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gLesson Plan Information
Lecture: 01 & 02
Course Title & Code: Strategic Management, MGT - 593
Program: MBA/EMBA
Topic: Introduction to Strategic Management
Learning Objectives:
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Contents :
LECTURE::01
Describe the strategic-management process.
Lesson: 01
Faculty: Md. Shahidur Rahman Khan
Date:
Length of Period: 3 x 2 = 6 Hrs

Explain the need for integrating analysis and intuition in strategic management.
Define and give examples of key terms in strategic management.
Time:

Discuss the nature of strategy formulation, implementation, and evaluation activities.

Describe the benefits of good strategic management.

Defining Strategic Management

Strategic management is defined as the art and science of formulating, implementing, and evaluating
cross-functional decisions that enable an organization to achieve its objectives.
Strategic management in this text is used synonymously with the term strategic planning.Sometimes
the term strategic management is used to refer to strategy formulation, implementation, and
evaluation, with strategic planning referring only to strategy formulation.
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 in lieu of other, “less
desirable” courses of action.

Stages of Strategic Management

Strategy formulation
 includes developing a vision and mission, identifying an organization’s external
opportunities and threats, determining internal strengths and weaknesses, establishing
long-term objectives, generating alternative strategies, and choosing particular
strategies to pursue
o Deciding what new businesses to enter,
o What businesses to abandon,
o How to allocate resources,
o Whether to expand operations or diversify,
o Whether to enter international markets,
o Whether to merge or form a joint venture,
o How to avoid a hostile takeover.
Strategy implementation
 requires a firm to establish annual objectives, devise policies, motivate employees, and
allocate resources so that formulated strategies can be executed
 often called the action stage
Strategy evaluation
 reviewing external and internal factors that are the bases for current strategies,
measuring performance, and taking corrective actions
Strategy formulation, implementation, and evaluation activities occur at three hierarchical levels in a
large organization: corporate, divisional or strategic business unit, and functional. Strategic
management helps a firm function as a competitive team.
Integrating Intuition and Analysis
Most organizations can benefit from strategic management, which is based upon integrating intuition
and analysis in decision making. Intuition is particularly useful for making decisions in situations of
great uncertainty or little precedent.
Adapting to Change
The second-largest bookstore chain in the United States, Borders Group, declared bankruptcy in
2011 as the firm had not adapted well to changes in book retailing from traditional bookstore
shopping to customers buying online, preferring digital books to hard copies.
Borders was on the brink of financial collapse before being acquired in July 2011 by Direct Brands .
Key Terms in Strategic Management
Competitive advantage is anything that a firm does especially well compared to rival firms.
Strategists are the individuals who are most responsible for the success or failure of an organization.
The Vision statement answers the question “What do we want to become?” and is often considered
the first step in strategic planning.
Mission statements are enduring statements of purpose that distinguish one business from other
similar firms. It identifies the scope of a firm’s operations in product and market terms and addresses
the basic question that faces all strategists: “What is our business?”
External opportunities and external threats refer to economic, social, cultural, demographic,
environmental, political, legal, governmental, technological, and competitive trends and events that
could significantly benefit or harm an organization in the future.
Internal strengths and internal weaknesses are an organization’s controllable activities that are
performed especially well or poorly and are determined relative to competitors.
Objectives are specific results that an organization seeks to achieve in pursuing its basic mission.
Long-term means more than one year. They should be challenging, measurable, consistent,
reasonable, and clear.
Strategies are the means by which long-term objectives will be achieved. They may include
geographic expansion, diversification, acquisition, product development, market penetration,
retrenchment, divestiture, liquidation, and joint ventures.
Annual objectives are short-term milestones that organizations must achieve to reach long-term
objectives. They should be measurable, quantitative, challenging, realistic, consistent, and prioritized.
They should be established at the corporate, divisional, and functional levels in a large organization.
Policies are the means by which annual objectives will be achieved. They include guidelines, rules,
and procedures established to support efforts to achieve stated objectives. Policies are guides to
decision making and address repetitive or recurring situations.
Some Opportunities and Threats
o Computer hacker problems are increasing.
o Intense price competition is plaguing most firms.
o Unemployment and underemployment rates remain high.
o Interest rates are rising.
o Product life cycles are becoming shorter.
o State and local governments are financially weak.
LECture::02
The Strategic-Management Model
These are three important questions to answer in developing a strategic plan:
Where are we now?
Where do we want to go?
How are we going to get there?
The framework illustrated in Figure 1-1 is a widely accepted, comprehensive model of the strategic-
management process. This model does not guarantee success, but it does represent a clear and
practical approach for formulating, implementing, and evaluating strategies. Relationships among
major components of the strategic-management process are shown in the model.
Benefits of Strategic Management
Historically, the principal benefit of strategic management has been to help organizations formulate
better strategies through the use of a more systematic, logical, and rational approach to strategic
choice.
Communication is a key to successful strategic management.
Through dialogue and participation, managers and employees become committed to supporting the
organization
Figure 1-2 illustrates this intrinsic benefit of a firm engaging in strategic planning. Note that all firms
need all employees on a mission to help the firm succeed.
Why Some Firms Do Not Strategic Planning
Lack of knowledge or experience in strategic planning—No training in strategic planning.
Poor reward structures—When an organization assumes success, it often fails to reward success.
When failure occurs, then the firm may punish.
Firefighting—An organization can be so deeply embroiled in resolving crises and firefighting that it
reserves no time for planning.
Waste of time—Some firms see planning as a waste of time because no marketable product is
produced. Time spent on planning is an investment.
Too expensive—Some organizations see planning as too expensive in time and money.
Laziness—People may not want to put forth the effort needed to formulate a plan.
Content with success—Particularly if a firm is successful, individuals may feel there is no need to
plan because things are fine as they stand. But success today does not guarantee success tomorrow.

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.
Learning Outcomes
1. a) Define strategic plan.
b) Briefly discuss the nature of strategy formulation, implementation, and evaluation activities.
2. Define and give examples of key terms in strategic management.
3. a) Clarify the need for integrating analysis and intuition in strategic management.
b) Develop a comprehensive strategic management model.
4. a) Compare business and military strategy.
b) Explain the benefits of good strategic management.
5. Describe how the seventeen guidelines can be used to determine the effectiveness of a good strategic planning in an
industry.

Text Book:
Thompson, A. A.and Strickland, A. J.(2003).Strategic Management: Concepts and Cases.13th edition.Boston:McGraw-
Hill/Irwin.

Reference Book:
Barney, J.B. and Hesterly, W.S. (2010). Strategic Management and Competitive Advantage.
3rd edition. New York: Prentice Hall.