formulation, implementation and...

Strategic Management

Formulation, Implementation and

Evaluation

Course Objectives

1. Understand the Strategic management concepts.

2. How to be a strategic thinker .

3. How to create a competitive advantages to your business.

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your business.

4. Develop students’ skills in strategy design, implementation and evaluation.

5. How culture differences affect management.

6. Develop the knowledge on the influence of social responsibility on business strategy.

Teaching Techniques

1. Lecturing and discussions.

2. Using cases in teaching : Real cases

and problem solving.

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and problem solving.

3. Presentations from students.

4. Group work, teamwork and

assignments.

Course Contents

�Concepts and definitions: Strategy, Strategic management, strategic planning, Importance of strategic management, Internal and external

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management, Internal and external environment analysis, competitive advantages, stakeholders, social responsibility and so on.

�Tools will be used in analysis, e.g., SWOT.

Course Contents continue

� Types of Strategies: Corporate-Level Strategies, Business Unit Strategies, Functional/operational Strategies.

� Strategy Formulation: Business Mission, strategy analysis and choice, corporate objectives and

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analysis and choice, corporate objectives and strategies.

� Strategy Implementation: Organizational Structure, assessment of Organizational Structure, restructuring and reengineering, short-term objectives and programs and activities.

Course Contents continue

�Strategy Evaluation and control:

processes of evaluation, measuring

performance and corrective action.

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performance and corrective action.

�Global Issues in strategic management:

global competition, managing cross-

cultures.

Strategic Management Defined

Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Strategy

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Strategy

“Top Management’s plan to attain outcomes consistent with the organization’s mission and goals” (Wright, Kroll and Parnell,1998)

Strategic management

A continuous process of change and

modification: intended strategy, realized

strategy.

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strategy.

ThreeThree--Stage ProcessStage Process

Strategy Formulation

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Strategy Implementation

Strategy Evaluation

Strategy Formulation

Vision & Mission

Strengths & Weaknesses

Opportunities & Threats

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Alternative Strategies

Long-Term Objectives

Strategy Selection

Strategy FormulationStrategy Formulation

Issues include:Issues include:�� What new businesses to enterWhat new businesses to enter

�� What businesses to abandonWhat businesses to abandon

How to allocate resourcesHow to allocate resources

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�� How to allocate resourcesHow to allocate resources

�� Expand operations or diversifyExpand operations or diversify

�� Enter international marketsEnter international markets

�� Merge or form joint ventureMerge or form joint venture

�� Avoidance of hostile takeoverAvoidance of hostile takeover

Strategy Implementation

Policies

Annual Objectives

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Employee Motivation

Resource Allocation

Strategy ImplementationStrategy Implementation

Action Stage of strategic management:Action Stage of strategic management:

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�� Most difficult stage Most difficult stage

�� Mobilizing employees and managersMobilizing employees and managers

�� Interpersonal skills are criticalInterpersonal skills are critical

�� Consensus on pursuing goalsConsensus on pursuing goals

Strategy Evaluation

External Review

Internal Review

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Performance Measurement

Corrective Action

Strategy EvaluationStrategy Evaluation

Final stage of strategic management:Final stage of strategic management:�� All strategies subject to future modification All strategies subject to future modification �� Success today is no guarantee of success Success today is no guarantee of success tomorrowtomorrow

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tomorrowtomorrow�� Success creates new and different problemsSuccess creates new and different problems�� ComplacencyComplacency\\satisfaction leads to demise satisfaction leads to demise \\end.end.

Prime Task of Strategic Prime Task of Strategic ManagementManagement

According to Peter Drucker…According to Peter Drucker…

The prime task is to think through the The prime task is to think through the

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The prime task is to think through the The prime task is to think through the overall mission of a businessoverall mission of a business

Ask the question:Ask the question:

What is our Business?What is our Business?

Integrating Intuition and AnalysisIntegrating Intuition and Analysis

The The strategic management processstrategic management processattempts to organize quantitative and attempts to organize quantitative and qualitative information under qualitative information under

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qualitative information under qualitative information under conditions of uncertainty.conditions of uncertainty.


Intuition based on:Intuition based on:

�� Past experiencesPast experiences

�� JudgmentJudgment

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�� JudgmentJudgment

�� FeelingsFeelings

Useful for decision makingUseful for decision making

�� Conditions of great uncertaintyConditions of great uncertainty

�� Conditions with little precedentConditions with little precedent


Intuition and judgmentIntuition and judgment

�� Management at all levelsManagement at all levels

�� Analyses are influencedAnalyses are influenced

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�� Analyses are influencedAnalyses are influenced

Analytical thinking and intuitive Analytical thinking and intuitive thinkingthinking

�� Complement each otherComplement each other

Adaptation to ChangeAdaptation to Change

Organizations must monitor eventsOrganizations must monitor events

�� OnOn--going processgoing process

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�� OnOn--going processgoing process

�� Internal and external eventsInternal and external events

�� Timely changesTimely changes


Rate and magnitude of changesRate and magnitude of changes�� Increasing dramaticallyIncreasing dramatically

��EE--commercecommerce

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EE--commercecommerce

��DemographicsDemographics

��TechnologyTechnology

��MergerMerger--maniamania

�� Effective AdaptationEffective Adaptation�� LongLong--run focusrun focus


Key strategicKey strategic--management questions:management questions:

�� What kind of business should we become?What kind of business should we become?

�� Are we in the right fields?Are we in the right fields?

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�� Are we in the right fields?Are we in the right fields?

�� Should we reshape our business?Should we reshape our business?

�� What new competitors are entering our What new competitors are entering our industry?industry?

�� What strategies should we pursue?What strategies should we pursue?

�� How are our customers changing?How are our customers changing?

Key TermsKey Terms

StrategistsStrategists�� Most responsible for success or failure of an Most responsible for success or failure of an organizationorganization

Various job titles:Various job titles:

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�� Various job titles:Various job titles:�� Chief executive officerChief executive officer

�� PresidentPresident

�� OwnerOwner

�� Chair of the BoardChair of the Board

�� Executive DirectorExecutive Director

�� EntrepreneurEntrepreneur

Key TermsKey Terms

Vision StatementVision Statement

�� What do we want to become?What do we want to become?

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�� What do we want to become?What do we want to become?

Mission StatementMission Statement

�� What is our business?What is our business?

Key TermsKey Terms

External Opportunities and ThreatsExternal Opportunities and Threats�� Significantly benefit or harm the organization in the Significantly benefit or harm the organization in the future.future.

Include the following trendsInclude the following trends::

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�� Include the following trendsInclude the following trends::�� EconomicEconomic

�� SocialSocial

�� CulturalCultural

�� Demographic EnvironmentalDemographic Environmental

�� Political, legal, governmentalPolitical, legal, governmental

�� TechnologicalTechnological

�� Competitive trendsCompetitive trends

Key TermsKey Terms

External Opportunities and ThreatsExternal Opportunities and Threats�� Largely beyond the control of a single Largely beyond the control of a single organization.organization.

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�� Basic tenetBasic tenet\\principleprinciple of strategic of strategic managementmanagement��Strategy formulation to: Strategy formulation to:

�� Take advantage of external opportunitiesTake advantage of external opportunities

�� Avoid or reduce impact of external threatsAvoid or reduce impact of external threats

Key TermsKey Terms

Environmental ScanningEnvironmental Scanning

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�� Industry AnalysisIndustry Analysis

��Process of conducting research and Process of conducting research and gathering and assimilating/integrate gathering and assimilating/integrate external informationexternal information

Key TermsKey Terms

Internal Strengths and WeaknessesInternal Strengths and Weaknesses�� Controllable activities performed especially Controllable activities performed especially well or poorly.well or poorly.

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�� Arise in functional areas of the businessArise in functional areas of the business::�� ManagementManagement�� MarketingMarketing�� Finance/accountingFinance/accounting�� Production/operationsProduction/operations�� Research & developmentResearch & development�� Computer Information SystemsComputer Information Systems

Key TermsKey Terms

Determining Internal Factors:Determining Internal Factors:

�� Financial ratiosFinancial ratios

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�� Financial ratiosFinancial ratios

�� Measuring performanceMeasuring performance

�� Industry averagesIndustry averages

�� Survey dataSurvey data

Key TermsKey Terms

LongLong--term objectives:term objectives:

�� MissionMission--driven pursuit of specific results more driven pursuit of specific results more than onethan one--year out.year out.

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than onethan one--year out.year out.

�� Essential for organizational successEssential for organizational success�� State directionState direction

�� Aid in evaluationAid in evaluation

�� Create synergyCreate synergy

�� Focus coordinationFocus coordination

�� Basis for planning, motivating and controllingBasis for planning, motivating and controlling

Key TermsKey Terms

StrategiesStrategies::�� Means by which longMeans by which long--term objectives will be term objectives will be achievedachieved..

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�� May include:May include:�� Geographic expansion, diversificationGeographic expansion, diversification�� AcquisitionAcquisition�� Product development, market penetrationProduct development, market penetration�� Retrenchment, divestitureRetrenchment, divestiture�� Liquidation, joint ventureLiquidation, joint venture

Key TermsKey Terms

Annual Objectives:Annual Objectives:

�� ShortShort--term milestones that organizations must term milestones that organizations must

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�� ShortShort--term milestones that organizations must term milestones that organizations must achieve to reach longachieve to reach long--term objectives.term objectives.

�� They should be SMART when writing them.They should be SMART when writing them.

Key TermsKey Terms

Policies:Policies:

�� Means by which annual objectives will be Means by which annual objectives will be

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�� Means by which annual objectives will be Means by which annual objectives will be achieved.achieved.

StrategicStrategic--Management ModelManagement Model

StrategicStrategic--Management Process Management Process ––

Dynamic and ContinuousDynamic and Continuous

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�� Dynamic and ContinuousDynamic and Continuous�� More formal in larger organizationsMore formal in larger organizations


1.1. Identify Organization’s existing:Identify Organization’s existing:

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•• VisionVision•• MissionMission•• ObjectivesObjectives•• StrategiesStrategies


2.2. Perform External AuditPerform External Audit3.3. Perform Internal AuditPerform Internal Audit4.4. Establish longEstablish long--term objectivesterm objectives

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4.4. Establish longEstablish long--term objectivesterm objectives5.5. Generate, evaluate, select strategiesGenerate, evaluate, select strategies6.6. Implement strategiesImplement strategies7.7. Measure and evaluate performanceMeasure and evaluate performance

Benefits of Strategic ManagementBenefits of Strategic Management

�� Proactive in shaping organization’s futureProactive in shaping organization’s future�� Initiate and influence activitiesInitiate and influence activitiesFormulate better strategiesFormulate better strategies

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�� Formulate better strategiesFormulate better strategies�� Systematic, logical, rational approachSystematic, logical, rational approach


�� Financial benefitsFinancial benefits�� Improvement in salesImprovement in salesImprovement in profitabilityImprovement in profitability

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�� Improvement in profitabilityImprovement in profitability�� Improvement in productivityImprovement in productivity


�� NonNon--Financial benefitsFinancial benefits�� Enhanced awareness of external threatsEnhanced awareness of external threats�� Improved understanding of competitors’ Improved understanding of competitors’ strategiesstrategies

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strategiesstrategies�� Increased employee productivityIncreased employee productivity�� Reduced resistance to changeReduced resistance to change�� Understanding of performanceUnderstanding of performance--reward reward relationshipsrelationships

�� Enhances problemEnhances problem--prevention capabilitiesprevention capabilities


1.1. Identification of opportunitiesIdentification of opportunities2.2. Objective view of management problemsObjective view of management problems3.3. Improved coordination and controlImproved coordination and controlMinimizes adverse conditions and changesMinimizes adverse conditions and changes

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4.4. Minimizes adverse conditions and changesMinimizes adverse conditions and changes5.5. Decisions to better support objectivesDecisions to better support objectives6.6. Effective allocation of time and resourcesEffective allocation of time and resources7.7. Internal communication among personnelInternal communication among personnel


8.8. Integration of individual behaviorsIntegration of individual behaviors9.9. Clarifies individual responsibilitiesClarifies individual responsibilities10.10.Encourages forward thinkingEncourages forward thinking

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10.10.Encourages forward thinkingEncourages forward thinking11.11.Encourages favorable attitude toward Encourages favorable attitude toward changechange

12.12.Discipline and formality to the Discipline and formality to the management of the businessmanagement of the business

�� Poor reward structuresPoor reward structures

�� FireFire--fightingfighting

Why Some Firms Do Why Some Firms Do NoNo

Strategic PlanningStrategic Planning

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�� FireFire--fightingfighting

�� Waste of timeWaste of time

�� Too expensiveToo expensive

�� LazinessLaziness

�� Content with successContent with success

�� Fear of failureFear of failure

�� OverconfidenceOverconfidence

�� Prior bad experiencePrior bad experience

Why Some Firms Do Why Some Firms Do NoNo

Strategic Planning (Cont’d)Strategic Planning (Cont’d)

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�� Prior bad experiencePrior bad experience

�� SelfSelf--interestinterest

�� Fear of the unknownFear of the unknown

�� SuspicionSuspicion

Business ethics defined:Business ethics defined:

�� Principles of conduct within Principles of conduct within organizations that guide decision organizations that guide decision

Business Ethics and Strategic Business Ethics and Strategic

ManagementManagement

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organizations that guide decision organizations that guide decision making and behavior.making and behavior.

Good business ethics:Good business ethics:

prerequisite for good strategic prerequisite for good strategic



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�� prerequisite for good strategic prerequisite for good strategic managementmanagement

Code of business ethics:Code of business ethics:

Provides basis on which policies can be Provides basis on which policies can be



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�� Provides basis on which policies can be Provides basis on which policies can be devised to guide daily behavior and devised to guide daily behavior and decisions at the workplacedecisions at the workplace

Internet privacy Internet privacy

Emerging ethical issue of immense Emerging ethical issue of immense



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�� Emerging ethical issue of immense Emerging ethical issue of immense proportionproportion

Internet and business ethics Internet and business ethics ----



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�� 3838% of companies store and review % of companies store and review employees email messagesemployees email messages

�� Up from Up from 1515% in % in 19971997

�� 5454% of companies monitor % of companies monitor employees’ Internet connectionsemployees’ Internet connections

Business actions Business actions alwaysalways unethical include:unethical include:

•• Misleading advertisingMisleading advertising

Business Ethics & Strategic Business Ethics & Strategic

PlanningPlanning

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•• Misleading advertisingMisleading advertising

•• Misleading labelingMisleading labeling

•• Environmental harmEnvironmental harm

•• Poor product or service safetyPoor product or service safety

•• Padding expense accountsPadding expense accounts

•• Insider tradingInsider trading

•• Dumping flawed products on foreign marketsDumping flawed products on foreign markets

Nature of Global CompetitionNature of Global Competition

Companies conduct business across bordersCompanies conduct business across borders�� International or multinational corporationsInternational or multinational corporations

�� Parent company Parent company

Host countryHost country

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�� Host countryHost country

�� Strategy implementation more difficultStrategy implementation more difficult�� Cultural differencesCultural differences

�� Norms, values, work ethicsNorms, values, work ethics

�� Absorb excess capacityAbsorb excess capacity

�� Reduce unit costsReduce unit costs

�� Spread economic risks over wider Spread economic risks over wider

Advantages of International Advantages of International

OperationsOperations

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�� Spread economic risks over wider Spread economic risks over wider marketsmarkets

�� LowLow--cost production facilitiescost production facilities

�� Competition may be less intenseCompetition may be less intense

�� Reduced tariffs, lower taxesReduced tariffs, lower taxes

�� Economies of scaleEconomies of scale

�� Different social, cultural demographic, Different social, cultural demographic, legal forces may create difficult legal forces may create difficult communicationcommunication

Disadvantages of International Disadvantages of International

OperationsOperations

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communicationcommunication

�� Weaknesses of foreign competition may Weaknesses of foreign competition may be underestimatedbe underestimated

�� Barriers to communication and effective Barriers to communication and effective management of personnelmanagement of personnel

�� Complications from different monetary Complications from different monetary systemssystems

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