Summary Outline

1. The Nature of Strategic Management

• Definition of strategic management
• Integration of different functions in strategic management
• Difference between strategic management and strategic planning
• Purpose of strategic management

2. Stages of Strategic Management

• Overview of the three stages: strategy formulation, strategy implementation, and strategy evaluation
• Activities involved in each stage
• Importance of strategy implementation and the challenges it presents

3. Integrating Intuition and Analysis

• Importance of intuition in strategic decision making
• Role of analysis in strategic decision making
• How intuition and analysis complement each other in strategic management

4. Strategic Management Concepts/Approaches/Stages

• Different approaches to strategic management based on organization size and business environment
• Strategy formation and the processes involved
• Strategic implementation and control and the key activities in this stage
• Strategy evaluation and choice and the factors to consider

5. The Strategy Hierarchy

• Levels of strategic management: corporate strategy, business strategy, functional strategies, and operational strategy
• Relationship between these levels and their respective focus and time horizon
• Importance of aligning strategies at different levels

6. Benefits of Strategic Management

• Financial benefits: improvement in sales, profitability, and productivity
• Non-financial benefits: improved understanding of competitors, enhanced awareness of threats, reduced resistance to change,
enhanced problem-prevention capabilities

7. Reasons Why Strategic Plans Fail

• Common reasons for failure, such as failure to execute, failure to understand the customer, inability to predict environmental
reactions, underestimation of resource competence, failure to coordinate, failure to obtain senior management and employee
commitment, underestimation of time requirements, failure to follow the plan, failure to manage change, poor communications

8. Limitations of Strategic Management

• Potential limitations of strategic management, such as groupthink, marketing myopia, limited scope of strategies, faddishness
in management theories, strategic convergence, analysis paralysis
Summary

1. The Nature of Strategic Management:

• Strategic management is the art and science of formulating, implementing, and

evaluating cross-functional decisions that enable an organization to achieve its
objectives.
• It focuses on integrating management, marketing, finance/accounting,
production/operations, research and development, and information systems to
achieve organizational success.
• Strategic management is often used synonymously with strategic planning,
although the former is more commonly used in academia and the latter in the
business world.
• The purpose of strategic management is to exploit and create new opportunities for
the future, while long-range planning optimizes current trends.
• Strategic planning experienced a boom in the 1950s-1970s, was cast aside in the
1980s, and was revived in the 1990s.

2. Stages of Strategic Management:

• The strategic management process consists of three stages: strategy formulation,

strategy implementation, and strategy evaluation.
• Strategy formulation involves developing a vision and mission, identifying external
opportunities and threats, determining internal strengths and weaknesses,
establishing long-term objectives, generating alternative strategies, and choosing
specific strategies to pursue.
• Strategy implementation requires establishing annual objectives, devising policies,
motivating employees, and allocating resources to execute the formulated
strategies.
• Strategy evaluation is the final stage and involves reviewing external and internal
factors, measuring performance, and taking corrective actions.

3. Integrating Intuition and Analysis:

• Strategic management involves integrating both analysis and intuition in decision

making.
• Intuition is essential for making decisions in uncertain situations, when interrelated
variables exist, or when choosing from several plausible alternatives.
• Analytical thinking and intuitive thinking complement each other and should be
used together in strategic management.
• It is important to discipline intuition and not rely solely on hunches without checking
them against facts.
• Successful strategy implementation requires interpersonal skills and the ability to
motivate employees.
4. Strategic Management:

• Strategic management is a field that deals with the major initiatives taken by general
managers on behalf of owners to enhance the performance of firms in their external
environment.
• It involves specifying the organization's mission, vision, and objectives, developing
policies and plans, and allocating resources to implement them.
• Strategic management provides overall direction to the enterprise and ensures
strategic consistency between the organization and its environment.
• It includes the management team, board of directors, and other stakeholders of the
organization.
• Strategic management can be an ongoing process that evaluates and controls the
business and industries, assesses competitors, and sets goals and strategies to
meet changing circumstances.

5. Concepts/Approaches/Stages of Strategic Management:

• The specific approach to strategic management depends on the size of the

organization and the tendency to change in its business environment.
• A global/transnational organization may employ a more structured strategic
management model, while an SME may employ an entrepreneurial approach.
• The strategic management process starts with formulating a mission statement and
conducting environmental scanning.
• It involves performing a situation analysis, setting objectives, and developing
strategies at different levels (corporate, business, and functional).
• Strategic implementation and control require organizing, resourcing, and managing
change.
• Strategy evaluation and choice involve assessing the suitability, feasibility, and
acceptability of options and determining the direction of action.

6. Benefits of Strategic Management:

• Strategic management allows organizations to be proactive in shaping their future

and exert control over their destiny.
• It helps organizations formulate better strategies through a systematic and logical
approach.
• Financial benefits include improvement in sales, profitability, and productivity.
• Non-financial benefits include improved understanding of competitors' strategies,
enhanced awareness of threats, reduced resistance to change, and enhanced
problem-prevention capabilities.
• Strategic management helps organizations take an organization-wide, proactive
approach to a changing global world and provides tangible tools for dealing with the
stress of change.
7. Reasons why Strategic Plans Fail:

• Failure to execute by overcoming cognitive, motivational, resource, and political

hurdles.
• Failure to understand the customer and conduct adequate marketing research.
• Inability to predict environmental reactions, such as competitor actions and
government intervention.
• Overestimation of resource competence and failure to develop new skills.
• Failure to coordinate reporting and control relationships and have a flexible
organizational structure.
• Failure to obtain senior management and employee commitment.
• Underestimation of time requirements and failure to follow the plan.
• Failure to manage change and poor communication among stakeholders.

8. Limitations of Strategic Management:

• Strategic management can stifle creativity and lead to groupthink or marketing

myopia.
• It may result in a narrow definition of the organization and failure to understand the
customer.
• Many theories of strategic management have limited applicability or undergo brief
periods of popularity.
• Strategic planning should not dominate action, and analysis paralysis should be
avoided.
• Strategic convergence can limit the scope of strategies used by rivals.
• Fluidity and adaptability are important in an uncertain and ambiguous world.
Key Terms

1. Strategic management: The art and science of formulating, implementing, and evaluating
cross-functional decisions that enable an organization to achieve its objectives.

2. Strategic planning: Synonymous with strategic management, it refers to the process of

formulating, implementing, and evaluating strategies.

3. Strategy formulation: The process of developing a vision and mission, identifying

external opportunities and threats, determining internal strengths and weaknesses,
establishing long-term objectives, generating alternative strategies, and choosing particular
strategies to pursue.

4. Strategy implementation: The process of establishing annual objectives, devising

policies, motivating employees, and allocating resources to execute formulated strategies.

5. Strategy evaluation: The final stage in strategic management, it involves reviewing

external and internal factors, measuring performance, and taking corrective actions to
assess the effectiveness of strategies.

6. Intuition: The ability to make decisions based on past experiences, judgment, and feelings,
particularly useful in situations of uncertainty or little precedent.

7. Analysis: The process of organizing qualitative and quantitative information in a logical

and systematic way to make effective decisions under conditions of uncertainty.

8. Mission statement: A document that outlines the purpose and scope of an organization,
specifying the markets it wishes to serve and the activities it intends to undertake.

9. Vision statement: A long-term view of a possible future that an organization aspires to

achieve.

10. Objectives: Specific, measurable targets that an organization aims to accomplish within a
certain timeframe.

11. Strategic business unit (SBU): A semi-autonomous unit within a larger organization that
is responsible for its own budgeting, decision-making, and performance.

12. Competitive advantage: The unique strengths or capabilities that enable an organization
to outperform its competitors and achieve superior performance.

13. SWOT analysis: An evaluation of an organization's internal strengths and weaknesses, as

well as external opportunities and threats, to identify strategic options and make informed
decisions.

14. Suitability: The extent to which a strategy addresses the key strategic issues and is aligned
with the organization's strategic position.
15. Feasibility: The availability of resources and the ability to develop or obtain them to
implement a strategy.

16. Acceptability: The expectations of stakeholders, including shareholders, employees, and

customers, with regard to the outcomes and performance of a strategy.

17. Basis of competition: The approach an organization takes to produce its products or
services and act within a market structure relative to its competitors.

18. Mode of action: The means by which a strategy is implemented, such as strategic alliances,
internal development, or mergers and acquisitions.

19. Financial benefits: The positive impact of strategic management on sales, profitability,
and productivity.

20. Non-financial benefits: The positive impact of strategic management on understanding

competitors' strategies, awareness of threats, resistance to change, and problem-prevention
capabilities.

21. Limitations of strategic management: The potential drawbacks of strategic management,

including rigidity, groupthink, marketing myopia, and the need for ongoing adaptation and
change.