Strategic
Management
LECTURE NOTES
, CONTENTS
Chapter Title Page No.
I WHAT IS STRATEGIC MANAGEMENT? 5
II STRATEGY ITS HISTORY AND IMPLEMENTATION 8
III DOES STRATEGIC MANAGEMENT WORK? 14
IV THE STRATEGIC MANAGER 18
V WHY STRATEGIES FAIL? 22
VI THE ANATOMY OF IMPLEMENTATION 32
VII DRIVING STRATEGY IMPLEMENTATION
WITH OPERATING PLANS 36
VIII SETTING THE STAGE 44
IX SETTING THE RIGHT PRIORITIES AND OBJECTIVES 50
X TRACKING STRATEGY IMPLEMENTATION PROGRESS 56
XI MAKING STRATEGY HAPPEN 72
XII MULTI-BUSINESSES 83
XIII SMALL BUSINESSES 91
XIV E-BUSINESS 95
, CHAPTER - I
WHAT IS STRATEGIC MANAGEMENT?
OBJECTIVE
Strategic management is difficult in part because it requires contradictory qualities and skills
in dealing with the paradoxical demands of situations. We can understand this by first seeing the
different types of managers there are and then realizing how the qualities and skills of the different
types may be present in single individuals, who have to bring them together in complementary ways
to deal with the strategic tensions they confront.
The study of strategic management in business schools and elsewhere has increased for one
good reason. Strategic management works. We will look at the evidence for this in the next chapter.
In this chapter we want to provide a simple working definition of strategic management, although we
recognize that there is no single universally agreed definition. In fact, there are hundreds if not thousands
of definitions of strategic management and probably the main variants of them can be justified on
numerous grounds.
PLANNING
Strategic management has become widely established in all sectors of modern economies,
although mainly in larger organizations. The rise of strategic planning in the 1960s and its use in the
private sector in the 1970s was noted, advocated, and analysed in many influential studies (Quinn,
1980; Ohmae, 1982; and Ansoff, 1987).
This prescriptive view of strategic planning emphasized the importance of the organizational
environment as a source of threats and opportunities and the need for effective responses was expressed
in a plan. Typically this plan formulated major decisions about entry to new industries or the
development of new products or services and was guided by sets of objectives and goals. In the
1980s, under the influence of Porter’s (1980) writings, the emphasis was less on the plan then on the
selection of an appropriate generic strategy to position the business unit in its competitive environment.
Porter appeared less concerned with trends and events that might pose threats and opportunities than
with an environment. He suggested that the competitive environment could be analysed using what is
now often referred to as a Five Forces Analysis. This entailed mapping the environment primarily as
a pattern of competitive pressures from rivals, suppliers, buyers, entrants, and substitutes. Then he
broadly distinguished two strategic options. The business could either position itself as offering a low
cost product at a standard price, or it could offer a product that was different from that offered by
5
, rivals. These are referred to as generic strategies. However, Porter still placed emphasis on the
analytical strategic thinking needed to formulate an appropriate response to an organization’s
environment. This analytical thinking extended to the planning of implementation of cost reductions or
additions to value through differentiation. This planning of the implementation of a generic strategy
could be done using Porter’s concept of the value chain. This involved essentially characterizing different
types of activity within an organization and analyzing them in sufficient detail to identify opportunities
for cutting unproductive costs or adding values as perceived by customers.
Selection of
generic strategy
Organizational Five Forces
activities analysed Analysis of
using value chain competitive forces
in industry
Figure 1 Porter’s analytical contributions to strategic management
IMPLEMENTATION
Quinn (1980), whose study had a more descriptive intent than some earlier studies of strategic
management, emphasized the emergent but rational quality of strategy formulation. This meant that
strategic thinking was logical but issues of organizational politics and managerial ignorance affected
the way in which strategy might be implemented. This and other studies alerted managers to the issues
of strategic implementation. Ansoff (1987), for example, took on board the importance of resistance
to change and modified his earlier normative conceptions of strategic management as being where
strategic planning is coupled with strategy implementation.
WORKING DEFINITION OF STRATEGIC MANAGEMENT
Ohmae’s (1982) ideas of strategic management offer a simple but robust initial definitions.
He draws attention to three key groups- the corporation, the customer, and the competitors. Strategic
management might be defined, therefore, as the pursuit of superior performance by using a strategy
that ensures a better or stronger matching of corporate strengths to customer needs than is provided
by competitors (Ohmae, 1982).
Ohmae also emphasizes the importance of moving from abstract ideas of strategy to concrete
planning of implementation. This means that this favors properly worked-up action plans for line
managers. Pettigrew and Whipp (1993) also make the point about the importance of properly linking
6
Management
LECTURE NOTES
, CONTENTS
Chapter Title Page No.
I WHAT IS STRATEGIC MANAGEMENT? 5
II STRATEGY ITS HISTORY AND IMPLEMENTATION 8
III DOES STRATEGIC MANAGEMENT WORK? 14
IV THE STRATEGIC MANAGER 18
V WHY STRATEGIES FAIL? 22
VI THE ANATOMY OF IMPLEMENTATION 32
VII DRIVING STRATEGY IMPLEMENTATION
WITH OPERATING PLANS 36
VIII SETTING THE STAGE 44
IX SETTING THE RIGHT PRIORITIES AND OBJECTIVES 50
X TRACKING STRATEGY IMPLEMENTATION PROGRESS 56
XI MAKING STRATEGY HAPPEN 72
XII MULTI-BUSINESSES 83
XIII SMALL BUSINESSES 91
XIV E-BUSINESS 95
, CHAPTER - I
WHAT IS STRATEGIC MANAGEMENT?
OBJECTIVE
Strategic management is difficult in part because it requires contradictory qualities and skills
in dealing with the paradoxical demands of situations. We can understand this by first seeing the
different types of managers there are and then realizing how the qualities and skills of the different
types may be present in single individuals, who have to bring them together in complementary ways
to deal with the strategic tensions they confront.
The study of strategic management in business schools and elsewhere has increased for one
good reason. Strategic management works. We will look at the evidence for this in the next chapter.
In this chapter we want to provide a simple working definition of strategic management, although we
recognize that there is no single universally agreed definition. In fact, there are hundreds if not thousands
of definitions of strategic management and probably the main variants of them can be justified on
numerous grounds.
PLANNING
Strategic management has become widely established in all sectors of modern economies,
although mainly in larger organizations. The rise of strategic planning in the 1960s and its use in the
private sector in the 1970s was noted, advocated, and analysed in many influential studies (Quinn,
1980; Ohmae, 1982; and Ansoff, 1987).
This prescriptive view of strategic planning emphasized the importance of the organizational
environment as a source of threats and opportunities and the need for effective responses was expressed
in a plan. Typically this plan formulated major decisions about entry to new industries or the
development of new products or services and was guided by sets of objectives and goals. In the
1980s, under the influence of Porter’s (1980) writings, the emphasis was less on the plan then on the
selection of an appropriate generic strategy to position the business unit in its competitive environment.
Porter appeared less concerned with trends and events that might pose threats and opportunities than
with an environment. He suggested that the competitive environment could be analysed using what is
now often referred to as a Five Forces Analysis. This entailed mapping the environment primarily as
a pattern of competitive pressures from rivals, suppliers, buyers, entrants, and substitutes. Then he
broadly distinguished two strategic options. The business could either position itself as offering a low
cost product at a standard price, or it could offer a product that was different from that offered by
5
, rivals. These are referred to as generic strategies. However, Porter still placed emphasis on the
analytical strategic thinking needed to formulate an appropriate response to an organization’s
environment. This analytical thinking extended to the planning of implementation of cost reductions or
additions to value through differentiation. This planning of the implementation of a generic strategy
could be done using Porter’s concept of the value chain. This involved essentially characterizing different
types of activity within an organization and analyzing them in sufficient detail to identify opportunities
for cutting unproductive costs or adding values as perceived by customers.
Selection of
generic strategy
Organizational Five Forces
activities analysed Analysis of
using value chain competitive forces
in industry
Figure 1 Porter’s analytical contributions to strategic management
IMPLEMENTATION
Quinn (1980), whose study had a more descriptive intent than some earlier studies of strategic
management, emphasized the emergent but rational quality of strategy formulation. This meant that
strategic thinking was logical but issues of organizational politics and managerial ignorance affected
the way in which strategy might be implemented. This and other studies alerted managers to the issues
of strategic implementation. Ansoff (1987), for example, took on board the importance of resistance
to change and modified his earlier normative conceptions of strategic management as being where
strategic planning is coupled with strategy implementation.
WORKING DEFINITION OF STRATEGIC MANAGEMENT
Ohmae’s (1982) ideas of strategic management offer a simple but robust initial definitions.
He draws attention to three key groups- the corporation, the customer, and the competitors. Strategic
management might be defined, therefore, as the pursuit of superior performance by using a strategy
that ensures a better or stronger matching of corporate strengths to customer needs than is provided
by competitors (Ohmae, 1982).
Ohmae also emphasizes the importance of moving from abstract ideas of strategy to concrete
planning of implementation. This means that this favors properly worked-up action plans for line
managers. Pettigrew and Whipp (1993) also make the point about the importance of properly linking
6
