Faculty Of Engineering & Architecture

(Engineering Management Program)

Strategic management
– ENMG 601 –
 Sun Tzu

Strategy without tactics is the slowest route to

victory. Tactics without strategy is the noise
before defeat.
What is a strategy?

http://tinyurl.com/hzlzc5o
 Definition of
Strategic Management

It is the set of managerial decisions and actions

to achieve the long term goals for the
organisation.

It can be seen as; running the day-to-day

operations to serve a future preset vision.
 What is Strategic Management?

—Carefully formulating, implementing, and

evaluating plans and strategies at the
highest levels of the company

—Top management sets goals for the

performance of the company
 What Strategic Planning is Not
• Strategic planning is not forecasting
• Strategic planning is not the simple
application of quantitative techniques to
business planning.
• Strategic planning does not eliminate risk,
it helps managers assess the risks they must
take by gaining a better understanding of
the parameters involved in their decisions.
 Why Managers Don’t Plan

• Time Consuming
• High Demands
• Not Rewarded
• Executives Don’t Support It
• Too Risky
• Focus on the results
• Lack of self discipline
 Benefits of Strategic Management

1. Clearer sense of strategic vision

2. Sharper focus on what is strategically important
3. Improved understanding of rapidly changing
environment
 Composition of Strategic Planning

Strategic Management is Composed of:

1. Environmental scanning: Where are we now?
2. Strategy formulation: Where do we want to be?
3. Strategy implementation: How to get there?
4. Evaluation and control: How do we measure our progress?
Simplified Process of Strategic Planning- How
it Works

Planning
Monitor Developments
•Gather Information
•Assess Capabilities and
•Make Assumptions Progress
•Make Strategic Assessments
•Formulate Strategy
•Establish Goals and Objectives
•Formulate Tentative Action Plans
•Finalize Action Plans

Execution
 Data Ideas
1. External Situation 4. Assumptions
2. Internal Situation
3. Capabilities and
competencies

Analysis

5. Strategic assessment
Strategic Issues

Direction
6. Strategies

Commitment
7. Vision and Mission Statement
Goals
Objectives

Implementation
8. Action Plans
9. Budgets
10. Schedules
 Strategic Management Model

Environmental Strategy Strategy Evaluation

Scanning Formulation Implementation & Control

External Mission
Societal Reason for
existence
Environment Objectives
General Forces What results
to
Task Strategies
Environment accomplish
Industry Analysis by when Plan to
achieve the Policies
mission &
Internal objectives Broad
Structure guidelines for Programs
decision Process
Chain of Command making Activities to monitor
needed to performance
Culture accomplish Budgets and
Beliefs, Expectations,
a plan Cost of the corrective
take
Values
programs
Procedures
action
Assets, Skills Sequence
Resources
needed to
of steps
Competencies,
Knowledge do the job Performance

Feedback/Learning
Strategic Management Model
Strategic Management Model
Strategic Management Model
Strategic Management Model
 Three Key Strategic Questions

1. Where is the organization now?

2. If no changes are made, where will the organization
be in one, two, five or ten years? Are the answers
acceptable?
3. If the answers are not acceptable, what specific
actions should management undertake? What are the
risks and payoffs involved?
 Start by Studying the Way It Is
Now
The course to your vision, like all navigation, starts
with a known position.
• What markets should you pursue
• Who are your competitors
• Where is your competitive advantage
• What are your strengths
• What are your weaknesses
Figuring out point A is the first essential step to
charting a course to get to point B.
 Simplified Process of Strategic
Planning (Cont.)
• There’s no denying that a simplified process
involves complex issues.
• The process involves digesting a lot of
information and requires some fairly difficult
analysis.
• Good strategic planning should be simplified not
simplistic.
• Good intentions alone does not get the job done.
 Simplified Process of Strategic
Planning (Cont.)
• You need to see it big at first. Start at a high
level.
• Sift through all of the noise to get to the
important details
• The next step is do the things that matter very
well.
• Occasionally, go back up to the high level to
make sure everything is still on course.
 Effects of strategy?

What could have saved Nokia

Environmental Variables
 Societal Environment

Composed of general forces in

environment
• Regional Shifts in Population
• Life Expectancies
• More women in workforce
• Greater concern for fitness
• Postponement of family formation
• Increase in temporary workers
 Technological Environment

• Total Government Spending for

R&D
• Total Industry Spending for R&D
• Focus of Technological Efforts
• Patent Protection
• Wireless Communications
• Nanotechnology
• Productivity Improvements
• Genetic engineering
 Political-Legal Variables

• Antitrust Regulations
• Tort Reform
• Environmental Protection Laws
• Taxation at local, state, federal levels
• Hiring and Promotion Laws
• Antitrust laws
• Tarrifs
• Etc…
 Demographic Variables

• Aging Population
• Rising affluence
• Changes in Ethnic Composition
• Geographic distribution of population
• Disparities in income levels
 Global Variables

• Increasing Global Trade

• Currency Exchange Rates
• Emergence of Indian and Chinese
Economies
• Trade agreements (NAFTA, EU,
ASEAN)
• Creation WTO
 Definition of Strategy Formulation

Strategy Formulation:
The process of developing long-range
plans to deal effectively with
environmental opportunities and threats
in light of corporate strengths and
weaknesses
 Main Elements of Strategy
Formulation

• Vision
• Mission
• Objectives
• Policies and procedures
 Definition of Vision

Vision:
Is the future static picture of the organization, it
represents the aspiration of the leadership, the
hoped for “TO BE” state, and the dream. It is
“how things would look like if the issue important
to you were completely and perfectly addressed.

Example: to become number in the world in

our
product / service
 Definition of Vision

Vision statements are designed to be uplifting

and inspiring.
They're also timeless: even if the organization
changes its strategy, the vision statement can
often stay the same for long time or It may
evolve with time to cover different scopes or
areas of interest.
 Vision Statement example

-Online retailer
“We intend to provide our customers with
the best online shopping experience from
beginning to end, with a smart, searchable
website, easy-to-follow instructions, clear
and secure payment methods, and fast,
quality delivery.”
 Vision Statement example
"We believe that we are on the face of the
earth to make great products and that's not
changing. We are constantly focusing on
innovating. We believe in the simple not the
complex. We believe that we need to own and
control the primary technologies behind the
products that we make, and participate only in
markets where we can make a significant
contribution. We believe in saying no to
thousands of projects, so that we can really
focus on the few that are truly important and
meaningful to us.
 Vision Statement example

-Hair Salon
“Our salon will change the way you think
about a haircut. Full service comfort,
friendly staff, a relaxing atmosphere, and
the best prices in town give you an
experience that will leave you glowing
both inside and out.”
 Vision Statement example

-The International Federation of Red Cross

and Red Crescent Societies (IFRC)
“ To inspire, encourage, facilitate and
promote at all times all forms of
humanitarian activities by National
Societies, with a view to preventing and
alleviating human suffering, and thereby
contributing to the maintenance and
promotion of human dignity and peace in
the world”
 Vision Statement example

-Another online retailer

“ To be Earth’s most customer-
centric company, where customers
can find and discover anything
they might want to buy online”
 Vision Statement example

• Vision statements don't have to be as grand as

those above.
• Small local companies might simply aspire to
have the friendliest customer service in town or
offer the freshest, locally grown produce.
1. To help people stay fit and healthy.
2. To have our product in every home.
3. To help people enjoy life, by offering an
affordable solution to health care.
4. To provide delicious, seasonal food and a fun
atmosphere that will bring customers back
again and again.
 Definition of Mission statement

Mission:
It tells the dynamics of the organization to reach
its vision, it may sometimes incorporate the
values, and main strategic tracks of work. It
may be narrow or broad in scope, depending the
size and function of the Organization.
 Definition of Mission statement

• They explain why you exist as a business, both to

members of the organization and to people outside
it.
• The mission statement might refer to a problem,
such as an inadequate housing, or a goal, such as
providing access to health care for everyone.
• How your corporate might fix these problems or
reach these goals
• It is usually in present tense and uses the terms "to
provide" or link a purpose statement with the
words "by" or "through".
 Mission Statement example

-Lebanese Red cross

“ The goal of the Lebanese Red Cross
is to promote peace, serve the society,
and alleviate human suffering with
neutrality and without any racial,
sexual, social, religious or political
discrimination.”
 Mission Statement example

-Online retailer
“ We strive to offer our
customers the lowest possible
prices, the best available
selection, and the utmost
convenience.”
 Vision and Mission statements

https://www.youtube.com/watch?v=HLVlZwkZGt4
 Exercise: Vision and Mission statements

Community school: A community school is both a

place and a set of partnerships between
the school and other community resources. Its
integrated focus on academics, health and social
services, youth and community development and
community engagement leads to improved student
learning, stronger families and
healthier communities

Red groups: write down vision and

mission for such schools
 Exercise: Vision and Mission statements

Energy engineering: Is a company that works in the

field of energy efficiency, energy services, plant
engineering, environmental compliance and alternative
energy technologies. Energy engineering combines
knowledge from the fields of physics, math, and
chemistry with economic and environmental
engineering practices. Energy engineers apply their
skills to increase efficiency and further develop
renewable sources of energy.

Green groups: write down vision and

mission for such a company
 Exercise: Vision and Mission statements

“SecureDeliver” is a company that excels

and prides itself in secure chain
management delivery system. They
provide fully secured parcels and
document delivery around the world to
their customers using their state-of-the-
art chain management system.
Blue groups: write down vision and
mission for such a company
 Main Elements of Strategy
Formulation

• Vision
• Mission
• Objectives
• Policies and procedures
 Definition of Strategic Objectives

They are the end results of planned activity.

They state WHAT is to be accomplished by
WHEN. They should be SMARTS.

They are 3-5 years broad reaching

objectives (think of architecture against the
narrow goals – brick laying)
Definition of Strategic Objectives
 Areas in Which to Set Objectives

1. Profitability
2. Efficiency
3. Growth
4. Shareholder wealth
5. Utilization of resources
6. Reputation
7. Contributions to employees / society
8. Technological / Market leadership
9. Survival
10. Personnel needs of management
Areas in Which to Set Strategic Objectives

Increase our profitability

Grow our market share

Enhance operational efficiency

Develop your workforce

 Examples of Strategic Objectives

Financial Strategic Objectives.

• Financial Growth: To exceed $10
million in the next 10 years.
• Financial Growth: To increase revenue
by 10% annually.
• Financial Efficiency: To decrease
expenses by 5%.
• Financial Efficiency: To increase net
profit by 10% annually.
 Examples of Strategic Objectives

Customer Strategic Objectives

• Current Customers: Expand sales to existing
customers by 3 new products
• Current Customers: Increase customer
retention by 20%
• Current Customers: Achieve and maintain
outstanding customer satisfaction by 90%
• New Customers: Introduce existing products
into a new market in China
 Examples of Strategic Objectives
Internal/Operational Strategic Objectives
• Product/Service Management: To have all product
meet standard of excellence guidelines of ISO…
• Technology Management: Increase efficiencies
through use of wireless or virtual technology in all
Offices
• Customer Management: To execute and maintain a
CRM process that increase customer engagement
by..
• Alliance Management: Establish one new strategic
alliance annually.
 Examples of Strategic Objectives

People/Learning Strategic Objectives

• People: Employ professionals with 5 year
experience who create success for customers.
• Training: To develop the leadership abilities
and potential of our team.
• Culture: To align incentives and staff rewards
with performance.
• Knowledge: To continually learn and adopt
current best practices.
 Some Statements of Objectives
McDonalds: To achieve 100% total customer
satisfaction everyday in every restaurant, for
every customer
To provide our shareholders with superior returns
by achieving double-digit annual earnings per
share growth, increasing dividends consistent
with earnings growth, repurchasing shares when
the opportunity is right, pursuing profitable
international expansions, and generating quality
earnings and cash flow returns
To become the most competitive enterprise in the
world by being No.1 or No.2 in market share in
every business the company is in
30% of the company’s sales must come from
products fewer than 4 years old 70