STRATEGIC MANAGEMENT

Course Instructor:
Abdisalan Muhumed
Suggested ‘Ground Rules’

2
COURSE STRUCTURE
Unit 1: Strategic Management: An Overview
Unit 2: Strategic Management and Strategic Planning
Unit 3: Initiating the Strategic Planning Process
Unit 4:Developing Vision, Mission and Core Values
Unit 5: Developing Strategic Objectives, Action Plans and
Stakeholder Analysis
Unit 6: Strategic Monitoring, Evaluation and Reporting
 Unit 1:

Strategic Management: An Overview

Chapter Objectives
• Definition of Strategy.
• Definition of Strategic Management.
• History of Strategic Management.
• Levels of Strategies.
• Features of Strategic Management.
• Elements of Strategic Management.
• Benefits of Strategic Management.
• Factors Associated Successful Strategic Management.
• Strategic Management Model.
• Stages of Strategic Management.
• Role of Management in Strategic Management.
• Critique of Strategic Management.
DEFINITION OF STRATEGY

• Strategy is a well defined roadmap of an organization

in order to achieve goals.

• Strategy describes how to end (Goal)will be achieved

by the means (Resource).

• Strategy is a bridge that connect the gap between

where we are and where we want to be.
DEFINITION OF STRATEGY…

• Strategy can be defined as a high-level plan or approach designed

to achieve specific goals or objectives.

• Strategy typically involves analyzing the current situation,

anticipating future challenges and opportunities, and determining
the best course of action to achieve long-term success.

• It is a dynamic process that requires continuous monitoring and

adaptation in response to changes in the internal and external
environment.
STRATEGIC MANAGEMENT
• Strategic management is a set of management decisions and
actions that determines the long-run performance of a
corporation.
• Strategic management can be defined as the systematic
process of formulating, implementing, and evaluating
decisions and actions that enable an organization to achieve
its long-term objectives.
• Strategic Management is the continuous planning,
monitoring, analysis and assessment of all that is necessary
for an organization to meet its goals and objectives.
STRATEGIC MANAGEMENT…
• It involves analyzing the internal and external
environments, setting goals and objectives, developing
strategies to achieve those objectives, and allocating
resources effectively to implement those strategies and
Monitor.

• Gary Hamel (2000), argues that the best strategy is

geared towards radical change and creating a new vision
of the future in which you are a leader rather than a
follower of trends set by others.
THE HISTORY OF STRATEGIC MANAGEMENT
• The origins of strategic management have been linked to the
military.

• The word strategy comes from the Greek strategos, which

refers to a military “general.” and combines strate (the
army) and gos (to lead). Literally, it means “leader of the
army.”

• Military strategy often deals with planning and execution in a

war setting, while taking into account the strategy and tactics
required to implement the plan.
THE HISTORY OF STRATEGIC MANAGEMENT

• The history of strategic management can be

traced back several thousand years. Particularly
from 520-480 BC when GEN SUNTZU of China
introduced management procedures to win the
war.
• In 1800-1900 strategic management was
practiced in small companies after the industrial
revolution.
THE HISTORY OF STRATEGIC MANAGEMENT…

• Between 1916-1930 the future plans of the company

were referred to as long term planning. Henry Fayol
introduced the functions of management used till
today.
• From 1945 to 1960 the future plans of the company
were referred to as corporate plans.
• From 1962 to date the future plans are referred to as
strategic management as defined by Alfred Chandler.
LEVELS OF STRATEGIES

• In organizations, there exist three levels of strategy namely corporate

level, business level, and functional level.

• All levels of strategies have a significant role in achieving the overall

targets of the organization.

• In a simple sense, the functional level strategy helps business-level

strategy and business to corporate-level strategy and corporate to
achieve vision and mission – they all are linked and managers need to
carefully set strategies at each level.
CORPORATE LEVEL STRATEGY

• Corporate level strategy is the uppermost level of strategy made by

top-level management which sets the overall direction of the
organization. It addresses the question of what business are we in?

• Small and large multinational corporations can both benefit from

corporate strategy.

• Corporate strategy in a multi-business organization is concerned with

geographic coverage, diversity of products/services and resource
distribution to various segments or units of the firm.
CORPORATE LEVEL STRATEGY…
• For making an effective corporate strategy the manager can go for its three
different types such as stability strategy, expansion strategy, and retrenchment
strategy.

1: Stability Strategy
• The stability strategy is a strategy that tries to keep an organization’s existing
activities going without making any significant changes in direction. Maintaining
existing products, markets, and operations is a priority.

• A stability strategy can be beneficial in the short term, but it can be harmful if
used for an extended period of time.
CORPORATE LEVEL STRATEGY…

2: Expansion/Growth Strategy
• The growth strategy aims to increase sales, assets, profits, product,
service or a combination of all.

• It allows businesses to take advantage of the growth curve and lower

the per-unit cost of products sold, resulting in higher profitability.

• Due to the increased availability of financial resources, organizational

procedures, and external links, larger organizations tend to endure
longer than smaller companies.
CORPORATE LEVEL STRATEGY…

3: Retrenchment Strategy
• Both stability and expansion strategies are in aggressive nature but
retrenchment is a defensive nature of strategy.

• A retrenchment strategy is a business approach that tries to diminish a

company’s size or diversity.

• It also entails cutting costs in order to maintain financial stability. It is used

to limit the diversity of the company’s operations or to reduce the overall
scale of the company’s operations.
BUSINESS LEVEL STRATEGY

• Business strategy is the most common level of strategy we are

discussing probably all of us heard about it.

• Business level strategy is the which is designed to use the best use
of organizational competencies to gain a long-term competitive
advantage over competitors.

• Business strategy deals with the question of how do we compete?

It aims to how to best successfully compete with competitors so
that competitive advantage will be gained.
BUSINESS LEVEL STRATEGY…

• It steers a strategic business unit (SBU) in the direction of competitive

advantage. A strategic business unit is a division of an organization
that has a separate district external market for goods and services from
the other strategic business units.

• Every distinct SBU requires different strategies to compete in the

market. A manager can usually go for a cost leadership strategy,
differentiation strategy, and focus strategy in order to get a
competitive advantage against competitors.
BUSINESS LEVEL STRATEGY…
1: Cost Leadership/Cost Reduction Strategy
• The cost leadership/cost reduction strategy is a step in
producing goods or services with attributes that customers
find acceptable at a lower cost than competitors.
2: Differentiation Strategy
• The differentiation strategy is an endeavor to produce
goods or services that buyers perceive as unique (at a
reasonable cost).
BUSINESS LEVEL STRATEGY…
3: Focus/Niche Strategy
• The focus/niche strategy entails producing goods or
services that cater to the needs of a specific competitive
segment.
• Firms use their core capabilities to fulfill the demands of a
certain industry segment, a different segment of a product
line, a different geographic market, or a specific customer
FUNCTIONAL LEVEL STRATEGY

• The functional level strategy also called operational level strategy is

developed to run effectively the day-to-day activities of the
organization. Most operational strategies are no longer than one year.

• The functional level strategies aim to deal with the question of how do
we support the business-level strategy? A number of functions are
carried out regularly to effectively run the business as different
functional departmental are created – production department, HR
department, marketing department, customer service department, etc.
FUNCTIONAL LEVEL STRATEGY…

• These strategies are related to capability, efficiency, customer

service, product quality, and marketing.

• All these functional strategists support the business level and

ultimately the corporate level strategy.

• Production Strategy, marketing strategy, finance strategy, human

resource strategy, and research & development strategy – all are
very important say parts or types of functional level strategy.
THE FEATURES OF STRATEGIC MANAGEMENT
• Objective Oriented: The strategic management is directed
towards organizational goal.

• Future Oriented: Strategy is future oriented plan and

formulated to attain future position of the organization.

• Availability and Allocation of Resources: To implement

strategy properly there is need of adequate resources and
proper allocation of resources. (i.e physical, financial and
human resource).
THE ELEMENTS OF STRATEGIC MANAGEMENT
BENEFITS OF STRATEGIC MANAGEMENT
Factors Associated Successful Strategies
1. The organization’s competitive environment is well understood, in
detail.
2. Strengths and weaknesses are assessed in a thorough and realistic
manner.
3. The strategy is consistent with the mission and goals of the
organization.
4. Plans for putting the strategy into action are designed with
specificity before it is implemented.
5. Possible future changes in the proposed strategy—a process called
strategic control—are evaluated before the strategy is adopted.
Intended and Realized Strategies
• Henry Mintzberg Introduced two terms to help clarify the
shift that often occurs between the time a strategy is
formulated and the time it is implemented.

A. An intended strategy (i.e., what management originally

planned) may be realized just as it was planned, in a
modified form, or even in an entirely different form.
B. The realized strategy—what management actually
implements—usually differ .
Intended and Realized Strategies…

The gap between the intended and realized strategies

usually results from:

1. Unforeseen environmental or organizational events.

2. Better information that was not available when the
strategy was formulated, or
3. Poor improvement in top management’s ability to
assess its environment.
THE STRATEGIC-MANAGEMENT MODEL

Where are we now?

Where do we want to go?

How are we going to get there?

 STAGES OF STRATEGIC MANAGEMENT

Environmental Strategic Strategy Strategy Strategy

Analysis Intent Formulation Implementation Evaluation
STAGES OF STRATEGIC MANAGEMENT..

Environmental Analysis

Environmental Analysis refers to the systematic study of the

environmental factors that affect an organizations, business and
projects. This stages involves evaluating both external and internal
elements to understand their impact and implications.
STAGES OF STRATEGIC MANAGEMENT..

Strategy Intent

Strategic intent is the hierarchy of objectives that the

organization set for it self in involves:-
Vision Mission Objectives
STAGES OF STRATEGIC MANAGEMENT..

Strategy Formulation
Strategy formulation is
This phase is also This Process is essential to
the process of
called as strategic an organization’s success ,
deciding best course
planning. This is also because it provides a
of action for framework for the action
a analytical phase
accomplishing that will lead to the
where plans are been
organizational anticipated results.
analyzed.
objectives.
STAGES OF STRATEGIC MANAGEMENT..

Strategy Implementation

Strategy implementation It involves translating

Strategic implementation strategic plans into
implies making strategy
actionable steps and
is the process of turning work as intended or
ensuring that resource,
putting the organizations
your strategic plan into process and people are
chosen strategy into aligned to execute the
action. action. strategy effectively
STAGES OF STRATEGIC MANAGEMENT..

Strategy Evaluation

The key strategy evaluation activities Evaluation makes sure that the
are appraising internal and external
organizational strategy as well as
factors that are the root of present
strategies, measuring performance and its implementation meets the
take corrective actions. organizational objectives.
Role of Senior Leadership Team on Strategic Management
• Leadership plays a crucial role in strategic management by
guiding, influencing, and shaping the strategic direction and
execution of an organization.
1. Vision and Direction: Leaders provide a clear vision for
the future, setting the strategic direction and goals of the
organization.
2. Strategic Planning: Leaders are involved in formulating
strategic plans, including setting objectives, analyzing the
competitive environment, and determining the best
strategies to achieve the organization’s goals.
Role of Senior Leadership Team on Strategic Management..
3. Decision-Making: Leaders make key decisions that affect the
organization’s strategy, such as resource allocation, market entry,
and major investments. Effective decision-making requires
evaluating risks, understanding market dynamics, and anticipating
future trends.
4. Alignment and Integration: Leaders ensure that various
departments and teams are aligned with the overall strategy.
5. Change Management: Leaders play a key role in managing
change, especially during strategic shifts or transformations. They
guide the organization through change, address resistance, and
ensure that the transition is smooth and effective.
 A CONTEMPORARY CRITIQUE OF
STRATEGIC MANAGEMENT
• For strategic management to be done well, it is typically a
complex process that is high in cost, time, and difficulty.

• Further, some decision makers are skeptical of the ability of

strategic management to achieve its goal: to accurately
anticipate an unknown future.

• Some critics go so far as to suggest that committing to a

strategy may limit a organization's ability to respond to a
changing environment.
Excerpts from Sun Tzu’s The Art of War Writings
• War is a matter of vital importance to the state: a matter of
life or death, the road either to survival or ruin. Hence, it is
imperative that it be studied thoroughly.

• Know your enemy and know yourself, and in a hundred

battles you will never be defeated.

• Skillful leaders do not let a strategy inhibit creative counter-

movement.
“ Without a strategy, an organization
is like a ship without a rudder, going
around in circles..’

Joel Ross and Michael Kami

Corporate Management In Crisis: Why the Mighty Fall
Abdisalan Muhumed