1. Strategic Management Process
Tutorial 03

2. Traditional Perspective
SMP
Resources based view
Traditional Perspective
Stakeholder View
The basic strategic management process is most closely related to the traditional model.
However, each of the three approaches heavily influences each one of the stages of this process.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

3. A combined perspective of Strategic Management
Process
Firms conduct external and internal analysis (Situation analysis), both of which include analysis of stakeholders. On the basis of information obtained, they create strategic direction, strategies, and tactics for implementing strategies and control systems
Origin
Traditional, Resource-based, and Stakeholder perspectives.
Adaption Vs Enactment
Influence the environment when it is economically feasible to do so. Take a proactive stance with regard to managing external stakeholders.
Monitor, forecast, and adapt to environmental forces that are difficult or costly to influence
Deliberate Vs Emergent
Firms should be involved in deliberate strategy-creating processes.
However, they should learn from past decisions and be willing to try new things and change strategic course.
Source of competitive advantage
Firms can obtain competitive advantage from superior resources, including knowledge based resources, superior strategies for managing those resources, and/or superior relationships with internal or external stakeholders
Creation of Strategic Alternatives
Firms develop strategies to take advantage of strengths and opportunities or overcome weaknesses or threats. They arise as organizations conduct resource analysis, analysis of organizational processes, and through analyzing and partnering with external stakeholders

4. Strategic Management Process
Analysis the Environment, Stakeholders, and Organizational Resources
Strategic Direction
Implement Strategies & Establish Control Systems
Formulate Basic Strategies
Control
Control
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

5. Components of Strategic Management Process
Situation analysis
Strategic direction
Strategy formulation
Strategy implementation
Strategic Control
SMP
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

6. Situation Analysis
When performing a situation analysis all of the stakeholders inside and outside of the firm, as well as the major external forces, should be analyzed at both the domestic and international levels.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

7. External Environment External environment includes
groups,
individuals, and
forces
outside of the traditional boundaries of the organization that are significantly influenced by or have a major impact on the organization.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

8. Internal Environment
The internal environment includes all of the stakeholders, resources, knowledge, and processes that exist within the boundaries of the firm.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

9. Analyzing the environment and the company can assist the company in all of the other tasks of strategic management.
Example
A firm's managers should formulate strategic direction and specific strategies based on organizational strengths and weaknesses and in the context of the opportunities and threats found in its environment.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

10. Strengths: company resources and capabilities that can lead to a competitive advantage.
 Weaknesses :resources and capabilities that a company does not possess, to the extent that their absence places the firm at a competitive disadvantage.
 Opportunities :conditions in the broad and operating environments that allow a firm to take advantage of organizational strengths, overcome organizational weaknesses, and / or neutralize environmental threats.
 Threats :conditions in the broad operating environments that may stand in the way of organizational competitiveness or the achievement of stakeholder satisfaction.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

11. Strategic Direction
Strategic direction pertains to the long-term goals and objectives of the organization.
It defines the purposes for which a company exists and operates.
This direction is often contained in mission and vision statements.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

12. Mission – Reason for Existence
Missions describe the areas or industries in which an organization operates.
 Example: Mission of the New York Stock Exchange
Support the capital-raising and asset-management processes by providing the highest-quality and most cost-effective, self- regulated market­place for the trading of financial instruments; promote confidence in and understanding of that process; and serve as a forum for discussion of relevant national and international policy issues.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

13. Vision
A vision statement expresses what the organization wants to be in the future, which may involve a fundamental change in its business.
 Example:
A start-up firm may have a mission to provide software design and support for its clients, but its long-range vision may be to become a fully integrated Internet provider.
While the mission directs the business for now, the mission will gradually change as the company moves over time towards fulfillment of its vision. 
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

14. Strategy Formulation
A strategy can be thought of in either of two ways:
 as a pattern that emerges in a sequence of decisions over time or
as an organizational plan of action that is in tended to move a company toward the achievement of its short term goals and, ultimately, toward the achievement of its fundamental purposes.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

15. In some organizations, particularly those
in rapidly changing environments and
in small businesses,
strategies are not "planned" in the formal sense of the word.
Instead, managers seize opportunities as they come up, but within guidelines or boundaries defined by the firm's strategic direction or mission.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

16. Strategies as "plans" are common in most organizations.
Strategy formulation, the process of planning strategies, is often divided into three levels
i.e
Corporate Level
Business Level
Functional Level
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

17. Corporate-level strategy :(“Where to Compete”)
defines a company's domain of activity through selection of business areas in which the company will compete.
Business-level strategy :("How to compete in those areas”)
pertains to domain direction and navigation, or how businesses should compete in the areas they have selected.
Sometimes business-level strategies are also referred to as “competitive strategies”.
Functional-level strategy : ("The functional details of how resources will be managed so that business-level strategies will be accomplished.“)
develops the details of how functional resource areas such as marketing, operations, and finance should be used to implement business-level strategies and achieve competitive advantage.
Basically, functional-level strategies are strategies for acquiring, developing, and managing organizational resources
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

18. Who takes Decesions? Corporate Strategy Business Level Strategy
Top Level
Middle Level
Lower Level
Corporate Strategy
Business Level Strategy
Functional Level Strategy
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

19. Strategy Implementation
Strategy formulation results in a plan of action for the company and it various levels.
Strategy implementation represents a pattern of decisions and actions that are in tended to carry out the plan.
It involves
Managing stakeholder relationships
Managing organizational resources
Creating an organizational design
Creating organizational control systems
in a manner that moves the business toward the successful execution of its strategies, consistent with its strategic direction.
Strategy Implementation
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

20. Strategic Control
Strategic control refers to the processes that lead to adjustments in strategic direction, strategies, or the implementation plan, when necessary.
Thus, managers may collect information that leads them to believe that the organizational mission is no longer appropriate or that its strategies are not leading to the desired outcomes.
 On the other hand, a strategic-control system may tell managers that the mission and strategies are appropriate, but that they have not been well executed. In such cases, adjustments should be made to the implementation process.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

21. Example- Greater Construction Inc (See Page no:12)
Although larger companies tend to make use of the strategic management process, this process is also a vital part of decision making in smaller companies. In fact, it is important in companies of all sizes
Example- Greater Construction Inc
(See Page no:12)
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )

22. Reference Jefferey S.Harrison,
Strategic Management of Resources and Relationships, United States of America
SMP
Chamara Bandara
FCA, ACMA,MBA (USQ - AUS)