Ministry of higher education and

Scientific researcher
Soran university
Business Department
Business English
Stage 1

Strategic Management
Prepared by:

Mahir Muhammad

Supervised by:

Yashar Fadhil

(2024-2023)
 Contents
Introduction ..................................................................................................... 1
What are the benefits of strategic management? ........................................... 2
Strategic management concepts ...................................................................... 2
Application ....................................................................................................... 3
Formulation...................................................................................................... 3
Implementation ................................................................................................ 4
Definitions ........................................................................................................ 5
Historical development .................................................................................... 6
Origins .............................................................................................................. 6
Change in focus from production to marketing ............................................. 8
Nature of strategy ............................................................................................ 8
Theory of the business ..................................................................................... 9
Conclusion ...................................................................................................... 10
References ...................................................................................................... 11

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 Introduction

Strategic management involves developing and implementing plans to help an

organization achieve its goals and objectives. This process can include
formulating strategy, planning organizational structure and resource allocation,
leading change initiatives, and controlling processes and resources.

Strategic planning involves identifying business challenges, choosing the best

strategy, monitoring progress, and then making adjustments to the executed
strategy to improve performance. Tools like SWOT (strengths, weaknesses,
opportunities, and threats) analysis are used to assess where opportunities and
threats lie between the organization, its competition, and the overall market.

Strategic management happens at broader levels like organization-wide

leadership, but it can also be implemented at a department or team level.

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 What are the benefits of strategic management?
Strategic management is generally thought to have financial and nonfinancial
benefits. A strategic management process helps an organization and its leadership
to think about and plan for its future existence, fulfilling a chief responsibility of
a board of directors. Strategic management sets a direction for the organization
and its employees. Unlike once-and-done strategic plans, effective strategic
management continuously plans, monitors and tests an organization's activities,
resulting in greater operational efficiency, market share and profitability.

Strategic management concepts

Strategic management is based around an organization's clear understanding of
its mission; its vision for where it wants to be in the future; and the values that
will guide its actions. The process requires a commitment to strategic planning, a
subset of business management that involves an organization's ability to set both
short- and long-term goals. Strategic planning also includes the planning of
strategic decisions, activities and resource allocation needed to achieve those
goals.

Having a defined process for managing an institution's strategies will help

organizations make logical decisions and develop new goals quickly in order to
keep pace with evolving technology, market and business conditions. Strategic
management can, thus, help an organization gain competitive advantage, improve
market share and plan for its future.

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 Application
Strategy is defined as "the determination of the basic long-term goals of an
enterprise, and the adoption of courses of action and the allocation of resources
necessary for carrying out these goals." Strategies are established to set direction,
focus effort, define or clarify the organization, and provide consistency or
guidance in response to the environment.
Strategic management involves the related concepts of strategic
planning and strategic thinking. Strategic planning is analytical in nature and
refers to formalized procedures to produce the data and analyses used as inputs
for strategic thinking, which synthesizes the data resulting in the
strategy. Strategic planning may also refer to control mechanisms used to
implement the strategy once it is determined. In other words, strategic planning
happens around the strategic thinking or strategy making activity.
Strategic management is often described as involving two major
processes: formulation and implementation of strategy. While described
sequentially below, in practice the two processes are iterative and each provides
input for the other.

Formulation
Formulation of strategy involves analyzing the environment in which the
organization operates, then making a series of strategic decisions about how the
organization will compete. Formulation ends with a series of goals or objectives
and measures for the organization to pursue. Environmental analysis includes the:

• Remote external environment, including the political, economic, social,

technological, legal and environmental landscape (PESTLE);
• Industry environment, such as the competitive behavior of rival
organizations, the bargaining power of buyers/customers and suppliers,
threats from new entrants to the industry, and the ability of buyers to
substitute products (Porter's 5 forces); and
• Internal environment, regarding the strengths and weaknesses of the
organization's resources (i.e., its people, processes and IT systems).
Strategic decisions are based on insight from the environmental assessment and
are responses to strategic questions about how the organization will compete,
such as:

• What is the organization's business?

• Who is the target customer for the organization's products and services?
• Where are the customers and how do they buy? What is considered
"value" to the customer?

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 • Which businesses, products and services should be included or
excluded from the portfolio of offerings?
• What is the geographic scope of the business?
• What differentiates the company from its competitors in the eyes of
customers and other stakeholders?
• Which skills and capabilities should be developed within the firm?
• What are the important opportunities and risks for the organization?
• How can the firm grow, through both its base business and new
business?
• How can the firm generate more value for investors?
The answers to these and many other strategic questions result in the
organization's strategy and a series of specific short-term and long-term goals or
objectives and related measures.

Implementation
The second major process of strategic management is implementation, which
involves decisions regarding how the organization's resources (i.e., people,
process and IT systems) will be aligned and mobilized towards the objectives.
Implementation results in how the organization's resources are structured (such
as by product or service or geography), leadership arrangements, communication,
incentives, and monitoring mechanisms to track progress towards objectives,
among others.
Running the day-to-day operations of the business is often referred to as
"operations management" or specific terms for key departments or functions,
such as "logistics management" or "marketing management," which take over
once strategic management decisions are implemented.

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 Definitions
In 1988, Henry Mintzberg described the many different definitions and
perspectives on strategy reflected in both academic research and in practice. He
examined the strategic process and concluded it was much more fluid and
unpredictable than people had thought. Because of this, he could not point to one
process that could be called strategic planning. Instead Mintzberg concludes that
there are five types of strategies:

• Strategy as plan – a directed course of action to achieve an intended set

of goals; similar to the strategic planning concept;
• Strategy as pattern – a consistent pattern of past behavior, with a
strategy realized over time rather than planned or intended. Where the
realized pattern was different from the intent, he referred to the strategy
as emergent;
• Strategy as position – locating brands, products, or companies within
the market, based on the conceptual framework of consumers or other
stakeholders; a strategy determined primarily by factors outside the
firm;
• Strategy as ploy – a specific maneuver intended to outwit a competitor;
and
• Strategy as perspective – executing strategy based on a "theory of the
business" or natural extension of the mindset or ideological perspective
of the organization.
In 1998, Mintzberg developed these five types of management strategy into 10
"schools of thought" and grouped them into three categories. The first group is
normative. It consists of the schools of informal design and conception, the
formal planning, and analytical positioning. The second group, consisting of six
schools, is more concerned with how strategic management is actually done,
rather than prescribing optimal plans or positions. The six schools are
entrepreneurial, visionary, cognitive, learning/adaptive/emergent, negotiation,
corporate culture and business environment. The third and final group consists of
one school, the configuration or transformation school, a hybrid of the other
schools organized into stages, organizational life cycles, or "episodes".
Michael Porter defined strategy in 1980 as the "...broad formula for how a
business is going to compete, what its goals should be, and what policies will be
needed to carry out those goals" and the "...combination of the ends (goals) for
which the firm is striving and the means (policies) by which it is seeking to get
there." He continued that: "The essence of formulating competitive strategy is
relating a company to its environment."

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 Historical development
Origins
The strategic management discipline originated in the 1950s and 1960s. Among
the numerous early contributors, the most influential were Peter Drucker, Philip
Selznick, Alfred Chandler, Igor Ansoff, and Bruce Henderson. The discipline
draws from earlier thinking and texts on 'strategy' dating back thousands of years.
Prior to 1960, the term "strategy" was primarily used regarding war and politics,
not business. Many companies built strategic planning functions to develop and
execute the formulation and implementation processes during the 1960s.
Peter Drucker was a prolific management theorist and author of dozens of
management books, with a career spanning five decades. He addressed
fundamental strategic questions in a 1954 book The Practice of
Management writing: "... the first responsibility of top management is to ask the
question 'what is our business?' and to make sure it is carefully studied and
correctly answered." He wrote that the answer was determined by the customer.
He recommended eight areas where objectives should be set, such as market
standing, innovation, productivity, physical and financial resources, worker
performance and attitude, profitability, manager performance and development,
and public responsibility.
In 1957, Philip Selznick initially used the term "distinctive competence" in
referring to how the Navy was attempting to differentiate itself from the other
services.[6] He also formalized the idea of matching the organization's internal
factors with external environmental circumstances.[30] This core idea was
developed further by Kenneth R. Andrews in 1963 into what we now call SWOT
analysis, in which the strengths and weaknesses of the firm are assessed in light
of the opportunities and threats in the business environment.
Alfred Chandler recognized the importance of coordinating management activity
under an all-encompassing strategy. Interactions between functions were
typically handled by managers who relayed information back and forth between
departments. Chandler stressed the importance of taking a long-term perspective
when looking to the future. In his 1962 ground breaking work Strategy and
Structure, Chandler showed that a long-term coordinated strategy was necessary
to give a company structure, direction and focus. He says it concisely, "structure
follows strategy." Chandler wrote that:
"Strategy is the determination of the basic long-term goals of an enterprise, and
the adoption of courses of action and the allocation of resources necessary for
carrying out these goals."
Igor Ansoff built on Chandler's work by adding concepts and inventing a
vocabulary. He developed a grid that compared strategies for market penetration,

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product development, market development and horizontal and vertical
integration and diversification. He felt that management could use the grid to
systematically prepare for the future. In his 1965 classic Corporate Strategy, he
developed gap analysis to clarify the gap between the current reality and the goals
and to develop what he called "gap reducing actions". Ansoff wrote that strategic
management had three parts: strategic planning; the skill of a firm in converting
its plans into reality; and the skill of a firm in managing its own internal resistance
to change.
Bruce Henderson, founder of the Boston Consulting Group, wrote about the
concept of the experience curve in 1968, following initial work begun in 1965.
The experience curve refers to a hypothesis that unit production costs decline by
20–30% every time cumulative production doubles. This supported the argument
for achieving higher market share and economies of scale.
Porter wrote in 1980 that companies have to make choices about their scope and
the type of competitive advantage they seek to achieve, whether lower cost or
differentiation. The idea of strategy targeting particular industries and customers
(i.e., competitive positions) with a differentiated offering was a departure from
the experience-curve influenced strategy paradigm, which was focused on larger
scale and lower cost. Porter revised the strategy paradigm again in 1985, writing
that superior performance of the processes and activities performed by
organizations as part of their value chain is the foundation of competitive
advantage, thereby outlining a process view of strategy.

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 Change in focus from production to marketing
The direction of strategic research also paralleled a major paradigm shift in how
companies competed, specifically a shift from the production focus to market
focus. The prevailing concept in strategy up to the 1950s was to create
a product of high technical quality. If you created a product that worked well and
was durable, it was assumed you would have no difficulty profiting. This was
called the production orientation. Henry Ford famously said of the Model T car:
"Any customer can have a car painted any color that he wants, so long as it is
black."
Management theorist Peter F Drucker wrote in 1954 that it was the customer who
defined what business the organization was in. In 1960 Theodore Levitt argued
that instead of producing products then trying to sell them to the customer,
businesses should start with the customer, find out what they wanted, and then
produce it for them. The fallacy of the production orientation was also referred to
as marketing myopia in an article of the same name by Levitt.
Over time, the customer became the driving force behind all strategic business
decisions. This marketing concept, in the decades since its introduction, has been
reformulated and repackaged under names including market orientation,
customer orientation, customer intimacy, customer focus, customer-driven and
market focus.

Nature of strategy
In 1985, Ellen Earle-Chaffee summarized what she thought were the main
elements of strategic management theory where consensus generally existed as
of the 1970s, writing that strategic management:

• Involves adapting the organization to its business environment;

• Is fluid and complex. Change creates novel combinations of
circumstances requiring unstructured non-repetitive responses;
• Affects the entire organization by providing direction;
• Involves both strategy formulation processes and also implementation
of the content of the strategy;
• May be planned (intended) and unplanned (emergent);
• Is done at several levels: overall corporate strategy, and individual
business strategies; and
• Involves both conceptual and analytical thought processes.
Chaffee further wrote that research up to that point covered three models of
strategy, which were not mutually exclusive:

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 1. Linear strategy: A planned determination of goals, initiatives, and
allocation of resources, along the lines of the Chandler definition
above. This is most consistent with strategic planning approaches
and may have a long planning horizon. The strategist "deals with"
the environment but it is not the central concern.

Theory of the business

According to Peter Drucker, business theory refers to the key points and strategies
of a company, which are divided into three parts:
1. The external environment (society, technology, customers, and competition).
2. The goal of an organization.
3. Guidelines essential to achieving the mission.
This business theory has four differentiations:
1. Hypotheses maintain that mission and guidelines must be reality focused.
2. Thoughts must have agreement.
3. The business theory must be notable and interpreted by the members of the
organization.
4. Business theory must be continuously analyzed.
Companies have difficulties when the assumptions of such a theory do not align
with reality, Peter Drucker took as an example large retail premises, his goal was
that people who wanted to buy in large commercial premises do so, but many
consumers rejected commercial premises and preferred retailers (which focus on
one or two categories of products and own their own premises) time was essential
in shopping instead of profits . This theory is classified as an assumption and a
discipline, which focused on the elaboration of systematic diagnoses, monitoring
and testing of the guidelines that make up the business theory in order to maintain
competition.

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 Conclusion
Strategic management is the ongoing planning, monitoring, analysis and
assessment of all necessities an organization needs to meet its goals and
objectives. Changes in business environments will require organizations to
constantly assess their strategies for success. The strategic management
process helps organizations take stock of their present situation, chalk out
strategies, deploy them and analyze the effectiveness of the implemented
management strategies. Strategic management strategies consist of five basic
strategies and can differ in implementation depending on the surrounding
environment. Strategic management applies both to on-premise and mobile
platforms.

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 References
1. ^ Nag, R.; Hambrick, D. C.; Chen, M.-J (2007). "What is strategic
management, really? Inductive derivation of a consensus definition of the
field". Strategic Management Journal. 28 (9): 935–
955. CiteSeerX 10.1.1.491.7592. doi:10.1002/smj.615.qn|date=June 2018
2. ^ Alkhafaji, Abbass F. (2003). Strategic Management: Formulation,
Implementation, and Control in a Dynamic Environment. New York: Routledge
(published 2013). ISBN 9781135186357. Retrieved 2018-06-17. Strategic
management is the process of assessing the corporation and its environment in
order to meet the firm's long-term objectives of adapting and adjusting to its
environment through manipulation of opportunities and reduction of threats.A
corporation-oriented view
3. ^ Courtney, Roger (2002). Strategic Management for Voluntary Nonprofit
Organizations. Routledge studies in the management of voluntary and non-
profit organizations. Vol. 5. London: Psychology Press.
p. 8. ISBN 9780415250238. Retrieved 2018-06-17. [...] 'Strategic
Management' as 'the process of strategic change' (Bowman and Asche 1987)
or as 'the process of making and implementing strategic decisions', 'strategic
decisions' being those 'that determine the overall direction of an enterprise and
its ultimate viability in light of the ... changes that may occur in its ...
environments' (Quinn 1980).
4. ^ Pfeffer, Jeffrey 1946- (2009). The external control of organizations : a
resource dependence perspective. Stanford Business Books. ISBN 978-0-8047-
4789-9. OCLC 551900182.
5. ^ A Simple Approach to Strategic Management
A_Simple_Approach_to_Strategic_Management A Simple Approach to
Strategic Management
6. ^ Jump up to:a b c d e f g h Ghemawat, Pankaj (Spring 2002). "Competition and
Business Strategy in Historical Perspective". Business History Review. 76 (1):
37–74. doi:10.2307/4127751. JSTOR 4127751. SSRN 264528.
7. ^ Hill, Charles W. L.; Jones, Gareth R. (2012). Strategic Management: An
Integrated Approach (10 ed.). Mason, Ohio: Cengage Learning.
p. 21. ISBN 9781111825843. Retrieved 2018-06-17. The feedback loop [...]
indicates that strategic planning is ongoing; it never ends. Once a strategy has
been implemented, its execution must be monitored [...]. This information and
knowledge is returned to the corporate level through feedback loops, and
becomes the input for the next round of strategy formulation and
implementation.
8. ^ (Lamb, 1984:ix)
9. ^ Lamb, Robert, Boyden Competitive strategic management, Englewood
Cliffs, NJ: Prentice-Hall, 1984
10. ^ Jump up to:a b c Porter, Michael E. (1996). "What is Strategy?". Harvard
Business Review (November–December 1996).
11. ^ Jump up to:a b c Chaffee, Ellen Earle (January 1985). "Three Models of
Strategy". Academy of Management Review. 10 (1): 89–
98. doi:10.5465/amr.1985.4277354.

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