CHAPTER 3
Strategic Management- is the ongoing planning, monitoring, analysis and assessment of all necessities
an organization needs to meet its goal and objectives.
Strategic Management- is generally thought to have financial and nonfinancial benefits.
Benefits of Strategic Management
1. Competitive Avantage- strategic management gives business an advantage over competitors because
its proactive nature means your company will always be aware of the changing market.
2. Achieving Goals- strategic management helps keep goals achievable by using a clear and dynamic
process for formulating steps and impelmentation.
3. Sustainable Growth- strategic management has been shown to lead to more efficient organizational
performance, which leads to manageable growth.
4. Cohesive Organization- strategic management necessitates communication and goal implementation
company-wide.
5. Increased Managerial Awareness- strategic management means looking toward the company’s future.
Prescriptive Strategic Management- means developing strategies in advance of an organizational issue.
Descriptive Strategic Management- means putting strategies into practice when needed.
Types of Strategic Management
SWOT Analysis- is one of the types of strategic management frameworks used by organizations to build
and test their business strategies.
Results from a SWOT Analysis- is a comprehensive evaluation of all the strengths, weaknesses,
opportunities and threats of the strategy you compose.
The Balanced Scorecard is a strategic management system that translates the vision and strategy of an
organization into operational objectives and measures.
Objectives and Measures- are developed for each of four perspectives: the financial perspectives, the
customer perspectives, the process perspectives, and the learning and growth perspective.
Four Different Perspective
1. The Financial Perspective describes the economic consequences of actions taken in the other three
perspectives.
2. The Customer Perspective defines the customer and market segments in which the business unit will
compete.
3. The Internal Business Process Perspective describes the internal processes needed to provide value
for customers owners.
4. The Learning and Growth (infrastructure) Perspective defines the capabilities that an organization
needs to create long-term growth and improvement.
Strategy Translation- on the other hand, means specifying objectives, measures, targets, and initiatives
for each perspective.
Performance Measure- may be the percentage of revenues from the sale of new products.
The Initiative descibes how this is to be accomplished.
The Four Financial Perspectives and Performance Measures
1. The Financial Perpectives- establishes the long- and short-term financial performance objectives.
2. Customer Perspective- is the source of the revenue component for the financial objectives.
3. Process Perspective- process are the means for creating customer and shareholder value.
4. Learning and Growth (Infratructure) Perspective- is the source of the capabilities that enable the
accomplishment of the other three perspectives’ objectives.
Basic Principles that can Help Strategic Management to be Successful
1. Creating a Unique Strategic Position for the Proposistion- focus on who your customers are, the
attractiveness of the offer (known as the value proposition), and how you can connect the two as
efficiently as possible.
2. Consider the Availability or Potential Availability of Resources- money and other resources are limited,
even though the balance can be improved through alliances to bring in other kinds of resources such as
knowledge and skills.
3. Understand the Importance of Values and Incentives- strategy must be based on reality both the
external and internal environments.
The External forces shaping business strategy include regulatory developments, demographics,
economic growth and political stability.
Internal factors includes skills, people’s attitudes to their work, their commitment or “engagement”,
the way they operate and the overall culture of the business.
4. Gain People’s Emotional Commitment to the Strategy- any strategy, however brilliant, will fail unless
people understand it and are emotionally committed to its success.
5. Be Open to Strategic Ideas Wherever they Originate- although the top people must decide a
company’s strategy, there is a mistaken view that only they can develop strategic ideas.
6. Keep the Strategy Flexible- all ideas are good for a limited time, not forever. Continually question the
answers to the “who,what,how” questions.