Strategic Management “Without a strategy the organisation is like a ship without a radar , going around in circles” Joel Ross and Michael Kami Generally, a strategy is a plan of action designed to achieve a particular goal.

Definition of Terms A company’s strategy consists of the competitive moves and business approaches that managers employ to grow the business, attract and please customers, compete successfully, conduct operations, and achieve the targeted levels of organisational performance (Thompson and Strickland 2010)

continuation In other words, a company’s strategy is all about: How management intends to grow the bus. How it will build a loyal clientele and outcompete rivals. How each functional unit of the bus will be operated How performance will be boosted.

Defns Ctd Strategic Management is a process directed by top management to determine the fundamental aims and goals of the organisation and ensure a range of decisions which will allow for the achievement of those aims or goals in the long term , whilst providing for adaptive responses in the shorter term. Strategic Management is the conduct of drafting, implementing and evaluating cross-functional decisions that will enable an organisation to achieve its long term objectives.

Strat Man Defn Ctd It is the process of specifying the organisation’s mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.

Intro Ctd Most strategies undertaken by firms are earmarked at improving the company’s financial performance, strengthen its long term competitive position and gain a competitive edge over rivals. A strategy that sets a company apart from rivals and yields a competitive advantage is a company’s most reliable ticket for earning above average profit (Thompson and Strickland 2010)

Intro Ctd The most frequently used and dependable strategic approaches are: 1. Striving to be the industry’s low cost provider 2. Creating a differentiation-based advantage keyed to such features as high quality, higher product range, increased performance, technological superiority and many others.

Intro Ctd 3. Focusing on serving the special needs and tastes of buyers comprising a narrow niche market. 4. Developing expertise and resource strengths that give the company competitively valuable capabilities that rivals cannot easily bit.

Intro ctd The strong connection between competitive advantage and profitability means that the quest for sustainable competitive advantage should always be at the centre of the crafting of a strategy.

Characteristics of a good Strategy A good and winning strategy should have the following characteristics : 1. There must be strategic fit between the company’s external and internal situation. 2. The strategy should help the company to achieve a sustainable competitive advantage 3. It should result in better company performance

Intro ctd Strategy making is not a once off event. It evolves over time due to 1)Changing market conditions 2) Technological changes 3) Fresh moves of competitors 4) Emergence of new opportunities and 5) Some strong evidence the present strategy is not working well

Why are strategies needed? To proactively shape how a company’s business will be conducted. To mold the independent actions and decisions of managers and employees into a coordinated, companywide game plan.

Three Levels of Strategy or The Strategy Hierarchy The decision making hierarchy of a firm typically contains three levels and these also make up the strategy levels. These levels are: 1. The Corporate level 2. The Business level 3. The Operational level

The Strategy Hierarchy ctd The above levels depend on the type of the organisation. For a single business company the strategy making pyramid will be as follows:

The Strategy Hierarchy for a single business company Functional Strategies (eg Mnfg;Mktng; Finance etc) Operating Strategies (eg regions &districts; plants; departments within functional areas)

The Strategy Hierarchy for a diversified company Corporate Strategy Business Strategies Functional Strategies Operating Strategies

Business Strategy This is the managerial game plan for a single business. Concerned with building and strengthening the company’s long term competitive position. It is thus mainly concerned with: 1) Responding to changes in industry, economy and other relevant areas.

Business Strategy ctd 2) Efforts to attain sustainable competitive advantage. 3) Building competitively valuable competencies and capabilities. NB: A business strategy is powerful if it produces a competitive advantage.

Functional Strategy Refers to the managerial game plan for a particular functional activity, business process or key department within a business. Examples are Marketing strategy or new product development. It is carried out to add detail or support the business strategy.

Operating Strategies They add detail to functional strategies. Examples include advertising campaigns, materials purchasing, inventory control etc.

Corporate Strategy This refers to the overall managerial game plan for a diversified company. The responsibility of corporate strategies rests on the board of directors, and chief executive and administrative officers. Corporate strategy is often stated explicitly in a mission statement eg "To bring inspiration and innovation to every athlete in the world." from Nike

The Corporate Strategy It involves: 1)Making efforts to establish positions in different businesses and achieve diversification. 2) Initiating actions to boost the combined performance of businesses the firm has diversified into. 3) Pursuing ways to capture valuable cross business strategic fits and turn them into competitive advantage.

Types of Corporate Strategies There are basically 3 Grand strategies viz Growth Strategies Stability Strategies and Retrenchment strategies

Growth Strategies They expand the company’s activities. Types of growth strategies include Intergration – vertical and horizontal Diversification and Concentration strategies (market penetration, market development, product development)

Stability Strategies They make no change to a company’s current activities. Stability strategies can be summarised as: Pause Proceed with caution No Change strategy Profit strategy

Retrenchment strategies They reduce the company’s level of activities. Examples of retrenchment strategies include: Turn around strategies Selling out or divestment Bankruptcy / liquidation strategy