UNIT ONE

INTRODUCTION TO
UNDERSTANDING
STRATEGIC MANAGEMENT
Importance of HR
Understating
Strategic thinking
Basics of strategic
management
 Human resources
• They are one of the most important assets of the organization.
Class Point of discussion:
Why Human Resources
and Man power is one of
the most important assets
of the organization?
 Human resource management (HRM)
Focuses on recruiting and hiring the best employees and
providing them with the compensation, benefits, training, and
development they need to be successful within an organization.
Why is it important to understand
strategic management ?
 To be able to attract, develop, reward, and
retain employees for the benefit of both the
employees as individuals and the organizations
a whole.
About Strategic
Thinking
Strategic thinking
Strategic
Thinking:
1. Purpose as a strategic
thinker is trying to do
something
2. Understanding the
environment,
particularly of the
opposing forces,
affecting and/or
blocking
achievement of these
ends
3. Creativity in developing
effective strategies, and
responses to the
opponent or opposing
About Strategic
Management
What is Strategic
Management?
• Strategic management is the application
of strategic
thinking to the job of leading/managing an
organization.
Strategic management is focused on the
•
future within a
context of a changing, but
relatively predictable environment.
• Strategic management
revolves around:
1 Formulation of the future mission of the
.
organization
in light of changing external factors such
as regulation,
2
competition,
Developmenttechnology and customers
of a competitive strategy
.
to achieve the
missi
on
3 Creation of an organization
.
structure
will deploywhich
resources to
successfully carry out
its competitive strategy.
S Strat Manage i …
o egic ment s
Evolution phases of strategic management
Strategic Management
Characteristics:
1. Changes in any one component
will affect other components
2. Strategy formulation and
implementation are sequential
Necessity of feedback from
institutionalization, review, and
evaluation to early stages of process
3. Need to regard it as dynamic, involving
constant changes in interdependent
strategic activities
Strategic Management
Benefits
1. Breaks you out of boundary
thinking.
2. Identifies direction and purpose.
3. Alerts stakeholders to
needed change.
4. Promotes interest and
commitment.
5. Encourages and builds
confidence.
Strategic Management Risks
1. Time involved in planning may
negatively impact operational
responsibilities of managers
2. Lack of involvement of strategy
makers in strategy
implementation may result in
shirking of responsibility for
strategic decisions
3. Potential disappointment of
employees over unattained
expectations requires managerial
Strategic Management
Killers
1. Business Tradition
2. Fear of ridicule
3. Stereotypes of people,
conditions, and governing
councils
4. Over-Satisfaction of some
stakeholders
5. Fatigued leaders
Strategic
Management
Phases
Strategic Phas
Management es
Strategic terms
 Visio
n
Conceptual your status & whaa
image of desired describes t
company wants
to be.
Itconcentrates on
future
Itis a inspirati
source of on
Itprovides a reference and criter
decision-making ia.
 DEVELOPING THE VISION
An organization's dream of what it wants to become.
A vision is like a beacon in the distance toward which
the organization is always moving.
In an organization with a clear vision, it is relatively easy
to stay appropriately focused.
Everything about the organization-its structure,
policies, procedures, and allocation of resources-should
support the realization of the vision.
Should the vision be capable of creating unity of
purpose? The Answer should be Yes
Writing the Vision Statement
Example Vision Statement
• The Institute for Corporate Competitiveness will be
recognized by its customers as the provider of choice
for organizational development products that are the
best in the world.

• Business Express Airlines will be recognized by

customers as the premiere air carrier in the United
States for business travelers.

• Pendleton Manufacturing Company will be the leading

producer in the United States of fireproof storage
cabinets.
 Missi
on
Broad Comprehensive Statement
of
purpose.

It defines the customer(s), critical it

processes and informs
you about the desired level of
performance.
It has to be within the
Vision scope.
DEVELOPING THE MISSION
It concentrates on present to future.

Describe the who, what, and where of the organization ,

making sure the who component describes the organization
and its customers.
Be brief. but comprehensive. Typically one paragraph
should be sufficient to describe an organization 's mission.
Choose wording that is simple, easy to understand, and
descriptive.
Avoid how statements. How the mission will be
accomplished is described in the " Strategies" section of the
strategic plan .
 Example Mission Statements
• The Institute for Corporate Competitiveness (ICC) is a
business-development company dedicated to helping
organizations continually improve their ability to
compete in the global marketplace. To this end, ICC
provides high-quality, competitiveness-enhancing
products and services to an ever-increasing number of
organizations in the United States.
 Example Mission Statements
• Business Express Airlines (BEA) is a domestic air carrier
dedicated to providing business travelers with air
transportation that exceeds their expectations in terms
of cost, convenience, service, and dependability. To
this end, BEA provides air carrier service to and from a
steadily increasing number of major hub airports in the
United States.
 Example Mission Statements
• Pendleton Manufacturing Company is a hazardous
materials storage company dedicated to making your
work environment safe and healthy. To this end,
Pendleton produces high-quality fireproof cabinets for
safely storing toxic substances and hazardous
materials for an ever-broadening market in the United
States.
 Core
values
• Describing how you in carrying out
conduct yourself mission.
your

• Affects and Reflects the organization's

culture and priorities.
• Main values protect the organization
during the progression
DEVELOPING CORE VALUES
An organization's core values establish the framework
within which it will pursue its mission.

Together, all of the core values represent the

organization
value system-the foundation of its corporate culture.
Developing core values is the responsibility of an
organization's executive management team . However, the
recommended approach is for executive managers to
solicit input from all levels before finalizing the guiding
principles.
DEVELOPING THE CORE
XYZ company places a high priority on:
ethics
customer satisfaction
Quality
stakeholder partnerships
employee input
continual improvement
safe and healthy work
environment consistent peak
performance
corporate citizenship
environmental protection.
 Goals &
Objectives
• Goals; general end purpose toward which
• efforts
Goals arearesimply
directed
a clearer statement of specifying the
accomplishments to be achieved if the mission is to
become real.
• The target objectives are clearer
statements of the
specific activities required to achieve the
goals, starting from the current status.
Change with the change of strategy.
• Objectives are Milestones, Goals are
• destinations. Objectives have to be
(SMART ( Specific, Measurable,
• Some books swaps
Achievable, the TimeGoals
Realistic, and
Framed.
definition of Objectives.
DEVELOPING Goals
Example of Goals
• The Institute for Corporate Competitiveness will be recognized by its customers as
the
provider of choice for organizational development products that are the best in
the world.
• The goals that translate this vision into measurable terms are:

[Link] produce organizational development products of

world- class quality that are improved continually
2. To provide organizational development services of
world-class quality that are improved continually
3. To establish and maintain a world-class workforce at all
levels of the organization
4. To continually increase the organization's market
share for its existing products/services
5. To continually introduce new products/services to
meet emerging needs in the organizational
development market
Some of the areas in which a corporation might establish its goals and objectives are:
• Profitability (net profits)
• Efficiency (low costs, etc)
• Growth (increase in total assets, sales, etc.)
• Shareholder wealth (dividends plus stock price appreciation)
• Utilization of resources (ROE or ROI)
• Reputation (being considered a “top” firm)
• ,Contributions to employees (employment security, wages
)diversity
• Contributions to society
• Market leadership (market share)
• Technological leadership (innovations, creativity)
• Survival (avoiding bankruptcy)
• Personal needs of top management
DEVELOPING OBJECTIVES
• The objectives are finite projects and activities
undertaken for the purpose of accomplishing an
organization's broad strategic objectives, and have the
following characteristics:
Are specific in nature
Are measurable
Can be quantifiable
Can be accomplished within a specified time frame
Can be assigned to a specific individual or group
Are tied directly to a broad objective
 Strategies
• A strategy is a long-term plan of action designed to achieve a
particular goal.
• Methods / Approach used to accomplish your goals.
• Milestones along the strategy path are the objectives needed
• to achieve each goal.
• Each goal can have 1 or more strategies, and sometimes 2 goals can be
achieved through the same strategy but from different perspectives.
 Implementation
Plans
• Detailed how the bein
descriptions of strategies are g
executed into
• actions.
It sets out how the is
implementation of strategy aligned
with the overall
• resources.
Operational Planning is an
important tool in implementation of peak
Strategies; and it in
reaches its project planning &
management
 Monitoring &
Evaluation
• Steps and triggers to successful
implementation and
development
• Frequenc Monitoring and Evaluation
y of is the key
• Reporting Monitoring and Evaluation is
Results
for of
continuous essential
development
 Decision
Making
Strategic management is based on
decision making
because in order to answer the questions
raised in the structured planning process,
choices must be made, and their
consequences.
A plan ultimately is more or less a set of
decisions about
what to do, how to do it and why to do it
 Inclusive
Process
An inclusive process means that people
who have a stake
in the work of your organization
participate in the planning process in
an appropriate way.
It does mean that these interested
individuals have a chance to be heard
by the decision makers
It also means that any change in any of the
components
affects the rest of components.
Class Discussi
Point of on

How does strategic

management
typically evolve in a
corporation?
 Exercis
e down what you hope to accomplish that will be
• Write
1 great.
truly
• Write down how you are preparing to accomplish
your task.
• Write down the greatest obstacles that might prevent
you from accomplishing your objectives, & How will
you be able to overcome them.

• This is an individual Exercise.

UNIT ONE
UNDERSTANDING THE
BUSINESS
ENVIRONMENT
Societal
Environment
Industry
Environment
Internal-
Scanning
What is Environmental
Scanning?
Environmental scanning is the
acquisition and use of
information about events, trends, and
relationships in an organization's
external & internal environment, the
knowledge of which would assist
management in planning the
organization's future course of action.
External Societal
Environment
PEST
PEST analysis stands for "Political, Economic,
Social, and
Technological analysis" and describes a
framework of macro environmental factors
used in environmental scanning.
It is also referred to as the STEP, STEEP, PESTEL
(adding Legal,
Environmental). Recently it was even
further extended to STEEPLED, including
ethics and demographics.
PEST analysis is a useful strategic tool for
understanding market
growth or decline, business position, potential
and direction for operations.
POLITICA factor
L s:
Tax policy
Employment laws
E n v i r onmental
regulations
Trade restrictions
and tariffs Political
stability
ECONOMIC
factors:
• Economic
• growth
• Inflation
• rate
Interest
rates
Exchange
rates
SOCIAL
factors:
• Cultural
• aspects
• Health
awareness
•
Population
•
growth
Age
distribution
Career
attitudes
Technological
factors
● Barriers to entry
● Efficient production level &
outsourcing
● Research & Development
activity
● Automation
● Technology incentives
● Rate of technological change.
External
Industrial
Environm
ent
 Porter
competitive power in an [Link]
Assumes that there are five important forces that determine

These are:
Supplier Power:
Assessing how easy it is for suppliers to drive up prices.
This is driven by the number of suppliers of each key
input, the uniqueness of their product or service, their
strength and control over you, the cost of switching from
one to another, and so on.
The fewer the supplier choices you have, and the more you
need suppliers' help,
Buyer Power:
the more powerful your suppliers are.
How easy it is for buyers to drive
prices down.
This is driven by the number of buyers, the importance of
each individual buyer to your business, the cost to them of
switching from your products and services to those of
someone else, and so on.
If you deal with few, powerful buyers, then they are often
able to dictate terms to you.
Competitive Rivalry:
What is important here is the number and capability of the
competitors.
If there are many competitors, and they offer equally
attractive products and services, then you'll most likely
have little power in the situation, because suppliers and
buyers will go elsewhere if they don't get a good deal
from you.
Threat
On theof Substitution:
other hand, if no-one else can do what you do, then
you can
This often have
is affected tremendous
by the ability of strength.
the customers to find a
different way of doing what you do – for example, if you
supply a unique software product that automates an
important process, people may substitute by doing the
process manually or by outsourcing it.
If substitution is easy and substitution is viable, then this
weakens your power.
Threat of New Entry:
The ability of people to enter the market.
If it costs little in time or money to enter the market
and compete effectively, if there are few economies
of scale in place, or if you have little protection for
your key technologies, then new competitors can
quickly enter the market and weaken your position.
If you have strong and durable barriers to entry, then
you can preserve a favorable position and take fair
advantage of it.
By thinking about how each force affects you, and by
identifying the
strength and direction of each force, you can quickly
assess the
strength of your position and your ability to make a
sustained profit in the industry.
Internal
Analysis
Resources- organization’s
assets
• Tangible
• Intangibl
e
Capabilitie corporation’s exploit
s- a resources ability to its
Types of resources
 Value-Chain Analysis

• Sequential process of value-creating activities

• The amount that buyers are willing to pay for what a firm
provides them
• Value is measured by total revenue
• Firm is profitable to the extent the value it receives exceeds
the total costs involved in creating its product or service
Organization structure elements
Corporate Culture: Organizational culture is the personality of the organization.
Corporate culture- the collection of beliefs,
and values learned and shared corporation
expectations
by a
members and ’s
fro onegeneratio of
transmitted
employe to anothe m n
es r.
Culture is comprised of the assumptions, values,
norms and tangible signs of organization members
and their behaviours.
The culture determines the type of leadership,
communication, and
group dynamics within the organization.
• Strong culture is said to exist where staff respond to
stimulus because
of their alignment to organizational values.
• There is also Weak culture where there is little
alignment with
organizational values and control must be exercised
through extensive procedures and bureaucracy.
• When culture is very strong, people do things
because they believe it is
the right thing to do; hence, there is a risk of
another phenomenon, Groupthink..
Evolution Organizational
of Culture Evolution, people will
At each level of Organisational
be working, acting,
thinking, and feeling at different levels of personal
commitment.
Organizational psychology classifies these levels
commitment as:
The level of Individual: People rely on personal skill
and
fromthe direction
Leaders. Each individual has his own culture.
The Level of Group: People have an emotional
connection
work/team. to their
This has further developed their
attitude for success.
The Level ofsee
individuals Organization: The
their work as feeling
their of People see
purpose.
greatness
a comes when
greater purpose
to the work they do, something greater than the
individual, or the group.
SWOT
SWOT
SWOT Analysis should be:
Realistic about the strengths and weaknesses of
the organization.
Distinguishing between where the
organization is today, and where it could be
in the future.
A p p l i ed in relation to
S p e cific avoiding grey areas.
competition
competition.
S h o r t and simple.
SWOT is
subjective.
• Strengths are attributes of the
organization that
are helpful to achieving the
objective.A STRENGTH could
be:
Strong marketing expertise
New, innovative product or
service
Location of your business
Quality processes and
procedures Strong
distribution & Logistics
Any other aspect of your
business that adds
value to your product or
• Weaknesses are attributes of the
organization that
are harmful to achieving the objective.

A WEAKNESS could
be:
● Lack marketing
of expertise products or(i.e. relati
● Undifferentiated
services in on
● to your competitors)
● Location of your
● business Poor quality
● goods
Lack or services
chann
of
Damagedels reputation
Opportunities are factors
outside the
organization that allow
opportunities for profit or
growth. An OPPORTUNITY
could be:
New technologies; a developing market
such as the
Internet
Mergers, joint ventures or strategic
alliances
Moving into new market segments that
offer improved profits
A new international market
A market vacated by an ineffective
competitor
• Threats are factors outside the
organization that can
stand in the way of its efforts to grow
and develop. A could
THREAT be:
A new competitor in your home
market
Price wars with competitors
A competitor has a new, innovative
product or service
Competitors have superior access to
channels of distribution
New regulations
Taxation is introduced on your
product or service Consumer shift …
etc
 SWO Analy
T sis
Positive Negativ
e
Intern
al

Extern
al
Class Discussio
Point of n2

How strategic decisions be

can othe kind of decisio
fro rdifferent
s ns?
m
 Exercise
• After Jan & June Revolutions, the Education and Employment
became two of the major challenges in Egypt on the short and
2
long terms. You have been appointed as the CEO of a new
training & consulting company ”EGYTRAIN” that will be catering
to the audience in Egypt and neighbouring Arab Countries to
leverage their skills and productivity and match their skills with
the needed one in the job market. You are requested to run an
environmental scan, and design an abridged (simplified)
strategic plan for the project as follows:
• What is the expected PEST analysis results (2 in each P,E,S,T)
• What is your expected SWOT analysis (2 in each S,W,O,T)
• What is your Vision & Mission Statements (1 sentence each)
• This is a team Exercise