STRATEGIC
MANAGEMENT
RAMSHA NASIR
RIDA FAREED
NADIA BARKAT ALI
SAJJAD ALI MUSLIM
MUHAMMAD YAZDAAN AZAM JAFFRI
WHAT IS STRATEGY
STRATEGIC MANAGEMENT
IMPORTANCE OF STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT PROCESS
TYPES OF ORGANIZATIONAL STRATEGIES
STRATEGIC MANAGEMENT IN TODAYS
ENVIRONMENT
Strategies are the decisions and plans that
determine the long term performance of an
organization.
Strategic management is what managers do to
develop the organizations strategies.
Strategic management specify the
organizations missions, visions and objectives
by developing policies and plans designed to
achieve those objectives.
Managers establish the roadmap for how the
organizations will do whatever it is in the
business to do.
One term which is used in strategic
management is the BUSINESS MODEL.
BUSINESS MODEL:
A strategic design for how a company
could get profit from its strategies and work
activities.
It focuses on two things.
Whether the customers will value what the
company is providing.
Whether the company can make any money
doing that.
Dell business of selling computers.
Performance of an organization.
Uncertainty in environments.
Nature
of organizations.
Decision-making
of managers.
Step 1: Identifying the organizations
current mission, goals, and strategies
mission - statement of the purpose of an
organization.
o It defines that what is the business is all
about.
o It is important in profit and not-for-profit
organizations
o
Step 2: Doing an external analysis
o
o
The environmental scanning of specific and
general environments.
A manager has to examine that what trends
and changes are occurring outside the
organization to cope up with current market
After analyzing the environment, manager has
to access all his information in terms of
opportunities or threats.
opportunities - positive trends in the
external environmental
o threats - negative trends in the external
environment
o
Step 3: Doing an internal analysis
o
In this phase, manager has to look inside the
organizations resources and capabilities.
Resources: assets, financial, physical and
human intangible.
Capabilities: skills and abilities of doing
work activities needed in business.
Core-competencies: the value-creating
capabilities and skills of an organization.
After internal analysis, manager should be
able to identify organizational strengths and
weaknesses.
strengths - Strengths create value for the
customer and strengthen the
competitive position of the firm.
weaknesses can place the firm at a
competitive disadvantage.
Organizational culture i.e strong and weak
cultures have different effects on strategies.
Steps 2 and 3 combined are called a SWOT
analysis. (Strengths, Weaknesses,
Opportunities, and Threats)
After this SWOT analysis, managers are ready
to formulate suitable strategies. i.e that
[Link] an organizations strengths and
external opportunities.
2. protect organization from external threats.
3. correct critical weaknesses.
Step 4: Formulating strategies
In this managers has to consider all the
realities of the external environment and
their available resources to formulate the
strategies which help the organization to
achieve its goal.
Step 5: Implementing strategies
o
Implementation: effectively fitting to
organizational structure and activities to the
environment.
a strategy is only as good as its
implementation
Step 6: Evaluating results
Last step is to assess the result of the process that
o
How effective have strategies been?
Have they helped to reach its goal?
What adjustments, if any, are necessary?
Corporate Strategy
Business Strategy
Functional Strategy
Growth Strategy
Seeking to increase the organizations business by
expansion into new products and markets.
Types of Growth Strategies
Concentration:
Focusing on a primary line of business and
increasing the number of products offered or
markets served.
Vertical Integration:
Backward vertical integration: attempting to gain
control of inputs (become a self-supplier).
Forward vertical integration: attempting to gain
control of output through control of the distribution
channel and/or provide customer service activities
(eliminating intermediaries).
Horizontal Integration:
Combining operations with another competitor
in the same industry to increase competitive
strengths and lower competition among industry
rivals.
Related Diversification
Expanding by merging with or acquiring firms in
different, but related industries that are strategic
fits.
Unrelated Diversification
Growing by merging with or acquiring firms in
unrelated industries where higher financial returns
are possible
Stability Strategy:
A strategy that seeks to maintain the status quo to deal
with the uncertainty of a dynamic environment, when the
industry is experiencing slow- or no-growth conditions, or
if the owners of the firm elect not to grow for personal
reasons.
Renewal Strategy:
Developing strategies to counter organization weaknesses
that are leading to performance declines.
Retrenchment: focusing of eliminating non-critical
weaknesses and restoring strengths to overcome
current performance problems.
Turnaround: addressing critical long-term performance
problems through the use of strong cost elimination
measures and large-scale organizational restructuring
solutions.
BCG Matrix
Developed by the Boston Consulting Group
Considers market share and industry growth rate
Classifies firms as:
Cash cows: low growth rate, high market share
Stars: high growth rate, high market share
Question marks: high growth rate, low market share
Dogs: low growth rate, low market share
A strategy focused on how an organization should
compete in each of its businesses.
Competitive Advantage:
An organizations distinctive competitive edge.
Quality as a Competitive Advantage:
Differentiates the firm from its competitors.
Represents the companys focus on quality
management to achieve continuous improvement and
meet customers demand for quality.
Sustainable competitive advantage:
Continuing over time to effectively exploit
resources and develop core competencies that enable an
organization to keep its edge over its industry
competitors.
Competitive strategies:
Five competitive forces are:
Threat of new entrants
Threat of substitutes
Regaining power of buyers
Bargaining power of suppliers
Current rivalry
Cost leadership strategy
Differentiation strategy
Focus strategy
Similar to Porters generic competitive
strategies
The competitive forces in an industry will create a
situation where three companies will dominate a
market.
Some firms in the market become super niche
players and while others end up as ditch
dwellers.
Firms unable to develop either a cost or
differentiation advantage become stuck in the
middle and lack prospects for long-term success.
Used to support the business-level strategy
Creates an appropriate supporting role for
each functional area of the organization
e.g., manufacturing, marketing,
human resources
Strategic Flexibility
New Directions in Organizational Strategies
e-business
customer service
innovation
Cost Leadership
On-line activities: bidding, order processing,
inventory control, recruitment and hiring
Differentiation
Internet-based knowledge systems, on-line ordering
and customer support
Focus
Chat rooms and discussion boards, targeted web sites
Giving the customers what they want.
Communicating effectively with them.
Providing employees with customer service
training.
Possible Events
Radical breakthroughs in products.
Application of existing technology to new uses.
Strategic Decisions about Innovation
Basic research
Product development
Process innovation
First Mover
An organization that brings a product innovation to
market or use a new process innovations
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