said, “I
believe in intuition and inspiration.
 At times I feel certain that I am right while not knowing the reason.
Imagination is more important than knowledge,
 Imagination is more important than knowledge, because knowledge is limited,
whereas imagination embraces the entire world.
Adapting to Change
Organizations should continually monitor internal and external
events and trends so that timely changes can be made as needed.
 Firms, like organisms, must be “adept at adapting” or they will not
survive.
Corporate bankruptcies and defaults are increasing more than ever.
All industries were hit hard, especially retail, chemicals, autos, and
financial and most of all shipping sector.
Even the economies of China, Japan, and South Korea slowed down
as demand for their goods from the United States and Europe dried
up.
The strategic management process is aimed at allowing
organizations to adapt effectively to change over the long run.
Adapting to Change
Firms have become a borderless world with global
citizens, global competitors, global customers, global
suppliers, and global distributors!
key strategic-management questions,
What kind of business should we become?” “Are we in
the right field(s)?”
“Should we reshape our business?” “What new
competitors are entering our industry?”
“What strategies should we pursue?” “How are our
customers changing?”
“Are new technologies being developed that could put
us out of business?”
Strategic Failure Example
New Coke
World’s most recognized brand.
1985 – Termination of Coke
Battle B/W Coke and Pepsi
1950: Pepsi as Youth Brand
1970: Pepsi Challenge
1980: Pepsi Generation
1981 – Coke Lost NO 1 Status
1983- Diet Coke
How Coke Try To Compete
 Advertisement in which celebrities praise coke for
been less sweeter
 More vending machine
 Effective distribution
Sampling Error
New Launch
Strategic Success Example
Strategic Management???
Give me Two Months