Strategic Management

& Strategic Planning

BY OVIDIJUS JUREVICIUS
AT STRATEGIC MANAGEMENT INSIGHT

Contents
Definition
What is strategic management?
Key terms
Difference between strategic management and

strategic planning
Basic strategic planning process
Different models of strategic management
Importance of strategic planning

Contents (continued)
Why some firms do not do strategic management
Key benefits
Limitations
Guidelines for successful strategic planning

Definition
Strategic management can be defined as the art and
science of formulating, implementing and evaluating crossfunctional decisions that enable an organization to achieve
its objectives.
by David, F.R. Strategic Management: Concepts and Cases

An integrative management field that combines analysis,

formulation, and implementation in the quest for
competitive advantage.
by Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases

Definition (cont.)
Strategic planning is defined as the process by which
managers of the firm analyze the internal and external
environments for the purpose of formulating strategies and
allocating resources to develop a competitive advantage in
an industry that allows for the successful achievement of
organizational goals.
by Cox, Daspit, McLaughlin and Jones (2012)

Strategic management includes understanding the

strategic position of an organisation, making strategic
choices for the future and managing strategy in action.
by Johnson, Scholes and Whittington (2008)

What is Strategic Management?

The general purpose of strategic planning is to
combine the energy of organizations functional areas
into one focused effort to achieve superior
performance. It is usually done through the
many steps of the process.

Initial
assessment

Situation
Analysis

Strategy
Formulation

Strategy
Implementa
tion

Strategy
Monitoring

What is Strategic Management? (continued)

In essence, it answers the following 3 questions:

Where the organization is at the moment?

Where does it want to go?
How it will get there?

Key terms
Competitive advantage

Key terms (cont.)

Strategists
The people who craft strategies and execute them in an organization.

Key terms (cont.)

Vision and mission statements
Vision what do we
want to become?

Mission what is our

business?

Key terms (cont.)

SWOT Matrix

S Strengths
W Weaknesses
O Opportunities
T - Threats

Key terms (cont.)

External forces

Key terms (cont.)

Internal forces
Value chain activities

Organizational culture

Core competencies

Human resources

Management
Marketing

Capabilities
Firm

Operations
Finances

Assets
R&D

Key terms (cont.)

Objectives
Objectives the goals that organization wants to
achieve in short or long-term

Key terms (cont.)

Policies
Policies are the tools used
to achieve objectives. They
include guidelines, rules
and procedures.

Difference between strategic management and

strategic planning
Both, strategic management and strategic planning, terms
mean the same!
Strategic Management

is used in

is used in

Academic environment

Strategic Planning

Business environment

Basic strategic planning process

Initial Assessment
Situation Analysis
Strategy Formulation
Strategy Implementation
Strategy Monitoring

Different models of strategic management

Davids model

Different models of strategic management (2)

Rothaermels model

Different models of strategic management (3)

Thompsons model

Importance of strategic planning

Requirement for sustained competitive advantage

Views things from broader perspective
Facilitates collaboration

Importance of strategic planning (cont.)

Requirement for sustained competitive advantage

Some companies may achieve competitive advantage

without thorough strategic planning but for the most
businesses out there it is vital to plan strategically, i.e.
analyze, create, implement and monitor their strategy,
and do this continuously.

Importance of strategic planning (cont.)

Views things from broader perspective
The other reason why the organizations dont simply
rely on their finances, marketing or operations
functional areas to bring the competitive advantage is
that managers of each area often view things only from
their own specific angle, which is too narrow view for
the whole organization to rely upon.
Only the managers (e.g. CEOs or strategic planners)
who see the whole picture of the company and its
surrounding environments can make the decisions that
bring the competitive advantage.

Importance of strategic planning (cont.)

Facilitates collaboration

Nowadays, most companies involve middle managers

of functional areas into the process of formulating
strategic plan. Middle managers are the people who
implement the strategies set out in a plan and if they
arent involved in making the plan, then they arent so
committed to support it.

Why some firms do not do strategic management

Poor reward

structures
Waste of time
Too expensive
Laziness
Fear of failure
Overconfidence
Prior bad experience
Difference in opinions

Key benefits
1.
2.
3.

4.
5.

Defines companys vision, mission and future

goals.
Identifies the suitable strategies to achieve the
goals.
Improves awareness of the external and internal
environments, and clearly identifies the
competitive advantage.
Increases managers commitment to achieving the
companys objectives.
Improves coordination of the activities and more
efficient allocation of companys resources.

Key benefits (cont.)

6. Better communication between managers of the
7.

8.
9.
10.

different levels and functional areas.

Reduces resistance to change by informing the
employees of the changes and the consequences of
them.
Strengthens the firms performance.
On average, companies using strategic management
are more successful than the companies that dont.
Strategic planning allows the organization to
become more proactive than reactive.

Limitations

The costs of engaging in strategic management are

huge.
The process is complex.
Success is not guaranteed.

Guidelines for successful strategic planning

It should be implemented in the organization rather

than left on paper.

Managers and employees must understand the

process and be involved in it.

It cannot become too bureaucratic, formal and too

rigid process
Managers involved in strategic management must

know all the required information as soon as possible

and use it to strengthen firms strategic efforts.

Thank you for reading

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