DFM 1103

INTRODUCTION TO
STRATEGIC MANAGEMENT

PROF DR HASLINDA ABDULLAH

Mobile: 019-3273122
Email: drhaslinda@gmail.com

Overview
Introduction
Welcoming to the Course Syllabus
Ground rules
Week 1 Chapter 1

What is Strategic Management

AK & AJ

What is Strategic Management?

Defined as a set of decisions and actions

that result in the formulation and
implementation of plans designed to
achieve a firms objectives

Strategic Management
achieves a firms success
through
integration

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

MIS

Purpose

To exploit and create new and different

opportunities for tomorrow: long range
planning

History
Used synonymously with the term
strategic planning (SP)
Strategic Planning originated in the 1950s
& very popular between 1960s and 1970s

Stages of Strategic Management

Stage 1 : Formulation
Stage 2 : Implementation
Stage 3: Evaluation

Strategy Formulation

Vision & Mission

External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection

Strategy Implementation

Establish Annual Objectives

Devise Policies
Motivate Employee
Allocate Resources

So that formulated strategies can be

executed

Strategy Implementation

Often called the action stage of strategic

management
Implementing strategy means mobilizing
employees to execute strategies
Considered as the most difficult stage
Requires personnel discipline, commitment
and sacrifice
Successful strategy hinges upon
manager's ability to motivate and influence

Strategy Evaluation

Internal Review
External Review
Measuring Performance
Corrective Actions

Strategy
Evaluation

Final
FinalStage
Stageof
ofStrategic
StrategicManagement
Management

Subject
Subjectto
tofuture
futuremodification
modification

Todays
Todayssuccess
successno
noguarantee
guaranteeof
of
future
futuresuccess
success

New
New&&different
differentproblems
problems

Complacency
Complacencyleads
leadsto
todemise
demise

Adapting to Change

Strategic Management process is based on the

belief that organizations must monitor events
On-going process
Internal and external events
Timely changes can be made

9 Key Terms/Concepts in Strategic

Management
Competitive advantage
2. Strategists
3. Vision and mission statements
4. External Opportunities and threats
5. Internal strengths and weaknesses
6. Long term objectives
7. Strategies
8. Annual objectives
9. Policies
1.

Concepts Defined
Competitive advantage : anything that a
firm does especially well compared to rival
firms
Strategists : Individuals responsible for
the success or failure of an organisation
Vision : What do we want to become?
Mission : What is and How?

External opportunities and threats refer

to

Economic
Social
Cultural
Demographic & environmental
Political, legal & governmental
Technological
Competition/Competitive trends and events

These can significantly harm or benefit an

organization in the future

Opportunities & Threats

Basic Tenet of Strategic

Management
Take
Takeadvantage
advantageof
of
External
ExternalOpportunities
Opportunities
Strategy Formulation

Avoid/minimize
Avoid/minimizeimpact
impactof
of
External
ExternalThreats
Threats

Strengths & Weaknesses (Internal)

Typically located in functional areas of the firm

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Computer Information Systems

Long term objectives: specific results

that an organisation seeks to achieve in
pursuing it basic mission (> 1 year)
Strategies : means by which long term
objectives will be achieved
Annual objectives: short term milestones
that organisations must achieve to reach
long term objectives
Policies : means by which annual
objectives will be achieved

Comprehensive strategic management model

External
Audit

Long-Term
Objectives

Vision
&
Mission

Internal
Audit

Generate,
Evaluate,
Select
Strategies

Implement
Strategies

Measure &
Evaluate
Performance

Strategic Management Model

Questions:

Where are we now?

Where do we want to go?
How are we going to get there?

Strategic management process is dynamic

and continuous
Typically more formal in larger and well
established organisation

Benefits of Strategic Management

Financial

Improvement in sales
Profitability
Productivity

Non Financial

Improved understanding of competitors strategies

Enhanced awareness of threats
Reduced resistance to change
Enhanced problem-prevention capabilities

Benefits of Strategic
Management (Greenley)
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control of
activities
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
6. Effective allocation of time & resources
7. Internal communication among personnel

Benefits of Strategic
Management (Greenley contd)
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
12. Encourages favourable attitude toward
change
13. Provides discipline and formality to the
management of the business

Why Some Firms Do No

Strategic Planning
Poor reward structures
Fire-fighting
Waste of time
Too expensive
Laziness
Content with success

Why Some Firms Do No

Strategic Planning
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion

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

Making intuitive decisions that conflict with

the formal plan
Top management 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 as unnecessary or
unimportant
Becoming so engrossed in current
problems that insufficient or no planning is
done
Being so formal in planning that flexibility
and credibility are stifled

Guidelines for Effective Strategic

Management

Should be a people process more than a paper

process
Should be a learning process for all managers
and employees
Should be words supported by numbers rather
than numbers supported by words
Should be simple and non routine
Should vary assignments, team memberships,
meeting formats and even the planning schedule

Should challenge the assumptions

underlying the current corporate strategy
Should welcome bad news
Should welcome open-mindedness and a
spirit of inquiry and learning
Should not be a beauracratic mechanism
Should not become ritualistic, stilted or
orchestrated
Should not be too formal, predictable or
rigid

Should not contain jargon or arcane

planning language
Should not be a formal system for control
Should not disregard qualitative
information
Should not be controlled by technicians
Do no pursue too many strategies at once
Continually strengthen the good ethics is
good business policy

Business Vs Military Strategy

The study of strategic management was formed

on a strong military heritage
According to New World Dictionary, strategy is
defined as the science of planning and directing
large-scale military operations, of manoeuvring
forces into the most advantageous position prior
to actual engagement with the enemy
Derived from the Greek word strategos - refers
to a military general and combines stratos (the
army) and ago (to lead)

Similarities

To gain competitive advantage

Use strengths to exploit competitors' weaknesses
If overall is wrong (ineffective) then all the efficiency in the
world may not be enough to allow success
Accidental strategies are not a favoured and happy result
Success is the result:

continuous attention to changing external and internal

conditions and

formulation and implementation of insightful adaptations to

external & internal conditions
Element of surprise provides great competitive advantages
Information systems that provide data on opponents' or
competitors' strategies and resources are vitally important

Difference

Business:
Strategy is
formulated,
implemented and
evaluated with an
assumption of
competition

Military:
Strategy is based
on an assumption of
conflict

Integration

Both business and military organisations must

adapt to change and constantly improve to be
successful
Napoleon won = because his opponents were
committed to the strategy tactics and organization
of earlier wars
He lost against Wellington, Russians & Spaniards =
because he used tried and true strategies against
enemies who thought afresh, who were developing
the strategies not of the last war but of the next

Conclusion

All firms have strategy even if it is informal,

unstructured and sporadic
All firms are heading somewhere but some do
are not sure
The strategic management process is becoming
more widely used by all firms, nonprofit
institutions, governmental organisations and
MNCs
The process of empowering managers and
employees has almost limitless benefits

All organisations should take a proactive

rather than a reactive approach
Should strive to influence, anticipate and
initiate rather than respond to events
Strategic management process represents
a logical, systematic and objective
approach for determining an
organisation's future direction

People and organisation that plan ahead

are more likely to achieve their objectives
than those who do not plan at all.

By failing to prepare, you are preparing to fail.

Benjamin Franklin

Always focus on the front windshield and not

the review mirror - Colin Powell