MGT 101 - Principles of Management and Business
Introduction to
Strategic Management
Week 7
Objectives
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To explain what managers do in the strategic management process
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To explain different types of strategies
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To have a look at benchmarking
Companies’ Strategies
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McDonald’s: 40 stores in India
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Starbucks: A new line of healthier and made-from-scratch baked
goods
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Tata: Acquisition of Jaguar and Land Rover
Strategic
Management
Definition
What managers do to develop an
organization’s strategies
Strategy
Definition
Plans for how the organization will
do what it’s in business to do, how
it will compete successfully, and
how it will attract its customers in
order to achieve its goals
External Analysis
•Opportunities
•Threats
Identify the
organization’s
current mission, goals,
and strategies
Formulate
Strategies
Implement
Strategies
Evaluate
Results
Internal Analysis
•Strengths
•Weaknesses
Strategic Management Process
A six-step process that encompasses strategy planning, implementation, and evaluation
Strategic Management Process
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Step 1: Identifying the organization’s current mission, goals,
and strategies
Mission: a statement of its purpose
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Step 2: Doing an external analysis
Opportunities: positive trends in the external environment
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Threats: negative trends in the external environment
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Strategic Management Process
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Step 4: Doing an internal analysis
Resources: an organization’s assets that it uses to develop, manufacture, and
deliver products of its customers
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Capabilities: an organization’s skills and abilities in doing the work activities
needed in its business
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Core Competencies: the major value-creating capabilities of an organization
Strengths: any activities the organization does well or any unique resources
that it has
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Weaknesses: activities the organization doesn’t do well or resources it needs
but doesn’t possess
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Strategic Management Process
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SWOT Analysis: the combined external and internal analysis
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Step 4: Formulating strategies
Types of Strategies: corporate, competitive, and functional
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Step 5: Implementing strategies
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Step 6: Evaluating strategies
Questions: How effective have the strategies been at helping the
organization reach its goals? What adjustments are necessary?
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Types of Strategies
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Corporate Strategy
An organizational strategy that specifies what businesses a
company is in or wants to be in and what it wants to do with those
businesses
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Competitive Strategy
An organizational strategy for how an organization will compete in its
business(es)
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Functional Strategy
The strategies used in an organization’s various functional
departments to support the competitive strategy
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Corporate Strategies
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Growth Strategy
A corporate strategy in which an organization expands the number
of markets served or products offered either through its current
business(es) or through new business(es)
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Stability Strategy
A corporate strategy in which an organization continues to do what it
is currently doing
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Renewal Strategy
A corporate strategy that addresses declining organizational
performance
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Competitive Strategies
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Competitive Advantage: what sets an organization apart; its distinctive edge
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Cost Leadership Strategy
When an organization competes on the basis of having the lowest costs in its industry
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Differentiation Strategy
When an organization competes on the basis of having unique products that are widely
valued by customers
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Focus Strategy
When an organization competes in a narrow segment or niche with either a cost focus or
a differentiation focus
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Benchmarking
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Definition
The search for the best practices among competitors or non
competitors that lead to the superior performance
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Learning Outcomes
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Strategic management is important for the organization’s continuity,
survival, and success
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Strategic management process consist of 6 steps that managers
follow
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There three different types of strategies: corporate, competitive, and
functional
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Benchmarking can be used to find better ways in having things done
for the corporation