Assignment on

Learning objectives from chapters Covered

Course Code: EIB 516/531
Course Title: International Strategic Management

Prepared by
Name ID
Mohammad Ullah ID - 801724019
Nafiz Mahmud Mazumder ID - 801724051
Md. Nayeem Hossain ID - 801620052
Md. Mahbub Alam ID - 801724023
Md. Rakibul Hasan ID - 801621056

Submitted to
Dr. Chowdhury Saima Ferdous
Associate Professor
Department of International Business
Faculty of Business Studies
University of Dhaka
Date of submission: 28th June, 2019
Introduction of Strategic Management
Definition:

Strategic management is the management of an organization’s resources to achieve its goals and
objectives. It involves setting objectives, analyzing the competitive environment, analyzing the
internal organization, evaluating strategies and ensuring that management rolls out the strategies across
the organization. Strategic management is not static in nature; the models often include a feedback
loop to monitor execution and to inform the next round of planning.

There are three major elements of Strategic management:

1. Tactics
2. Goals
3. Objectives.

Strategy and tactics:

Strategy and tactics are two terms that get thrown around a lot and are often used interchangeably in
numerous contexts.

While strategy and tactics originated as military terminology, their use has spread to planning in many
areas of life. Strategy is overarching plan or set of goals. Changing strategies is like trying to turn
around an aircraft carrier—it can be done but not quickly.

Tactics are the specific actions or steps we undertake to accomplish our strategy. For example, in a
war, a nation’s strategy might be to win the hearts and minds of the opponent’s civilian population. To
achieve this, they could use tactics such as radio broadcasts or building hospitals. A personal strategy
might be to get into a career, whereas our tactics might include choosing our educational path, seeking
out a helpful mentor, or distinguishing our self from the competition.

We might have strategies for anything from gaining political power or getting promoted, to building
relationships and growing the audience of a blog. Whatever we are trying to do, we would do well to
understand how strategy and tactics work, the distinction, and how we can fit the two together.

Strategic goals:
Strategic goal is a term denoting the set of highest goals of the organization or an individual. Strategic goals
are used in strategic management.

Objectives:
Strategic management has two-fold objectives:

 To gain competitive advantage, with an aim of outperforming the competitors, to achieve

dominance over the market.
  To act as a guide to the organization to help in surviving the changes in the business
environment.

Components of Strategy:

 Purpose
 Give Direction
 Resource Employment.

Strategically Differences between Business Competition & Military Conflict:

Military
Action Business
Competition

 Opposite is Enemy, * Opposite is Competitor

 War * Need more profit
 Destroy * Without destroy

Strategic Management Process:

The strategic management process helps company leaders assess their company’s present situation,
chalk out strategies, deploy them and analyze the effectiveness of the implemented strategies. The
strategic management process involves analyzing cross-functional business decisions prior to
implementing them. Strategic management typically involves:
  Analyzing internal and external strengths and weaknesses.
 Formulating action plans.
 Executing action plans.
 Evaluating to what degree action plans have been successful and making changes when desired
results are not being produced.

Strategic Management is all about specifying the organization’s vision, mission and objectives,
environment scanning, crafting strategies, evaluation and control.

Importance of Strategic Management:

The strategic management process is a management technique used to plan for the future:
Organizations create a vision by developing long-term strategies. This helps to identify the necessary
processes and resource allocation to achieve those goals. It also helps companies strengthen and
support their core competencies.
  What are the common Elements in successful strategy?
Answer: The common elements in successful strategy are:

Common elements in
successful strategy

Effective Implementation Plan

(The integral part)

Clear Profound
understanding Objective
consistent
of the appraisal of
long term
competitive resources
goal
environment

Set the goal

Internal & External Environment
Establish the standard

Effective Implementation Plan: Implementation is the process that turns strategies and plans into
actions in order to accomplish strategic objectives and goals. Implementing your strategic plan is as
important, or even more important, than our strategy. A strategic plan provides a business with the
roadmap it needs to pursue a specific strategic direction and set of performance goals, deliver customer
value, and be successful. This can be divided into following parts:
 Clear consistent long term goal: The goal should be set first, and then we have to establish
the standard. When we have a large goal that we are working on, breaking it down into small
bite size pieces will help us stay consistent. For example, our goal is to run a successful home
business that provides us with a sufficient income to allow us to work exclusively from home.
To succeed at this goal, we need to break it down into bite size pieces.
 Profound understanding of the competitive environment: The competitive environment of
any company or organization consists out of a “red ocean” of bloody contested marketing space
filled with fighting competitors and the potential of a “blue ocean” of uncontested market space
where competition is (still) irrelevant. The type of understanding, which recognizes the
changing structures generating both these oceans is the profound understanding we’re looking
for. The industry environment (‘profound understanding of the competitive environment’)
represents the core of the firm’s external environment and is defined by the firm’s relationships
 with customers, competitors and suppliers. Hence, we view strategy as forming a link between
the firm and its external environment.
 Objective appraisal of resources: Most of the appraisal system and procedure is subjective
and varies according to the perception of reporting manager and HR manager. We must assure
that, the resources we gathered have been properly utilized for achieving our organization’s
goal.

 What is strategic Management?

Answer: Strategic management is the management of an organization’s resources to achieve its goals
and objectives. Strategic management involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating strategies, and ensuring that management
rolls out the strategies across the organization. It is the continuous planning, monitoring, analysis and
assessment of all that is necessary for an organization to meet its goals and objectives. Fast-paced
innovation, emerging technologies and customer expectations force organizations to think and make
decisions strategically to remain successful.

 What are the environmental factors in strategic planning?

Answer: For any business to grow and prosper, managers of the business must be able to anticipate,
recognize and deal with change in the internal and external environment. Change is a certainty, and
for this reason business managers must actively engage in a process that identifies change and modifies
business activity to take best advantage of change. That process is strategic planning.
The following diagram provides examples of factors that are agents of change and need to be
considered in the strategic planning process.
  How to identify a company’s strategy?
Answer:
A company’s strategy can be founded by following ways:
 In the head of the managers: Managers always think about new ideas and strategies
to achieve organizational goal. These strategies are kept secret to compete with other
competitors. Most of the times they are prepared with confidentiality.
 In their articulation of strategy in speeches & written documents: Though
strategies are kept secret until the implementation, companies have to publish some of
them for the stakeholders’ acknowledgement. For example, a shareholder may want to
know how much possibility he has to get profit from a company and what are the
strategy the company is going to run for his profit. These strategies are described by
managers in speeches and written documents.
 In decision through which strategy is enacted: By observing a company’s activity, it
can be easily understood which strategy is going to be taken by that company.
Example, Bata Shoe Company has made a contract with Linjer, a low cost leather
provider. That means, Bata is going to low cost strategy by outsourcing leather
manufacturing.

 “Strategy has its origin in the thought process”- explain.

Answer: Strategic thinking is defined as a mental or thinking process applied by an individual in
the context of achieving a goal or set of goals in a game or other endeavor. As a cognitive activity,
it produces thought. When applied in an organizational strategic management process, strategic
thinking involves the generation and application of unique business insights and opportunities
intended to create competitive advantage for a firm or organization. Strategic thinking includes
finding and developing a strategic foresight capacity for an organization, by exploring all possible
organizational futures, and challenging conventional thinking to foster decision making today. And
no strategy can be made without thinking about organizational objectives and goals.

 Describe the strategic approaches in strategic management.

Answer: The strategic approaches are:
 Low cost provider strategy: A pricing strategy in which a company offers a relatively low
price to stimulate demand and gain market share. It is one of three generic marketing
strategies that can be adopted by any company, and is usually employed where the product
has few or no competitive advantage or where economies of scale are achievable with
higher production volumes. Also called low price strategy.
 Differentiation Strategy: Differentiation strategy, as the name suggests, is the strategy
that aims to distinguish a product or service, from other similar products, offered by the
competitors in the market. It entails development of a product or service that is unique for
 the customers, in terms of product design, features, brand image, quality, or customer
service.
 Offering more value for money: This strategic approach includes two strategy:
 Best cost provider strategy: A best-cost strategy relies on offering
customers better value for money by focusing both on low cost and upscale
difference. The ultimate goal of the best-cost strategy is to keep costs and
prices lower than other providers of similar products with comparable
quality and features.
 Satisfy buyer with key quality/performance: Organizations today face a
continuous barrage of requests to improve quality. They may throw front-
line staff into quality training workshops in the hope that this will improve
the management of quality. Or management may decide to attend quality
management workshops to become acquainted with the latest strategy;
exposing themselves to Six Sigma, Lean Manufacturing, Process
Management, and Quality Awards and so on. Yet somehow quality still
remains an issue.
 Focusing on a narrow market niche within an industry: A niche market is the subset of
the market on which a specific product is focused. The market niche defines the product
features aimed at satisfying specific market needs, as well as the price range, production
quality and the demographics that it is intended to target. It is also a small market segment.
Market niche strategy is defined as a narrow group of customers who are looking for
specific products or benefits. They have clearly defined needs and are ready to pay a higher
price for a specific product (service) or its quality to satisfy them. Niche market strategy
consists in choosing the narrow scope of the market, where the buyers’ needs and
preferences differ from the rest of the market.
 Aims to achieve advantages through greater efficiency in serving niche
 Aims to greater effectiveness in meeting niches special needs.

 Describe the significance of strategic management.

Answer: Strategy management provides a consistent framework for managing each phase of the
strategic planning lifecycle (design through delivery). Management tools and processes provide
guardrails that help organizations overcome a majority of issues causing less than acceptable
outcomes. Detailed planning information is carried between individual phases providing
consistency and traceability.
It is important because of the following matters:
 Decision support
 Helps in coordination
 Helps to achieve target
 It detects existing problems and risks
 Opportunity to take the best alternative
 Improves relationship between managers and subordinates.
 Better job allocation
 Resistance to change is reduced.
 What are the risks of strategic management?
Answer: The risks of strategic management are:
 Possible negative impact on operational managers’ responsibility
 Problems with ill-fit strategy
 Lack of competent managers to deal with the consequences of strategic management
changes
 Problems with lack of implementation.
 Strategic Leadership

Definition

Strategic Leadership refers to manager’s ability to articulate a strategic vision for the company &
to motivate others to buy into that vision
Or
Strategic leadership refers to a manager’s potential to express a strategic vision for the
organization, or a part of the organization, and to motivate and persuade others to acquire that
vision.

 Characteristics

A few main characteristics of effective strategic leaders that do lead to superior performance
are as follows:

 Loyalty- Powerful and effective leaders demonstrate their loyalty to their vision by
their words and actions.
 Keeping them updated- Efficient and effective leaders keep themselves updated
about what is happening within their organization. They have various formal and
informal sources of information in the organization.
 Judicious use of power- Strategic leaders makes a very wise use of their power. They
must play the power game skillfully and try to develop consent for their ideas rather
than forcing their ideas upon others. They must push their ideas gradually.
 Have wider perspective/outlook- Strategic leaders just don’t have skills in their
narrow specialty but they have a little knowledge about a lot of things.
 Motivation- Strategic leaders must have a zeal for work that goes beyond money and
power and also they should have an inclination to achieve goals with energy and
determination.
 Compassion- Strategic leaders must understand the views and feelings of their
subordinates, and make decisions after considering them.
 Self-control- Strategic leaders must have the potential to control
distracting/disturbing moods and desires, i.e., they must think before acting.
 Social skills- Strategic leaders must be friendly and social.
 Self-awareness- Strategic leaders must have the potential to understand their own
moods and emotions, as well as their impact on others.
 Readiness to delegate and authorize- Effective leaders are proficient at delegation.
They are well aware of the fact that delegation will avoid overloading of
responsibilities on the leaders. They also recognize the fact that authorizing the
subordinates to make decisions will motivate them a lot.
 Articulacy- Strong leaders are articulate enough to communicate the vision (vision of
where the organization should head) to the organizational members in terms that boost
those members.
  Constancy/ Reliability- Strategic leaders constantly convey their vision until it
becomes a component of organizational culture.

To conclude, Strategic leaders can create vision, express vision, passionately possess
vision and persistently drive it to accomplishment.

 Strategic Making / Implementation Process

 Developing Strategic Vision

 Setting Objectives
 Crafting a Strategy
 Implanting & Executing Strategies
 Evaluation

Another Process to Implement

 Developing an organization having potential of carrying out strategy successfully.

 Disbursement of abundant resources to strategy-essential activities.
 Creating strategy-encouraging policies.
 Employing best policies and programs for constant improvement.
 Linking reward structure to accomplishment of results.
 Making use of strategic leadership.

 A winning Strategy must pass 3 Test

Three tests can be used to evaluate the merits of one strategy over another and to gauge how
good a strategy is:

1. The Goodness of Fit Test

A good strategy is well matched to the company's situation - both internal and external
factors and its own capabilities and aspirations.
2. The Competitive Advantage Test
A good strategy leads to sustainable competitive advantage. The bigger the competitive edge
that a strategy helps build, the more powerful and effective it is.
3. The Performance Test
A good strategy boosts company performance. Two kinds of performance improvements are
the most telling: gains in profitability and gains in the company's long-term business strength
and competitive position.
  Differentiate strategy from strategic management

The term strategy is derived from a Greek word strategies which means generalship. A strategy
can be said to be a plan or course of action or a set of decision rules making a pattern or creating
a common thread. Strategy is an action that managers take to attain one or more of the
organization‘s goals. Strategy can also be defined as “A general direction set for the company
and its various components to achieve a desired state in the future. Strategy results from the
detailed strategic planning process”. Strategy is a well-defined roadmap of an organization.
It defines the overall mission, vision and direction of an organization. The objective of a
strategy is to maximize an organization‘s strengths and to minimize the strengths of the
competitors.
Strategy, in short, bridges the gap between “where we are” and “where we want to be”.
Strategic management process has following four steps:
1. Environmental Scanning- Environmental scanning refers to a process of collecting,
scrutinizing and providing information for strategic purposes. It helps in analyzing the
internal and external factors influencing an organization.

2. Strategy Formulation- Strategy formulation is the process of deciding best course of

action for accomplishing organizational objectives and hence achieving organizational
purpose.

3. Strategy Implementation- Strategy implementation includes designing the

organization‘s structure, distributing resources, developing decision making process,
and managing human resources.

4. Strategy Evaluation- Strategy evaluation is the final step of strategy management

process. The key strategy evaluation activities are: appraising internal and external
factors that are the root of present strategies, measuring performance, and taking
remedial / corrective actions.

These components are steps that are carried, in chronological order, when creating a new
strategic management plan.

 The levels of strategy formulation

Strategy formulation, the process of planning strategies, is often divided into three levels:

I. Corporate level
II. Business level
III. Functional or operational levels
In other words, strategies exist at a number of levels in an organization.

 Porter’s five forces model

Five forces model was created by M. Porter in 1979 to understand how five key competitive
forces are affecting an industry. The five forces identified are: the threat of entry into an
industry; the threat of substitutes to the industry‘s products or services; the power of buyers of
the industry‘s products or services; the power of suppliers into the industry; and the extent of
rivalry between competitors in the industry.

The five forces are now explained in detail-

How easy it is to enter the industry obviously influences the degree of competition. Threat of
entry depends on the extent and height of barriers to entry. Barriers are the factors that need
to be overcome by new entrants if they are to compete successfully. High barriers to entry are
good for existing competitors, because they protect them from new competitors coming in.

Typical barriers are as follows:

 Scale and experience: In some industries, economies of scale are extremely important:
for example, in the production of automobiles or the advertising of fast-moving
consumer goods. Once incumbents have reached large-scale production, it will be very
 expensive for new entrants to match them and until they reach a similar volume they
will have higher unit costs. This scale effect is accentuated where there are high
investment requirements for entry, for example research costs in pharmaceuticals.
Barriers to entry also come from experience curve effects that give incumbents a cost
advantage because they have learnt how to do things more efficiently than an
inexperienced new entrant could possibly do. Until the new entrant has built up
equivalent experience over time, it will tend to produce at higher cost.

 Access to supply or distribution channels: In some industries manufacturers have

control over supply and/or distribution channels. Sometimes this can be through direct
ownership, sometimes just through customer or supplier loyalty. In some industries this
barrier can be overcome by new entrants who can bypass retail distributors and sell
directly to consumers through e-commerce.

 Expected retaliation: If an organization considering entering an industry believes that

the retaliation of an existing firm will be so great as to prevent entry, or mean that entry
would be too costly, this is also a barrier. Retaliation could take the form of a price war
or a marketing blitz. Just the knowledge that incumbents are prepared to retaliate is
often sufficiently discouraging to act as a barrier. In global markets this retaliation can
take place at many different ‘points’ or locations.

 Legislation or government action: Legal restraints on new entry vary from patent
protection, to regulation of markets, through to direct government action (for example,
tariffs. Of course, organizations are vulnerable to new entrants if governments remove
such protection.

 Differentiation: Differentiation means providing a product or service with higher

perceived value than the competition; Cars are differentiated, for example, by quality
and branding. Steel, by contrast, is by and large a commodity, undifferentiated and
therefore sold by the tone. Steel buyers will simply buy the cheapest. Differentiation
reduces the threat of entry because it increases customer loyalty.

The threat of substitutes

Substitutes are products or services that offer a similar benefit to an industry‘s products or
services, but by a different process. For example, aluminum is a substitute for steel in
automobiles; trains are a substitute for cars; films and theatre are substitutes for each other.
Managers often focus on their competitors in their own industry, and neglect the threat posed
by substitutes. Substitutes can reduce demand for a particular class of products as customers
switch to alternatives – even to the extent that this class of products or services becomes
obsolete. However, there does not have to be much actual switching for the substitute threat to
have an effect. The simple risk of substitution puts a cap on the prices that can be charged in
an industry.

There are two important points to bear in mind about substitutes:

 The price/performance ratio is critical to substitution threats. A substitute is still an
effective threat even if more expensive, so long as it offers performance advantages that
customer’s value. Thus aluminum is more expensive than steel, but its relative lightness
and its resistance to corrosion give it an advantage in some automobile manufacturing
applications. It is the ratio of price to performance that matters, rather than simple price.

 Extra-industry effects are the core of the substitution concept. Substitutes come from
outside the incumbent’s industry and should not be confused with competitor’s threats
from within the industry. The value of the substitution concept is to force managers to
look outside their own industry to consider more distant threats and constraints. The
more threats of substitution there are, the less attractive the industry is likely to be.

The power of buyers

Buyers are essential for the survival of any business. But sometimes buyers can have such high
bargaining power that their suppliers are hard
Pressed to make any profits at all. Buyer power is likely to be high when some of the following
conditions prevail:

 Concentrated buyers: Where a few large customers account for the majority of sales,
buyer power is increased. If a product or service accounts for a high percentage of the
buyer’s total purchases their power is also likely to increase as they are more likely to
‘window shop‘ to get the best price and therefore squeeze suppliers than they would for
more trivial purchases.

 Low switching costs: Where buyers can easily switch between one supplier and another,
they have a strong negotiating position and can squeeze suppliers who are desperate for
their business. Switching costs are typically low for weakly differentiated commodities
such as steel.

 Buyer competition threat: If the buyer has some facilities to supply itself, or if it has
the possibility of acquiring such facilities, it tends to be powerful. In negotiation with
its suppliers, it can raise the threat of doing the suppliers’ job themselves. This is called
 backward vertical integration, moving back to sources of supply, and might occur if
satisfactory prices or quality from suppliers cannot be obtained.

The power of suppliers

Suppliers are those who supply the organization with what it needs to produce the product or
service. As well as fuel, raw materials and equipment, this can include labor and sources of
finance. The factors increasing supplier power are the converse to those for buyer power. Thus
supplier power is likely to be high where there are:
 Concentrated suppliers: Where just a few producers dominate supply, suppliers have
more power over buyers. The iron ore industry is now concentrated in the hands of three
main producers, leaving the steel companies, relatively fragmented, in a very weak
negotiating position for this essential raw material.

 High switching cost: If it is expensive or disruptive to move from one supplier to

another, then the buyer becomes relatively dependent and correspondingly weak.
Microsoft, for example, is said to be a powerful supplier because of the high switching
costs of moving from one operating system to another. Buyers are prepared to pay a
premium to avoid the trouble, and Microsoft knows it.

 Supplier competition threat: Suppliers have increased power where they are able to cut
out buyers who are acting as intermediaries. Thus airlines are now able to negotiate
tough contracts with travel agencies as the rise of online booking has allowed them to
create a direct route to customers. This is called forward vertical integration, moving
up closer to the ultimate customer.

Industry (Competitive) rivalry

These wider industry or competitive forces all impinge on the direct competitive rivalry
between an organization and its most immediate rivals. Thus low barriers to entry increase the
number of rivals; powerful buyers with low switching costs force their suppliers to high rivalry
in order to offer the best deals. The more competitive rivalry there is, the worse it is for
incumbents within the industry.
Industry rivals are organizations with similar products and services aimed at the same
customer group (that is, not substitutes). In the European transport industry, Air France and
British Airways are rivals; trains are a substitute. As well as the influence of the four previous
forces, there are a number of additional factors directly affecting the degree of rivalry in an
industry or sector:
  Competitor balance: Where competitors are of roughly equal size there is the danger
of intense competition as one competitor attempts to gain dominance over others.
Conversely, less rivalrous industries tend to have one or two dominant organizations,
with the smaller players reluctant to challenge the larger ones directly for example, by
focusing on niches to avoid the attention of the dominant companies.
 Industry growth rate: In situations of strong growth, an organization can grow with the
market, but in situations of low growth or decline, any growth is likely to be at the
expense of a rival, and meet with fierce resistance. Low-growth markets are therefore
often associated with price competition and low profitability. The industry life cycle
influences growth rates, and hence competitive conditions.

 High fixed costs: Industries with high fixed costs, perhaps because they require high
investments in capital equipment or initial research, tend to be highly rivalrous.
Companies will seek to reduce unit costs by increasing their volumes: to do so, they
typically cut their prices, prompting competitors to do the same and thereby triggering
price wars in which everyone in the industry suffers. Similarly, if extra capacity can
only be added in large increments, the competitor making such an addition is likely to
create short-term overcapacity in the industry, leading to increased competition to use
capacity.

 High exit barriers: The existence of high barriers to exit – in other words, closure or
disinvestment – tends to increase rivalry, especially in declining industries. Excess
capacity persists and consequently incumbents fight to maintain market share. Exit
barriers might be high for a variety of reasons: for example, high redundancy costs or
high investment in specific assets such as plant and equipment that others would not
buy.

 Low differentiation: In a commodity market, where products or services are poorly

differentiated, rivalry is increased because there is little to stop customers switching
between competitors and the only way to compete is on price.

The five forces framework provides useful insights into the forces at work in the industry or
sector environment of an organization. It is important, however, to use the framework for more
than simply listing the forces. The bottom line is an assessment of the attractiveness of the
industry. The analysis should conclude with a judgment about whether the industry is a good
one to compete in or not.