Chapter Three

What is strategic management?

Strategy: an approach adopted by organization
to ensure successful performance in the
marketplace
Strategic management: is management that
bases all actions , activities , and decisions on
what is most likely - within an ethical
framework - to ensure successful performance
in marketplace

Strategic Categories
- Cost / leadership

Strategies : strategies in this

category seek to improve efficiency and
control costs throughout an organizations
activity - cost chain .
- Differentiation Strategies : strategies in this
category seek to add value as defined by
customers to the organizations product or
service
- Market-niche Strategies : strategies in this
category focus on a narrowly defined
segment of the market

Competitive strategy
To survive in a globally competitive
marketplace , organizations must
adopt a broad strategy that gives
them a sustainable competitive
advantage

Components of Strategic Management

Strategic planning:
Who are we
Where are we going
How will we get there
What are our strengths and weaknesses
Strategic execution:
The implementation phase

Strategic planning
Involves developing a written plan that has the
following components :
An organization vision (like a dream of what it wants to
became)
An organization mission (describes who an organization
is, what it does, and where it is going)
Guiding principles (framework within which it will
pursue its mission.)
Broad strategic objectives (translate its mission into
more specific terms
Specific tactics
projects or activities for achieving the broad objectives
.

Strategic Execution
Involves implementing strategies set
forth in:
Strategic planning,
Monitoring progress toward their
achievement,
Adjusting as necessary

Swot analysis
(environmental assessment)

Step 1

Develop the vision

Step 2

Develop the mission

Step 3

Develop the guiding principles

Step 4

Develop the broad strategic

objectives

Step 5

Develop the specific tactics

( action plan )

Step 6

The strategic planning process

Conducting the SWOT Analysis

1/2
Identifying organizational strengths : is any
characteristic or capability that gives the
organization a competitive advantage
Identifying organizational weaknesses: is any
characteristic or capability that is lacking to the
extent that it puts the organization at a
competitive disadvantage

Conducting the swot analysis 2/2

Identifying external opportunities : external
opportunities are opportunities in the
organizations business environment that
represent potential avenues for growth and
gaining a sustainable competitive advantage .
Identifying external threats: an external threat is
a phenomenon in an organizations business
environment that has the potential to put the
organization at a competitive disadvantage

Developing the vision

Sets the tone

for employees
Non concerned
with numbers
Creates unity of
purpose

Lofty , yet
Tangible
Challenging ,
yet attainable
Brief ,but
comprehensive
Easily
Understood

Characteristics of a well-crafted vision

statement

Visions
Caterpillar : Be the global leader in customer
value.
Ford : Democratize the automobile
Honda : To Be a Company that Our
Shareholders, Customers and Society Want
Pfizer: We will become the world's most
valued company to patients, customers,
colleagues, investors, business partners, and
the communities where we work and live

Developing the mission

Apply the following rules when developing it :
Describe the who , what , and where of the
organization, making sure the who component
describes the organization and its customers .
Be brief , but comprehensive
Choose wording that is simple , easy to
understand , and descriptive .
Avoid how statements . How the mission will be
accomplished is described in the strategies
section of the strategic plan .

Mission Statements
McDonald's Mission Statement: McDonald's
mission is to be the world's best quick service
restaurant experience. Being the best means
providing outstanding quality, service, cleanliness,
and value, so that we make every customer in every
restaurant smile
DELLs Mission Statement: "To be the most
successful computer company in the world at
delivering the best customer experience in
markets we serve."

Developing the guiding principles

An organizations guiding
principles establish the
framework within which it will
pursue its mission . Each guiding
principle encompasses an
important organizational value .

Broadly
stated
Specific
enough to be
measured

Show what the

organization
wants to
accomplish
Characteristics of
broad strategic
objectives
In accordance
with the
guiding
principles

Single issue

focus

Tied directly to
the
vision/mission

Characteristics of a well-written broad strategic objectives

Assemble input
Find optimum input (analysis)

Resolve differences
Finalize objectives
(unwritten)
Publish objectives (written)

Steps in writing broad strategic objectives