STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT(SME)(SME)

Presented by: Presented by: Ahmed Kamal Ahmed Kamal

Strategic Management The term ‘strategy’ has its origin in the Greek word strategos. Stategos means ‘the art of war’ as a noun and ‘to commend an army’ as a verb.

Strategos is to plan the destruction of one’s enemies through the effective use of sources.

Strategic management Management Tasks concerned with growth and future of a business enterprise

It ensures that the enterprise keeps moving in the right direction.

Strategy Strategy is about achieving competitive advantage through being different- delivering a unique value added to the customer, having a clear and enact able view of how to position yourself uniquely in the industry.

Michael Porter

Strategic management Understanding where the business is at present

A clear view about where it wants to be in future

A wide scale debate about how it will reach its future destination

Jack Welch

Nature and Scope Serves as a route map Lays down growth objectives and strategies

Ensures the firm remains prepared Ensures best utilization of recourses Serves as a hedge against uncertainty Helps to understand trends in advance

Nature and Scope Helps to avoid haphazard response Provides the best possible fit Helps build competitive advantage and core competencies

Draws from both intuition and logic

Critical Questions Who are my customers now ? What do they want now ? What choices do my customers have ? What must I do now to satisfy them ?

Who will responsible for carrying these activities out ?

How much will it cost ?

Essential steps in SME strategy

Vision ( what we see the organization becoming at some future time )

Mission ( how we will get to this future point )

Strategy (near terms goal that move us forward vision )

Tactics ( implementation detail of strategy)

Stages of strategic management in SME

Analyzing external and internal environments

Selecting business strategies

Evaluating business strategies

Implementing those strategies

External and Internal environment of firm

Analyzing external and internal environments

External Environment Political and legal factors.

Economical factors.

Socio-cultural factors.

Technological factors.

External Environment Analysis

PEST Analysis

Industry Analysis Competitive Environment

Entry of new competitors. Threats of substitutes. Bargaining power of buyers. Bargaining power of suppliers.

The rivalry among existing competitors.

Opportunity and Threats Profile

Internal Environment Analysis

Firms strengths and weaknesses Resources Culture Management Production/Operations Finance/Accounting Marketing

Firms strengths and weaknesses

All organizations have strengths and weaknesses in the functional areas of business.

Management Production/Operations Finance/Accounting Marketing

Resources

Physical resources Plant Material Human resources employees, training etc Organizational resources trade mark, copy rights etc

Characteristics of resources

Innovative capability Substitutability Appropriability Durability Imitability

Culture

Pattern of behaviors Responses to external and internal problems

Values Beliefs Rituals Language

MANAGEMENT 

planning, Organizing Motivating Staffing Controlling

PRODUCTION/OPERATIONS 

Inputs Transformations Outputs

FINANCE/ACCOUNTING Liquidity Profitability Growth

MARKETING

Customer analysis Selling products/services Product and service planning Pricing Distribution Marketing research Opportunity analysis

Strategic Management of firm includes

Strategic marketing management

Strategic financial management

Strategic HR management Strategic information management

Formulating/Selecting business strategies

Cost Leadership Stability Expansion Retrenchment Diversification Combination

Cost Leadership Standardized products Price-sensitive customers low per-unit cost

Types :- low-cost strategy best-value strategy

Stability No change Pause/proceed with caution Profit strategies

Expansion

Through concentration Through integration Through diversification Through cooperation Through internationalization

Retrenchment

Turn around Divestment liquidation

DIVERSIFICATION Related Diversification Unrelated Diversification

Combination Simultaneous Sequential Combination of both

Evaluating business strategies

Focusing on alternatives Narrow down a choice Determine the criteria Based on personal judgments (SME)

Evaluation of strategic

alternatives Bring together the results of analysis

Making the strategic choice Most suitable choice under existing conditions

Subjective factors in strategic choice

Considerations for govt. policy Commitment to past strategic plans Strategic decisions style & attitude to risk

Internal political considerations Timing & competitors consideration. Social responsibility

Importance of evaluation

conditional ????? Need for feedback Appraisal & reward Check on validity of e strategic choice

Successive culmination of strategic management process

Creating inputs for new strategy

Strategy Implementation

It is always more difficult to do something (strategy implementation)

than to say you are going to do it

(strategy formulation)

Management Perspectives

Devising policies Allocating resources Matching strategy with structure Managing natural environment Strategy supportive culture Minimizing resistance to change developing a strategy-supportive culture

pyramid of strategy implementation

Strategy Implementation Issues

in (SME) Marketing issues Finance/Accounting issues Research and development issues

Management information system

Marketing issues Marketing decisions may require policies :

To use heavy, light, or no TV advertising

To offer a complete or limited warranty

To advertise online or not To reward salespeople based on straight salary, straight commission, or a combination salary/commission.

Finance/Accounting issues

To raise capital with short-term debt or long-term debt

To lease or buy fixed assets To determine the amount of cash that should be kept on hand

Research and development issues

Emphasize product or process improvement

Be leaders or followers in R&D. Develop computerized or manual-type processes

Spend a high, average, or low amount of money on R&D.

Perform R&D within the firm or contract to outside firms

Management information system

(SME) Old computer information systems

Lack of assimilating and evaluating information

Lack of collection, retrieval, and storage of information

Lack of coordinating activities

Strategy Implementation (SME)

Less than 10 percent of strategies formulated are successfully implemented

Some reasons : failing to segment markets falling behind competitors in R&D Not recognizing the benefit of computers in managing information