CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
The Fundamental Concepts
Learning Objectives:
At the end of this module, you should be able to, to wit:
1. Know the history of strategic management;
2. Will have an insight about the school of thoughts on strategic management;
3. Understand the concept of strategic management; and
4. Have glimpse with the correlation of STAW to the business context.
I. Origins of the Strategic Management
Strategy-derived from the Greek word “strategos” which translate to army leader. Military
strategy often deals with planning and execution in a war setting, while taking into account the
strategy and tactics required to implement the plan. Defeating the enemy in a “chess-like” play
situation entails critically thought-out plan with emphasis on the plan’s execution.
Strategic management can be linked to the works of Sun Tzu that dates back to 400 B.C. and
to Carl von Clausewitz in the eighteenth century. Sun Tzu’s reference to space, quantities, and
other factors related is similar to the characteristics of the positioning schools. According to
Sun Tzu, calculations underlie victorious situations in war.
Carl von Clausewitz’s considered strategy “a variation of themes” in war situation. Clausewitz
notes that strategy was “open-ended and creative” in a situation of chaos and disorganization.
This provides avenue for a more systematic and organized approach, which is why planning
became part of the process. Strategy formation takes into consideration the various maneuvers
and the scenarios and calculations pertaining to them. Being flexible while being proactive and
deliberative, however, is essential. Literature since the twentieth century used these works to
describe strategy in the corporate arena.
With the pioneering ideas from the battlefield, businessmen adapted the ideologist from the
time of Sun Tzu, who’s known to be the world’s greatest strategies, to Clausewitz to better
achieve a more accurate result that could lead to the better result and growth of the entire
organization.
II. Strategic Management
Igor Ansoff (1918- 2002) was a prominent Russian American mathematician and scientist. He
is known as the father of Strategic management and his development of the strategy model, the
Ansoff matrix.
Strategic management is the ongoing planning, monitoring, analysis and assessment of all
necessities an organization needs to meet its goals and objectives. Changes in business
environments will require organizations to constantly assess their strategies for success. The
strategic management process helps organizations take stock of their present situation, chalk
out strategies, deploy them and analyze the effectiveness of the implemented management
strategies. Strategic management strategies consist of five basic strategies and can differ in
implementation depending on the surrounding environment. Strategic management applies
both to on-premise and mobile platforms. (Tucci, n,d.)
Importance:
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CBMEC 1/CBME 102-Strategic Management
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Jhonniño A. Serdenia, MBA, CHRA
Financial Benefits: It results into financial benefits to the organizations in the form of
increased profit even in the face of environmental threats.
Offsetting Uncertainty: By prescribing the future course of action.
Clarity in Objectives & Directions: It is used for achieving those objectives; they focus
on clarity of objectives.
Increased Organizational Effectiveness: Its concept is that the organization is able to
achieve its objectives within the given resources.
Personnel Satisfaction: If the decisions are systematized in the organization everyone
knows how to proceed, how to contribute towards objectives this clarity brings
satisfaction.
Limitations:
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Complex & Dynamic Environment: We require knowledge of the trend in the
environment, increase in complexity leads in difficult to predict the future outcome
Rigidity: There is a need for concept of moving balance among the consideration on
which the strategy is based.
Inadequate Appreciation of Strategic Management: Managers are inadequately aware
about its contribution to the success & the way in which Strategic Management (SM)
can be undertaken
Limitations in Implementation: Many problems cannot be solved by SM alone but
require the use of other aspects of management
The Seven (7) Steps of Strategic Management Process
1. Organizational Mission & Objectives: They have some specific mission towards which
all efforts are directed. Objectives are other factor which determines the Strategy.
2. Environmental Analysis: The organization has to relate itself with the environment it
provides opportunities & threats to an organization
3. Organizational Analysis: Evaluates an organization’s strength & weakness, it helps to
overcome the weakness
4. Identification of Strategic Alternatives: It should be identified the opportunities &
threats generated through the environmental & organizational analysis and
organizational mission & objectives
5. Choice of Strategy: Identification of various strategic alternatives
6. Implementation of Strategy: It involves various activities like organization structure,
effective leadership & information system, functional policies, allocation of resources
etc
7. Evaluation & control: It is an ongoing process for future course of action
Ansoff Matrix
Present Markets
New markets
Present products
Market penetration
Market expansion
New products
Product expansion
diversification
Figure 1. 2x2 Matrix
This Matrix was developed by strategy professor Igor Ansoff in the 1960s.
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
The idea behind the Ansoff Matrix is simple; a company or organization gains a clear insight
into the possible growth strategies based on the combination of existing and new products and
existing and new markets. These could also be services instead of products.
The term market is aimed at concrete markets as well as various target groups. In addition,
Ansoff’s Growth Matrix should always be considered from the perspective of the organization.
This strategic planning tool, Ansoff’s Growth matrix, is connected to the general strategic
direction of an organisation. Additionally, four alternative growth strategies are presented in
the table, being:
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Market penetration: market penetration by pushing existing products in market
segments
Market expansion: development of new markets for existing products
Product expansion: developing products for existing markets
Diversification: developing new products for new markets
III. School of Thoughts on Strategic Management
Many schools of thought have emerged in the strategic management domain. Mintzberg and
colleagues (1998) described the domain as consisting of ten schools/perspectives that pertain
to design, planning, positioning, entrepreneurial, cognitive, learning, power, cultural,
environmental, and configuration. Mintzberg and his colleagues notes that the first three school
are more prescriptive, with an emphasis on strategy formulation that developed from 1960s to
1980s. The next six schools are less prescriptive, while emphasizing how strategies are
developed. The tenth school conceptually combines and captures the other nine schools of
thought into an integrative whole. Brief description of each schools is given in this section.
1. The design school emphasis a fit between an organization’s internal capabilities and
external opportunities. This school emphasizes the importance of a firm’s position
within the context in which it operates. The environment is used as a reference while
weighing the firm’s strategies and the emphasis is on how it develops its structure in
order to support the strategy.
2. The second school, planning, which was developed in 1970s, conceptualized strategy
to include a structured, step-by-step approach. Mission and vision statement were set,
and goals were clearly spelled out while detailing the objectives that would lead to the
accomplishment of those goals.
3. The third school is positioning, which was developed in 1980s. Although not very
different from planning and design school, it views strategy formation as consisting of
a few strategy types. This school emerged from the work of Porter (1980), with an
emphasis on strategy typologies. Strategy was still conceptualized as a formal and
controlled process, but the focus here was on competitive strategies and industry
structure.
4. The fourth school of thought is the entrepreneurial school, which pertain to decision
making and the process of strategy formation. Here the central role of strategy
formation lies with the leader, whose “intuition, judgment, wisdom, experience and
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
insight” are at the heart of decision making. The leader’s vision and his or her leadership
style influence the organization’s strategic posture.
5. The cognitive school is the fifth school, and it emphasizes strategy formation from the
perspective that the decision maker’s cognition and mind drive strategy making. The
cognitive skills of managers influence their perspectives on the environment. These
perspectives in turn influence the strategy formation process. According to Mintzberg
and his colleagues, they include concepts, maps, schemas, frames.
6. The sixth school is learning, which supports the notion that strategy making is based on
the foundation of learning. The strategy maker is constantly learning about process of
strategy formation and its various elements in complex environment .As a matter of
fact, the firm is learning constantly as a whole, which is incremental and continuous in
a complex business environment. The knowledge perspective is part of the learning
school, and the focus here is on the on the system as a whole rather than only a few
managers at the helm of decision making.
7. The seventh school view strategy formation from a power perspective, with negotiation
at the crux of the process. Power and politics drive this school of thought, with
organizations vying for position in the markets and transactions. Strategy formation is
more emergent as firms engage in power plays, ploys, and tactics to maneuver in
various contexts.
8. The eighth school is the cultural school, where, again, the emphasis is on the
organization as a collective whole and strategy formation as comprising social
interaction. Strategy is deliberate in that the members are engaged in the process that
involves collective action. Resources and capabilities are the sources of competitive
advantage, as firms are able to create a culture that brings forth unique decision making
with a resistance toward organizational change.
9. The ninth school pertains to environment while describing strategy formation as a
reactive. The firm’s external environment influences the strategy formulation and
implementation process, and firms are viewed as being part of an environment that is
simple or complex, stable or dynamic. The decision maker’s role is one of a boundary
spanner in being able to scan the environment while identifying the macro and micro
level forces that impact the firm’s position within a business domain.
10. The tenth school is the configuration school, which views strategy as transformational.
Configuration refers to the structure that a firm adopts in a given environmental context,
and transformation refers to a change in configuration based on a change in context.
The life cycle of organization is essentially a pattern that emerges from the various
configurations and transformation that occur over the various periods of change that
organizations go through. The essence of strategy formation is to ensure that firms are
able to recognize the need to change its configuration while transforming from one state
to the other during its productive life.
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
IV. Sun Tzu’s Art of War in Business Strategy
1. The Laying of Plans, Calculations, and Estimations
The Book states: before any steps are taken, research and planning are the keys to any venture.
My Interpretation? Any blueprint or business plan has to be compiled with reference to 5 basic
points:
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Seasonal Factors and Timing
Landscape or Operational Terrain,
Leadership Qualities – wisdom, sincerity, benevolence, courage, and strictness
Management skills – covering logistics, methodology and organizational structure
Moral Law – The Way of the World and the Laws of Human Nature.
This strategy handbook proceeds to lay out 7 methods for forecasting based on your capabilities
of these factors. In short, it calls for a SWOT Analysis.
Here, it also calls for leaders to adhere to classic principles in Project Management. It advises
you to have awareness of your capabilities and surroundings, adjust your plans to suit your
resources and track or monitor your operations against possible deviation from the original
plan. Get back on track as quickly as possible, he says.
Once plans are in operation we have to outwit our competition by not betraying our course and
be subtle in our direction. One of the most succinct quotes from this treatise says:
“All warfare is based on deception.”
2. Waging War – The Challenge
The next segment focuses on the importance of decisive behavior, correct timing and economy
in your actions. Before embarking in any ventures, we can minimize challenges, conflict and
ensuing costs by:
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Focusing on the Logistics of any plan and prevent over-extension of your company’s
resources.
Maintaining organizational Morale and keeping the “Troops” motivated and well
resourced.
Sun Tzu provides us with a clever tip – If you are low on resources and want to save:
focus more on exploiting your competitor’s weakness rather than throwing more
cash/resources at the problem.
Consider the wisdom of having effective Exit strategies in place if something does not
work. That reminds me of the (Colin) Powell Doctrine.
The takeaway here is something all marketers can relate to:
“let your main object be victory, not lengthy drawn-out campaigns.”
3. Attack by Stratagem or Planning Offensives
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
Here Sun Tzu echoes that old adage, its Not Size but Unity that determines the strength and
organizational effectiveness. He makes that now-famous quote:
“the skillful leader subdues the enemy’s troops without any fighting”
In other words, avoid competing for head on and avoid using up resources directly against
competitors. Aim instead for excellence so that no other organization would even dare compete.
In short, create a natural Monopoly.
How?
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In a business environment, I interpret this as taking the initiative and being first to
market or innovate. Engage a pre-emptive “attack” on your competitors with your
superior offering thus demotivating any would-be contenders with your superior market
share. Invent the most innovative product, process, occupy new territory or be the first
to secure the marketplace.
Failing that, “Surround them” assuming you have adequate resources to cover the
market and try for a Me-too approach.
If you have insufficient resources, a Divide and Conquer approach may work. Segment
the market or break your problem into parts and attack each individually.
Failing that – your only option is to meet your (enemy) competitor head on. In business
terms, I interpret this as a potential Price war.
Failing that you will be forced into a Siege Mentality which is costly for both attacker
and the attacked.
Once you run out of resources, will have to Retreat or drop out of the market – become
the victim of shake-out.
Sun Tzu also points out ways you can really screw things up as a leader:
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Having an insufficient vision and a poor overview of the situation.
This results in using the incorrect amount of resources or methods to meet the right
challenges.
Not being decisive or flexible enough to exploit opportunities – not knowing when to
act / when not to act
Running an organization that does not have the means to respond to your directives &
isn’t able to act on its own initiative when required. Recruiting of decisive and strong
management is essential here.
Conversely, not communicating your Goals clearly and leaving your team to their own
devices – the mark of a poor leader who has an undisciplined team.
Poor human resource management skills that utilize the wrong people for the wrong
task, the inability to motivate your team or facilitate it.
In other words:
“If you know neither the enemy nor yourself, you will succumb in every battle”
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
4. Tactical Dispositions or Positioning
This phase of his treatise emphasizes defensive behavior; securing and consolidating the
resources you have and using them effectively as a solid base for exploiting new opportunities
when they occur. I see this as a reminder to business to get your housekeeping in order, be
efficient and lean cost-wise. Have insurance or fail-safes before embarking on anything new or
risky.
This line says it all:
“One may KNOW how to conquer without being able to DO it”
5. Energy & Direction
This is about capturing momentum and synergy.
“The quality of decision is like the well-timed swoop of a falcon which enables it to strike
and destroy its victim.”
Sun Tzu outlines Direct and Indirect / Subtle methods of accomplishing your mission or let us
call them obvious versus not-so-obvious downright sneaky methods. He encourages us to use
these 2 approaches creatively and in tandem.
Being able to alternate methods generates momentum and ensures sustainable results.
Tips on how to “win” the battle include
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The Element of Surprise
Deception: Masking your true strength when trying to outflank or outwit your
“opponent”
Using Bait to outwit your opponents and draw their true intentions and positions.
Not relying on any one person but instead focusing on the discipline and unity of your
team.
6. Weak Points and Strong / Illusion versus Reality
Here Sun Tzu helps us spot the best opportunities for attack, how to spot weaknesses in your
opponent and position yourself in the most advantageous way. In business terms, I interpret his
advice as follows:
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Take the initiative rather than play catch up – you may waste more resources playing
catch up than in taking entrepreneurial risks.
Be aware of your Competition’s weak points, expose them and hasten to do better in
these areas quickly.
Be aware of markets or territories where your Competitor has no presence and exploit
these gaps.
Be aware of Competitive advantage. Maximize your resources where you possess
natural barriers to entry.
Be a Moving target and make it hard for your Competitors to guess your next move.
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Jhonniño A. Serdenia, MBA, CHRA
Never overextend yourself and focus on your Core Competencies. If you have weak
organizational flaws, consolidate your resources in strengthening a few critical areas
not all of them at once.
Timing is everything– make sure you research the accurate moment with which to
activate your plans.
The line that is suitable:
“Do not repeat the tactics which have gained you one victory, but let your methods be
regulated by the infinite variety of circumstances.”
7. Maneuvering and Dealing with Direct Conflict
There will be times when we will still have to meet difficult challenges head on and may not
circumvent them. Sun Tzu advises us to maintain the following if we are to emerge unscathed
and maximize our tactical advantage.
Key takeaways here:
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Personnel – Maintain harmonious relationships between all levels of your hierarchy and
create a unity within your organization that operates to internal discipline. Ensure they
get a share of the “spoils” to keep them motivated and help them buy into company
Mission.
Logistics – Always ensure clear l lines of supply secured to sustain you throughout your
campaign.
Local Knowledge – Make sure you have good local knowledge of your market with an
insider’s view if possible.
Competition – Know when they are operating at peak strength and only launch your
attack when you know they are recovering from another campaign or when they are on
downtime.
Do not enter into an Alliance until you are certain as to the motives of your partners
“The difficulty of tactical maneuvering consists in turning devious into the direct, and
misfortune into gain”
8. Variation in Tactics aka The Innumerable Changes
This section talks about the art of Judgement. Good tactics also mean knowing What NOT to
do. It is not enough to know your business and environment well, you also need Versatility of
Mind.
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In business terms it can be interpreted as: knowing what paths not to follow, markets
that are not worth pursuing or contracts & alliances that are a No Win for your business.
If subordinate to a higher command, Sun Tzu implies there are situations where you
must not even obey your superiors. You could even say it may be a good thing to flout
conventional wisdom.
In everything you do, always have the versatility of mind to inhabit the thinking behind
Competitors or Customers’ actions.
Take a 360 Degree approach to everything you do and be mindful of all your
stakeholders in any action you take, this allows you to escape hidden pitfalls or exploit
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CBMEC 1/CBME 102-Strategic Management
Jhonniño A. Serdenia, MBA, CHRA
every potential advantage/opportunity not just obvious ones. The sort of thinking can
be found in guerrilla marketing approaches or CSR marketing that exploits nonobvious opportunities.
“in the midst of difficulties we are always ready to seize an advantage, we may extricate
ourselves from misfortune”
9. The Army on the March / Moving the Force
This segment focuses on observing the right signs in your “enemy”. I interpret this as the
ability to read your environment correctly and forecast effectively based on the current
behavior of your competitors, economy, potential customers and even stakeholders. He goes
on to detail clever practical tips for reading your enemy’s behavior on the battlefield.
A great leader has the ability to read the signs around him, track history and therefore be alert
to deception or sudden changes by correctly extrapolating future behavior.
He gives an Acute reading of human behavior here:
“When envoys are sent with compliments in their mouths, it is a sign that the enemy wishes
for a truce.”
10. Terrain or Situational Positioning
In anything we do – we will encounter points of resistance. How we position ourselves may
result in assorted advantages and disadvantages. In the original text, he inventories the types of
geographical terrain an ancient army may encounter and prescribes the best positions to take.
Sun Tzu emphasizes:
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A Point of Vantage. Make sure that no matter where you are, you have a clear view of
the endgame.
o Sneaky tip 1: when no one makes the first move or you don’t know where your
competitor is: do a false retreat to draw out your prospective opponents
o Sneaky tip 2: if your competitor has a superior position than you, entice them to
focus on something else and fool them into vacating their no.1 spot
Secure Lines of supply and good Communications throughout your organization are
essential otherwise there is disconnect between your best-laid plans and execution on
the ground.
Find yourself trying to match up to your competitor and always trailing behind? MeTooism can be a destructive activity that eats up too many resources. You should
reconsider the campaign in the first place.
6 signs you are failing as a leader
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Flight: when you pit your organization against a superior force with no preparation
Insubordination: when management is weak and discipline falls apart.
Collapse: when workers are under-resourced
Ruin: when Management does not buy into the organizational mission and rebels.
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CBMEC 1/CBME 102-Strategic Management
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Jhonniño A. Serdenia, MBA, CHRA
Disorganization: when there are no clear organizational rules, roles or best practice laid
down.
Rout: when the wrong resources or tactics are being used
“The power of estimating the adversary, of controlling the forces of victory, and of shrewdly
calculating difficulties, dangers, and distances, constitutes the test of a great general.”
11. The Nine Situations / Terrains
According to Sun Tzu, there are 9 common stages in any campaign. He prescribes reactions to
each one in terms of old world battle scenarios. Some prescriptions are obvious..
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On Home ground; don’t waste too many resources campaigning here.
On Entering New territory; keep pushing aggressively early in the campaign as long as
nothing gets in the way, and as long as you have a clear easy exit strategy. You aren’t
too heavily invested at this stage and can turn back if needs be.
Contentious ground or Strategically Essential Territory; Do not be the first to move
without smoking out your competitors’ intentions first and understanding their strategy
too. Hide your true interests and distract the competition where possible from
discovering them.
Open ground or easily Accessible territory – don’t get in the way of other competitors
assuming their activity is of no strategic relevance to your mission.
The ground of Intersecting Highways, where there is activity from more than one
interested party or contender – form alliances with others.
Serious ground; where much effort was required to secure this territory and you are in
a precarious position. It may be hard to exit and hard to move forward – A “ Winning
Hearts and Minds ” policy is required here. Do not antagonize any stakeholders and do
your best to sustain all of your business relationships at their optimum levels.
Difficult ground or difficult conditions in which to operate – keep going and don’t stop
until you are in a safer position. In Business terms I interpret this as consolidating
resources, being cost conscious and keeping your productivity high, maintaining and
pushing for higher targets.
Hemmed-in ground; where it is difficult to extricate oneself from this situation – Resort
to Deception, Intrigue and Stratagem.
Desperate ground; where there is no exit possible – once there you have to stick it out
and give it everything you’ve got, its all about survival.
Sun Tzu compares a Skillful tactician to a species of mountain Snake due to his ability to react
quickly:
“Strike at its head, and you will be attacked by its tail; strike at its tail, and you will be
attacked by its head; strike at its middle, and you will be attacked by head and tail both.”
12. The Attack by Fire
This next segment does seem a little esoteric especially if trying to apply to contemporary
business models – Sun Tzu talks about 5 ways to attack by fire. Nevertheless, I see it as a
reminder on the strategic ways you can mount an offensive campaign to any competitor (from
the inside).
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CBMEC 1/CBME 102-Strategic Management
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Jhonniño A. Serdenia, MBA, CHRA
The Soldiers – Poach their personnel, demotivate them or use them?
The Stores – Attack your competitor’s financial investments?
The Baggage Trains – Their logistics, lines of supply or key suppliers?
The Arsenal and Magazines – Attack your competitors cash-cows and sources of
Revenue?
Hurl fire on your enemy as Artillery – Attack their operations, throw a spanner in the
works?
Most importantly – Follow up the internal attack with your own offensive on the outside and
be resourced, the time it right and don’t get caught up in the fire.
“Unhappy is the fate of one who tries to win his battles and succeed in his attacks without
cultivating the spirit of enterprise; for the result is waste of time and general stagnation.”
13. The Use of Spies / Intelligence
Sun Tzu warns us against wasteful campaigns that expend a lot of resources or hours of labour
when a simple use of intelligence or Foreknowledge would be more efficient.
According to the text it can only be obtained through scoutmasters, reconnaissance or 5 kinds
of spies:
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Local spies;
inward spies;
converted spies;
doomed spies; and
surviving spies.
Key pointers here:
Reward your spies liberally and be sagacious yet sincere when dealing with them. Above all
keep this operation in utmost secrecy internally.
If you wish to convert someone into a spy – spoil them. A converted Spy is your greatest asset
as they can help you recruit more.
“Spies are a most important element in water because on them depends an army’s ability to
move.”
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