STRATEGIC MANAGEMENT

Topic 1
Overview
 DEFINING STRATEGY
 Johnson and Scholes (
Exploring Corporate Strategy) define strategy
as follows:
 "Strategy is the direction and scope of an
organisation over the long-term: which
achieves advantage for the organisation
through its configuration of resources within
a challenging environment, to meet the needs
of markets and to
fulfill stakeholder expectations".
 DEFINING STRATEGY
1. Long-term direction of an organisation: Where is the
business trying to get to in the long-term
2. The scope of organisations activities: i.e. which
markets should a business compete in and what kind of
activities is involved in such markets?
3. Advantage: How can the business perform better than
the competition in those markets?
4. Business environment: What external, environmental
factors affect the businesses' ability to compete?
5. Resources and competences: are required in order to
be able to compete?
6. The values and expectations of powerful stakeholders
in and around the organisation. 3
 CHARACTERISTICS OF STRATEGIC
DECISIONS
 Complex in nature– e.g. covers wide geographical areas,
looks at a diverse range of products or services
 Uncertainty: nobody can be sure about the future.

 Affect Operational decisions - because they are linked to

strategy.
 Require an integrated approach (both inside and outside
the organisation) i.e. cross functional and operational
boundaries
 Developing Relationships and networks outside the
organisation e.g. with suppliers, distributors and
customers.
 Involves considerable Change e.g. structural, cultural,
 LEVELS OF STRATEGY
1. Corporate Strategy
 concerned with the overall purpose and scope of an
organisation and
 how value will be added to the different parts of the
organisation.
 Includes issues such as geographical coverage,
diversity of products/services or business units,
resource allocation
 Also concerned with the expectations of owners. It is
a crucial level since it is heavily influenced by
investors in the business and
 acts to guide strategic decision-making throughout the
business
 Corporate strategy is often stated explicitly in a
"mission statement".
 LEVELS OF STRATEGY (CONT’D)
2. Business Strategy/Competitive strategy
 Concerned more with how a business competes
successfully in a particular market.
 Strategic decisions include choice of products, meeting
needs of customers, gaining advantage over competitors,
exploiting or creating new opportunities etc.
 Strategies include pricing, differentiation
 BU strategy relates to strategic business unit (SBU’s)
within the overall organisation
 (SBU is a part of an organisation for which there is a
distinct external market for goods or services that is
different from another SBU).
 LEVELS OF STRATEGY (CONT’D)
3. Operational Strategy
 Concerned with how each component part of the
business is organised to deliver the corporate and
business-unit level strategic direction.
 Operational strategy focuses on issues of resources,
processes, people etc.
 Successful business strategies depend to a large extent
on decisions that are taken, or activities that occur, at
the operational level.
 The integration of operational decisions and strategy is
therefore of great importance
 VOCABULARY OF STRATEGY
 Mission:
 general expression of the overall purpose of the organisation,
 ideally, is in line with the values and expectations of major
stakeholders and
 Is concerned with the scope and boundaries of the organisation.
 It answers the question: ‘What business are we in?’

 Vision or strategic intent

 the desired future state of the organisation.
 An aspiration around which a strategist, perhaps a chief executive,
might seek to focus the attention and energies of members of the
organisation.
 Goal: a general aim in line with the mission. It may well be
qualitative in nature.
 E.g. to maintain profitability
 Objective: is more likely to be quantified, or at least to be a more
precise aim in line with the goal.
 E.g. control costs in production and operations by ..% every quarter
 VOCABULARY OF STRATEGY (CONT’D)
 Strategic capability: concerned with the resources and
competences that an organisation can use to provide value
to customers or clients.
 Unique resources and core competences: are the bases
upon which an organisation achieves strategic advantage
and is distinguished from competitors. (technological
infrastructure, brand name)
 A business model: describes the structure of product,
service and information flows and the roles of the
participating parties.
 Strategic control: involves monitoring the extent to which
the strategy is achieving the objectives and suggesting
corrective action (or a reconsideration of the objectives)
"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
 STRATEGIC MANAGEMENT –
DEFINED
 Underlies the importance of managers in strategy
 Managers are formulators and implementers of strategy

 Managers should have a ‘Helicopter View’ i.e. capable of

managing organisational complexity, conceiving the
whole rather than the part of an organisation
 Need to conceptualise – i.e. go beyond planning and
analysis or taking action
 Requires understanding strategic concepts to inform
planning and analysis
 STRATEGIC MANAGEMENT –
DEFINED
 David, F (2009): the art and science of
formulating, implementing and evaluating cross-
functional decisions that enable an organisation
achieve its objectives
 Johnson, Scholes & Whittington (2011): includes
understanding the strategic position of the
organisation, making strategic choices for the
future and managing strategy in action
 Rothaermel, F.T, (2017): the integrative
management field that combines analysis,
formulation and implementation in the quest for
competitive advantage.
STRATEGIC MANAGEMENT MODEL
 STRATEGIC MANAGEMENT PROCESS
1. Strategic Position: concerned with identifying the impact
on strategy of:
a. The Environment
 An organisation exists in the context of a complex political,
economic, social and technological, environment and legal world.
The environment changes and is more complex for some
organisations than for others.
 Techniques/tools that can be used to analyse the environment
include:
 PEST Analysis - a technique for understanding the
"environment" in which a business operates
 Scenario Planning - a technique that builds various plausible
views of possible futures for a business
 Five Forces Analysis - a technique for identifying the forces
which affect the level of competition in an industry
STRATEGIC POSITION (CONT’D)
b. Strategic capability of the organisation
 The resources and competences of an organisation needed for
it to survive and prosper
 Involves considering the strengths and weaknesses of the
organisation
 The aim is to form a view of internal influences and constraints
on strategic choices for the future.
c. Stakeholder expectation
 Involves exploring the influences of stakeholder
expectations on an organisations purposes (the
organisations vision, mission and values).
d. Cultural and historical influences
 At the organisational, sectoral or national level cultural
influences
 STRATEGIC MANAGEMENT PROCESS
(CONT’D)
2. STRATEGIC CHOICES
 Involves understanding the underlying bases for future
strategy at both the business unit and corporate levels
and the options for developing strategy in terms of both
the directions and methods of development.
 Involve choices
 In terms of how the organisation seeks to compete at
the business level
 At the corporate level, to do with the scope, breadth
of an organisation e.g. diversification.
 On International strategies to be pursued
STRATEGIC MANAGEMENT PROCESS (CONT’D)

3. Strategic Implementation
 When a strategy has been analysed and selected, the task is
then to translate it into organisational action, i.e. they are
working in practice.
 Involves issues such as
 Strategy development processes of an organisation i.e. intended or
emergent
 Intended strategies are the product of formal strategic planning and
decision making,
 emergent strategy is actually pursued, including bottom-up initiatives, rapid

responses to unanticipated opportunities and threats, and sheer chance

 Structuring an organization to support successful performance
(structures, processes and relationships)
 Resourcing strategies in separate resource areas (human resource,
finance, management information systems)
 READING ASSIGNMENT – TOPIC 1
 Difference between strategic management and strategic planning
 Benefits of strategic Management
 Why some firms do no strategic planning
 Guidelines for effective strategic management

Reference Guide
 Johnson, Scholes & Whittington (2011), Exploring Strategy:
Text and Cases, 9th Ed., Prentice Hall, Harlow – England

 David, F. R. & David, R.D., (2017) Strategic Management:

Concepts and Cases – a competitive advantage approach,
16th Ed., Prentice Hall, Boston

 Rothaemel, R.T., (2017), Strategic Management,3rd Ed.,

McGraw Hill