Tutorial 03
Traditional
Perspective
The basic strategic
management
Resources
based view
SMP
process is most
closely related to
the traditional
Stakeholder
View
model.
However, each of the three approaches
heavily influences each one of the stages of
this process.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
2
Process
Firms conduct external and internal analysis (Situation analysis), both of which include analysis of
stakeholders. On the basis of information obtained, they create strategic direction, strategies, and tactics
for implementing strategies and control systems
Origin
Traditional, Resource-based, and Stakeholder perspectives.
Adaption Vs
Influence the environment when it is economically feasible to do so. Take a proactive stance with regard
Enactment
to managing external stakeholders.
Monitor, forecast, and adapt to environmental forces that are difficult or costly to influence
Deliberate Vs
Firms should be involved in deliberate strategy-creating processes.
Emergent
However, they should learn from past decisions and be willing to try new things and change strategic
course.
Source of
Firms can obtain competitive advantage from superior resources, including knowledge based resources,
competitive
superior strategies for managing those resources, and/or superior relationships with internal or external
advantage
stakeholders
Creation of
Strategic
Alternatives
Firms develop strategies to take advantage of strengths and opportunities or overcome weaknesses or
threats. They arise as organizations conduct resource analysis, analysis of organizational processes, and
through analyzing and partnering with external stakeholders
3
Analysis the Environment,
Stakeholders, and
Organizational Resources
Strategic
Direction
Formulate Basic
Strategies
Control
Implement
Strategies &
Establish Control
Systems
Control
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
4
1) Situation analysis
2) Strategic direction
3) Strategy formulation
4) Strategy implementation
5) Strategic Control
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
5

When performing a situation
analysis all of the stakeholders
inside and outside of the firm,
as well as the major external
forces, should be analyzed at
both the domestic and
international levels.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
6

External environment includes
 groups,
 individuals, and
 forces
outside of the traditional boundaries of
the organization that are significantly
influenced by or have a major impact
on the organization.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
7

The internal environment
includes all of the
stakeholders, resources,
knowledge, and processes
that exist within the
boundaries of the firm.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
8

Analyzing the environment and the
company can assist the company in all
of the other tasks of strategic
management.

Example
 A firm's managers should formulate strategic
direction and specific strategies based on
organizational strengths and weaknesses and
in the context of the opportunities and
threats found in its environment.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
9

Strengths: company resources and capabilities that can lead to a competitive
advantage.

Weaknesses :resources and capabilities that a company does not possess, to the
extent that their absence places the firm at a
competitive disadvantage.

Opportunities :conditions in the broad and operating
environments that allow a firm to take advantage of
organizational strengths, overcome organizational
weaknesses, and / or neutralize environmental threats.

Threats :conditions in the broad operating environments that may stand in the way
of organizational competitiveness or the achievement of stakeholder satisfaction.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
10

Strategic direction pertains to the long-term goals and
objectives of the organization.

It defines the purposes for which a company exists and
operates.

This direction is often contained in mission and vision
statements.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
11

Missions describe the areas or industries in which an
organization operates.

Example: Mission of the New York Stock Exchange
 Support the capital-raising and asset-management processes by
providing the highest-quality and most cost-effective, selfregulated marketplace for the trading of financial instruments;
promote confidence in and understanding of that process; and
serve as a forum for discussion of relevant national and
international policy issues.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
12

A vision statement expresses what the organization wants to be in
the future, which may involve a fundamental change in its business.

Example:
 A start-up firm may have a mission to provide software design and support
for its clients, but its long-range vision may be to become a fully integrated
Internet provider.

While the mission directs the business for now, the mission will
gradually change as the company moves over time towards
fulfillment of its vision.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
13

A strategy can be thought of in
either of two ways:
 as a pattern that emerges in a
sequence of decisions over time or
 as an organizational plan of action
that is in tended to move a company
toward the achievement of its short
term goals and, ultimately, toward the
achievement of its fundamental
purposes.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
14

In some organizations, particularly those
 in rapidly changing environments and
 in small businesses,
strategies are not "planned" in the formal sense of the
word.

Instead, managers seize opportunities as they come
up, but within guidelines or boundaries defined by the
firm's strategic direction or mission.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
15

Strategies as "plans" are common in most
organizations.

Strategy formulation, the process of planning
strategies, is often divided into three levels

i.e
 Corporate Level
 Business Level
 Functional Level
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
16
 Corporate-level strategy :(“Where to Compete”)
 defines a company's domain of activity through selection of business areas in which the company will
compete.
 Business-level strategy :("How to compete in those areas”)
 pertains to domain direction and navigation, or how businesses should compete in the areas they
have selected.
 Sometimes business-level strategies are also referred to as “competitive strategies”.
 Functional-level strategy : ("The functional details of how resources will be managed so
that business-level strategies will be accomplished.“)
 develops the details of how functional resource areas such as marketing, operations, and finance should be
used to implement business-level strategies and achieve competitive advantage.

Basically, functional-level strategies are strategies for acquiring, developing, and managing organizational
resources
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
17
Corporate Strategy
Business Level
Strategy
Functional Level
Strategy
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
18
Strategy formulation results in a plan of action for the company and it
various levels.
Strategy implementation represents a pattern of decisions and actions
that are in tended to carry out the plan.
It involves
Managing stakeholder relationships
Managing organizational resources
Creating an organizational design
Creating organizational control systems
in a manner that moves the business toward the successful execution of
its strategies, consistent with its strategic direction.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
19
Strategic
control refers to the processes that lead to adjustments in strategic
direction, strategies, or the implementation plan, when necessary.

Thus, managers may collect information that leads them to believe that the
organizational mission is no longer appropriate or that its strategies are not
leading to the desired outcomes.

On the other hand, a strategic-control system may tell managers that the
mission and strategies are appropriate, but that they have not been well
executed. In such cases, adjustments should be made to the implementation
process.
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
20

Although larger companies tend to make use of the strategic
management process, this process is also a vital part of
decision making in smaller companies. In fact, it is important
in companies of all sizes

Example- Greater Construction Inc
(See Page no:12)
Chamara Bandara
FCA,ACMA,MBA (USQ - AUS )
21

Reference
 Jefferey S.Harrison,
Strategic Management of Resources and
Relationships, United States of America
SMP
Chamara Bandara
FCA, ACMA,MBA (USQ - AUS)
22