Introduction to Strategic
Management
BUS496
Strategic Management & Policy
Prof. Steven E. Phelan
1
Exercise
 In groups of 3 to 5 answer:
What is the difference between…
 Planning & strategy
 A business plan, corporate plan, &
strategic plan
 Strategy & tactics
 A goal & an objective
 A vision & a mission
2
Comparison: military and corporate
strategy
Military
 Fight to win
 Zero-sum-game:
cooperation
extremely difficult
if at all possible
 Discrete with
limited timeframe
Corporate
 Compete to
win/gain
 Positive-sum-game
likely: cooperation
not easy but very
likely
 Continuous
3
Key issues of strategic
management
 Why do some organizations succeed while others
fail?
 How do I make my firm succeed?
 What is strategy?
 An action a company takes to attain one or more of
its goals (textbook)
 An action a company takes to attain superior
performance (textbook)
 An action taken to increase the firm’s (perceived?)
value to its present or future owners (in a for-profit
enterprise)
 How do these definitions differ?
 Why should managers care about the last definition?
4
Firm-Specific Performance and
Profitability
 Competitive advantage
 A firm’s profitability is greater than the average
profitability for all firms in its industry
 Sustained competitive advantage
 A firm maintains competitive advantage for a
number of years
 Business model
 Management’s model of how strategy will allow
the company to gain competitive advantage and
achieve superior profitability
5
What is the strategic
management process?
 The process by which managers choose,
implement, and adapt a set of strategies
for the enterprise to pursue its vision.
 Distinguish between strategic (what to
do?), tactical (how and when to do it?)
and operational (do it now!) decisions.
6
Basic Planning Model
Basic Strategic Planning Model
Define Vision/Mission and Set Top-Level Goals
External Analysis of Opportunities and Threats
Internal Analysis of Strengths and Weaknesses
Selection of Appropriate Strategies
Implementation of Chosen Strategies
7
Levels of Strategic Management
8
SWOT and Strategic Choice
 Strengths and Weaknesses
 Opportunities and Threats
(SWOT Analysis)
Strategic Choice
Business
Functional
Global
Corporate
9
The Mission or Vision
 What the company is trying to achieve over
the medium to long term
 The Boeing Company in 2016:
 “People working together as a global enterprise
for aerospace leadership”
 Microsoft:
 “To empower people through great software, any
time, any place, on any device”
10
Values
 How managers and employees should
conduct themselves
 Organizational culture
 The set of values, norms, and standards that
control how employees work to achieve an
organization’s mission and goals
 Often seen as a source of competitive advantage
 In high-performing organizations, values
respect the interests of key organizational
stakeholders.
11
Values at Nucor
 “Management is obligated to manage Nucor in
such a way that employees will have the
opportunity to earn according to their
productivity.”
 “Employees should be able to feel confident that if
they do their jobs properly, they will have a job
tomorrow.”
 “Employees have the right to be treated fairly and
must believe that they will be.”
 “Employees must have an avenue of appeal when
they believe they are being treated unfairly.”
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Strategic Leadership
 Vision, eloquence, and consistency
 Commitment to the vision
 Being well informed
 Willingness to
delegate and empower
 Astute use of power
 Emotional intelligence
13
Intended and Emergent
Strategies
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Strategy as an Emergent
Process
 Strategy making in an unpredictable world
 Creates the necessity for flexible strategic
approaches.
 Strategy making by lower-level managers
 Strategy evolves through autonomous action.
 Serendipity and strategy
 Accidental discoveries and happenstances can
have dramatic effects on strategic direction.
 Intended and emergent strategies
 Realized strategies are combinations of intended
and emergent strategies.
15
Different processes…
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Strategic Planning in Practice
 Planning under uncertainty
 Scenario planning for dynamic environmental
change
 Ivory tower planning
 Lack of contact with operational realities
 The importance of involving operating managers
 Procedural justice in the decision-making process
 Engagement, explanation, and clarity of expectations
 Planning for the present: Strategic Intent
 Recognition of the static nature of the strategic fit
model
 Strategic intent in focusing the organization on
winning by achieving stretch goals
17
Improving Strategic Decision
Making
 Cognitive biases systematically influence
the rationality of decision makers.
18
Groupthink and Strategic
Decisions
 Pitfalls of groupthink
 Failing to question underlying
assumptions.
 Coalescing around a single person or
policy.
 Filtering out conflicting information.
 Developing after-the-fact
rationalizations.
 Having an emotional (nonobjective)
commitment to an action.
19
Techniques for Improving
Decision Making
 Two decisionmaking
processes
that
counteract
cognitive
biases and
groupthink.
20
Exercises
 Design a planning system for an
internet role-playing company
 Yahoo Case
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