MGT 212: Organizational

Management 
MID 2 LT 2 Managing Strategy

MD Asif Hossain 
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Today’s Topic

 Define strategic management and explain why it’s

important
 Explain what managers do during the six steps of
the strategic management process
 Describe the three types of corporate strategies
 Describe competitive advantage and the
competitive strategies organizations use to get it
 Discuss current strategic management issues
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Example of Company Strategies
 • Online retailer Zalando is considering an alliance with Uber to
make it easier for customers to return unwanted merchandise.
 • Kroger Company and CVS Health Corporation are planning to
replace conventional eggs with cage-free eggs, promising
shareholders higher profits.
 • Japan’s NTT Data Corporation plans to purchase Dell’s
information technology service, which will expand sales outside
Japan.
 • Amazon, Google, and Microsoft are waging a price war on cloud
services.
 • Al Jazeera is closing its American cable channel and laying off
10 percent of its workforce to lower operating costs. 3
What Is Strategic Management?

 Strategicmanagement - what managers do to

develop the organization’s strategies.
 Strategies - the plans for how the organization will
do what it’s in business to do, how it will compete
successfully, and how it will attract and satisfy its
customers in order to achieve its goals.
 Business model - how a company is going to make
money

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Importance of Strategic Management

 1. It results in higher organizational performance.

 2.It requires that managers examine and adapt to
business environment changes. (Cope with
continuous change)
 3.It coordinates diverse organizational units,
helping them focus on organizational goals.
 4.It is involved in the managerial decision-making
process

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The Strategic Management Process

 Strategic management process - a six-step process that encompasses

strategic planning, implementation, and evaluation.
 How can you be a winner in your career? 6
Strategic Management Process
 Step 1: Identify the Organization’s Current Mission,
Objectives, and Strategies
 Mission: the firm’s reason for being
 The scope of its products and services
 Goals: the foundation for further planning
 Measurable performance targets
 Step 2: Conduct an External Analysis
 The environmental scanning of specific and general environments
 Focuses on identifying opportunities and threats
 Opportunities are positive trends in external environment
 Threats are negative trends

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Components of a Mission Statement

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Strategic Management Process (Cont.)

Step 3: Conduct an Internal Analysis

◦ Assessing organizational resources, capabilities, activities, and
culture:
 Strengths (core competencies) create value for the customer and
strengthen the competitive position of the firm
 Weaknesses (things done poorly or not at all) can place the firm at a
competitive disadvantage.
 Steps 2 and 3 combined are called a SWOT
analysis. (Strengths, Weaknesses,
Opportunities, and Threats)
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SWOT
Internal
 Strength ​
 Weakness ​

External
 Opportunities ​
 Threats 

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SWOT Analysis

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Strengths
-What does your organisation do better than
others?
-What are your unique selling points?
-What do you competitors and customers in
your market perceive as your strengths?
-What is your organisations competitive edge?
Weaknesses
-What do other organisations do better
than you?
- What elements of your business add
little or no value?
What do competitors and customers in
your market perceive as your weakness?
Opportunities
- What political, economic, social-cultural,
or technology (PEST) changes are taking
place that could be favorable to you?
- Where are there currently gaps in the
market or unfulfilled demand?
- What new innovation could your
organisation bring to the market?
Threats
-What political, economic, social-cultural, or
technology (PEST) changes are taking place
that could be unfavourable to you?
- What restraints to you face?
- What is your competition doing that
could negatively impact you?
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Strategic Management Process (Cont.)

Step 4: Formulate Strategies

 Develop and evaluate strategic alternatives
 Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
 Match organizational strengths to environmental
opportunities
 Correct weaknesses and guard against threats
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Strategic Management Process (Cont.)

 Step 5: Implement Strategies

 Implementation: effectively fitting organizational
structure and activities to the environment
 The environment dictates the chosen strategy;
effective strategy implementation requires an
organizational structure matched to its requirements
 Step 6: Evaluate Results
 How effective have strategies been?
 What adjustments, if any, are necessary?

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Corporate Strategies

 Corporate strategy - an organizational strategy that

determines what businesses a company is in or
wants to be in, and what it wants to do with those
businesses.
 Types of Corporate Strategies
 Growth: expansion into new products and markets. [Either
through its current business(es) or through new business(es)]
 Stability: organization continues to do what it is currently doing.
(Keeps the same)
 Renewal: examination of organizational weaknesses/problems that
are leading to performance declines.
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Growth Strategies

 Concentration- focuses on its primary line of business

and increases the number of products offered or
markets served in this primary business.
 verticalintegration- is an arrangement in which the
supply chain of a company is owned by that company.
 Forward- Wholesaler becoming a retailer
 Backward- For example manufacturer become is own
suppliers
 horizontalintegration- a company grows by
combining with competitors. 16
Growth Strategies (Cont.)

 Diversification-.
 Related diversification happens
when a company combines with
other companies in different, but
related, industries
 Unrelated diversification is when a
company combines with firms in
different and unrelated industries
Example- Tata Company- Owning
IT/Communication)

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Horizontal
and Vertical
Integration

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Example: Different Brands Under One Parent
Company

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Market Share Example

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How Are Corporate Strategies Managed?
 When an organization’s corporate strategy
encompasses a number of businesses, managers can
manage this collection, or portfolio, of businesses
using a tool called a corporate portfolio matrix
 This matrix provides a framework for understanding
diverse businesses and helps managers establish
priorities for allocating resources
 BCG matrix - a strategy tool that guides resource allocation
decisions on the basis of market share and growth rate of
SBUs.
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BCG Matrix

 Developed by the Boston Consulting Group

 Considers market share and industry growth rate
 Classifies Firm as:
 Stars: High market share/High anticipated growth rate
 Cash Cows: High market share/Low anticipated growth
rate
 Question Marks: Low market share/High anticipated
growth rate
 Dogs: Low market share/Low anticipated growth rate
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BCG
Matrix
ta rs Ques
S tion M
arks

Dogs

Cash Cow
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Business-Level Strategy

 Business-Level Strategy
 Strategic Business Unit (SBU) - the single independent
businesses of an organization that formulate their own
competitive strategies.

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The Role of Competitive Advantage

 Competitive strategy - an organizational strategy

for how an organization will compete in its
business(es).
 Competitive advantage - what sets an organization
apart; its distinctive edge.
 Different Business/es might have their different
strategy and advantage

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New Types of Competitive Strategies

 Quality as a Competitive Advantage

 Emphasize on quality of products/service
 Maintain quality; be known for good quality
 Design Thinking as a Competitive Advantage
 Design Thinking is a design methodology that
provides a solution-based approach to solving
problems
 https://www.youtube.com/watch?v=qRQwkJLRfWw

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Design
Thinking
Process

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New Types of Competitive Strategies
 Social Media as a Competitive Advantage
 Real time Response
 Influencer/bloggers

 Brand monitoring
 Engaging customers
 Marketing & Advertising
 Sustaining Competitive Advantage
 Should be able to keep the competitive advantage through
proper management of resource to keep edge over competitors.
 https://study.com/academy/lesson/sustainable-competitive-ad
vantage-definition-concept-examples.html
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Competitive Strategies
 Cost Leadership Strategy
 – Seeking to attain the lowest total overall costs relative to other
industry competitors
 Differentiation Strategy
 – Attempting to create a unique and distinctive product or
service for which customers will pay a premium
 Focus Strategy
 – Using a cost or differentiation advantage to exploit a
particular market segment as opposed to a larger market
Stuck in the Middle
 Organizations that are unable to develop a cost or differentiation
advantage 30
Poter’s Five
Force Model

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Poter’s Five Force Model (Cont.)

 1. Threat of new entrants. How likely is it that new

competitors will come into the industry?
 2. Threat of substitutes. How likely is it that other
industries’ products can be substituted for our industry’s
products?
 3. Bargaining power of buyers. How much bargaining
power do buyers (customers) have?
 4. Bargaining power of suppliers. How much
bargaining power do suppliers have?
 5. Competitive Rivalry. How intense is the rivalry 32

among current industry competitors?

Current Strategic Management Issue
 The Need for Strategic Leadership- The ability to
anticipate, envision, maintain flexibility, think
strategically, and work with others in the organization to
initiate changes that will create a viable and valuable
future for the organization
 The Need for Strategic Flexibility- The ability to
recognize major external changes, to quickly commit
resources, and to recognize when a strategic decision was
a mistake

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Effective Strategic Leadership

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Strategies for Today’s Environment

 E-Business Strategy
 Reduce Cost
 Use updates software to keep track of inventory
 Low cost in handling customers
 Customer Service Strategies
 Winning customer through providing excellent customer
service.
 Innovation Strategies
 Continuously innovating. Adding value to product
 First Mover
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Advantages & Disadvantages of First
Mover

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Further Reading

 Chapter9- Management 14th Edition- Stephen P.

Robbins, Mary Coulter

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