8th edition
Written by: Michael and Bob
Strategic Management
• The set of managerial decisions
and actions that determines
the long-run performance
of an organization.
Strategy: A detailed
and organized plan of
action.
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Slide 2
Why Strategic Management Is Important
 Studies have shown a positive relationship
between strategic planning and the
improved performance of an organization.

It is the reason why firms succeed or fail.
 It enables managers to cope with the
uncertain environments.

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It causes managers to examine the changing
situation in deciding how to proceed.
Slide 3
Why Strategic Management Is Important
 It coordinates the work activities of the
different organizational units.

It keeps them focused on achieving the
organization’s goals.
 It is involved in many of the decisions
that managers make.

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Most of the important business events
reported in the news involve strategic
management.
Slide 4
Strategic Management Process
A six-step process.
1. Identifying the organization’s current mission,
objectives, and strategies.
2. External analysis.
3. Internal analysis.
4. Formulating strategies.
5. Implementing strategies.
6. Evaluating results.
The first four describe the planning that takes place, the
last two deal with implementation and evaluation.
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Slide 5
The Strategic Management Process
Exhibit 8.1
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Slide 6
Strategic Management Process
• Step 1: Identifying the organization’s current
mission, objectives, and strategies
 The Mission:
 What
is the firm’s reason for being in business.
 What
is the scope of its products and/or services.
 The Goals and Strategies:
 They
are the foundation of planning.
 They
provide measurable performance targets.
 They
give managers a basis for evaluating
whether goals need to be changed.
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Slide 7
Components of a Mission Statement
• Customers: Who are the organization’s customers?
• Products or services: What are the organization’s major products or
services?
• Markets: Where does the organization compete geographically?
• Technology: How technologically current is the organization?
• Concern for survival growth, and profitability: Is the organization
committed to growth and financial stability?
• Philosophy: What are the organization’s basic beliefs, values,
aspirations, and ethical priorities?
• Self-concept: What is the organization’s major competitive advantage
and core competencies?
• Concern for public image: How responsive is the organization to
societal and environmental concerns?
• Concern for employees: Does the organization consider employees a
valuable asset?
Source: Based on F. David, Strategic Management, 8th ed. (Upper Saddle River, NJ: Prentice Hall, 2001), pp. 65–66.
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Exhibit 8.2
Slide 8
Strategic Management Process
• Step 2: Conducting an external analysis.
Managers need information that might affect the
organization, e.g. on the competition, government
legislation, local labor supply, etc…
 Managers examine the changes that take place in
the specific and general environments so they
can develop appropriate strategies.
 They assess (measure) what they have learned in
terms of opportunities and threats.
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Slide 9
Strategic Management Process
• Step 3: Conducting an internal analysis.
The managers evaluate the organization’s resources and
capabilities to determine its strengths and weaknesses.
Resources: Such as capital, technical excellence, skilled
employees, experienced managers.
Capabilities: In performing activities such as
manufacturing, marketing, engineering, etc..
Core competencies: Capabilities or resources that are
exceptional or unique – The core competencies of the
organization determine its competitive weapons.
• Note: Steps 2 and 3 combined are called a SWOT analysis.
(Strengths, Weaknesses, Opportunities, and Threats)
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Slide 10
Identifying the Organization’s Opportunities
Exhibit 8.3
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Slide 11
Strategic Management Process
• Step 4: Formulating (expressing) strategies.
 Develop and evaluate strategic alternatives (choices).
 Select strategies that capitalize (take advantage of) on
the organization’s strengths and exploit (use)
environmental opportunities.
 Correct weaknesses and develop protection
against threats.
This step is considered successful when managers
have developed strategies that suggest (show) a
reasonable advantage over competitors.
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Slide 12
Strategic Management Process
• Step 5: Implementing strategies
 New strategies can only succeed if implemented
properly.
 Implementation often require hiring new employees,
transferring or laying off (firing) current ones.
 The ability to build and manage effective teams is an
important part of implementation.
 Top management leadership and motivated middle
and lower-level managers are necessary ingredients
(elements or components) in a successful strategy.
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Slide 13
Strategic Management Process
• Step 6: Evaluating Results
 How effective have strategies been?
 What adjustments, if any, are necessary?
An assessment of the results of previous strategies
may provide ground (a reason) for making changes
as needed.
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Slide 14
CHAPTER REVIEW
The Importance of Strategic Management (Slides 3,4)
• Discuss what studies of the effectiveness of strategic
management have shown.
• Explain why strategic management is important.
The Strategic Management Process (Slides 5,9,10)
• List six steps in the strategic management process.
• Describe what managers do when they do external and
internal analyses.
• Explain the role of resources, capabilities, and core
competencies in the internal analysis.
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Slide 15