Strategic Management Chapter 1

Project
Strategic
Management
chapter 1
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education .
What is a Project?
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A unique set of activities meant to produce a defined

outcome within an established time frame using specific
allocation of resources.” (Harvard Business Review)
“A project is a temporary endeavor undertaken to create

a unique product or service.” (Project Management Institute)
Strategic management
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Strategic management is the process of setting goals,

procedures, and objectives in order to make a company
or organization more competitive.
Typically, strategic management looks at effectively

deploying staff and resources to achieve these goals
Strategic management Cont…
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Strategic management provides overall direction by

developing plans and policies designed to achieve
objectives and then allocating resources to implement the
plans.
Ultimately, strategic management is for organizations to

gain a competitive edge over their competitors.
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Two Perspectives of Leadership
1-6
External Control
Romantic View
Perspective
 Leader is the key  External forces
force in the determine the
organization’s organization’s
success success
 i.e. Steve Jobs  i.e. economic
downturns
OR?
Defining Strategic Management
1-7
 Strategic Management involves

 Analysis
 Strategic goals (vision, mission, strategic objectives)
 Internal and external environment
 Decisions
 What industries should we compete in?
 How should we compete in those industries?
 Actions
 Allocate necessary resources
 Design the organization to bring intended strategies
to reality
Two Fundamental Questions
1-8
1. How should we compete in order to

create competitive advantages in the
marketplace?
2. How can we create competitive
advantages in the marketplace that are
unique, valuable, and difficult for rivals
to copy or substitute?
NOTE: Operational effectiveness is not enough to
sustain a competitive advantage.
Strategic Management
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 Key Attributes of strategic management

 Directs the organization toward overall goals
and objectives.
 Includes multiple stakeholders in decision
making.
 Needs to incorporate short-term and long-
term perspectives.
 Recognizes trade-offs between efficiency
and effectiveness.
Strategic Management Trade-offs
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Managers need to be ambidextrous

 Focusing on Wh  Focusing on long-
il e
short-term also term effectiveness
efficiency  Expanding
 Aligning resources product-market
to take advantage scope by
of existing proactively
product markets exploring new
opportunities
Intended vs Realized Strategies
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The Business Environment is far from predictable.

Intended Strategy Realized Strategy
 Organizational  Decisions are
decisions are determined by both
determined only by analysis (deliberate) &
analysis unforeseen
versus environmental
developments,
 Intended strategy
unanticipated resource
rarely survives in its
constraints, and/or
original form
changes in managerial
preferences (emergent)
Strategy Analysis
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 Starting point in the strategic

management process
 Precedes effective formulation and
implementation of strategies
 Involves careful analysis of the
overarching goals of the organization
 Requires a thorough analysis of the
organization’s external and internal
environment
Strategy Formulation
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 Based on strategy analysis

 Developed at several levels
 Involves decisions that can create and
sustain competitive advantage
 Investment decisions
 Commitment of resources
 Operational synergies
 Recognizing viable opportunities
Strategy Implementation
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 Implements the formulated strategy

 Ensures proper strategic control systems
 Establishes an appropriate organizational design -
coordinates & integrates activities within the firm
 Coordinates activities with suppliers, customers,
alliance partners
 Leadership ensures organizational commitment to
excellence & ethical behavior
 Promotes learning & continuous improvement
 Acts entrepreneurially in creating new
opportunities
Corporate Governance & Stakeholder
Management
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 Corporate Governance: the relationship

among various participants in determining
the direction and performance of
corporations.
 Primary participants:
 The shareholders
 The management (led by the Chief Executive
Officer)
 The Board of Directors (BOD)
Stakeholder Management
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Exhibit 1.5 An Organization’s Key Stakeholders & the Nature of Their Claims
Social Responsibility
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 Social responsibility: the expectation that

businesses or individuals will strive to improve
the overall welfare of society.
 Firms have multiple stakeholders and must go
beyond a focus solely on financial results
 Firms must create shared value – identify & expand
connections between societal & economic progress
 Firms can measure a triple bottom line
 Assessing financial, social, AND environmental
performance
 Embracing environmental sustainability.
Coherence in Strategic Direction
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 Organizations express priorities best

through stated goals & objectives that
form a hierarchy of goals
 Vision – evokes powerful & compelling
mental images of a shared future
 Mission – encompasses the organization’s
current purpose, basis of competition, &
competitive advantage
 Strategic objectives – operationalize the
mission statement with specific yardsticks
Coherence in Strategic Direction
1-19
Exhibit 1.6 A Hierarchy of Goals

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Project

A unique set of activities meant to produce a defined

“A project is a temporary endeavor undertaken to create

Strategic management is the process of setting goals,

Typically, strategic management looks at effectively

Strategic management provides overall direction by

Ultimately, strategic management is for organizations to

 Strategic Management involves

1. How should we compete in order to

 Key Attributes of strategic management

Managers need to be ambidextrous

The Business Environment is far from predictable.

 Starting point in the strategic

 Based on strategy analysis

 Implements the formulated strategy

 Corporate Governance: the relationship

 Social responsibility: the expectation that

 Organizations express priorities best

Exhibit 1.6 A Hierarchy of Goals

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