Strategic Imperative

Strategic
Management
(BA 491)

STRATEGIC MANAGEMENT
McGraw-Hill/Irwin

Introduction to
Strategic
Management
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Strategic Management
Strategic management is the study of why some firms
outperform others.
How to create a competitive advantage in the market place that
is unique, valuable, and difficult to copy

Total organization perspective, integrating across

functional areas.
Two perspectives of leadership: romantic view and
external control perspective.
Strategies put together an understanding of the
external environment with an understanding of internal
strengths and weaknesses.
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Definition of Strategic Management

Strategic management consists of the analysis,
decisions, and actions an organization
undertakes in order to create and sustain
competitive advantages (Dess, Lumpkin, &
Eisner, Strategic Management: Creating
Competitive Advantage, 3rd Ed., p. 9).

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Definition of Strategic Management

Analysis
Strategic goals (vision, mission, strategic objectives)
Internal and external environment of the firm

Decisions
What industries should we compete in?
How should we compete in those industries?

Actions
Allocate necessary resources
Design the organization to bring intended strategies to
reality
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Attributes of Strategic Management

Directs the organization toward overall goals
and objectives.
Includes multiple stakeholders in decision
making.
Needs to incorporate short-term and long-term
perspectives.
Recognizes trade-offs between efficiency and
effectiveness.

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Mintzbergs Views of Strategy

Plan - consciously intended course of action
Ploy - maneuver to outwit opponent
Pattern - consistency in behavior
Position - location in environment
Perspective - way of perceiving the world

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Forms of Strategy
Formal versus informal - associated with size of
firm and stage of development. Mintzbergs
distinction between entrepreneurial and
planning mode.
Intended versus realized - intended strategies
are the plans managers develop; realized
strategies are the actions that actually take
place over time.

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Forms of Strategy

Source:H. Mintzberg and J. A. Waters, Of Strategies, Deliberate and

Emergent, Strategic Management Journal 6 (1985), pp. 257-72.

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Strategic Management Process

Analysis
Hierarchy of goals
Analysis of external and internal environments

Formulation
What business(es) should we be in?
For each, what is the basis for competitive
advantage (low cost, differentiation, focus)?

Implementation
Functional tactics
Culture and organization structure

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Coherence in Strategic Direction

Company vision
Massively inspiring
Overarching

Company vision

Long-term
Driven by and evokes passion
Fundamental statement of the
organizations
Values

Hierarchy of Goals

Aspiration
Goals

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

10

Coherence in Strategic Direction

Mission statements
Purpose of the company

Company vision

Basis of competition and

competitive advantages

Mission statements

More specific than vision

Focused on the means
by which the firm will
compete
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Hierarchy of Goals

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Coherence in Strategic Direction

Strategic objectives
Operationalize the
mission statement
Measurable, specific,
appropriate, realistic,
timely, challenging,
resolve conflicts that
arise, and yardstick for
rewards and incentives
Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

Company vision
Mission statements
Strategic objectives

Hierarchy of Goals

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Levels of Strategy

CEO
DIsney Corporation
Studio Entertainment

Parks & Resorts

Corporate-level

Consumer Products

Media Networks

Business-level
Walt DIsney Pictures Touchstone Pictures...

Disneyland...

Disney Stores...

ABC Network...

Manager

Functional-level
Operations Marketing Finance...

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13

Does Strategic Planning Pay Off?

Original research showed mixed results. Planning
might not pay off for firms in static or turbulent
environments or for small firms.
Miller and Cardinals (1994) meta-analysis found that
strategic planning affects firm growth and profitability.
In particular, they found that:
Planning performance link true for formal and informal
planning.
Planning performance link even stronger in turbulent
environments.
Firm size unrelated to effectiveness of planning.

Copyright 2005 by The McGraw-Hill Companies, Inc. All rights

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