1. THE STRATEGIC MANAGEMENT PROCESS
G. Tyge Payne
(2)

2. Strategic Management Process
1. Analysis (Where are we now?)
Strategic goals (vision, mission, strategic objectives)
Internal and external environment of the firm
2. Strategic decisions (Where are we going?)
What industries should we compete in?
How should we compete in those industries?
3. Actions (How do we get there?)
Allocate necessary resources
Design the organization to bring intended strategies to reality

3. Formulating Directions - Develop Vision/Mission (1)
-Set Objectives (2)
Organizational Culture
Stakeholder Influence
Values / Ethics
Opportunities and Threats
from Economic, Political,
Technological etc Sources
Strategic Analyses (3)
Strategic Control (6)
External Environment
Opportunities and Threats
from Competition and
Key Stakeholders
Competitor/Stakeholder
Internal Organization
Organizational Culture
Stakeholder Influence
Values / Ethics
Strategy Formulation (4)
-Formulate and Consider
Alternatives
-Make Strategy Choice
Implementation (5)
Context of Strategy
(type of organization, culture, values,
life cycle competitive position)

4. The Strategic Management Process – Competing for Advantage

5. Developing a Vision and Mission (1)
Begins with thinking strategically about:
The firm’s future business makeup
Where to take the firm
The task is to:
Create a roadmap of a company’s future
Decide what future business position to stake out
Provide long-term direction
Give the firm a strong identity

6. Setting Objectives (2) Establishing OBJECTIVES
Converts vision/mission into specific performance targets
Creates yardsticks to track performance
Pushes firm to be inventive and focused
Helps prevent coasting and complacency if targets require stretch

7. Types of Objectives Required
Financial Objectives
Strategic Objectives
Outcomes focused on improving a firm’s financial performance.
Outcomes focused on improving a firm’s competitiveness and its long-term business position.
-- May include social objectives.

8. Strategic Analysis (3)
A complete strategic analysis requires one to extensively examine the organization from all angles: the outside, the inside, and the fit between.
External Analysis
Environmental Forecasting
The General Macro-environment
Porters 5-forces Model
Strategic Groups
Internal Analysis
Resource Strengths/Weaknesses
Value Chain
Strategic Fit

9. Strategy Formulation (4)
Strategic Formulation involves determining whether to:
Concentrate on a single business or several businesses (diversification)
Cater to a broad range of customers or focus on a particular niche
Develop internationally or not
Develop a wide or narrow product/service line
Pursue a competitive advantage based on
Low cost or
Differentiation – product / service superiority or unique organizational capabilities

10. Porter’s Generic Strategies
Strategy 1
Cost
Leadership
Strategy 2
Differentiation
Strategy 3A
Cost Focus
Strategy 3B
Focus
Competitive Advantage
Lower Cost Differentiation
Competitive
Scope
Broad
Target
Narrow

11. Implementing Strategy (5)
Creating fits between way things are done and what it takes for effective strategy execution
Getting the organization to execute strategy proficiently and efficiently
Producing excellent results in a timely manner
Strategy Implementation: an internal, operations-driven activity involving organizing, budgeting, motivating, culture-building, supervising, and leading to “make the strategy work” as intended!

12. Control & Evaluating Performance (6)
The “processes” of strategic management are not a one-time only exercise because
Times and conditions change
Events unfold
Better ways to do things emerge
New managers with different ideas take over
Thus, corrective adjustments are often needed to:
Alter long-term direction
Redefine the business
Raise or lower performance objectives
Modify the strategy
Improve strategy execution