STRATEGIC MANAGEMENT

CHAPTER 1
INTRODUCTION TO SM

✓ Management
✓ Definitions of Strategy
✓ Strategy is partly proactive and partly reactive.

✓ Definition of strategic management

✓ Importance or benefits of SM
✓ Limitations of SM

✓ Definition of strategic intent – the philosophical base of SM

▪ Vision- where the organisation wants to be in the long run.
▪ Mission – what it does on a daily basis to fulfil its vision
▪ Goals and objectives- goals are broad outcomes the organisation wants to achieve, while
objectives are specific measurable steps to reach these goals.
▪ Values/value system- fundamental belief and principle.

✓ Strategic levels in organisations

▪ Corporate level – CEO, CFO, other senior executives, board of directors and corporate staffs.
▪ Business level – divisional managers and staff
▪ Functional level – functional managers (marketing, finance etc).
✓ Strategic business units (SBUs)

✓ Network of relationship between the three levels.

▪ Functional and divisional relationship
▪ Horizontal relationship
▪ Matrix relationship
 CHAPTER 2
STRATEGIC ANALYSIS: EXTERNAL ENVIRONMENT
✓ Strategic analysis ▪ Maturity
➢ External analysis ▪ Decline
▪ Customer analysis
▪ Competitor analysis ➢ Value chain analysis
▪ Market analysis By MICHAEL PORTER
▪ Environmental analysis • Definition
➢ Internal analysis • 1. Primary activities
▪ Performance analysis  Inbound logistics
▪ Determinants analysis  Operations
➢ SWOT analysis  Outbound logistics
✓ Limitations of strategic analysis  Marketing and sales
✓ Issues to consider for it
 Service
➢ Time
• 2. Secondary activities
➢ Balance of external and internal factors
➢ Procurement
➢ Strategic risk
➢ Technology development
➢ Human resource management
✓ Strategy and business environment
➢ Infrastructure
✓ Definition of environment
✓ Definition of business environment
✓ Industry environment analysis
✓ Micro environment and its issues
➢ Porter’s five forces model
✓ Macro environment and its elements
▪ Threat of new entrants
➢ Demographic environment
▪ Bargaining power of buyers
➢ Socio- cultural environment
▪ Bargaining power of suppliers
➢ Economic environment
▪ The nature of rivalry in the industry
➢ Political-legal environment
▪ Threats of substitutes
➢ Technological environment
➢ Attractiveness of industry – which industry to
✓ PESTLE analysis- a tool to analyse macro
choose for starting business
environment
➢ Experience curve
▪ Political factors
➢ Value creation
▪ Economic factors
▪ Socio-cultural factors
▪ Technological factors
▪ Legal factors ✓ Customer
▪ Environmental factors ✓ Customer analysis
✓ Customer behaviour
✓ Internationalization of business ➢ External influences
➢ Characteristics of a global business ➢ Internal influences
➢ Steps in international strategic planning ➢ Decision making
➢ Reasons why companies go global ➢ Post-decision process
➢ International environment ✓ Competitive strategy
▪ Multinational environmental analysis ✓ Competitive landscape
▪ Regional environmental analysis Steps:
▪ Country environmental analysis ➢ Identify the competitor
➢ Understand the competitors
✓ Understanding product and industry ➢ Determine the strength of competitors
➢ Characteristics of business products ➢ Determine the weakness of competitors
➢ Product Life Cycle (PLC) ➢ Put all the information together
▪ Introduction ✓ Key factors for competitive success.
▪ Growth
 CHAPTER 3
STRATEGIC ANALYSIS: INTERNAL ANALYSIS
3. Core competency (CC)
1. Understanding key stakeholders via
✓ Definition
Mendalow’s model- helps to identify the real
✓ Main 3 conditions:
areas of resource allocation.
▪ Competitor differentiation
o Shareholders
▪ Customer value
o CEO and Board od Directors
▪ Application to other markets
o Major vendor (production houses)
o Consumers/viewers
o Employees
✓ Criteria for building core
competencies
▪ Mendelow’s model/ stakeholder analysis
- Valuable
matrix and the Power-Interest matrix
- Rare
▪ Grid
- Costly to imitate
• Keep satisfied stakeholders- high
- Non-substitutable
power, less interest
• Key players stakeholders- high power,
high interest
• Low priority stakeholders- low power, 4. SWOT analysis: combining external and
internal analysis
low interest
5. MICHAEL PORTER’s Generic Strategies-
• Keep informed stakeholders- low
competitive advantage
power, high interest
▪ Cost leadership strategy
✓ Synergy benefit
2. Strategic drivers
✓ How to achieve
▪ Industry and markets
✓ Advantages
Strategic group mapping.
✓ Disadvantages
▪ Customers
▪ Products/services
▪ Differentiation strategy
Marketing strategies
✓ Basis of differentiation
- Social marketing
- Product
- Augmented marketing
- Pricing
- Direct marketing
- Organisation
- Relationship marketing
✓ Achieving it
- Services marketing
✓ Advantages
- Person marketing
✓ disadvantages
- Organization marketing
▪ Focus strategies
- Place marketing
focused cost leadership
- Enlightened marketing
focused differentiation
- Differential marketing
✓ How to achieve
- Synchro marketing
✓ Advantages
- Concentrated marketing
✓ Disadvantages
- Demarketing
▪ Best cost provider strategy
▪ Channels
• Sales channel
• Product channel
• Service channel
 CHAPTER 4
STRATEGIC CHOICES

❖ Strategic exits
❖ Strategic choices (corporate strategies) can be
➢ Turnaround strategy/retrenchment
classified into:
- Need
1. Stability strategy
- Action plan
2. Growth/expansion
- Elements
3. Retrenchment
➢ Divestment strategy
4. Combination
- Characteristics
❖ Stability strategy
- Major reasons
▪ Characteristics
▪ Major reasons
❖ Growth/expansion strategy
▪ Characteristics ❖ Strategic options
▪ Major reasons 1. Ansoff’s product market growth
▪ Types matrix(2x2)
Internal growth strategies ▪ Market penetration
✓ Expansion through intensification ▪ Market development
- Market penetration ▪ Product development
- Market development ▪ Diversification
- Product development 2. ADL matrix(4x5)
✓ Expansion through diversification 3. Boston Consulting Group (BCG) growth
- Concentric diversification share matrix
1. Vertically integrated - Stars
diversification - Cash cows
• Forward integration - Question marks
• Backward integration - Dogs
2. Horizontal integrated 4. General electric (GE) matrix [stop-light
diversification strategy model]
- Conglomerate diversification
- Innovation

External growth strategies

✓ Expansion through mergers and acquisitions
Types of mergers
- Horizontal mergers
- Vertical mergers
- Co-generic mergers
- conglomerate mergers
✓ Expansion through strategic alliance
- advantages
- disadvantages
 CHAPTER 5
STRATEGY IMPLEMENTATION AND EVALUATION

✓ Meaning of implementation Steps to initiate Strategic change

✓ Meaning of evaluation 1. Recognize the need for change
2. Create a shared vision to manage
change
3. Institutionalise change
• Kurt Lewin’s Model of Change
1. Unfreezing the situation
2. Changing to the new situation
1. Compliance
2. Identification
3. Internalization
✓ Stages in SM 3. Refreezing
• Developing a strategic vision and ✓ How does digital transformation work?
formulation of statement of mission, ➢ Change management
goals and objectives. ➢ Essential elements
• Environmental and organizational ➢ How does it work?
analysis ➢ It’s role in digital transformation
• Formulation of strategy ➢ Benefits
• Implementation of strategy ➢ Change management strategies
1. Begin at the top
• Strategic evaluation and control
2. Ensure change is both necessary and
✓ Strategy formulation
desired
• Corporate strategy
3. Reduce disruption
➢ Strategic planning – and
4. Encourage communication
characteristics
5. Recognize that change is the norm, not
➢ Operational planning- and
exception
characteristics
➢ How to manage change during digital
➢ Strategic uncertainty and how
transformation
to deal with it
1. Specify the digital transformation’s
✓ Strategy implementation
aims and objectives
✓ Difference between strategy formulation and
2. Always communicate
strategy implementation
3. Be ready for resistance
✓ Linkages
4. Implement changes gradually
• Forward linkages
5. Offer assistance and training
• Backward linkages ✓ Organisational framework-
✓ Issues in strategy implementation McKinsey 7S Model
• Project implementation
• Procedural implementation
• Resource allocation
• Structural implementation
• Functional implementation
• Behavioural implementation

✓ Strategic change through digital

transformation
• Strategic change
➢ Organisation structure

Benefits of SBU structure

6. Matrix structure

➢ Types of organization structure

1. Simple structure
2. Functional structure

7. Network structure
3. Divisional structure

8. Hourglass structure

➢ Organization culture
4. Multi divisional structure • Where does corporate culture come
5. Strategic business unit (SBU) from?
structure • Culture: ally or obstacle to strategy
execution
• Role of culture in strategy execution

✓ Strategic leadership
✓ Strategic control
Types
1. Premise control
2. Strategic surveillance
3. Special alert control
4. Implementation control
✓ Strategic performance measures
• Types
1. financial measures
2. customer satisfaction measures
3. market measures
4. employee measures
5. innovation measures
6. environmental measures

• Importance of strategic performance

measures
1. Goal alignment
2. Resource allocation
3. Continuous improvement
4. External accountability
• Choosing the Right strategic
performance measures
1. Relevance
2. Data availability
3. Data quality
4. Data timeliness