1. Strategic Management
Orientation & Introduction
Sir godz eding
Asst prof 4

2. Chapter 1
The Nature of Strategic Management
Strategic Management:
Concepts & Cases
12th
Edition
Fred David
Sir godz eding
Asst Prof 4

3. Bankruptcy
Downsizing
Rightsizing
Reengineering
Divestitures
Acquisitions
Liquidations

4. Philosophy Behind the Strategic
Management Course
• Strategic Management is the capstone course
for business student majors.
• Students learn new strategy formulation,
implementation, and evaluation concepts and
techniques.
• Students use this new knowledge, coupled with
knowledge acquired from other courses, to chart
the future direction of different organizations.

5. • Strategic Management students analyze firms in
different industries, make objective strategic
decisions for companies, and justify those decisions
through oral or written communication.
• It covers problems & issues on the whole spectrum
of business, including finance, marketing,
management, management information systems,
production operations, economics, and statistics.
• Strategic management is an emerging and rapidly
developing discipline.
• Experiential exercises allows students to test the
concepts, knowledge learned.
• Cases

6. External
Audit
Chapter 3
Internal
Audit
Chapter 4
Long-Term
Objectives
Chapter 5
Generate,
Evaluate,
Select
Strategies
Chapter 6
Implement
Strategies:
Mgmt Issues
Chapter 7
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8
Measure &
Evaluate
Performance
Chapter 9
Vision
&
Mission
Chapter 2
Comprehensive Strategic Management Model
Simple & straightforward approach
To strategic planning
Used widely among businesses
& academia worldwide
Use to integrate and organize
All chapters in this text

7. • Chapter 1 provides an overview of strategic
management.
• A practical, integrative model of the strategic-
management process is introduced.
• Basic activities and terms in strategic management
are defined.
• The benefits of strategic management are
presented.
• Important relationships between business ethics
and strategic management are discussed.
• The chapter initiates discussion of two themes:
global considerations and the strategic implications
of the natural environment.

8. • 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 THAT WORRY.
• CONFUCIOUS

9. Art & science of formulating,
implementing, and evaluating,
cross-functional decisions that enable
an organization to achieve its
objectives.
WHAT IS STRATEGIC MANAGEMENT?

10. Business Policy
Defined:
General management orientation
that looks inward for properly
integrating the firm’s functional
activities.

11. Four Phases of
Strategic Management
• Basic financial planning
• Forecast-based planning
• Externally-oriented planning (strategic)
• Strategic management

12. Strategic Management achieves a
firm’s success through
integration ––
Management
MIS
Production/OperationsFinance/Accounting
Marketing
Research & Development

13. Strategic Management
In essence, the strategic plan is a company’s
game plan
• Its used synonymously with strategic planning.
• It is also used at many colleges and universities as the subtitle
for the capstone course, Business Policy, which integrates
material from all business disciplines.

14. Vision & Mission
Strategy Formulation
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

15. Decision
issues in
Strategy
Formulation
New business opportunities
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile
takeover
New business opportunities
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile
takeover

16. Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
It includes developing a strategy-supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets,
developing and utilizing information systems, and linking employee
compensation to organizational performance.
“ACTION STAGE”

17. Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
It’s 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.

18. Peter Drucker: -- Think through the
overall mission of a business.
Ask the key question: “What is our
Business?”
Prime Task of
Strategic Management

19. Topic Reports
Group 1 Case 2: Bytes Product Inc
Chap 8 Marketing, R&D, CIS
Group 2 Chap 3 Making an External Assessment
Group 3 Chap 4 Making an Internal Assessment
Group 4 Chap 5 Placing Strategies into Action
Group 5 Chap 6 Understanding Strategy
Analysis and Choice
Group 6 Chap 7 Dealing with Management and
Operations Issues

20. INTUITION
Henry Sy
Innate intuition
Don’t believe in feng chui
Believes in common sense
Intuition is the ability to re-pattern

21. Organizations must monitor events
• On-going process
• Internal and external events
• Timely changes
Adapting to Change

22. Rate & magnitude of change increasing
dramatically
Adapting to Change
E-commerce
Demographics
Technology

23. • What kind of business should
we become?
• Are we in the right fields
• Are there new competitors?
• What strategies should we
pursue?
• How are our customers
changing?
Adapting to Change – Key
Strategic Management Questions

24. Chapter 1
The Nature of Strategic Management
Strategic Management:
Concepts & Cases
12th
Edition
Fred David
Sir godz eding
Instructor/Asst Prof 2

25. • “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, make timely
change.” Abraham Lincoln

26. Your Intuitive Ability
• Scoring:
• Total the number of “a” responses on
questions 1, 3, 5, 6, 11: A= _____
• Total the number of “b” responses on
questions 2, 4, 7, 8, 9, 10, 12: B=______
• Add your “a” and “b” scores A+B= _______
• Your intuitive score is _______
• 12 HPS and 0 is lowest

27. Intuition is based on:
– Past experiences
– Judgment
– Feelings
Integrating Intuition and Analysis
Intuition is useful for decision making in:
– Conditions of great uncertainty
– Conditions with little precedent
“instinctive knowledge
or feeling “
The strategic-management process can be described as an objective,
logical, systematic approach for making major decisions in an organization.
It attempts to organize qualitative and quantitative information in a way that
allows effective decisions to be made under conditions of uncertainty.

28. KEY TERMS IN STRATEGIC MANAGEMENT
1. Competitive Advantage
2. Strategists
3. Vision & Mission Statements
4. External Opportunities & Threats
5. Internal Strengths & Weaknesses
6. Long-Term Objectives
7. Strategies
8. Annual Objectives
9. Policies

29. “Anything that a firm does especially
well compared to rival firms”
Strategic Management is Gaining
and Maintaining 1-Competitive
Advantage

30. 1. Adapting to change in external trends,
internal capabilities and resources
Achieving Sustained Competitive
Advantage…how?
2. Effectively formulating, implementing &
evaluating strategies

31. Strategists – are individuals who are most responsible for
the success or failure of an organization . They help an
organization gather, analyze and organize information. They track
industry and competitive trends, develop forecasting models and
scenario analyses, identify business threats and develop creative
action plans. Strategic planners usually serve in a support or staff
role. Usually found in higher levels of management, they typically
have considerable authority for decision-making in the firm.
•Various Job Titles:
Chief Executive Officer (CEO)
Chief Strategy Officer (CSO)
Executive Director
2
•President
•Owner
•Board Chair

32. 3 Vision & Mission Statements
• Vision statements answer the question: “What do
we want to become?”
• Mission statements are “enduring statements of
purpose that distinguish one business from other
similar firms. A mission statement identifies the
scope of a firm’s operations in product and market
terms.” It addresses the basic question that faces all
strategists: “What is our business?” It should
include the values and priorities of an organization

33. 4 External Opportunities & Threats
• Refer to economic, social, cultural, demographic,
environmental, political, legal, governmental,
technological, and competitive trends and events
that could significantly benefit or harm an
organization in the future.
• Are largely beyond the control of a single
organization, thus the term external.
• Environmental scanning or Industry analysis is the
process of conducting research & gathering &
assimilating information.
• Industry is a group of firms that produces a similar
product or service

34. Basic Tenet of Strategic Management
Key Terms
4 Opportunities & Threats
Strategy Formulation
Take advantage of
External Opportunities
Take advantage of
External Opportunities
Avoid/minimize impact of
External Threats
Avoid/minimize impact of
External Threats
Tenet – doctrine, principle

35. 5 Internal Strengths & Weaknesses
• Are an organization’s controllable activities
that are performed especially well or poorly.
• Identifying and evaluating organizational strengths and
weaknesses in the functional areas is an essential
strategic management activity.
• Strengths and weaknesses are determined
relative to competitors and may be
determined by both performance and
elements of being.

36. Strengths & Weaknesses (Internal)
Key Terms
Typically located in functional areas of the firm
• Management
• Marketing
• Finance/Accounting
• Production/Operations
• Research & Development
• Computer Information Systems

37. Assessing the Internal Environment
Key Terms
Strengths & Weaknesses
Internal Factors
Measure Performance
Compute Financial Ratios
Industry Averages
Survey Data Comparing past periods

38. Objectives - specific results that an organization
seeks to achieve in pursuing its basic mission.
more than one year
Long-term Objectives6
Corporate goals and objectives include:
Profitability (net profits)
Growth (increase in total assets, etc.)
Utilization of resources (ROE or ROI)
Market leadership (market share)

39. The means by which long-term objectives are
achieved
Key Terms
Strategies6
A strategy of a corporation forms a comprehensive master
plan stating how the corporation will achieve its mission
and objectives. It maximizes competitive advantage and
minimizes competitive disadvantage.

40. Hierarchy of Strategy
Corporate Strategy
Business
(Division Level)
Strategy
Functional
Strategy

41. Strategies
3 Types of Strategy
 Corporate strategy
Ex. Stability, Growth, Retrenchment
 Business strategy
Ex. Competitive strategies, Cooperative strategies
Apple’s differentiation vs. Alliances by some airlines/banks
 Functional strategy
Ex. Technological leadership, Technological followership
Pioneer an innovation vs. Imitate products of other companies

42. Strategies
Key Terms
Some Examples
• Geographic expansion
• Diversification
• Acquisition
• Market penetration
• Retrenchment
• Liquidation
• Joint venture

43. Short-term milestones that firms must achieve
to attain long-term objectives
Annual Objectives7
Policies
Means by which annual objectives will be
achieved
8

44. Dynamic & Continuous
More formal in larger organizations
Strategic Management Model
Strategic Management Process

45. External
Audit
Chapter 3
Internal
Audit
Chapter 4
Long-Term
Objectives
Chapter 5
Generate,
Evaluate,
Select
Strategies
Chapter 6
Implement
Strategies:
Mgmt Issues
Chapter 7
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8
Measure &
Evaluate
Performance
Chapter 9
Vision
&
Mission
Chapter 2
Comprehensive strategic management model

46. 1. Identify Existing --
Strategic Management Model
• Vision
• Mission
• Objectives
• Strategies

47. 2. Audit external environment
3. Audit internal environment
4. Establish long-term objectives
5. Generate, evaluate & select
strategies
6. Implement selected strategies
7. Measure & evaluate performance
Strategic Management Model

48. External
Audit
Chapter 3
Internal
Audit
Chapter 4
Long-Term
Objectives
Chapter 5
Generate,
Evaluate,
Select
Strategies
Chapter 6
Implement
Strategies:
Mgmt Issues
Chapter 7
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8
Measure &
Evaluate
Performance
Chapter 9
Vision
&
Mission
Chapter 2
Comprehensive strategic management model

49. Benefits of Strategic Management
• Proactive in shaping firm’s future
• Initiate and influence firm’s activities
• Formulate better strategies
•Systematic, logical, rational

50. Benefits of Strategic Management
Financial Benefits
• Improvement in sales
• Improvement in profitability
• Productivity improvement

51. Benefits of Strategic Management
Non-Financial Benefits
• Improved understanding of competitors strategies
• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities

52. WHY SOME FIRMS DO NO STRATEGIC PLANNING
1. Poor reward structures
2. Fire fighting
3. Waste of time
4. Too expensive
5. Laziness
6. Content with success
7. Fear of failure
8. Overconfidence
9. Prior bad experience
10.Self-interest
11.Fear of the unknown
12.Honest difference of opinion
13.Suspicion

53. PITFALLS IN STRATEGIC PLANNING
• Using strategic planning to gain control over decisions and resources
• Doing strategic planning only to satisfy accreditation or regulatory requirements
• Too hastily moving from mission development to strategy formulation
• Failing to communicate the plan to employees, who continue working in the dark
• Top managers making many intuitive decisions that conflict with the formal plan
• Top managers not actively supporting the strategic-planning process
• Failing to use plans as a standard for measuring performance
• Delegating planning to a “planner” rather than involving all managers
• Failing to involve key employees in all phases of planning
• Failing to create a collaborative climate supportive of change
• Viewing planning to be unnecessary or unimportant
• Becoming so engrossed in current problems that insufficient or no planning is
done
• Being so formal in planning that flexibility and creativity are stifled

54.  ISO 14000
Natural Environment Perspective
ISO used to gain strategic advantage
Focuses on operating in an environmentally
friendly manner. Voluntary standards in
environmental fields.
ISO 14001 standard for Environmental Management System
Not certified can be a strategic disadvantage
Firms minimize harmful effects on environment
International Organization for Standardization based in Geneva,
Switzerland, Is a network of national standards institutes of 147
countries.

55. Parent company
Host country
The Nature of Global Competition
International/multinational corporations
Refers to a company investing in
International operations
It’s the country where that business is conducted
Strategy implementation may be difficult
Cultural differences: Ex. Norms, Values, Work ethic
Co. that conduct business operations across national borders

56. Advantages of International Operations
Absorb excess capacity
Reduce unit costs
Spread risk over wider markets
Low-cost production facilities
Less intense competition
Lower taxes
Economies of scale
The decrease in unit cost of a product or service
resulting from large-scale operations, as in mass.

57. Disadvantages of International
Operations
Difficult communications
Underestimate foreign competition
Cultural barriers to effective management
Complications arising from currency
differences

58. Conclusion
• All firms have a strategy, even if it is informal, unstructured, and sporadic.
All organizations are heading somewhere, some don’t know…
• The Strategic –management process is becoming more widely used by
small firms, large companies, non-profit, government organizations, & MNC.
When managers & employees are empowered, it has limitless boundaries.
• Organizations should take proactive rather than reactive approach in their
industry; should influence, anticipate, & initiate rather that just respond to
events.
• The strategic-management process is logical, systematic and objective
approach in determining an enterprise future direction.

59. THE END

60. Challenges to
Strategic Management
Globalization
– Internationalization of markets and corporations
• Global (worldwide) markets rather than national
markets
Electronic Commerce
– Use of the Internet to conduct business transactions
• Basis for competition on a more strategic level rather
than traditional focus on product features and costs

61. Global Issues
• European Union (EU)
– Economic integration of 15 member countries
• North American Free Trade Agreement (NAFTA)
– Improved trade among 3 member countries
• Mercosur
– Free-trade area among Argentina, Brazil, Uruguay, and
Paraguay
• Association of South East Asian Nations (ASEAN)
– Attempting to link members into a borderless economic
zone

62. E-Commerce
7 Trends:
1. Internet forcing companies to transform themselves
2. Market access and branding are changing, causing
disintermediation of traditional distribution channels
3. Balance of power shifting to the consumer
4. Competition is changing
5. Pace of business increasing drastically
6. Internet purchasing corporations out of their traditional
boundaries
7. Knowledge becoming a key asset and source of
competitive advantage

63. Strategic Management
Highly Rated Benefits:
• Clearer sense of strategic vision for the firm
• Sharper focus on what is strategically important
• Improved understanding of a rapidly changing
environment