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Strategic Management:
Creating Competitive Advantages
McGraw-Hill/Irwin
Strategic Management: Text and Cases, 4e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
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Strategic Management – What is
it?
• Strategic management is the study of why
some firms outperform others. It involves:
• Analysis
• Strategic decisions
• Actions
• Involves different types of leadership
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Why Strategy
• Focuses on goals and objectives
• Includes multiple stakeholders in decision
making
• Incorporate short-term and long-term
perspectives
• Recognizes trade-offs between efficiency and
effectiveness
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Strategic Management Process
Adapted from Exhibit 1.2 Realized Strategy and Intended Strategy: Usually Not the Same
Source: H. Mintzberg and J. A. Waters, “Of Strategies, Deliberate and Emergent,” Strategic Management Journal 6 (1985), pp. 25772.
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Why Strategic Analysis
• Clear goals and objectives permit effective allocation
of resources
• Hierarchy of goals
• Analyzing external environments
• Analyzing a firm’s internal environment
• Assessment of Strengths
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Different Levels of Strategy
• Business level strategy
• Corporate-level strategy addresses
• International Strategy
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Control Levers
• Informational control
• Behavioral control
• Effective corporate governance
• Organizational structure and design
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Question
• Briefly describe the role of board of directors in corporate
governance.
Board of Directors
•Elected representatives of the owners
•Ensure interests and motives of
management are aligned with those of
the owners
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Coherence in Strategic Direction
• Company vision
-
Massively inspiring
Overarching
Long-term
Driven by and evokes
passion
- Fundamental statement of
the organization’s
• Values
• Aspiration
• Goals
Company vision
Hierarchy of Goals
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Coherence in Strategic Direction
• Mission statements
- Purpose of the company
- Basis of competition and
competitive advantages
- More specific than vision
- Focused on the means by
which the firm will
compete
Company vision
Mission statements
Hierarchy of Goals
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Coherence in Strategic Direction
• Strategic objectives
- Operationalize the mission
statement
- Provide guidance on how
the organization can fulfill
or move toward the “higher
goals”
- More specific
- Cover a more well-defined
time frame
Company vision
Mission statements
Strategic objectives
Hierarchy of Goals
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Coherence in Strategic Direction
• Strategic objectives
-
Measurable
Specific
Appropriate
Realistic
Timely
Challenging
Resolve conflicts that arise
Yardstick for rewards and
incentives
Company vision
Mission statements
Strategic objectives
Hierarchy of Goals