Intro to Strat Mgt2

8/3/2019 Intro to Strat Mgt2

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Business Strategy/Policy 2008/9Topic 1 : Introduction to Strategy and

Strategic Management Part 2


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Definition of Strategic Management

Strategic management is concerned with thelong-term policy decisions affecting the entire

organisation and involving major decisions onresource allocation, the overall objective beingtopositionthe organisation to deal effectivelywith its environment.

(Gunnigle et al., 1997)

This definition reflects a resource-based viewof Strategic Management


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What is Strategic Management

in Practice?

Strategic management includes

understanding the strategic position of aorganisation, making strategic choices forthe future, and managing strategy in action.


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Key Strategic Management Terms

1. Strategists2. Vision statements

3. Mission statements4. External opportunities and threats5. Internal strengths and weaknesses6. Long-term objectives

7. Strategies8. Annual objectives9. Policies


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1. Strategists

Usually found in the higher levels of management

Help organisation gather, analyse, andorganise information

Track industry and competitive trends

Develop forecasting models

Evaluate corporate and divisional performance


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2. Vision Statement

Answers the question: What do we want to become?

First step in strategic planning

Often just a single sentence

Our vision is to take care of your vision.

(Stokes Eye Clinic, Florence, South Carolina)



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3. Mission statement

answers the question:

What is our business?


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Kingston University:

Mission Statement

To promote participation in higher education,which it regards as a democratic entitlement; to

strive for excellence in learning, teaching, andresearch; to realize the creative potential andfire the imagination of all its members; and toequip its students to make effectivecontributions to society and the economy


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4. External Opportunities & Threats

Largely beyond the control of asingleorganisation

Economic Social Cultural Demographic Environmental Political Governmental Technological Competitive trends & events



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5. Internal Strengths & Weaknesses Controllable activities that are performed well or poorly relative

to competitors

Based on functional analysis of activities in the organisations keyresult areas:

Management Marketing Finance/accounting

Production/operations Research and development Computer information systems

Organisations strive to pursue strategies that capitalise onstrengths and improve on weaknesses



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6. Long-Term Objectives

Results to be achieved in pursuing the organisations

mission. Time frame is beyond one year

State direction

Aid in evaluation

Create synergy

Reveal priorities

Focus co-ordination

Provide basis for effective management



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7. Strategies1. Potential actions that require top management decisions and

large amounts of resources2. Mechanisms by which long-term objectives are realised

Geographic expansion

Diversification

Acquisition

Product development Market penetration

Retrenchment

Divestiture

Liquidation

Joint venture



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8. Annual Objectives1. Short-term milestones necessary to achieve long-

term objectives2. Represent the basis for allocating resources3. Established at corporate, divisional, and functional

levels4. Stated in terms of accomplishments for:

management marketing finance/accounting production/operations research and development information systems etc.



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9. Policies

Important in strategy implementation as the means

by which annual objectives will be achieved

Guide to decision-making

Address repetitive situations

Established at corporate, divisional, or functionallevels

Allow consistency & coordination within andbetween organisational departments



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Exhibit 1.2 The vocabulary of strategy

The Vocabulary of Strategy: Personal Examples


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The Key Elements of theStrategic Management Process:

Four Basic Elements


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Environmental scanning:

The monitoring, evaluating, anddisseminating of information from theexternal and internal environments to key

people within the organisation to avoidstrategic surprises and ensure the long-term health of the organisation

Environmental scanning is a strategic activity inorganisations and should be treated as such bymanagement


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Environmental Scanning

Identifies the strategic factors affecting the organisation Internal Environment

Strengths & Weaknesses Factors within the organisation but not subject to short-run

control of management

External Environment Opportunities & Threats

Factors external to the organisation but not subject to short-run control of management

SWOT Analysis (combines the results of internal andexternal analysis) allowing organisations to:

Use internal strengths to take advantage of externalopportunities, and

Address internal weaknesses to avoid/minimise the effect ofthreats in the external business environment


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Environmental Scanning: a model (David, 2002)

Intro to Strat Mgt2

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