STRATEGIC MANAGEMENT

WHAT IS STRATEGIC MANAGEMENT?

Strategic management is the study of:

-why some firms outperform others?

-how to compete in order to achieve desired objectives.

DEFINITION

Strategic management is the art and science of executing a continous process of analysis, cross-functional decisions, and actions a company undertakes in order to earn and sustain competitive advantages and achieve its objectives.

Customers

Company Resources &

Capabilities

Competitors Offers

STRATEGIES

INDUSTRY KEY SUCCESS FACTORS

STRATEGIES

Distinctive Strengths Sources of Competitive Advantage

Needs &wants

& expectations Offers to satisfy

Industry

Strengths

to satisfy

CONCEPTS Competitive advantage - is a plus compared to competitors, the outcome of strategies, resulting in achieving higher sales and profits and keeping more customers; it is what makes company’s offer superior to competitors’ offers.

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CONCEPTS • Industry Key Success Factors (IKSFs) are those

things which determine the ability of firms of an industry to prosper; those things which every company that seeks success has to do; for example in automobile industry, image, distribution network, the reliability of technology, after sale service, safety and fuel efficiency.

Competitive advantage is built by concentrating on one or several industry key

success factors and performing them in a manner that is superior to rivals.

CONCEPTS • Resources are factors that provide a company the

means to perform its business processes.

• Capabilities are managerial abilities, skills and capacity from each function of the company , needed to exploit resources (combine, integrate, coordinate and capitalize) for undertaking activities and create value.

• Strengths are resources that a company possesses and capabilities that the company has developed which support the achievement of activities, realization of strategies and attainment of objectives; they can be used as a basis to develop a competitive advantage.

CONCEPTS

• Distinctive strengths are those strengths that the company does particularly well relative to competitors.

• Strategy is the integrated plan externally oriented of how a company will achieve its objectives and compete against rivals; it is the result of choices executives make, on WHERE to compete and HOW to compete.

CONCEPTS

• External opportunities and external threats refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm a company in the future.

• Weaknesses are negative internal factors, vulnerabilities, which hinders development, implementation of strategies and achievement of objectives.

CONCEPTS

• Vision – the strategic intent, the mental projection in the present of the company’s future expectations.

• Mission - defines the scope of the company’s business, expressing the essential characteristics of the company, the reasons for its existence, the nature of its business, the groups who are served and the principles/values under which it operates.

• Objectives - specific outcomes that a company seeks to achieve in pursuing its basic mission and accomplishing its vision; there are strategic and annual objectives.

In summary, a strategically thinking means:

THE STRATEGIC MANAGEMENT PROCESS

Situation analysis Strategy formulation Strategy implementation Strategy evaluation

1. External assessment

a1.1) Macroenvironmet

a1.2) Industry analysis

1. Setting strategic

direction

1. Setting annual

objectives

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2. Setting policies

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3. Allocating resources

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4. Matching OS to

strategy

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5. Creating control and

aarewards systems

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6. Developing a strategy-

aasupportive culture

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1. Examining the

aunderlying bases of the

company's strategy

2. Assessing

performance

3. Taking corrective

actions

2. Generating &

evaluating aaalternative

strategies 2. Internal assessment

3. Selecting strategies