WEEK 1: Strategic Management Essentials

MKAB 2283
STRATEGIC & CHANGE MANAGEMENT

Fakulti Kejuruteraan Awam

School of Civil Engineering
 OUTLINES
Ice Breaking Session

Course Overview

Course Learning Outcome

Course Assessment

innovative • entrepreneurial • global | www.utm.my 2

 Number of years of experience in the field related
to the project: 6 years Field of specialization
(2015 – 2021)

➢ Mitigation on Urban Heat Island Issues – Construction Materials

Eeydzah Aminudin (Buildings & Highways)
Block M50, Level 1 ➢ Environmental Technology and Sustainability Waste Materials
Department of Structures & Materials, ➢ Sustainable Energy Consumption (Simulation)
School of Civil Engineering, ➢ Carbon Footprints Assessment (Currently attached with Malaysian
Faculty of Engineering, Highway Authority)
Universiti Teknologi Malaysia ➢ Economic Analysis – Cost Benefits Analysis (assisting Government
Skudai, Johor of Public Works)
[email protected] ➢ Developing Sustainable Green Assessment Tools
+60177138111 (Currently attached with Public of Works - CREATE, UITM, UPNM)
➢ Construction Management – Developing National Agenda towards
Construction Industry 4.0
➢ Building Information Modeling (BIM)
 WEEK 1:
Strategic Management Essentials

Learning Objectives

1. Describe the strategic-management process.

2. Discuss the three stages of strategy
formulation, implementation, and evaluation
activities.
3. Explain the need for integrating analysis and
intuition in strategic management.
4. Define and give examples of key terms in
strategic management.

innovative • entrepreneurial • global | www.utm.my

 WEEK 1:
Strategic Management Essentials

5. Illustrate the comprehensive strategic-

management model.
6. Describe the benefits of engaging in
strategic management.
7. Explain why some firms do no strategic
planning.
8. Describe the pitfalls in actually doing
strategic planning.
9. Discuss the connection between
business and military strategy.

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DEFINITIONS
 Defining Strategic Management
Strategy”, narrowly defined, means “the art of the general” (the Greek stratos,
meaning ‘field, spread out as in ‘structure’; and agos, meaning ‘leader’).
5 P’s of strategy

1. A plan, a “how do I get there”

2. A pattern, in consistent actions over time
3. A position that is, it reflects the decision of the firm to offer particular products or
services in particular markets.
4. A ploy, a maneuver intended to outwit a competitor
5. A perspective that is, a vision and direction, a view of what
the company or organization is to become.

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 Definition Strategic Management
1. Chandler(1962) Strategy is the determinator of the basic long-term goals of an enterprise,
and the adoption of courses of action and the allocation of resources necessary for carrying out
these goals.
2. Mintzberg (1979) Strategy is a mediating force between the organization and its
environment: consistent patterns in streams of organizational decisions to deal with the
environment.
3. Prahlad (1993) Strategy is more then just fit and allocation of resources. It is stretch and
leveraging of resources.
4. Porter (1996) Strategy is about being different. It means deliberately choosing a different
set of activities to deliver a unique mix of value.
5. The systematic analysis of the factors associated with customers and competitors (the
external environment) and the organization itself (the internal environment) to provide the basis
for maintaining optimum management practices. The objective of strategic management is to
achieve better alignment of corporate policies and strategic priorities.
6. The strategic management process means defining the organization’s strategy. It is also defined
as the process by which managers make a choice of a set of strategies for the organization that will
enable it to achieve better performance.

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 Defining Strategic Management
The art and science of formulating, implementing, and evaluating cross-
functional decisions that enable an organization to achieve its objectives

Planning Monitoring Analysis Assessment

of all necessities an
organization needs to meet
its aims and objectives
Aims & Objectives
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 Defining Strategic Management
Strategic management is used synonymously with the term
strategic planning in this course.

Sometimes the term strategic management is used to refer to

strategy formulation, implementation, and evaluation, with strategic
planning referring only to strategy formulation.
1-10

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 Definition
A strategic plan is a company’s game plan.

A strategic plan results from tough managerial choices among numerous good alternatives, and
it signals commitment to specific markets, policies, procedures, and operations.

The process requires a commitment to strategic

planning, which is a subset of business
management, that involves in an organization’s
ability to set

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 Strategic planning also comprise

Planning of decision Resource Allocation

Activities

GOALS
 Characteristics of Strategic Management
1. Uncertain :Strategic management deals with future-oriented non-routine situation. They
create uncertainly. Managers are unaware about the consequences of their decisions

2. Complex :Uncertainly brings complexity for strategic management. Managers face environment
which is difficult to comprehend. External and internal environment is analyzed.

3. Organization wide :Strategic management has organization wide implication. It is not operation
specific. It is a systems approach. It involves strategic choice.

4. Fundamental :Strategic management is fundamental for improving the long- term performance
of the organization.

5. Long-term implication :Strategic management is not concerned with day-to-day operation. It has
long-term implications. It deal with vision, mission and objective.

6. Implication :Strategic management ensure that strategic is put into action, implementation is
done through action plans.
 Characteristics of Strategic Management
7. Universal
Strategy refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise,
memories, perceptions, and expectations that provides general guidance for specific actions in
pursuit of particular ends. Nations have, in the management of their national policies, found it
necessary to evolve strategies that adjust and correlate political, economic, technological, and
psychological factors, along with military elements.

8. Keeping Pace With Changing Environment

The present day environment is so dynamic and fast changing thus making it very difficult for any
modern business enterprise to operate. Because of uncertainties, threats and constraints. Under
such circumstances, the only last resort is to make the best use of strategic management
which can help the corporate management to explore the possible opportunities and at the
same time to achieve an optimum level of efficiency by minimizing the expected threats.
MODEL OF STRATEGIC
MANAGEMENT
 Stages/ Model of Strategic Management

Environmental Strategy Strategy Strategy

Scanning formulation implementation evaluation

• Goal Settings:
Fixing Short-term goals as a direct blueprint in
accomplishing Long-term objectives. Every members
that leads to the execution of long run. • Implement strategies • Monitoring
• Gathering Information & Analysing The employees involved in the Involves analysing, managing,
Acts as foundation for strategic management, and process should have a clear idea tracking evaluating
allows the company to recognize internal avoidances on the execution (plan & goals)
that affecting the operations organization Every steps associated with
• Strategic forming strategic management plan either
Includes the data information, forming the unique based on desired outcomes
strategies that able to satisfies the necessities & based on the current outcome
requirements. The resources are based on asset
purchase & recruitment experts Made certain adjustments based
on new planning if required
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 Stages of Strategic Management

What new
❖ developing a vision and mission businesses
to venture
What
❖ identifying an organization’s businesses
to abandon
external opportunities and
threats
❖ determining internal strengths Whether to
Whether to expand
and weaknesses enter operations
international or diversify
❖ establishing long-term objectives markets
.
❖ generating alternative strategies
❖ choosing particular strategies to
Whether to
pursue merge or How to
form a joint avoid a
venture hostile
takeover

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 Stages of Strategic Management

❖ requires a firm to establish annual What new

businesses
objectives, devise policies, to venture
motivate employees, and allocate What
resources so that formulated businesses
to abandon
strategies can be executed

❖ often called the action stage Whether to

Whether to expand
enter operations
international or diversify
markets
.

Whether to
merge or How to
form a joint avoid a
venture hostile
takeover

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 Stages of Strategic Management

❖ Determining which strategies are What new

businesses
not working well to venture
What
businesses
❖ Three fundamental activities: to abandon
1. reviewing external and internal
factors that are the bases for current Whether to
strategies Whether to expand
enter operations
2. measuring performance international or diversify
3. taking corrective actions markets
.

Whether to
merge or How to
form a joint avoid a
venture hostile
takeover

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Key Terms in Strategic Management
Competitive Advantage
❖ any activity a firm does especially
well compared to activities done
by rival firms,
❖ any resource a firm possesses that
rival firms desire.

Strategist ❖ the means by which long-term

❖ Individuals most responsible for objectives will be achieved
the success or failure of an ❖ may include geographic expansion,
organization diversification, acquisition, product
❖ Help an organization gather, development, market penetration,
analyze, and organize retrenchment, liquidation, and joint
information ventures

Vision and Mission Long-Term Objectives

Statements ❖ specific results that an organization
❖ A vision statement answers seeks to achieve in pursuing its basic
the question “What do we mission
want to become?” ❖ long-term means more than one year
❖ A mission statement ❖ should be challenging, measurable,
answers the question “What consistent, reasonable, and clear
is our business?” 1-20
Key Terms in Strategic Management

External Opportunities and Threats Some Opportunities and Threats:

❖economic, social, cultural, ❖ Availability of capital can no
demographic, environmental, longer be taken for granted.
political, legal, governmental, ❖ Consumers expect green
technological, and competitive operations and products.
trends and events that could ❖ Marketing is moving rapidly
significantly benefit or harm an to the Internet.
organization ❖ Commodity food prices are
increasing.
❖ An oversupply of oil is
driving oil and gas prices
Internal Strengths and Internal
down.
Weaknesses
❖an organization’s controllable
activities that are performed
especially well or poorly
❖determined relative to
competitors

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 Stages of Strategic Management

❖ requires a firm to establish annual What new

businesses
objectives, devise policies, to venture
motivate employees, and allocate What
resources so that formulated businesses
to abandon
strategies can be executed

❖ often called the action stage Whether to

Whether to expand
enter operations
international or diversify
markets
.

Whether to
merge or How to
form a joint avoid a
venture hostile
takeover

Copyright ©2017 Pearson Education, Limited 1-22

 Stages of Strategic Management

❖ Determining which strategies are What new

businesses
not working well to venture
What
businesses
❖ Three fundamental activities: to abandon
1. reviewing external and internal
factors that are the bases for current Whether to
strategies Whether to expand
enter operations
2. measuring performance international or diversify
3. taking corrective actions markets
.

Whether to
merge or How to
form a joint avoid a
venture hostile
takeover

Copyright ©2017 Pearson Education, Limited 1-23

Strategic Management Model
Environment Strategy Strategy Evaluation and
Scanning Formulation Implementation Control
Where are we External Factors Performance
Mission Program
now? Societal Environment Reason For Programs
General Forces Existence Activities
Task Environment Needs
Where do we Industry Analysis Objectives
want to go? What Result To Budget
Internal Factors be Achieved Budgets
Structure Chain of
How are we command Strategies Procedure
going to get Culture Belief, Sequence of
there? Expectations values, Policies Steps
Resources Assets, Strategic plans to
Skills, policies broad
Competencies, guidelines for
Knowledge decision-making

1-24
Comprehensive Strategic-Management Model

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1-25
1-26
LEVEL OF STRATEGIES
Level of Strategies

Responsibility of
corporate-level managers

Responsibility of
business –level general
managers

Responsibility of heads of
major functional activities
within a business unit or
division

Responsibility of plant
managers, geographic
unit managers, and
lower-level supervisors Jitendra Patel, Assistant Professor, PIMR,
1/22/2020 19
Indore
Four Approaches to strategic decision making process

1. The Chief Architect approach: A single 3. The Collaborative or Team Approach:

person – the owner or CEO –assumes the This is a middle approach when by a manager
role of chief strategist and chief with strategy-making responsibility enlist the
entrepreneur, singlehandedly shaping most assistance and advice of key peers and
or all of the major pieces of strategy. subordinates in hammering out a consensus
2. The Delegation Approach: Here the strategy.
manager in charge delegates big chunks 4. The Corporate Entrepreneur Approach: In the
of the strategy-making task to trusted corporate entrepreneur approach, top
subordinates, down the-line managers in management encourages individuals and teams
charge of key business units and 29 to develop and champion proposals for new
departments, a high-level task force of product lines and new business ventures
knowledgeable and talented people from
many parts of the company, self-directed
work teams with authority over a
particular process or function, or, more
rarely, a team of consultants brought in
specifically to help develop new strategic
initiatives.
Strategist & their roles
Who are strategists? List of Strategists
• Strategists are individuals or groups who 1.Board of directors
are primarily involved in the formulation, 2.CEOs
implementation, evaluation of strategy. In a
3.Entrepreneurs
limited sense, all managers are strategists.
4.Senior Management
They can be internal, as well as external
5.SBU- Level Executives
• Variation in the boards of companies
6.Corporate Planning Staff
across sectors
7.Consultants
• Directions to managers & Operational 8.Middle Level Managers
matters of significance
9.Executive Assistants
• Formal and informal functions
• Vital link between the company and the
environment
Consultants
They can be individuals, academia, or
consulting companies specializing in
strategic management.
• McKinsey and Company, specializes in offering
consultancy in the areas of fundamental change
management and strategic visioning;
• Anderson Consulting, is in business restructuring,
and info tech and systems; Boston Consulting
helps in building competitive advantage; and
KPMG Peat Marwick is in strategic financial
management and feasibility studies for strategy
implementation.

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 Benefits of Strategic Management
❖Strategic management allows an organization to be more
proactive than reactive in shaping its own future;

❖It allows an organization to initiate and influence (rather

than just respond to) activities—and thus to exert control
over its own destiny.

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Benefits to a Firm That Does Strategic Planning

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 Financial Benefits
❖Businesses using strategic-management concepts show
significant improvement in sales, profitability, and productivity
compared to firms without systematic planning activities

❖High-performing firms tend to do systematic planning to

prepare for future fluctuations in their external and internal
environments

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 Nonfinancial Benefits
❖Enhanced awareness of external threats
❖Improved understanding of competitors’ strategies
❖Increased employee productivity
❖Reduced resistance to change
❖Clearer understanding of performance–reward
relationships

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Why Some Firms Do No Strategic Planning
❖No formal training in strategic
management
❖No understanding of or appreciation for the
benefits of planning
❖No monetary rewards for doing planning
❖No punishment for not planning
❖Too busy “firefighting” (resolving internal
crises) to plan ahead
❖View planning as a waste of time, since no
product/service is made
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Why Some Firms Do No Strategic Planning
❖Laziness; effective planning takes time and effort; time is
money
❖Content with current success; failure to realize that
success today is no guarantee for success tomorrow;
even Apple Inc. is an example
❖Overconfident
❖Prior bad experience with strategic planning done
sometime/somewhere

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 Pitfalls in Strategic Planning
❖ Using strategic planning to gain control over decisions
and resources
❖ Doing strategic planning only to satisfy accreditation or
regulatory requirements
❖ Too hastily moving from mission development to strategy
formulation
❖ Failing to communicate the plan to employees, who
continue working in the dark
❖ Top managers making many intuitive decisions that
conflict with the formal plan
❖ Top managers not actively supporting the strategic-
planning process
❖ Failing to use plans as a standard for measuring
performance
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 Pitfalls in Strategic Planning
❖Delegating planning to a “planner” rather than
involving all managers
❖Failing to involve key employees in all phases of
planning
❖Failing to create a collaborative climate
supportive of change
❖Viewing planning as unnecessary or unimportant
❖Becoming so engrossed in current problems that
insufficient or no planning is done
❖Being so formal in planning that flexibility and
creativity are stifled
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How to Gain and Sustain
Competitive Advantage

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 Comparing Business and
Military Strategy
❖A fundamental difference between military and business
strategy is that business strategy is formulated, implemented,
and evaluated with an assumption of competition, whereas
military strategy is based on an assumption of conflict
❖Both business and military organizations must adapt to
change and constantly improve to be successful

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Excerpts from Sun Tzu’s The Art of War Writings
❖War is a matter of vital importance to the state: a matter of life
or death, the road either to survival or ruin. Hence, it is
imperative that it be studied thoroughly
❖Know your enemy and know yourself, and in a hundred
battles you will never be defeated
❖Skillful leaders do not let a strategy inhibit creative counter-
movement

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Assignment?
Reflection
TESLA

https://www.bnnbloomberg.ca/video/tesla-hitting-1-trillion-market-cap-is-just-for-
starters-dan-ives~2308445
#CNBC #CNBCTV

Hertz interim CEO explains company's massive Tesla order

https://youtu.be/Itc6wNjs3EU

EXERCISE
30 mins to discuss TESLA’s Vision and Mission, and why they are successful.