Entrepreneurship
and Small Business
Lecture 3
Strategic
Management
PowerPoint Presentation by Charlie Cook
Copyright © 2003 South-Western College Publishing.
All rights reserved.
What is Strategic Management?
• Strategies
- The decisions that determine the long-run performance of an organization.
• Strategic management
- Is what managers do to develop an organization’s strategies.
- Strategic management is the management of an organization’s resources to achieve its
goals and objectives.
- Strategic management involves setting objectives, analysing the competitive
environment, evaluating strategies, and ensuring that management implement the
strategies across the organization.
• Business Model
- Is a strategic design of how a company will make money and describe the way a
business will produce its product , offer it to the market and drive sales .
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What Is Strategic Decision Making?
• Strategic decision-making is a process of understanding the interaction of
decisions and their impact upon the organization.
• In other words, the power of strategic thinking in combining the power of
the right decision with the right time.
• Competitive Advantage: factors that sets a business apart from its
competitors and gives it a unique position in the market
Importance of Strategic Management
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Proactive in shaping firm’s future
Improved understanding of competitors strategies
Enhanced awareness of threats
Reduced resistance to change
Enhanced problem-prevention capabilities
Effective allocation of time & resources
Clarify individual responsibilities
Encourage forward thinking .
The Strategic Management Process
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Step 1: Identifying the Current Mission, Goals,
and Strategies
 Mission: a statement of the purpose of an organization
• The scope of its products and services
 Goals: is a desired future or objective that an
organization tries to achieve.
• They must be realistic and challenging
• They must be achieved within a specific time frame
• They must be precise.
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Characteristics of Mission
1.Mission must be attainable. It should be possible to achieve it.
2.Mission should be clear enough so that any action can be taken.
3.It should be inspiring for the management, staff and society.
4.It should be precise enough ; it should be neither too broad nor too narrow.
5.It should be unique to leave an impact in everyone’s mind.
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Step 2: Doing
an external analysis
 Focuses on identifying opportunities and threats
 Key success factors: factors that determine a company's
ability to compete successfully in an industry.
 The Partnership
Partnership is an association of two or more people who coown a business for the purpose of making profit.
 Partnership Agreement is a document that states in
writing all the conditions of operating the partnership
and protect the interest of each partner.
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Step 3: Doing
an internal analysis
 Assessing organizational resources, capabilities, and
core competencies:
Strength: positive internal factors company uses to accomplish
mission, goals and objectives. Skills, knowledge, experience.
Weaknesses: negative internal factors that get in the way of
company’s mission and goals. Lack of capital, shortage of
skilled workers.
Analyzing financial and physical assets is fully easy, but
assessing intangible assets (employee’s skills, culture,
corporate reputation ) isn’t as easy.
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Analyse the competition
• Identify potential new coopetitors
• Improve reaction time to competitors’ action
• Anticipating rival's next strategic move
• Knowledge management: practice of gathering organizing and
disseminating the collective wisdom and experience of a
company’s employees for the purpose of strengthening its
competitive position
Step 4: Formulating
strategies
 Develop and evaluate strategic alternatives.
 Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors.
 Match organizational strengths to environmental
opportunities.
 Correct weaknesses and guard against threats.
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Step 5: Implementing strategies
 Implementation: effectively fitting organizational
structure and activities to the environment.
 The environment dictates the chosen strategy;
effective strategy implementation requires an
organizational structure matched to its
requirements.
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Step 6: Evaluating
results
 How effective have strategies been?
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 What adjustments, if any, are necessary?
• Establish accurate controls to make sure that the strategies are
followed as closely as possible
• A balanced scorecard techniques used to accomplish this.
• Balanced Scorecard: set of measurements unique that include
financial and operational measures as well as customers
perspectives
Strategic Entrepreneurship
• Strategic entrepreneurship aims to integrate entrepreneurship with strategic
management through entrepreneurial action from a strategic perspective. The
use of opportunities and change adaptation are the main concerns in the
disciplines of entrepreneurship and strategic management.
Entrepreneurial Opportunities
• Entrepreneurial opportunities are conditions in which new products or
services can satisfy a need in the market
Entrepreneurs or entrepreneurial managers must be able to:
 identify opportunities not perceived by others
 take actions to exploit the opportunities
 establish a competitive advantage
Strategic entrepreneurship elements
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