 Nature of Strategic

Management
Concepts & Cases

“With a strategy an organization is

like a ship without a rudder, going
around in circles. Its like a tramp;it
has no place to go”.
Joel,Ross and Michael Kami
 Themes in the Text
E-Commerce
 Vital strategic management tool
 Emergence of internet has
united dispersed suppliers,
clients , creditors, shareholders ,
 competitors , rivals etc. by
providing platforms
 Distances have been minimized
by cumbersomeness of time ,
distance and space in doing
business.
 Concept of strategy
 The crafting of a strategy represents a managerial
commitment to pursue a particular set of actions in
growing the business, attracting and pleasing
customers, competing successfully, conducting
operations and improving the company’s financial
and market performance (Johnson and Scholes,
2008).
 A Firm’s strategy is managements’ action plan for
running the business and conducting operations
(Thompson et al, 2007).
 The balance of actions and choices between
internal capabilities and external environment of an
organization. Accordingly, strategy can be seen as a
plan, play, pattern, position and perspective
(Mintzberg et al, 2009).
 A pattern of actions and resource allocations
designed to achieve the goals of the organization
(Bateman and Zeithman ,1993)
 The strategy an organization implements should be
directed toward building strengths in areas that
satisfy the wants and needs of consumers and
other key actors in the organizations’ external
environment.
 Forms/types of Strategies
 Corporate level strategy: concerned with the overall
scope of an organization and how value will be
added to the different parts (business units) of the
organization. This could include issues of
geographical coverage, diversity of
products/services of business units, and how
resources are to be allocated between different
parts of the organizations
 Wechsler et al (1986) reporting on Ohio state
agencies revealed four distinct public sector
strategies:
• Developmental :used by public sector organizations in the
developing mode striving to enhance organizational status,
capacity and resources with a view creating a new and
different organizational future.
• Transformational:are conditioned by commitment to
fundamental change, either internal or external
• Protective :
• Political strategy

Art & science of formulating, implementing, and
evaluating, cross-functional decisions that enable
an organization to achieve its objectives
 Strategic management as a practice involves
behaviors and actions that are determined by both
individual human agency and structural
/institutional forces. Individuals and groups who are
embedded in social structures that are reproduced
and shaped by individual and group actions make
strategic choices (Jarzabkowski, Balogun and Seidl,
2007).
 According to Vinzant and Vinzant (1996), strategic
management is a process carried out at the top of
the organization, which provides guidance, direction
and boundaries for all aspects of operational
management

In essence, the strategic plan is

a company’s game plan
Peter Drucker: -- Think through
the overall mission of a
business. Ask the key
question: “What is our
Business?”
The strategic management process
attempts to organize quantitative and
qualitative information under conditions of
uncertainty, can be best described as an
objective, logical and systematic approach
of making major decision in an
organization.

Intuition is based on:

 Past experiences
 Judgment
 Feelings
Organizations must monitor
events
 On-going process
 Internal and external events
 Timely changes
For Example, windows , internet,
mobile technologies
Busniess questions:
Are we going in right direction?
What new competitors are entering industries?
How our customers are changing?
What strategies we pursue?
Are new technologies being developed

“Anything that a firm does

especially well compared to
rival firms”
1. Adapting to change in external
 trends, internal capabilities and
resources

Rate & magnitude of change

increasing dramatically

Effective Adaptation
 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?

 Key Terms
Vision Statement –
What do we want to become?
Mission Statement –
What is our business?
 Largely beyond the control of a single
organization
Opportunities & Threats (External)
 Process of conducting research
and gathering and assimilating
external information
Basic Tenet of Strategic
Management
 Controllable activities performed
especially well or poorly
 Are determined relative to
competitors
 Can be determined in number of
ways
Strengths & Weaknesses
(Internal)
Assessing the Internal
Environment
 Mission-driven pursuit of specified
results more than one year out
Long-term Objectives
 Means by which long-term objectives
are achieved
Strategies
 Short-term milestones that firms
must achieve to attain long-term
objectives
 Annual objective should be
measurable , quantitative,
challenging, consistent
 Should be established at corporate,
divisional and functional level
 Should be stated in terms of
marketing , management , finance
/accounting, production/operation

 Means by which annual objectives

will be achieved
 Important in implementation stage
 Can be established at corporate level
and apply to entire organization
 Policies include:
 Guidelines
 Rules
 Procedures

 Example Strategies in Action

in 2005
 Example Strategies in Action
in 2005
 Comprehensive strategic
management model
 Dynamic & Continuous
 More formal in larger organizations
1. Identify Existing --
 Audit external environment
 Audit internal environment
 Establish long-term objectives
 Generate, evaluate & select
strategies
 Implement selected strategies
 Measure & evaluate
performance
 Principles of conduct within
organizations that guide decision
making and behavior
 Prerequisite for good strategic
management
 Provides basis on which policies can
be devised to guide daily behavior
and decisions in the workplace
 Misleading advertising
 Misleading labeling
 Harm to the environment
 Insider trading
 Dumping flawed products on foreign
markets
 Poor product or service safety
 Padding expense accounts

 ISO 9000 focuses on quality control

 > 1.5 million companies incorporate ISO

 Voluntary standards
 ISO 14001 standard for
Environmental Management System
 Firms minimize harmful effects on
environment
 Parent company
 Host country
 Cultural differences
 Norms
 Values
  Work ethic
 case study
 On May 5, 2009, McDonald’s Corporation (MCD,
hereafter) and Starbucks went full force
campaigning for the attention of coffee
connoisseurs. Following its success with McCafés in
Europe,MCD surprised Starbucks with its
announcement to offer lattes and mochas in its
McCafés in the United States. In an attempt to woo
rival starbucks’ customers, MCD promised to offer
premium taste at bargain prices. This
announcement came at a time when Starbucks,
hard hit by losses, was closing hundreds of stores in
the United States. The MCD–Starbucks fight is
everywhere on the tube, in print, and the airwaves.
MCD even taunts Starbucks with ads on buses and
billboards that read “4 bucks is dumb.” Starbucks is
retaliating by placing newspaper ads that read
“Beware of a cheaper cup of coffee. It comes with a
price.”
 In April 2009, MCD reported strong sales growth in
the first quarter of 2009 in spite of recessionary
conditions worldwide. MCD sales in the United
States increased by 4.7 percent, in Europe by 3.2
percent, and in Asia/Pacific, Middle East, and Africa
by 5.5 percent. But as the U.S. dollar gained
strength against most currencies, especially the
 euro, British pound, Australian dollar,Canadian
dollar, and the Russian ruble, MCD experienced
$642 million in foreign currency
 translation losses in the first quarter of 2009, as
indicated in Exhibit 1. Undeterred, however, MCD
 is forging ahead with a renewed commitment to
allure coffee enthusiasts away from rivals, big
 and small.
 But as the U.S. dollar gained strength against most
currencies, especially the euro, British pound,
Australian dollar,Canadian dollar, and the Russian
ruble, MCD experienced $642 million in foreign
currency
 translation losses in the first quarter of 2009,
however, MCD is forging ahead with a renewed
commitment to allure coffee enthusiasts away from
rivals, big and small.
 History
 MCD was launched in 1940 when brothers Dick and
Mac McDonald opened a restaurant in San
Bernadino, California. However, the credit of growing
the corporation into a franchised, global operation is
attributed to Ray Kroc, who acquired equity from the
McDonald brothers and took the firm public in
1965. MCD has a really cool history timeline called
“Travel in Time with Us” such as the following:
 1979 MCD introduced Happy Meals
 1981 MCD opened stores in Spain, Denmark, and the Philippines
 1983 MCD entered its 32nd country
 1984 Ray Kroc passed away
 1987 MCD introduced Fresh Salads
 1990 MCD opened a store in Moscow, Russia
 1992 MCD opened a store in Warsaw, Poland
 1995 MCD’s new ad was “Have You Had Your Break Today?”
 1996 www.mcdonalds.com Web site introduced

 1979 MCD introduced Happy Meals

 1981 MCD opened stores in Spain, Denmark, and
the Philippines
 1983 MCD entered its 32nd country
 1984 Ray Kroc passed away
 1987 MCD introduced Fresh Salads
 1990 MCD opened a store in Moscow, Russia
 1992 MCD opened a store in Warsaw, Poland
 1995 MCD’s new ad was “Have You Had Your Break
Today?”
 1996 www.mcdonalds.com Web site introduced
 1997 MCD’s new ad was “Did Somebody Say
McDonald’s?”
 2001 The Big N’Tasty sandwich introduced
 2003 MCD introduced Premium Salads and its
“Plan to Win” strategy
 2006 MCD introduced Snack Wraps