A complete Lecture on Strategic Management [At MBA Level], including the various option of strategies including the latest option of application of Maqasid Al-Shariah in Strategic Management.

1. Lecture
STRATEGIC MANAGEMENT
[Including Application of Maqasid Al Shariah in Strategic Management]
This lecture was given to MBA Students.
University of Keele ,Staffordshire,(UK); INSANIAH & KUIS (MALAYSIA)
and Senior Managers of Caprice Gold Group, Turkey
MISSION
To Score Distinction For MBA
OBJECTIVE
Understand & Apply
By Prof. SHAYA’A OTHMAN
sottoman@gmail.com
1429H [1st Lecture] -1435H [Revised] / 2008M [1st Lecture] -2014M [Revised]

2. Proposed Time For The Lecture [1000 - 1800]
[13th March 1999]
Strategic Management
•
•
•
•
•
•
•
•
•
1000-1100
1100-1200
1200-1300
1300-1400
1400-1500
1500-1600
1600-1615
1600-1700
1700-1800
-
LECTURE
LECTURE
DISCUSSION
LUNCH
LECTURE
LECTURE
TEA BREAK
DISCUSION
DISCUSSION

3. STRUCTURE OF LECTURE
Part 1. SITUATION ANALYSIS
:
1000 - 1300 [3hrs]
• STRATEGIC MANAGEMENT
• Definition and Process
• FORMULATION OF
STRATEGY
• Situation Analysis
• Strategic Option
• SITUATION ANALYSIS
• General Environment
• Competitive Environment
• Organization
• Internal Environment
• SWOT Analysis
Part 2. STRATEGIC OPTION
: 1400-1800 [4 hrs]
• COMPETITIVE STRETEGY
• Three Generic Strategies
• DEVELOPMENT STRATEGY
• Alternative Directions For
Strategic Development
• PORTPOLIO STRATEGY
• Boston Consulting Group
[BCG] Growth Share Matrix
• McKinsey/Attractiveness
Strength Matrix
• BLUE OCEAN STRATEGY
• MAQASID AL-SHARIAH
STRATEGY

4. STRATEGIC MANAGEMENT
STRATEGIC
S
MANAGEMENT
SUM
M
Slide 2

5. Definition
of
STRATEGY
• As Plan = deals with how leaders try to establish direction for the
company, to set them on predetermine courses of action
• As Pattern = focuses on action, reminding us that the concept is
an empty one if it does not take behavior into account
• As Position = encourages us to look at organizations in their
competitive environments
• As Perspective = raises intriguing questions about intention and
behavior in a collective context
• A Strategy is a pattern or plan that integrate an organization’s major goals,
policies, and action sequences into a cohesive whole.
James Brian Quinn,[1988], The Strategy Process, Prentice Hall

6. Definition
of
Management
• “Knowing exactly what you want [people] to do, and then seeing that they do it in
the best and cheapest way”.
- Frederick Taylor
• “Application of knowledge to realities in order to attain desired results”
•
K. O’Donnell, Weitrich 1986, Essential of Management, McGraw Hill
• “A set of activities [including planning and decision making, organizing, leading, and
controlling] directed at an organization’s resources, [human, finical, physical and
information] within the aim of achieving organizational goals in an efficient and
effective manner”
• efficient = using resources wisely and in a cost-effective way.
• effective = making the right decisions and successfully implementing them.
Ricky W Griffin [1996] Management, Houghton
Mifflin

7. Definition
of
STRATEGIC MANAGEMENT
• ALL THAT IS NECESSARY TO
POSITION THE COMPANY A WAY
THAT WILL ASSURE ITS LONGTERM
SURVIVAL
IN
A
COMPETATIVE ENVIRONMENT

8. FORMULATION OF STRATEGY
MATCHING
CAPABILITIES
ENVIRONMENT
• In essence, the
FORMULATION OF
STRATEGY is
concerned with
MATCHING the
CAPABILITIES of the
organization with its
ENVIRONMENT
MATCHING = SITUATION ANALYSIS [The Firm and its Environment]

9. STRATEGY FORMULATION
5
3
SITUATION ANALYSIS
•
GENERAL ENVIRONMENT
•
•
Firm’s Position - Lifecycle Model,
Strategic Group analysis, Market
Share Analysis
•
Recourses and Capabilities: The
Value Chain
COMPETITIVE STRETEGY
•
•
•
Three Generic Strategies
DEVELOPMENT STRATEGY
•
Alternative Directions For Strategic
Development
PORTPOLIO STRATEGY
•
Boston Consulting Group [BCG]
Growth Share Matrix
•
INTERNAL ENVIRONMENT
•
•
Product, Supplier, Buyer, Rivalry,
Labor
ORGANIZATION
•
•
Economics, Technological, Legal,
Political, Social & Cultural
COMPETITIVE ENVIRONMENT
•
•
STRATEGIC OPTIONS
McKinsey/Attractiveness Strength
Matrix
•
BLUE OCEAN STRATEGY
•
MAQASID AL SHARIAH STRATEGY
SWOT ANALYSIS
•
Determine Firm Strategic position,
Capability of Present Strategy to
changes

10. SITUATION ANALYSIS
• GENERAL ENVIRONMENT
• Economics, Technological, Legal, Political, Social & Cultural
• COMPETITIVE ENVIRONMENT
• Product, Supplier,Buyer,Rivalry,Labor
• ORGANIZATION
• Firm’s Position - Lifecycle Model, Strategic Group analysis, Market Share
Analysis
• INTERNAL ENVIRONMENT
• Recourses and Capabilities: The Value Chain
• SWOT ANALYSIS
• Determine Firm Strategic position, Capability of Present Strategy to
changes

11. 1. General Environment
[SITUATION ANALYSIA]
• Economics factors :
• Technological factors :
• Legal factors :
• Political factors :
• Social & Cultural factors :

12. 2. Competitive Environment
[SITUATION ANALYSIA]
• Product, Supplier,Buyer,Rivalry,Labor [ PROS BURILA]
Potential Entrants
Treats of new entrants
Suppliers
Bargaining
Power
Industry
Competitors
Bargaining
Power
Buyers
Rivalry Among
Existing Firms
Porter 1980
The Five Forces of
Industry Competition
Treats of substitute products or services
Substitutes

13. 3. Organization
[SITUATION ANALYSIS]
• Firm’s Position :
• Lifecycle Model:
• Strategic Group Analysis:
• Market Share Analysis

14. 3.1 Firm’s Position
[SITUATION ANALYSIS: Organization]
• Comparing environmental influences have on the firm and its
competitors. Assessment of the overall impact the changes are likely to
have on companies
Company
Overall
Healthy living
PROTONGood
Fair
Prices
Design
Fair
Thriftiness
Excellent
Good
KIA
Excellent
Excellent
Good
Good
Excellent
MZADA
Excellent
Excellent
Excellent Good
Excellent
LADA
Fair
Fair
Good
Fair
Fair

15. 3.2 Life-Cycle Model
[SITUATION ANALYSIS: Organization]
Industry Sales
• INTRODUCTION
GROWTH
Proton Perdana V6
Proton Satria GTi
•
•
•
•
•
•
•
MATURITY
Proton
Wira
DECLINE
Proton
Iswara
Growth Rate
Slow
Accelerating
Leveling
Declining
Sales
Low
Rising
Peak
Declining
Unit Cost
High
Declining
Product Line
Profits
Competitors
Pricing
Short
Negative
Few
Cost Plus
Low
Low
Growing
Diversified
Shrinking
Increasing
High
Declining
increasing
more but stable
Declining
Penetration
Competitive
Cut

16. 3.3 Strategic Group Analysis
FORD
ROVER
VW
MAZDA
NISSAN
HONDA
TOYOTA
SUZUKI
DAIHATSU
SKODA
LADA
Local
•
CRYSLER
FIAT
RENAULT
PEUGEOT
SEAT
Narrow
Product Range Covered
Broad
[SITUATION ANALYSIS : Organization ]
VOLVO
PROTON
MERCEDES
BMW
AUDI
SAAB
Multinational
Extend of Geographic coverage [in terms of sales

17. 3.4 Market Share Analysis
[SITUATION ANALYSIS : Organization ]
100 %
Proton Market Shares in Malaysia 1998
Mercedes
BMW
0%
MARKET SHARES
Proton
Perodua
Audi
Volvo
Perodua
Micro
Mini
Medium
Big
Luxury
•
MARKET SEGMENTS
4x4
Proton-Lotus
Sports

18. 4. Internal Environment
• Recourses and Capabilities: The Value Chain, Porter
Firm Structure
1985
Human Resource Management
Technology Development
Procurement
PRIMARY ACTIVITIES
Marketing
and sales
Services
in
Outbound
Logistics
M
a rg
Operation
n
Inbound
Logistics
i
arg
M
SUPPORT
ACTIVITIES
[SITUATION ANALYSIS]

19. 5. SWOT Analysis
[SITUATION ANALYSIS]
• STRENGTH &
WEAKNESSES OF
THE ORGANIZATION
AGAINST THE
OPPORTUNITIES
AND TREATS
THROWN OUT BY
THE ANALYSIS OF
EXTERNAL
ENVIRONMENT

20. STRATEGIC OPTION
1. COMPETATIVE STRATEGIES
2. DEVELOPMENT STRATEGIES
3. PORTPOLIO STRATEGIES
4. BLUE OCEAN STRATEGY
5. MAQASID AL SHARIAH STARTEGY

21. Criteria for evaluating the Strategic Option
• SUITABILITY
• relation to the state of the internal and
external environment[based on Situational
Analysis
• FEASIBILITY
• assessment of how it might work in practice
• ACCEPTABILITY
• consequences in terms of the risk and return
to interested parties [shareholders,
management, etc]

22. 1. Competitive Advantage
[STRATEGIC OPTION]
• Three Generic Strategies. [Porter 1985]
Broad Target
Narrow Target
Competitive Scope
Low Cost
Competitive Advantage
Differential
1. Cost Leadership
2. Differentiation
3A. Cost Focus
3B. Differential Focus

23. 1.1 Cost-Leadership Strategies
[Examples of Successful Implementation ]
• BiC in ballpoint pens and disposable razors
• Black&Decker in tools
• Amstrad in consumer electronics
• Aldi and KwikSave in the retail grocery trade
• The Superdrug chemist chain

24. 1.1.1 Cost-Leadership Strategies
[Striving for an overall low-cost position ]
•
•
•
•
Leader in constructing the most efficient plants
Implementing cost-reducing technological advances
Keeping overhead and administrative costs to a minimum
Containing costs in R&D, advertising, service and
distribution,
• WHILE MAINTAINING PRODUCT QUALITY
• THE FIRM HAS SUPERIOR COORDINATION ACROSS
LINKAGES IN THE VALUE CHAIN, WHILE KEEPING
COSTS TO A MINIMUM IN EACH ACTIVITY

25. 1.1.2 Cost-Leadership Strategies
[Backfiring ]
• Ford Motor Company 1900, the low cost leader, successful
strategy for decade
• But fail to take into account the changing nature of
consumer preferences
• Inflexibility, notably in production, and spread right across
the value chain into other activity, thus Ford could not
respond to market change
• Example of Ford Model T 1900s for mass production at low
costs, 55% market share in 1921 drop to 45% in 1925 and to
35% in 1926. Consumer shift to Chevrolet, little expansive
but better specification.

26. 1.1.3 Cost-Leadership Strategies
[Possible Risks ]
• Technological Changes can result in cost or process
breakthrough which
efficiency gains
nullify
past
investments
and
• May be short-lived if rivals easily imitate the leader’s lowcost methods
• Shift in market with consumers being less price sensitive
• requires firms to be the overall cost leader - this would
result in fierce competition and squeeze the profit until
leader was established and recognized.

27. 1.2 Differentiation Strategies
[Examples of Successful Implementation ]
• Coca-Cola - A different taste
• Rolex - Unusual quality and distinctiveness
• Mercedes Benz - Engineering design & performance
• Rolls Royce -Top-of-the-line image and reputation
• Sony - Technological leadership in consumer
electronics

28. 1.2.1 Differentiation Strategies
[Sustained Competitive Advantage is to come from four areas ]
• Technical Superiority
• Quality
• Giving Customers More Support Services
• More Value [The Same Money

29. 1.2.2 Differentiation Strategies
[Be warned - there are risks ]
• May result in a selling price so high that buyers opt
for lower-priced brand
• Buyers may decide, over a period of time, decide
that they do not need extra features.
• Rival may imitate the product or service attributes buyers cannot distinguish
• Broad-based differentiators may be out-maneuvered
by specialist firms focusing on particular segment

30. 1.3 Focus Strategies
[Examples of Successful Implementation ]
•
•
•
•
•
•
Cray Computer - Large Main Frame
Rolls Royce - Luxury cars
Land Rover - Off Road Vehicles
Porsche - Unique Sports Cars
Lotus - Sports Cars Excellent Handling
Virgin Airline - Low-cost transatlantic flight

31. 1.3.1 Focus Strategies
[Risks Involved ]
• Possibility that broad-range competitors will find
effective ways to match the focused firm in serving
market segment
• Unfavorable shifts in buyer preferences may leave
the focuser without viable market
• Competitors may find sub- segments within the
target segment and out focuses the focuser

32. 2. DEVELOPMENT STRATEGIES
[Alternative Directions For Strategic Development]
Market
Product
Line
PL0
Mo
M1
Market
Penetration
M2
…………………….
.Mn
Market Development
PL2
‘
.
.
PLn
Product Development
PL1
Diversification
Paul Dobson & Ken Starkey [1993], The Strategic Management , Blackwell

33. 2. DEVELOPMENT STRATEGIES
[Alternative Directions For Strategic Development]
• 1. MARKET PENETRATION
• Continue with the same market with the same product
• Increases its market share through improved quality or productivity
• Market share is maintained through consolidation
• 2. PRODUCT DEVELOPMENT
•
•
•
•
Develops new products while maintaining its present markets
Firms continually introducing product lines
Typically in consumer-oriented industries-tastes are changing
Products with short-life-cycle : computer, electronics products

34. 2. DEVELOPMENT STRATEGIES
[Alternative Directions For Strategic Development]
• 3. MARKET DEVELOPMENT
• Maintaining present product lines but extends its market
operation
• Opening new market segments, devising new uses for the
products
• Extending new geographical areas for its present products
Globalization

35. 2. DEVELOPMENT STRATEGIES
[Alternative Directions For Strategic Development]
• 4. RELATED DIVERSIFICATION
• Increasing the range of activities in the value chain
• ‘Vertically integrate backwards’ towards its inputs [e.g producing
raw materials, machinery - for better quality and price
• ‘Vertically integrated forwards’ towards outputs[ e.g. moving to
transportation, distribution, retailing, or services and maintenance, to
have control over final product market.
• ‘Horizontally integrated’ towards substitute or complementary
activities[ e.g. marketing-by-products]

36. 2. DEVELOPMENT STRATEGIES
[Alternative Directions For Strategic Development
• 5. UNRELATED DIVERSIFICATION
• Covers beyond the boundaries of the industry presently operates
• Appropriate when current markets are saturated and/or declining
• New activities sought should be complementary to current activities,
either in terms of resources or finances [combined effect should be
3+3=8 [e.g join production, common use of facilities etc]
• Divisionalized or internally restructured the firm’ management
bureaucracy

37. 2. DEVELOPMENT STRATEGIES
[Categories of Methods]
• Internal Development
• Appropriate when activities requires a build-up knowledge and skills
- highly technical in design or methods of manufacturing
• Acquisition
• To enter new product or market areas [e.g. R&D, knowledge of
markets and products, production system, all these may take years to
develop internally]
• Joint Development and Agency Relations
• Entering into partnership or Joint venture
• Franchising and agency

38. 3. PORTFOLIO STRATEGIES
HIGH [Higher than
LOW [Slower than
the economy as a whole] the economy as a whole]
Industry Growth Rate
[Boston Consulting Group [BCG] Growth-share matrix]
Relative Market Share Position
STARS
CASH COWS
PROBLEM CHILDREN
DOGS
Note: The sizes of the circles indicate the sizes of revenues generated

39. 3. PORTFOLIO STRATEGIES
• STARS
• High Growth and High Share
• Strongly placed in the growth phase of the product life cycle
• Cash generation is strong but not sufficient to finance rapid growth
• CASH COWS
• Dominant products in a mature market
• Produce excess cash that can be invested in STARS and PROBLEM
CHILD

40. 3. PORTFOLIO STRATEGIES
• DOGS
• Low-share products in low-share markets
• Cash flow is usually low and can be negative due to weak competitive
position
• Divest and re-allocate to STARS or PROBLEM CHILDREN
• PROBLEM CHILDREN
• Low-share of a growing market
• Considerable cash is required to maintain share
• Investment to create a star is risky

41. 3. PORTFOLIO STRATEGIES
STAR
PROBLEM CHILD
DOG
CASH COW

42. 3. PORTFOLIO STRATEGIES
[Drawbacks of BCG Growth Share Matrix]
• Is mainly concerned with the uses of cash flows
• Its relies too heavily on the notion of product lifecycles and cost efficiency
for generating profits
• It neglects that small market share can still result in high profits if
product quality is high and unique.
• It limits the measurement to business strength [market share] and market
attractiveness [growth rates] only.

43. 3. PORTFOLIO STRATEGIES
[McKinsey/ General Electric Attractiveness-Strengths Matrix]
Medium
High
Business Strength
Low
Industry Attractiveness
High
Medium
Low
Note:
The sizes of circles
indicate the sizes
of revenues
generated
and the shaded
areas in each circle
indicate product’s
market share

44. 3. PORTFOLIO STRATEGIES
[McKinsey/ General Electric Attractiveness-Strengths Matrix]
• BUSINESS STRENGTH
• is measured in terms of organization’s ability and relative
competitive position and to take into consideration:
• relative market shares
• profit margins relative to competitors
• able to compete on price and quality
• knowledge of customer and market
• competitive strength and weakness
• technological capability
• employee relations and goodwill
• the caliber of management

45. 3. PORTFOLIO STRATEGIES
[McKinsey/ General Electric Attractiveness-Strengths Matrix]
• INDUSTRY ATTRACTIVENESS
• is measured with reference to the operating and general environment
and addresses:
• market size and its growth rates
• industry profit margins [both historic and projected]
• competitive intensity
• economies of scale
• the nature of demand [seasonality , cyclicality]
• technology and capital requirements
• barriers to entry and exist
• social, environmental and legal impacts
• emerging opportunities and threats

46. 4. BLUE OCEAN
STRATEGY
By
W. Chan Kim –The Boston Consulting Group ,
Chair Professor of Strategy and International
Management at INSEAD,
and
Renee Mauborgne, -The INSEAD Fellow and
Professor of Strategy and Management

47. BLUE OCEAN STRATEGY
The Essence:
“Creating Uncontested Market Space
and Make Competition Irrelevant”

48. RED OCEAN STRATEGY vs BLUE OCEAN STRATEGY
RED OCEAN STRATEGY
BLUE OCEAN STRATEGY
Compete in existing market space
Create uncontested market space
Beat the Competition
Make the competition irrelevant
Exploit existing demand
Create and capture new demand
Make the value-cost trade-off
Break the value-cost trade-off
Align the whole systems of a firm’s
activities with its strategic choice of
differentiation or low cost.
Align the whole system of a firm’s
activities in pursuit of differentiation
and low costs

49. BLUE OCEAN STRATEGY
Align the whole system of a
firm’s activities in pursuit of
differentiation and low costs

54. From Head to Head Competition to Blue Ocean Creation
Head to Head Competition
Blue Ocean Creation
INDUSTRY
Focuses on rivals within its industry
Looks across alternative industries
STRATEGIC GROUP
Focuses on competitive position
within strategic group
Looks across strategic groups within
industries
BUYER GROUP
Focuses on better serving the buyer
groups
Redefines the industry buyer group
SCOPE OF PRODUCT OR SERVICE
OFFERING
Focuses on maximizing the value
product and service offering within
the bounds of its industry
Looks across to complementary
product and service offering
FUNCTIONAL -EMOTIONAL
ORIENTATION
Focuses on improving price
Rethinks the functional-emotional
performance within the functional- orientation of its industry
emotional orientation of its industry TIMEX, BODYSHOP,
TIME
Focuses on adapting to external
trends as they occur
Participates in sharing external
trends over time
iTUNE, MP3

55. SIX PRINCIPLES OF BLUE OCEAN STRATEGY
Formulation Principles
1. Reconstruct market boundaries.
2. Focus on the big picture, not the numbers
3. Reach beyond existing demand
4. Get the strategic sequence right
Execution Principles
5. Overcome key organizational hurdles.
6. Build execution into strategy

56. Cirque du Soeil as an example of putting BLUE
OCEAN STRATEGY back since 1984
Cirque du Soeil [CDS], Canada’s largest cultural exports, created in 1984 by group of
street performers.
CDS productions - 40 million people in 90 countries in less than 20 years. It revenues
took champion of circus industries more than 100 years to attain.
CDS Success:
1.Did not win by taking customers from shrinking circus industry
2.Did not compete with Circus Players or Industry.
3.It created uncontested new market space that made the competition
irrelevant.
4.It appealed to a whole new group of customers.
5.CDS succeeded because it realized that to win in the future, companies
must stop competing with each other.

57. MALAYSIAN Experience – From Blue Ocean to Red Ocean
The first to introduce to the world the usage of e-Identification
Cards.

58. MALAYSIAN Experience – From Blue Ocean to Red Ocean
The first to introduce to the world the usage of e-Passport. Now
it going to become a world standard.

59. My-Kad to I-Kad
From Blue Ocean to Red Ocean than to Blue Ocean

60. World’s First Variable Density Tunnel Boring Machine
Examples of Blue Ocean Strategy

62. Examples of Blue Ocean Strategy

64. The Malaysian Police force kickstarted its 2014 Hybrid Revolo
engine, first-of-its-kind plug-in technology for car and light
commercial vehicles
The prime minister witnessed a
memorandum of understanding signing
between the Police and Malaysian Green
Technology Corporation as well as
DFRAN Technologies Research Sdn Bhd
responsible in introducing the Revolo
engine, first-of-its-kind plug-in
technology for car and light commercial
vehicles.
The hybrid engine capable
1.Improving acceleration up to 40 %,
%
2.Fuel efficiency by 35%,
3.Reduce emission by 30%
4.Lower travel cost by 25 %.

66. 5. MAQASID AL-SHARIAH STRATEGY
MAQASID = ULTIMATE OBJECTIVES
AL-SHARIAH = THE COMAMMADMENT OF ALLAH FOR ALL
ASPECT OF HUMAN ACTIVITIES IN THIS WORLD
MANAGEMENT = ACTIVITIES OF THINKING, PLANNING,
ORGINIZING, LEADING & CONTROLING
MAQASID AL- SHARIAH = ULTIMATE OBJECTIVES OF THE
COMAMMADMENT OF ALLAH FOR ALL ASPECT OF HUMAN ACTIVITIES
INCLUDING MANAGEMENT, IN THIS WORLD:
1.
PARENTS, COMMUNITY LEADERS, COMPANY
MANAGERS & NATION LEADERS
SHOULD
UNDERSTAND AND APPLY THIS MAQASID ALSHARIAH IN MANAGING FAMILIES,
COMMUNITIES, COMPANIES, NATIONS,
RESPECTIVELY.
SHAYA’A OTHMAN
PROTECTION OF
RELIGION
2.
3.
PROTECTION OF LIFE
4.
PROTECTION OF
INTELLECT
5.
PROTECTION OF WEALTH
PROTECTION OF
OFFSPRING

67. MAQASID AL SHARIAH AS A
CORPORATE STARTEGY
1.
2.
3.
4.
5.
PROTECTION OF RELIGION
PROTECTION OF LIFE
PROTECTION OF OFFSPRING
FUNCTIONAL STRTAEGIES
PROTECTION OF INTELLECT
PROTECTION OF WEALTH
1. COMPETATIVE STRATEGIES
2. DEVELOPMENT STRATEGIES
FULFILLING THE
ABOVE OBJECTIVES
OF SHARIAH
3. PORTPOLIO STRATEGIES
4. BLUE OCEAN STRATEGY

82. MBA
Strategic Management
Distinction
EVALUATION
• MISSION
• To Score Distinction
Result of The Exam
A
• OBJECTIVE
• To Understand [ %]
[ %]
• To Applied
Above 80% Distinction

83. ASSIGMENT
[ To get Distinction you must score 80% and above.
Below 50% is definitely failed ]
Explain in details how you can apply Maqasid AlShariah in Strategic Management of your
Organization or your Company.
[ To be submitted by 14 Rabi Al-Awal 1435 / 15. 01.2014
in Soft Copy to my e-Mail AND Hard Copy to of Office ]
e-Mail to sottoman@gmail.com