Overview of Strategic
Management
Overview
• Why do some firms succeed while others fail?
– A central objective of strategic management is to learn
why this happens.
• What is strategy?
– An action a company takes to attain superior
performance.
• What is the strategic management process?
– The process by which managers choose a set of
strategies for the enterprise to pursue its vision.
Company
Experiences,
Know-how,
Resource
Strengths and
Weaknesses,
and
Competitive
Capabilities
Actual
Company
Strategy
A Company’s Strategy is Partly Planned
and Partly Reactive
Social,
political,
regulatory and
community
factors
Competitive
conditions and
industry
attractiveness
Company
opportunities
and threats to
company’s
well-being
Company’s Strategic Situation
Resource
strengths,
capabilities,
and
weaknesses
Influences of
key executives
Shared values
and company
culture
 External Factors
Determine
relevance
of internal
and
external
factors
Identify and
evaluate
alternatives
Craft
the
strategy
 Internal Factors
Factors Shaping the Choice of Company
Strategy
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.
Why Do Strategies Evolve?
• A company’s strategy is a work in progress
• Changes may be necessary to react to
–
–
–
–
–
–
–
Shifting market conditions
Technological breakthroughs
Fresh moves of competitors
Evolving customer preferences
Emerging market opportunities
New ideas to improve strategy
Crisis situations
Strategic Management
• Set of decisions and actions that result to the
formulation and implementation of plans
designed to achieve a company’s objectives
• Study of why and how some firms
outperform others
Benefits of Strategic
Management
• Strategy formulation activities enhance the
firm’s ability to prevent problems.
• Group-based strategic decisions are likely to
be drawn from the best available
alternatives.
• The involvement of employees in strategy
formulation improves their understanding of
the productivity-reward relationship in every
strategic plan and, thus, heightens their
motivation.
• Gaps and overlaps in activities among
individuals and groups are reduced as
participation in strategy formulation
clarifies differences in roles.
• Resistance to change is reduced.
Risks of Strategic
Management
• The time that managers spend on the strategic
management process may have a negative impact
on operational responsibilities.
• If the formulators of strategy are not intimately
involved in its implementation, they may shirk their
individual responsibility for the decision reached.
• Strategic managers must be trained to anticipate
and respond to the disappointment of participating
subordinates over unattained expectations.
What is Formality?
• The degree to which participation,
responsibility, authority, and discretion in
decision-making are specified in strategic
management.
Entrepreneurial Mode
• The informal, intuitive, and limited approach
to strategic management associated with
owner-managers of smaller firms.
Planning Mode
• The strategic formality associated with large
firms that operate under a comprehensive,
formal planning system.
Adaptive Mode
• The strategic formality associated with
medium-sized firms that emphasize the
incremental modification of existing
competitive approaches.
Key Attributes of Strategic Management
• Directs the organization toward overall goals
and objectives
• Includes multiple stakeholders in decision
making
• Needs to incorporate short-term and longterm perspectives
• Recognizes trade-offs between efficiency
and effectiveness
Critical Tasks of Strategic Management
•
•
•
•
•
•
•
•
•
Formulate the company’s mission
Conduct internal analysis
Assess the company’s external environment
Analyze company’s options
Identify most desirable option/s
Select long-term objectives and grand strategies
Develop annual objectives and short-term strategies
Implement the strategic choices
Evaluate success of the strategic process
Dimensions of Strategic Decisions
Strategic issues
• require top-management decisions
• require large amounts of the firm’s resources
• often affect the firm’s long-term prosperity
• are future oriented
• usually have multifunctional or multi-business
consequences
• require considering the firm’s external environment
Task 1
Task 2
Task 3
Task 4
Task 5
Develop
Vision
and
Mission
Set
Goals &
Objectives
Formulate
Strategy
to Achieve
Goals &
Objectives
Implement
and
Execute
Strategy
Monitor,
Evaluate,
and Take
Corrective
Action
Revise as
Needed
Revise as
Needed
Improve/
Change
Improve/
Change
Recycle
as Needed
Develop Mission and Vision
What is a Company Mission?
This is the fundamental purpose that sets a firm
apart from other firms of its type and identifies the
scope of its operations in product and market terms.
It sets out why the organization exists and what it
should be doing.
It broadly outlines the organization’s future course
and serves to communicate “who we are, what we
do, and where we’re headed”
Coca-Cola Company
Mission
Everything we do is inspired by our enduring
mission:
• To Refresh the World... in body, mind, and spirit.
• To Inspire Moments of Optimism... through our
brands and our actions.
• To Create Value and Make a Difference...
everywhere we engage.
Develop Mission and Vision
What is a Vision?
This is a general statement of the
organization’s intended direction that evokes
emotional feelings in organization members.
A strategic vision describes the route a
company intends to take in developing and
strengthening
Coca-Cola Company
Vision
To achieve sustainable growth, we have established a vision
with clear goals.
• Profit: Maximizing return to shareowners while being mindful
of our overall responsibilities.
• People: Being a great place to work where people are inspired
to be the best they can be.
• Portfolio: Bringing to the world a portfolio of beverage brands
that anticipate and satisfy peoples’ desires and needs.
• Partners: Nurturing a winning network of partners and building
mutual loyalty.
• Planet: Being a responsible global citizen that makes a
difference.
Linking the Vision with Company Values
• Companies often develop a statement of values
to guide a company’s pursuit of its vision and
strategy and paint the white lines for how the
company’s business is to be conducted
• Values statements remain a bunch of nice words
until the espoused beliefs, traits, and behaviors
are incorporated into company’s operations and
work practices and are used as the benchmark
for job appraisal, promotions, and rewards.
Coca-Cola Company
Values
We are guided by shared values that we will live by
as a company and as individuals.
• Leadership: "The courage to shape a better future"
• Passion: "Committed in heart and mind"
• Integrity: "Be real"
• Accountability: "If it is to be, it’s up to me"
• Collaboration: "Leverage collective genius"
• Innovation: "Seek, imagine, create, delight"
• Quality: "What we do, we do well"