Presentation on theme: "Strategic Management: an overview"— Presentation transcript:
1 Strategic Management: an overview Session 1Civil Service College DhakaPresentation byDr. Muhammad G. SarwarCell:
2 Presentation Contents Strategic Management: course outlineStrategic Management: referencesWhat is Strategic Management?Stages of Strategic ManagementStrategic Management ModelBenefits of Strategic ManagementWhy Strategic Planning/Management may fail?Strategic Management and Business EthicsGuidelines for Effective Strategic Management
3 Strategic Management: course outline Sl. No.Topic TitleSession no.1Strategic Management: an overview2Strategy FormulationDesigning Vision and Mission StatementsSetting Company/Organization ObjectivesInternal AssessmentExternal AssessmentStrategy Analysis and Choice4Strategy Evaluation5Limitations of Strategic Management: why strategy may fail ?
4 Strategic Management: references Fred R. David (2008), Strategic Management: Concepts and Cases, 11th Edition, Prentice HallArthur A. Thompson, Jr. (2010) Crafting and Executing Strategy: the quest for comparative, 16th Edition, McGraw Hill
5 What is Strategic Management? Strategic Management is an art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives (Fred R. David, 2008).Strategic Management is the approaches to grow, attract and please clients, compete successfully and achieve targeted levels of organizational performance (Arther A. Thompson, 2010)
6 What is Strategic Management? (contd.) In ultimate analysis Strategic Management is the Quest for Competitive Advantage.4 most frequently used strategic approaches:Striving to be the industry’s low-cost providerOutperforming rivals based on quality, diversity, style, technology, value –added services etcFocusing on a narrow market nicheDeveloping capability that rivals can’t easily imitate.
7 What is Strategic Management? (contd.) Strategic Management focuses onIntegrating management,Production/operation.Financing/accounting,Marketing,Research & development,MIS
8 Strategic Management vs. Strategic Planning The term ‘Strategic Management’ is mostly used in academia, whereas the term ‘Strategic Planning’ is mostly used in business world.Strategic Management refer to strategy formulation, implementation and evaluation.Strategic Planning refer only to strategy formulation.
9 Stages of Strategic Management Strategic Management process consists of 3 stages:Strategy formulation,Strategy implementation, andStrategy evaluation.
10 Strategy formulation Strategy formulation includes: Developing a vision and mission statementsIdentifying organization’s external opportunities and threatsIndentifying internal strengths and weaknessesEstablishing long-term objectivesGenerating alternative strategiesChoosing particular strategies.
11 Strategy formulation (contd.) Strategy formulation involves questions like:What new businesses to enter ?What businesses to abandon ?How to allocate resources to attain goals and targets?Whether to expand existing production capacity or diversify !Whether to enter international market !Whether to merge or form a joint venture !How to avoid a hostile takeover ?
12 Strategy implementation Strategy implementation is the ‘action stage’ of Strategic Management. It requires:Setting annual objectivesDevise policies to attain set objectivesMotivate employees to achieve objectivesAllocating resources for achieving objectives
13 Strategy evaluationStrategy evaluation is the final stage of strategic management. 3 strategy evaluation activities:Reviewing external and internal factors that are the basis of current strategies,Measuring performance, andTaking corrective actions.
14 Strategic Management Model Strategy FormulationStrategy ImplementationStrategy Evaluation
15 Strategy as a Blend of Proactive Initiatives and Reactive Adjustments Strategy Evolves over TimePrior version of strategyNew initiatives+ongoing strategy elementsAdaptive reactions to changing circumstancesLatest version of strategy
16 Management Strategy vs. Business Model An Organization's management strategy relates broadly to its competitive initiatives and action plan to attain the set objectives.Business model focus on how the business will generate revenues sufficient to cover cost, produce attractive profits and return on investment.A business model is the story line of the Management how the strategy will be a moneymaker.
17 Historical Development of Strategic Management History of Strategic Planning began in the military.Word ‘Strategy’ comes from Greek word ‘Straegos’, that refers to military general and combines ‘stratos’ (army) and ‘ago’ (to lead).Both Military Strategy and Business Strategy focus how to use their own strengths to exploit enemy’s / competitor’s weaknesses.Fundamental difference between Military Strategy and Business Strategy is that Military strategy is based on the assumption of ‘Conflict’, whereas Business Strategy is based on the assumption of ‘Competition’.
18 Historical Development of Strategic Management (contd.) Strategic Management as an academic discipline started to develop in the 1950s. Most influential pioneers were: Alfred Chandler, Philip Selznick, Igor Ansoff and Peter Drucker.Alfred Chandler developed the idea of coordinating the various aspect of management under one all-encompassing strategy.
19 Historical Development of Strategic Management (contd.) Philip Seznick introduced the idea of matching organization’s internal factors with the external environmental circumstances.Igor Ansoff developed a strategy grid that compared market penetration strategies, product development strategies, market development strategies, horizontal and vertical integration and diversification strategies.Peter Drucker developed the theory of management by objectives (MBO) that involve the entire organization in setting objectives.
20 Benefits of Strategic Management Financial Benefits:Strategic management make organization more profitable and successfulNonfinancial Benefits:Objective view of management problemsFramework for improved coordinationIdentify, prioritize and exploit opportunitiesEncourage forward thinkingEncourage favorable attitude toward change
21 Why Some Firms Do No Strategic Planning ? Poor Reward StructureFire FightingContent with SuccessOverconfidencePrior Bad ExperienceFear of FailureWaste of Time
22 Why Strategic Planning/Management may fail? Strategic planning to satisfy regulatory requirement,Top management not actively supporting the strategic planning processFailing to involve key employees in all phases of strategic planningBecoming so engrossed in current problems that insufficient planning is doneFailing to communicate the strategy to employees who continue working in dark
23 Strategic Management and Business Ethics All Strategy formulation, implementation and evaluation decisions have ethical ramifications.Good Business Ethics is a prerequisite for good strategic Management.Business Ethics is defined as principles of conduct within organization that guide decision making and behavior, like harming the natural environment is unethical.
24 Strategic Management and Business Ethics (contd.) A strategy can’t be considered ethical just because it is legal,To meet the standard of being ethical, a strategy must pass moral scrutiny,To be ethical a strategy must not be shady, unconscionable, injuries to others or unnecessarily harmful to the environment.
25 Guidelines for Effective Strategic Management Effective Strategic Management is open- mindedness; a willingness and eagerness to consider new information, new viewpoints, new ideas, and new possibilities.Strategic Management is a self-reflective learning process that familiarizes managers and employees in the organization with key strategic issues and feasible alternatives for resolving those issues.