Why study S t r a t e g i c M a n a g e m e n t ?
Strategic manager need to know the answer of: …..
in a very competitive environment – why some businesses
outperform other of its competitors.
Thus to compete in the competitive market, strategic manager needs to
know – what competitive advantages they should have & how that
advantages should be obtained so that their business could have earn
sustainable competitiveness over the longer period of time.
This mean strategic manager focuses on two fundamental questions:
o How can we create competitive advantages (strategic plan) in the
marketplace that are unique, valuable as well as difficult for the
rivals to copy or substitute?
o How should we compete (strategic implementation) with the
created competitive advantages in the marketplace?
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Strategic Planning
Strategic Implementation
Strategic Control
Strategic Management
Course Instructor: Kamrul Arefin, Professor
: Suggested Texts :
Pearce II, J.S. & Thompson, Jr, A.A. & Dress G. &
Robinson, R.B. Strickland III, A.J. Lumpkin G.T.
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Traditional Planning System
‣ Traditional Long-term Planning Process:
o Started with a multi-year forecast of the firm’s sales;
o Forecast (based on historical data usually 5 year) for other
functional areas such as production, personnel, marketing, etc.
which represent a growth commitment on firm’s sales;
o Finally, aggregation of these projections [sales & other functional
areas] into a financial plan to ensure control over the firm.
‣ Limitations of Traditional planning Process
o Only long term sales forecast represent a little without the total market
forecasts. Such as ignoring the underlying economic, demographic and
attitudinal factors that might cause serious forecasting error;
o Typical assumption – the future will offer a smooth continuity of the
past – is a serious wrong assumption thus, it does not work under
quick changing and very competitive environment;
o Resource allocation in the long-term planning are mainly done by
project using – Payback period & or Discount Rate method of cash
follows – that fail to give actual financial & market position of the firm.
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Responsibility of the manager for the Success of Long
term Plan:
o Take a thoughtful projection of the environmental
trends of firm’s product, customers, market etc.
o Grasp these premises [assumptions] on which the
firm’s plans are based-on.
Pre-conditions for the success of LT Plan:
o Firm essentially should be with a single
business & also have (some) dominant on it;
o Market growth of the firm’s business should
be high;
o Relatively low degree of rivalry/competition
among the competitors;
o Market trends should be fairly predictable.
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Strategic planning is a process of creating sustainable
competitive advantages through establishing long-term objectives
& strategies and, accordingly developing long-term & short-term
hierarchy of plans for integrating and coordinating business
activities for the achievement of organization mission.
Six Dimensions of Strategic Management:
1. Strategic decisions are f u t u r e oriented;
2. Strategic issues require top-management decision;
3. Strategic issues usually do have require for multi-
functional or multi-business activities;
4. Strategic implementation require investment of large
amount of resources;
5. Strategies must consider the firm’s external environment.
6. Strategic decision often (may) affects the firm long-term
prosperity;
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Three Basic Tasks for the Strategic Managers
First task: Develop MISSION …… Company’s mission is the
unique purpose that sets ‘a company’ apart from ‘others of its
type’ and identifies the scope of its operations.
o In details: M i s s i o n describe the company’s product,
market, and technological areas of emphasis in a way that
reflects the values [philosophical standard] & priorities of
strategic decision makers..
Second task: Establish OBJECTIVES ….represents the managerial
Long-term & short-term commitments to produce
quantitative results in a specified period.
o In details: Company’s objectives are the results in the
specific areas e.g., productivity, competitive position,
employee development etc. that ‘an organization seeks to
achieve’ over a specific time period.
Third task: Set-up DIRECTION setting tasks …..decide - ‘who
should do what?’ - to achieve objectives.
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Fist Task: Develop of M i s s i o n .
M i s s i o n could be either three of the following formats:
o Slogan Format: ‘News first’ …. (BBC World).
o Short Bullet Points Format: Microsoft (at its founding): A
computer on every desk and in every home.
o Sort Paragraph Format: “To be the premier financial institution in
the country providing high quality products and services backed by
latest technology and a team of highly motivated personnel to deliver
Excellence in Banking.” ... (Dhaka Bank Ltd.)
Mission statement has three main components: (i)
a statement of mission or vision of the company, (ii) a statement of the
core values that shape the acts & behavior of the employees, and (iii)
a statement of the goals & objectives.
Thus an effective mission statement must represent the answer of
following five questions:
1. What is our business?
2. Who is our customer?
3. What is the value of our customer?
4. What will our business be?
5. What should our business be?
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Avon Product Inc. mission statement ….. “Avon’s
corporate mission is to expand aggressively our new
emerging businesses [health care, specialty
chemicals, direct mail, and fine jewelry] while
continuing our historical growth as the world largest
beauty business. The company’s diverse operations
enhance our access to profitable, consistent growth.
Our growth financial position will enable us to find
most growth opportunity through internal resources.”
Rhone-Poulene Rorer (RPR) [Sanofi]
mission statement ….. Our Mission is to become
the best pharmaceutical company in the world by
dedicating our resources, our talents and our
energies to help improve human health and
quality of life of human throughout the world.
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What to do for & with – a Business Mission
o Understand – what business a firm is really in
o Communicate the mission among all the employees in
a clear, exciting and inspiring manner
o Decide when to change the mission due to the change
in the firm’s operating or remote environmental changes
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How to Understand ……
: What business a firm is really in?
o Understand the Customer needs
– what is being satisfied ?
o Know the Customer group –
who is being satisfied ?
o Technology and functional
performance measure – how
customer needs are satisfied ?
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Second Task:
Establishing Business OBJECTIVES
Business objective represents the specified results in the specified
areas of business such as competitive position; return on
investment; public responsibility; etc. that an organization seeks
over a pre specified time period.
Business objective should include issues like:
o How much to produce?
o What kind of performance to do?
o When to do?
Objective of Quaker Oats Company
‘To achieve return on equity at twenty percent or
above, “real” earning growth averaging five percent or
better over time, be a leading marketer of strong
consumer brands, and improve the profitability of low-
return businesses or divest them within next five year.’
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Third Task:
Set-up Directions….Who should do what?
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Third Task……
Set-up Direction ….Who should do what?
o Corporate level: The CEO : Establish business position in the
different industries.
o Business level (General Managers / Heads of Businesses):
Establish long term business competitive position for the
specific businesses.
o Functional level (Functional Heads) : Develop managerial
game plans for running specific functional activities for a
specific businesses.
o Operational level (Field unit heads / lower level managers):
Establish managerial performance for the frontline managers.
Who are the Strategic Managers?
Every managers should at-least be able to think
strategically and also some-how involved in strategy-
making and strategy-implementing and control process.
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Four (04) Different ways of Developing Strategies
o The Master strategist approach: The CEO himself acts
as the chief strategies for the firm. He decide what to do,
how to do, who to do & when to do etc.
o The Delegation–it–to–others approach: The CEO
delegates the responsibility to develop strategy to a plan-
team, rarely involve him to the strategy, rarely consider
the developed strategy seriously.
o The Collaborative approach: CEO and the team jointly
involve in developing and implementing the strategy.
o The Champion approach: The CEO is interested
neither in personally crafting the detail strategy nor the
implementation or control of it. Rather CEO encourages
the subordinates to develop, to champion and to
implement the strategy.
CEO’s involvement with the strategy is as a judge and
evaluator of the strategy.
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Three (03) mandatory tests to Evaluate - whether
the chosen strategy is Wining or not?
o The Goodness of Fit test: A good strategy will match
with firm’s present situation and chancing external
environment too.
o The Competitive Advantage test: A good strategy
will increase the competitiveness (organizational
effectiveness) of the firm through increasing the
employee’s efficiency level (organizational output) in
the highly competitive market.
o The Performance test: An effective strategy will
increase the financial and non-financial
performance of the firm through increasing the profit
margin (dividend) and long term strength (wealth
maximization) of the firm.
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Strategic Games ?
o Game of Chance: Believing that LUCK will be
the determining factor for the firm success.
o Game of Skills: The better team will win. i.e.,
A game of skill generally has an element of
chance, however skill plays a greater role in
determining the outcome.
o Game of Strategy: Though all the strategies
have their own success and failure factors
however at the end of the day the strategic firm
will be most effective and be the final winner
However, at the end…… that firm will win in the
game of business competition who will be able to
develop best strategy, implement the strategy
strategically and regulate organization activities to
make them consistent with mission.
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