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    Topic 2 - The Concepts of Strategic Management

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    Topic 2 - The Concepts of Strategic Management

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    3 views24 pages

    Topic 2 - The Concepts of Strategic Management

    Uploaded by

    mostafa elyamani

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    © All Rights Reserved
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    of 24

    WELCOME

    BM4407- Strategic Management

    Dr. Khaled Mohamed Khaled


    01
    The Concepts of
    Strategic Management
    Learning Outcomes

    o Discuss strategic-management process involving the

    stages of strategy formulation, implementation and

    evaluation.

    o Explain benefits of strategic management.

    o Discuss how strategic management process in the

    rapidly changing environment.


    Introduction
    In this topic, students will learn about strategic-management process, and the
    stages of strategy formulation, implementation and evaluation.

    In addition, students will be exposed on how to integrate intuition in strategic


    management.
    This topic also provides the key terms in strategic management. Besides that,
    students will be exposed on the benefits of engaging in strategic management
    and explain why some firms do not engage in strategic planning.
    Definition of Strategic Management

    ○ The art and science of formulating, implementing, and


    evaluating cross-functional decisions that enable an
    organization to achieve its objectives.

    ○ Strategic management is used synonymously with the


    term strategic planning in this course.

    ○ Sometimes the term strategic management is used to


    refer to strategy formulation, implementation, and
    evaluation, with strategic planning referring only to
    strategy formulation.
    Definition of Strategic Management

    ○ A strategic plan is a company's game plan.

    ○ A strategic plan results from tough managerial choices among


    numerous good alternatives, and it signals commitment to specific
    markets, policies, procedures, and operations.

    ○ Strategic management is about the set of management decisions


    and actions that determines the long run performance of a
    corporation. This long term performance of a corporation is its
    sustain competitive advantage.

    ○ It includes analyzing the external and internal environments,


    establishing strategic direction, formulating strategies to achieve
    established goals and implementing those strategies and
    controlling the outcomes.
    Source: https://www.youtube.com/watch?v=eOFqekOF9ZI

    Strategic Management Processs Model


    Strategic Management Process Model

    External and
    Strategy Strategic
    Internal Strategic Direction
    Formulation Implementation
    Environmental
    & Control
    Analysis
    External and Internal Environmental Analysis

    Internal stakeholders are the managers, employees


    The external environmental analysis involves evaluation
    of the broad (general) and task (industry) environments to and the owners and their representatives
    determine trends, threats and opportunities and to provide (the Board of Directors).
    a foundation for strategic direction.
    The internal analysis includes the evaluation of the
    organization's resources and capabilities to
    determine strengths, weaknesses and opportunities
    The board environment consists of domestic and for competitive advantage and to identify
    global environmental forces such as socio-cultural, organizational vulnerabilities that
    technological, political and economic trends. should be corrected.

    The task (industry) environment consists of external


    stakeholders.
    Stakeholders are groups or individuals outside the
    organization that are significantly influenced by or have a
    major impact on the organization.
    Strategic Direction
     Strategic direction pertains to the long-term goals (vision and mission) and objectives
    of the organization.
     Fundamentally strategic direction defines the purposes for which an organization
    exists and operates.
     This direction is contained in the mission statement. It describes the areas or
    industries in which the organization operates.

    A well-established strategic direction provides guidance to the managers and employees who are
    largely responsible for carrying it out as well as a greater understanding of the organization for
    the external stakeholders with whom the organization interacts.

    Strategic direction is an important part of the internal organization


    Strategic Formulation

    Business strategy formulation pertains to domain direction and navigation or how businesses
    compete in the areas they have selected.

    On the other hand, corporate strategy formulation refers primarily to domain definition or the
    selection of business areas in which the organization will compete.

    For example, in diversified organizations are involved in several different businesses and serve a
    variety of customer groups. In the functional strategy formulation, it pertains to how the
    functional areas such as marketing, operations, finance and research should work together to
    achieve the business-level strategy.

    Functional strategy is most closely associated with strategy implementation.


    How did Toyota beat FORD & GM using its GENIUS Supply Chain Model?

    https://www.youtube.com/watch?v=0wVAPXswE6E
    Strategy implementation & Control

    Strategy Formulation results in a plan of Action.


    Structure reflects the way people and
    01 Srategy implemention carry out set of decions and
    actions to carry out the plan for the strategic ends.
    04 work are organized.

    Process such as operation procedures


    02
    Functional Strategies outlines the specific
    actions to convert business strategies into 05 developed to create uniformity and
    actions promote efficiency.

    Organizational systems developed to train Strategy implementation may require


    03 and compensate employees ; to enforce 06 changes over time.
    organization values.
    Strategy implementation & Control

    • Good control is critical to Organization Success


    • Strategic Control refers to the process that leads to adjustments in the
    strategic direction , strategies or the implantation plan when necessary.

    • Managers may collect new information that leads them to re-evaluate their
    assessment of the environment.

    • They may determine that the organization mission is no longer appropriate or


    the organizational strategies is not leading to the desired outcomes.
    Benefits of Strategic Management

    Non-Financial
    Identification, To Differentiate Financial Benefits Benefits

    Prioritization Evaluating the Such as more


    business is awareness of external
    Exploration strategically aligned threats, efficient
    to its goals and internal processes &
    New opportunities priorities clear understanding
    of performance in link
    of reward.
    2.4 Strategic Management &
    rapidly growing Environment

     Strategic management has now evolved to the point that its primary value is to enable the
    organization to operate successfully in a dynamic, complex environment.

     Managers at all levels are expected to continually analyze the changing industry they
    are in, in order to create or modify strategic plans throughout the year.

     Managers have to do more than set long-term strategies; they must go through
    "incremental management" in the sense that they have to make fine tuning and incremental
    adjustments (emergent change) to improve the efficiency of the firm's operations to meet
    the challenges of the environmental forces of change.
    2.4 Strategic Management &
    rapidly growing Environment

     Sometime the forces of change can exert pressure on managers to make major changes in the firm's
    strategic direction. If the firm does not make the necessary changes, it may not be able to sustain
    its competitive advantage.
     Therefore, for a company to maintain its sustainable competitive advantage it must develop
    strategic flexibility in order to be able to shift from one dominant strategy to another.
     Strategic flexibility demands a long-term commitment to the development and nurturing of critical
    resources.
     It also demands that the company becomes a learning organization i.e. an organization skilled at creating,
    acquiring and transferring knowledge and at modifying its behavior to reflect new knowledge and
    insights.
     Learning Organizations:

     Learning organizations are skilled at four main


    activities:

    1. Solving problems systematically


    2.4 Strategic 2. Experimenting with new approaches
    Management 3. Learning from their own experiences and past history as
    & rapidly well as from the experiences of others
    growing 4. Transferring knowledge quickly and efficiently throughout the
    environment organization.
     Initiation of Strategy: Triggering Events:

     A strategic drift can occur in organizations due to management


    inertia especially at the stage of strategy formulation.

    2.4 Strategic  This is because the management believed that the current
    strategy is still appropriate and needs only some "fine tuning".
    Management
    & rapidly
     However some triggering events may act to stimulate for a
    growing change in strategy such as:
    environment  New CEO
     External intervention
     Threat of a change in ownership
     Performance gap
    Quiz
    Q1: Strategic Management Process Model Includes the
    following processes , except :

    A. External and Internal Environmental Analysis


    B. Strategic Direction
    C. Strategic Implementation & Control
    D. Strategy organization
    E. Strategy formulation
    Quiz
    Q2: Awareness of external threats, efficient internal
    processes & clear understanding of performance in link of
    reward are among benefits of strategic management:

    A. Financial Benefits
    B. Exploration Benefits
    C. Differentiation Benefits
    D. Non-Financial Benefits
    E. Non of the above
    Quiz
    • Q3: It refers to the process that leads to adjustments in the
    strategic direction , strategies or the implementation plan when
    necessary.

    A. Strategic internal analysis


    B. Strategic Control
    C. Strategy direction
    D. Strategy formulation
    E. Non of the above
    Quiz
    Q4: Below are some triggering events may act to
    stimulate for a change in strategy , except:

    A. New CEO

    B. External intervention

    C. Employees non satisfaction.

    D. Threat of a change in ownership

    E. Performance gap
    Thanks!
    Strategic Management -2024 Dr. Khaled Mohamed Khaled

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