1. Ch1
Strategic ManagementStrategic Management
W P GamageW P Gamage

2. Ch1
Sustained Competitive AdvantageSustained Competitive Advantage
Above-Average ReturnsAbove-Average Returns
Returns in excess of what an investor expects toReturns in excess of what an investor expects to
earn from other investments with similar riskearn from other investments with similar risk
Occurs when a firm develops a strategy thatOccurs when a firm develops a strategy that
competitors are not simultaneously implementingcompetitors are not simultaneously implementing
Provides benefits which current and potentialProvides benefits which current and potential
competitors are unable to duplicatecompetitors are unable to duplicate
Strategic CompetitivenessStrategic Competitiveness
Achieved when a firm successfully formulatesAchieved when a firm successfully formulates
and implements a value-creating strategyand implements a value-creating strategy

3. Ch1
which are required for firms to achieve:which are required for firms to achieve:
Above-Average ReturnsAbove-Average Returns
Strategic CompetitivenessStrategic Competitiveness
Sustained Competitive AdvantageSustained Competitive Advantage
The Strategic Management ProcessThe Strategic Management Process
Involves the full set of:Involves the full set of:
ActionsActionsCommitmentsCommitments DecisionsDecisions

4. Ch1
DEFINITIONS OF STRATEGIC MANAGEMENT
• Strategic management is a process that
combines three major interrelated activities
• Strategy analysis
• Strategy formulation
• Strategy implementation
Gregory G Dess and Alex Miller

5. Ch1
• Strategic management is the process by
which and organization establishes its
objectives formulates actions designed to
achieve these objectives in the desired
timescales, implements the actions and
assesses progress and results.
• Arthur A Thompson

6. Ch1
• Strategic management can be defined as
the art and science of formulating
implementing and evaluating cross-
functional decisions that enable an
organization to achieve its objectives.
• Fred R David

7. Ch1
• Strategic management is the set of
managerial decisions and actions that
determines the long-run performance of a
corporation. It includes environmental
scanning, strategy formulation, strategy
implementation, strategy evaluation and
control.

8. Ch1
As a whole, the core of the strategic management
• Understanding the organization’s s/w relative to any
competition
• Evaluating current and potential o/t to the organization
• Understanding of the relative power an influences of
various stakeholders
• Identifying and evaluating suitable changes
• Concentrating the element of management

9. Ch1
Stages of sm
• Strategic management process consists of
three stages
• Strategy formulation
• Strategy implementation
• Strategy evaluation and control

10. Ch1-
The StrategicThe Strategic
ManagementManagement
ProcessProcess
The StrategicThe Strategic
ManagementManagement
ProcessProcessInternal
Environment
External
Environment
Strategic Intent
Strategic Mission
Strategy Formulation Strategy Implementation
Objective
setting
Competitive
Dynamics
Corporate-Level
Strategy
International
Strategy
functional
StrategiesBusiness level
strategy
Action plan Structure
& Control
Strategic
Leadership
motivation
& Innovation
Strategic
Inputs
Feedback
Strategic
Outcomes
StrategicStrategic
ActionsActions
Strategic
Evaluation and
Control of
Returns

11. Ch1-
Why sm is important
• SM is aimed toward achieving corporate goals
• SM considers a broad range of stakeholders
• SM entails multiple time horizons
• SM is concerned with both efficiency and
effectiveness
• Environment is dynamic and volatile

12. Ch1-
Historical development of strategic management
• Phase 1
• Type of plan Basic financial plan
(budgeting, control)
• Effectiveness of Operational control
Formal planning Annual budgeting
Functional focus
• Value system Meet budget

13. Ch1-
• Phase II
• Forecast based planning
• Effective planning for future
• Planning for growth
• Multi-year forecast
• Static allocation of resources
• Predictive future

14. Ch1-
• Phase III
• External oriented planning
• Environmental analysis
• Necessary response to market competition
• Competitive assessment
• Dynamic allocation of resources
• Think strategically

15. Ch1-
• Phase IV
• Strategic planning
• Organization of all resources to create
competitive advantage
• Strategically chosen planning framework
• Create flexible planning process
• Supportive value system and climate
• Create future