Strategic Management


It is very important to understand upfront the difference between the terms strategy and strategic management.

Coulter defines a strategy as “a series of goal directed decisions and actions that match an organization’s skills and resources with environmental opportunities and threats” (Coulter, 23). It further defines strategic management as “those decisions and actions in which organizational members analyze the current situation; develop appropriate strategies; put those strategies into action; and, evaluate, modify, or change those strategies as needed” (Coulter, 23).

Consider these two definitions and the differences between them very carefully. Strategic Management is a business function, analogous to other business functions such as accounting, marketing, advertising, etc. It involves the development and management of strategies.

The strategies themselves that are being managed can be directed at almost anything of concern to the business or organization. Strategies can exist that are directed at any organizational level. High level strategies can and often do give rise to lower level strategies which in turn can give rise to even lower level strategies, etc. Like wise the function of strategic management can exist at any organizational level.

The reason for this paper is that this class is concerned with the study of strategic management as a business function, i.e. how are strategies developed, implemented, measured, etc. You will find as we proceed through the business analogy that there are even strategies (for example, SWOT analysis) for strategic management, which means that there are strategies for developing, implementing, and measuring the effect of strategies. When you fully understand that strategic management is a business function this should not surprise you.

One of the problems, I typically see is managers confusing the management of strategies with the strategies that are being managed. In this class, since we are discussing the business function of strategic management, when discussing a particular strategy let’s say an example of a marketing strategy, you should also keep in mind the strategic management dimension of that strategy, that is, how was it developed, how was it implemented, how is its effectiveness measured, and how will it be changed if that is necessary. Similarly if, for example, you are comparing the advertising strategies of two companies in a particular industry, you should also consider what effect the comparison of those strategies should or could have on the strategic management function in each of the companies involved.

Let me try and clarify what I am trying to say by using an analogy. Suppose we were having a class on how to manage a used car lot. We might easily find ourselves discussing the differences between Ford cars and Dodge cars. But since we are having a class on managing the used car lot we should probably be the most interested in those differences that actually impacted how we would manage a used car lot.

Works Cited

Coulter, Mary. Strategic Management in Action. 2nd ed-custom ed. New Jersey: Prentice-Hall. 2002.


Strategic Management: Critical Steps for Developing Competitive Edge and Innovative Strategies


Introduction Many intelligent people have extremely innovative ideas. Most ideas never make it outside of the brain. A few find their way to the development table. These people develop plans and grand schemes concerning how they are going to sweep the globe with their new, “totally unique and never before thought of” product or service, making millions of dollars in a few short years. Most of these projects never see the day of light. Those that are based in solid business fundamentals have a tough enough time succeeding for any period that makes an impact on the market. Of those plans that become profitable businesses, the good majority will fail in three to five years. What sets the long-term successes apart from the “one hit wonders”? The answer lies in the business plan and how it is developed.

Developing and exploiting a competitive edge in the market is the key to success. Without this edge, the chances of success are slim. Venture capitalists know this and therefore look long and hard for the things that set the “want to bes” apart from the “could very well bes”. Most start-up businesses that want to make a difference in the market need outside capital to get the operations running. In order to be successful in the fund raising venture, CEOs need to understand the fundamentals of developing and exploiting this edge.

Develop a Vision and Mission Statement The founders must have an image in their mind regarding what they want to achieve, where they want to go and how they want to get there. This vision gives future employees direction, determines future decisions and helps motivate staff in difficult times. When this vision is written on paper, in the form that answers the question, “What business are we really in?” in such a way that it becomes tangible, it becomes an expression of how the company distinguishes itself from others in the market, and shows in no uncertain terms what the mission of the business really is. This becomes the Mission Statement.

Determine Core Competencies, Target Market and Desired Market Position Companies must determine what they are good at, where they want to be and at what position in the market they desire to achieve. If they can do this, and do it better than their rivals then they will have an edge by understanding the consumer better and thus be able to meet the customers’ needs in ways that the competition cannot. These core competencies consist of unique products, services, and capabilities that they do better than everyone else. They can then take these competencies and utilize them to specialize in a certain portion of the market. When they define their position they are able to determine the target and develop the specific strategies needed to succeed.

Perform a S.W.O.T. Analysis of theCurrent and Future Business Situation All organizations need to learn about their own Strengths and Weaknesses within the company that can affect their actions in the market. What are they good at, and what are they not so good at. By understanding the strengths, they can develop plans to capitalize on those points while at the same time diminishing the weaknesses, or trying to find ways to turn the weaknesses to advantages through research, development, and or other means. It is important to understand the strengths because in the future those advantages may disappear, or be nullified through changing market circumstances.

External circumstances occurring outside the organization will influence the success of the organization. By finding out the potential opportunities to “get ahead” and then capitalizing on them, it may give the organization the edge that it needs to skate past the rivals who are struggling in the same market. A good example of this is the implications that the Kyoto Accord has on automobile makers developing hybrid vehicles. As Japan is lagging behind on their agreement, the government will start to impose stricter regulations, forcing consumers to utilize less gasoline-powered vehicles. The companies that have been working on hybrid, or electric, or use a bio fuel will be able to attract these consumers to their segment.

Looking at it from the other side of the coin, there are threats like the Kyoto Accord which can severely damage the way a business profits. For those organizations relying upon diesel transport fleets, such as large transport companies, the costof fines due to not getting rid of the dieselcould have serious ramifications on their operating profit margins, thus affecting how the investors see the health of the organization. The largest external threat to an organization is the ever-changing, constantly mutating demographic spread. This can make successful companies obsolete if they are unprepared for the change.

By putting these Strengths, Weaknesses, Opportunities, and Threats together in a chart for the managers to see, this S.W.O.T can help to predict the future necessary actions a company may be required to take in order to stay in the market.

Identify Key Success Factors Critical factors to success are relationships between the business variables that companies have control over and the factors that influence their ability to actually compete in the market. By knowing what these factors are, and exploiting them in such a way as to bring events to the desired conclusion, businesses have a greater chance of succeeding in their business plans.

Analyze the Competition (Due Diligence) Whenever a company takes on a new venture, be it an M&A, entering a new market, developing a new product, it is essential to the future success of the business to perform a comprehensive occupational due diligence program. This kind of research will provide information about everything a company needs to know concerning the rivals in the business. It should prevent being caught off guard by “surprises” that might have been predicted and neutralized in advance. Performing this extensive market research can also identify new market opportunities, changing segments, as well as unexpected market competition that arises like a phoenix out of nothing to “storm the castle”. Reaction time to market changes can be improved by constantly looking at the market and predicting advance occurrences.

These days information transfer is so rapid that the advantage of “time” no longer seems like an option. Once when Sony had three years of time from launch of new product, they now have apparently three months. The old saying “You snooze, you lose” has never been more true than now. If you don’t anticipate your rival’s strategies, then your strategies will be anticipated and beaten by your rivals. There no longer is time for a “long slow think”.

Create Goals and Objectives By creating goals and objectives the management team begins turning ideas and dreams into real, concrete places to go and things to do once there. Goals are the long-range things that a company wants to get done and the objectives are the detailed specific, measurable, attainable, realistic and timely steps on what you set out to do. It is important to get S.M.A.R.T.

Formulate Strategies to Accomplish the Goals Once goals and objectives have been written out and solidified hard-core strategies on how to actually reach the objectives and goals must be planned in great detail. These strategies are a company’s roadmap that will show them where they want to go, how to get there, and what to do if they get off track. Strategies fulfill the mission, the goals and the objectives. It is important not to be a “me too” because then the company is too late and can only pick up the leftovers which hardly make for delicious meals.

Translate Strategies into Action When a company has gotten to this stage, it is time to take action and “run the programs” that have been designed to succeed in the market while returning the best possible ROI available. Projects are defined by determining purpose, scope, contribution to market, available resources, requirements to succeed in market, and the timing of entry. I would suggest that at this time it is also essential to determine future exit strategies, as well as the costs to overcome the barriers to exit. Companies that have come this far will most likely have an excellent plan for short, medium and long term in a format that can be understood and acted upon by the employees.

Establish Accurate Controls Once the plan has been activated, it is necessary to see how well it is working in the market. In order to do this the organization must determine the standards against which performance is actually measured. There are many ways to do this, and new ways are being developed every year that seem to be the “answer to the deficiencies of the past”. It used to be sufficient for a company to look solely at their financial measures such as ROI, ROE, ROM and Operating Profits, and so forth. But as time progressed and business shifted from a product-oriented market to a knowledge-oriented market, the important factors changed. One of the recent tools that organizations attempt to utilize (though actually quite difficult and extremely time intensive to employ) is the Balanced Scorecard. This is a set of four measures that an organization collects data about, and then reviews to see how well they are performing.

The four perspectives of the balanced scorecard are:

  • 1. Customer Perspective – How does the customer see us in the market? Are we successful? Are we meeting their needs? Are we lacking in something?
  • 2. Internal Perspective – What do we do in the company that we can modify and adjust in order to improve our operations?
  • 3. Innovation and Learning Perspectives – How can we improve our investment in knowledge, developing it in such a way as to have a new competitive advantage over our clients? How can we increase our knowledge?
  • 4. Financial Perspective – The “traditional” way of looking at the company from an investor point of view in order to determine how healthy we are “financially”, which translates into “how profitable are we”?

Conclusion Companies that take these steps seriously when developing their business plans stand a much better chance of succeeding in their venture. With the success ratio climbing, investors will be more interested in looking to funding start-ups more readily. Of course there are still a huge number of variables that venture capitalists look to in addition to a sound business plan but to take the original idea this far, and be this serious about it, the entrepreneur is performing a comprehensive due diligence program that will surely improve chances of longer term success in the market. If after performing all of these activities, the business is still having trouble, it may be that the original plans and goals of the CEO were “off the mark”. In many cases the operators take the blame for not being able to achieve the expected objectives. But more often than not the CEOs plans are the cause of friction and potential failure. In this situation it is crucial that the CEO be willing and able to realign the goals and objectives they originally developed for the company’s future. This is the realm of Second Generation Knowledge Management and “Double-Loop Learning”.


7 Steps Effective Strategic Planning Process


This TQM article provides an insight of a typical Strategic Planning Process that was used in several organizations and proven to be very practical in implementation. the key processes of this typical Strategic Planning Process are lined up into 7 steps. Detail of each steps are illustrated below:-

Step 1 – Review or develop Vision & Mission

Able to obtain first hand information from various stakeholders (Shareholders, customers, employee, suppliers communities etc).

You may use templates to evaluate how the stakeholders think about your organization. To find out whether their action are aligned with the organization’s objectives.

To review or develop company’s Vision and Mission with the involvement of other stakeholders to ensure it is still current with the business changes and new challenges. Also use this session as a mean for communication.

Step 2 – Business and operation analysis (SWOT Analysis etc)

One of the key consideration of strategic planning is to understand internal (own organization) Strengths and Weaknesses as well as external Threats and Opportunities. These are commonly known as the four factors of a S.W.O.T. analysis.

Involvement from various stakeholders to provide their points of view about your organization is key. In the process, you will gain better buy-in from these implementers of strategies and policies.

Step 3 – Develop and Select Strategic Options

You may use templates to develop several key possible strategies to address the organization’s objectives. More important, these possible strategies are develop based on the inputs from stakeholders (step 1) and Business and Operation analysis (step 2).

It is often several possible strategies are developed and everyone of them seems important. Since it is quite normal that an organization would have several key issues to tackle, you will be able to use a proper tools to select a few from the possible strategies. You will b e able to apply several prioritizing tools as introduced in this step.

Step 4 – Establish Strategic Objectives

During this step, you will be able to view the overall picture about the organization and able to select a few strategic options objectively. Template may be used to understand various strategic options, set key measures and broad time line to ensure the selected strategic options are achieved.

While it is quite common that measures and timeline is given by top management, it is the intention of this step 4 that these measures and timeline is SMART . What it meant was Specific (S), Measurable (M), Achievable (A), Realistic (R) and Time-bound (T). when the strategic options are SMART, it will help to ease the communication toward the lower level of the organizational hierarchy for implementation.

Step 5 – Strategy Execution Plan

Many organization failed to realize its full potential of its strategies are due to weak implementation. In this Step 5, a proper deployment plan is developed to implement these strategies.

Step 6 – Establish Resource Allocation

Very often, management team assigned selected strategies to key personnel and left it to the individual to carry out the task. While most organizations operate with minimum resources, it often ends up work overloaded by individual.

Step 7 – Execution Review

One of the key success factors for an effective strategy deployment is constant review of its progress and make decision for any deviations to plan. It is vital to decide what to review and with who the review is done. New decision may be required as the status of the strategies progressed.

In summary: Follow this 7-steps in Strategic Planning will ensure various options are considered including its execution, resource allocation d and Execution Review. This 7-Steps form a complete cycle for new or existing Strategic Planning initiatives


Strategic Management – Some Important Concepts


Some of you may have seen articles that I have posted challenging those who would degrade the role and status of the terms manager and management. In those articles and comments I said I would post further articles on strategic management. This article is the first of, hopefully, a series of articles on strategy and strategic management.

This particular article describes some general concepts, drawing on insights from General Systems Theory that may be useful in strategy formulation and strategy implementation. I am not going to produce a list of activities that you must undertake to do strategy. I am not even going to recommend a method (I hate the term methodology incorrectly applied – methodology is the study of method!). Instead, this article concentrates on underlying concepts that will be useful to anyone with responsibilities for strategy formulation and strategy implementation in a business organisational context. These concepts are applicable to both commercial and not for profit organisations.

I shall use the definition of strategy and tactics given by M P Schutzenberger and his concepts of “flexibility” and “span of foresight” and show how these can be applied in strategic management and how these can be useful in supplementing your preferred strategy method.

M P Schutzenerger (“A tentative Classification of Goal Seeking Behaviour” – Psychology Review Vol.63 1956) defines a tactic as a means of choice which proceeds according to a criterion of optimality that is applied locally, stage by stage. He defines a strategy as a means of choice which takes into account the situation as a whole. In this paper he also defines two concepts; the span of foresight and flexibility. The span of foresight is how far you can make predictions ahead of time. Flexibility is how quickly your organisation can move from one plan to another plan.

Before we look at how these concepts may assist us in strategy formulation and implementation, it is worth exploring these concepts further.

Let us look at strategy and tactics. Suppose we have perfect foresight, then strategy is relatively easy. We look ahead with our perfect foresight and determine where we want to be. We then produce a plan that will drive the organisation towards this ideal position. In such a world, the tactical plans are a ‘drill-down’ of the strategic plan and everything dovetails neatly. Strategy implementation is just ensuring the organisation conforms to the overall strategic plan. Indeed, this is the assumptions made when we do ‘corporate plans’.

In normal business corporate planning, the Board and the CFO or FD produces a set of assumptions and each subunit produces a three year forecast that is aggregated. There is a a process (either negotiation or tell) that ensures that the plans are consistent resulting in a 3 year forecast of which the next year’s forecast becomes the operational budget against which performance is measured. Note, this method assumes that we can predict with some certainty at least twelve months ahead if not three years ahead.

Suppose we cannot predict with certainty that far ahead. What can we do? How can we do strategy in these circumstances? Well it turns out we can even if we cannot predict perfectly we can still do some strategic planning. If the environment is stochastic (this is a fancy mathematical term that means there are random elements) then Schutzenberger showed in such an environment, the optimal strategy is just the simple tactic of doing one’s best in the local situation. He illustrates this with an example.

Suppose a dog is running to meet its owner in some open ground. Most dogs would follow the line of sight to its owner. If its owner is walking in a straight line at a constant speed, the optimal path is not the path the dog would take but it can be determined by simple mathematics (basically a solution of two simultaneous equations). The optimal path is a straight line that intersects. Dogs don’t do maths so adopting the simple tactic of always running to its owner will get the goal it wants. However, if the owner is pacing backwards and forwards at random, it can be shown mathematically that the dog’s tactic of always running towards its owner is the optimal strategy. The tactic becomes the strategy.

In real life, there are many instances where we can’t predict precisely how things will work out but we can see an underlying structure with a random element. Examples would include sales, patients attending casualty, help desk calls etc., in a given period. In such circumstances our corporate planning tools can be used if we adopt flexible budgeting.

Let us now get back to the two other concepts; span of foresight and flexibility. Span of foresight is basically how far you can see ahead. If we include instances of stochastic environments, as defined above, it is a measure of how well we can forecast and predict, not only in sales but all other factors that may impact on our organisation. Most strategy methods require you to analyse environmental factors such as political, technological, legislative, societal, competitive etc factors to be considered in your strategic analysis. The span of foresight is basically how far you can look ahead with any confidence.

If you are in the music business, ten years ago, your span of foresight may well be several years. Ok, you may not be able to predict exactly which artist or band might make it but you could probably guess the size of the market and probably your market share. However, if you are in this industry now with internet downloads etc, your span of foresight may well be significantly less.

Flexibility is a similar time based measure. It is how quickly you can change your strategy. Your flexibility may be dependent on the flexibility your workforce, the contracts you have with your suppliers, your infrastructure (both technical and physical), even your methods of operation.

It does not take a rocket scientist to see that your flexibility should be shorter than your span of foresight yet how often have organisations failed to recognise this.

The British motor industry in 1950s and 1960s is a classic case. Production facilities had been consistently starved of investment and little investment was put into creating a flexible workforce. In those days where new models took years to create and product-lifecycles were relatively long, inflexibility was not recognised as a strategic issue. In contrast the Japanese motor industry invested significantly in flexible production (Kan-ban, QC, JIT etc) plus faster new product development resulting in their dominance in this sector.

Some organisations are running similar risks today. I have always asserted that management has some similarity to the fashion business. A new fad comes along. People adopt it regardless whether it is relevant to their organisation or not. In many instances, the new fad or fashions yield short-term financial benefits at the risk of compromising the organisations’ future flexibility. Yet rarely is this recognised.

In the 1980s, the deregulation in Financial Services allowed many insurance companies to innovate with new products. In many instances, the speed of innovation necessitated the introduction of packaged solutions that did not run on the organisations own IT infrastructure and created islands of independent IT outside the control of its in-house departments. This was fine while organisations wanted to view the world through a product perspective but in the last decade, organisations were moving towards a customer centric perspective and found great difficulty in implementing solutions because of the need to iron out inconsistent views of a single customer. In many instances, this lead to implementing ‘clunky’ data warehouse software just to get a unified view on what each customer bought off the organisation. Basically implementing product-based solution decreased the organisations flexibility when it came to implementing customer-wealth management.

Another area that could lead to compromising flexibility is that of outsourcing. Don’t get me wrong, I am a fan of outsourcing when it is the sensible thing to do as part of a coherent strategy. However, it can be a source of organisational inflexibility often obscured by the cost reduction business case. Outsource providers need a period of operation with some guarantee of obtaining a return on their investment. Hence they would tend to negotiate contracts that ‘locks-in’ an organisation for a certain period. Also, to make a return, they need to define clearly what service, what volumes and what service levels they have committed. Now, the tighter the contractual terms you negotiate with your outsource provider, the greater the potential inflexibility and the greater potential for higher costs to you as your supplier plays “the change control game” with you and your procurement department.

It is not only outsourcing that increases inflexibility. There would appear to be a heuristic relationship between the complexity of a situation and its impact on your flexibility. Using external resources through contract may save you effort in controlling the work but you take on added complexity in that you have externalised control and have to take on contract risks.

You may even believe that you have negotiated a great contract with your supplier where you have passed all risks to them at a favourable price. Two examples will illustrate what appear to be great deals when negotiated, but may not be so good in operation. The first is the construction project for The new Wembley Stadium undertaken by the English Football Association. It is now years late and even when it is delivered, there will be years of court cases with the contractor.

The second example of an external contract is the administration of the Congestion Charge in London. The Mayor’s office did a great job in negotiating a contract with Capita for the provision of the administration and technology to support the Congestion Charge in London. This contract pushed most of the risks to the supplier. After one year of operation, the traffic in the designated the area was significantly reduced, well below the assumptions made by Capita. Since they were paid on a percentage of the revenue collected, Capita was not making the expected returns. The Mayor’s Office had to make an ex-gratia payment of about £30M to its supplier to keep the contract going.

So when you are doing strategic thinking, try and be clear how far you can actually see ahead with any accuracy. This will be a good clue to your ‘span of foresight’. Also, look critically at your organisation and try and assess its flexibility. Basically, ask yourself how quickly you can execute a major change in strategy. This is an indication of your ‘flexibility’. Make sure your flexibility is less than your span of foresight.

To sum up, this article is revisiting the fundamentals of strategy formulation and implementation. It looks at business strategy from a General Systems perspective and has highlighted the difference between strategy and tactics. It has also highlighted the importance of two strategic concepts; an organisation’s “span of foresight” and an organisation’s “flexibility”. We have also seen how the normal business planning tools such as corporate planning is dependent on a ‘predictable’ type of environment.

Whether you are a leader or even a manager with strategy responsibilities, I would recommend using these concepts in your work. This should be used alongside your preferred strategy methods. I shall be publishing further articles on environment classifications following the work of Emery and Trist and propose way of looking at an organisations’ strategic stance base on some ideas of mine.


Strategic Management


Strategic management is the process of specifying an organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity. It is not a task, but a rather a set of managerial skills that ought to be exerted throughout the organization, in a wide array of functions.

An organization’s strategy must be appropriate for its resources, environmental circumstances, and core objectives. The process involves matching the company’s strategic advantages to the business environment the organization faces. One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently.

A good corporate strategy should integrate an organization’s goals, policies, and tactics into a cohesive whole, and must be based on business realities. Business enterprises can fail despite ‘excellent’ strategy because the world changes in a way they failed to understand. Strategy must connect with vision, purpose and likely future trends.

Strategic management can be seen as a combination of strategy formulation and strategy implementation, but strategy must be closely aligned with purpose.

Strategy formulation involves doing a situation analysis: both internal and external, both micro-environmental and macro-environmental; setting objectives–crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives; and planning. This three-step strategy formulation process is sometimes described as determining where you are now, determining where you want to go, and then determining how to get there. These are the essence of strategic planning.

Strategy implementation involves allocation of sufficient resources (financial, personnel, time, technology support); establishing a chain of command or some alternative structure (such as cross functional teams); assigning responsibility of specific tasks or processes to specific individuals or groups; managing the process–monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary. When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with legacy processes.

Strategy formulation and implementation is an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Strategic management is dynamic. It involves a complex pattern of actions and reactions. It is partially planned and partially unplanned. Strategy is both planned and emergent, dynamic, and interactive.

For strategic management to be a success, organizations must not fail to follow the plan. They should be guided by the set of objectives that they have formulated, envisioning a prosperous business. They should strive to understand customers more thoroughly. Over-estimation of resource competence and under-estimation of time requirements should be avoided. Employee and senior management commitment should be obtained through keeping communication channels open and healthy. Most crucially, the management should acquire the ability to predict environmental reaction and manage change.

Copyright 2007 Ismael D. Tabije


Strategic Management


In strategic management, managers must know how the different parts of the organization and its environment fit together. It is crucial in understanding how they affects and influence each other.

To understand what is strategic management, we need to ask the following questions:-

How did our organization reach the situation it is today?

Why is it producing these particular products or services?

Why you are located here?

Why are you serving a particular part of the market place?

Why are you organized this way?

It boils down to decisions of course!

How these major (or strategic) decisions about products, location, structure and senior management appointments are made and how they are implemented can be defined as the process of strategic management.

Corporate planning process can be adhoc or opportunistic (less structured) approach for small firms; fashion clothing retailer. It is more logical and structured approach to making strategy for big MNCs like Glaxo, Philips, SIA etc.,

Who undertakes the strategic decisions or the corporate planning process?


Senior management team, Staff analysts (technical work)

Implementations by middle and junior managers.

Strategic Reviews and Scenario Planning on a quarterly or half yearly basis well facilitated by a professional facilitator and consultant brings about the best result in Organizational Change Development.

Organizations that do not plan strategically will ultimately lead to failure!

Don’t take it lightly if we are serious about our organizations survival and success.


If your organization needs such professional service, contact us

And we will be very glad to advise and serve you.