Strategic Mnagement Bml 206 lecture notes 1

THE MANAGEMENT UNIVERSITY OF AFRICA
SCHOOL OF MANAGEMENT AND
LEADERSHIP
BML 206: INTRODUCTION TO STRATEGIC
MANAGEMENT
COURSE SYLLABUS
COURSE INSTRUCTOR: A.KIHANYA
CREDIT HOURS: 3 HRS

1.0 COURSE PURPOSE
The course equips the learner with knowledge and
skills in Strategic Management to be able to make
strategic decisions in business. It is also intended to
provide the student with an exposition to the
concept

of

strategy,

the

process

of

strategy

formulation and strategy implementation.
The course is designed to help you develop skills
and judgment for your business career. The intent is

to sharpen your ability to think critically and
logically, and to help you learn to diagnose
situations from a strategic point of view.

2.0 COURSE LEARNING OUTCOMES
At the end of this course, the learner should be able
to;
1. Analyze a company’s external environment,
internal strategy and their interface.
2. Explain the nature of business competition and
sources of competitive advantage
3. Discuss how the internal and external
environment influence firm performance
4. Understand and appreciate the process and value
of Strategic Management.
5. Relate the role of ethics in corporate social
responsibility.

3.0 TEACHING METHODOLOGY
The course will be conducted using lectures,
group/class discussions, assignments and case
studies.
4.0 COURSE ASSESSMENT
Continuous Assessment Test 15%
Work Based Assignments

15%

Final Examination

70%

TOTAL

100%

5.0 COURSE TEXTS AND JOURNALS
1. Wheelen, T., & Hunger, J. D. (2004).Concepts in
strategic management and business policy. New
York: Prentice
2. Academy of Management Executive: Academy of
Management: New York.

6.0 RECOMMENDED TEXT BOOKS
1. Gerry, J., Scholes, K., & Whittington, R.
(2005).Exploring Corporate Strategy: Text only.
New Jersey; Prentice Hall.
2. Ghemawat, P. (2006). Strategy and the Business
Landscape. Core Concepts. Upper Saddle River.
NJ: Prentice Hall.
3. Hunger J &Wheelen, T. (2006) Essentials of
Strategic Management. New Jersey: Prentice Hall
4. International Executive : Joho Wiley & Sons : New
Jersey

TOPIC ONE

INTRODUCTION

INTRODUCTORY QUESTION

Why are some

firms more successful than others?
1.0 THE CONCEPT OF STRATEGY
“Effective managers live in the present – but
concentrate on the future." James L. Hayes
What is Strategy?
The word strategy comes from a combination of the
words; stratos, which meant “army”, and agein
meaning “to lead”. Greek Language (6th century
BC)
A strategy is a comprehensive action plan that
identifies long-term direction and guides resource
utilization to accomplish organizational goals with
sustainable competitive advantage.
“Strategy

is the direction and

scope of

an

organization over the long term: which achieves
advantage

for

the

organization

through

its

configuration of resources within a changing
environment, to meet the needs of markets and to
fulfill stakeholder expectations.”
“Strategy

becomes

a

fundamental

framework

through which an organization can assert its vital
continuity, while at the same time purposefully
managing

its

environment

adaptation
to

gain

to

the

competitive

changing
advantage.

Strategy includes the formal recognition that the
recipients of the results of a firm’s actions are the
wide constituency of its stakeholders. Therefore the
ultimate

objective

of

strategy

is

to

address

stakeholder benefits – to provide a base for
establishing the host of transactions and social
contracts that link a firm to its stakeholders.”
Strategic Management is Process of formulating,
implementing,

and

evaluating,

strategies

to

accomplish long-term goals and sustain competitive
advantage.

Strategic management is the process in which an
organization develops and implements plans that
espouse

the

goals

and

objectives

of

that

organization.
The process of strategic management is a continuous
one that changes as the organizational goals and
objectives evolve. Small businesses engage in
strategic management to ensure that they adapt to
trends and external changes such as globalization.
Several

key

concepts

characterize

strategic

management and the development of organizational
goals.
Essentially strategic management answers three
basic questions;
1. “Where do you want your business to go?”
(goals),
2. “How is your business going to get there?”
(strategy)

3. “How will you know when you get there?”
(Evaluation).
1.1 Characteristics of Strategy
The question “what is strategy?” can be addressed
by attempting to find characteristics that distinguish
strategic decisions from other decisions taken
within the organization.
Characteristics of strategic decisions:
• affect thelong term direction of the organization.
• achieve

anadvantage,

frequently

over

the

competition.
• are about the scope of the organization’s
activities.
• match an organization to its environment.
• build

on

an

organization’s

resources

and

competences.
• are the requirement for major resource changes
within an organization.

• have an impact on operational decisions across
the organization.
• give

the

values

and

expectations

of

the

organization.
Above all, strategic decisions are complex, involve a
high

degree

of

uncertainty

and

affect

the

organization as a whole.

2.0 BUSINESS POLICY
2.1 Definition of Business Policy
Business Policy defines the scope or spheres within
which decisions can be taken by the subordinates in
an organization.
It permits the lower level management to deal with
the problems and issues without consulting top
level management every time for decisions.
Business policies are the guidelines developed by

an organization to govern its actions. They define
the limits within which decisions must be made.
Business policy also deals with acquisition of
resources with which organizational goals can be
achieved.
Business policy is the study of the roles and
responsibilities of top level management, the
significant issues affecting organizational success
and the decisions affecting organization in longrun.
2.1.1Features of Business Policy
An effective business policy must have following
features1. Specific- Policy should be specific/definite. If it
is uncertain, then the implementation will
become difficult.
2. Clear- Policy must be unambiguous. It should
avoid use of jargons and connotations. There

should be no misunderstandings in following
the policy.
3. Reliable/Uniform- Policy must be uniform
enough so that it can be efficiently followed by
the subordinates.
4. Appropriate- Policy should be appropriate to
the present organizational goal.
5. Simple- A policy should be simple and easily
understood by all in the organization.
6. Inclusive/Comprehensive- In order to have a
wide scope, a policy must be comprehensive.
7. Flexible-

Policy

should

be

flexible

in

operation/application. This does not imply that a
policy should be altered always, but it should be
wide in scope so as to ensure that the line
managers

use

them

in

repetitive/routine

scenarios.
8. Stable- Policy should be stable else it will lead
to indecisiveness and uncertainty in minds of
those who look into it for guidance.

2.1.2 Difference between Policy and Strategy
The term “policy” should not be considered as
synonymous to the term “strategy”. The difference
between policy and strategy can be summarized as
follows1. Policy is a blueprint of the organizational
activities which are repetitive/routine in nature.
While

strategy

is

concerned

with

those

organizational decisions which have not been
dealt/faced before in same form.
2. Policy formulation is responsibility of top level
management. While strategy formulation is
basically done by middle level management.
3. Policy

deals

with

routine/daily

activities

essential for effective and efficient running of an
organization. While strategy deals with strategic
decisions.
4. Policy is concerned with both thought and
actions. While strategy is concerned mostly with
action.

5. A policy is what is, or what is not done. While a
strategy is the methodology used to achieve a
target as prescribed by a policy.
3.0 Meaning of Strategic Management
The following statements serve as a number of
workable definitions of strategic management:
Strategic management is the process of managing
the

pursuit

of

organizational

mission

while

managing the relationship of the organization to its
environment (James M. Higgins).
Strategic management is defined as the set of
decisions and actions resulting in the formulation
and implementation of strategies designed to
achieve the objectives of the organization (John A.
Pearce II and Richard B. Robinson, Jr.).
Strategic management is the process of examining
both present and future environments, formulating
the

organization's

objectives,

and

making,

implementing, and controlling decisions focused on
achieving these objectives in the present and future
environments (Garry D. Smith, Danny R. Arnold,
Bobby G. Bizzell).
Strategic management is a continuous process that
involves attempts to match or fit the organization
with

its

changing

environment

in

the

advantageous way possible (Lester A. Digman).

most

Meaning of Strategic Management
Strategic Management is Process of formulating,
implementing,

and

evaluating,

strategies

to

accomplish long-term goals and sustain competitive
advantage.
Strategic management is the process in which an
organization develops and implements plans that
espouse

the

goals

and

objectives

of

that

organization.
The process of strategic management is a continuous
one that changes as the organizational goals and
objectives evolve. Small businesses engage in
strategic management to ensure that they adapt to
trends and external changes such as globalization.
Several

key

concepts

characterize

strategic

management and the development of organizational
goals.
Essentially strategic management answers three
basic questions;

4. “Where do you want your business to go?”
(goals),
5. “How is your business going to get there?”
(strategy)
6. “How will you know when you get there?”
(Evaluation).

Key Terms in Strategic Management
Strategic management, like many other subjects, has
developed terminology to identify important
concepts.
1. Purpose
The organization's purpose outlines why the
organization exists; it includes a description of its
current and future business (Leslie W. Rue, and Loyd
L. Byars) The purpose of an organization is its
primary role in society, a broadly defined aim (such

as manufacturing electronic equipment) that it may
share with many other organizations of its type.
2. Mission
The mission of an organization is the unique reason
for its existence that sets it apart from all others. The
organization's

mission

describes

why

the

organization exists and guides what it should be
doing. Often, the organization's mission is defined in
a formal, written mission statement. Decisions on
mission are the most important strategic decisions,
because the mission is meant to guide the entire
organization. Although the terms "purpose" and
"mission"

are

distinguish

often
between

used
them

interchangeably,
may

help

to
in

understanding organizational goals.
3. Goals
A goal is a desired future state that the organization
attempts to realize.
4. Objectives

The term objective is often used interchangeably
with goal but usually refers to specific targets for
which measurable results can be obtained.
Organizational objectives are the end points of an
organization's mission. Objectives refer to the
specific kinds of results the organizations seek to
achieve through its existence and operations.
Objectives define what it is the organization hopes
to accomplish, both over the long and short term.
5. Tactics
In contrast, tactics are specifics actions the
organization might undertake in carrying its
strategy.
6. Strategists
Strategists are the individuals who are involved in the
strategic management process. Several levels of
management may be involved in strategic decision
making. Strategists have various job titles such as
CEO, President, Owner, Chair of the board,

Executive Director, Chancellor, Dean,
Entrepreneur.
7. Competitive Advantage
Anything that a firm does especially well
compared to rival firms.
Getting and keeping competitive advantage is
essential for the long term success in an
organization.
A firm must strive for sustained competitive
advantage.
8. Vision statement
• Answers the question “what do we want to
become”
• It is the first step in strategic Management.
• Many vision statements are single statements
“Our vision is to take care of your vision”
9. Mission Statements
Are enduring statements of purpose that
distinguish one business firm from other
similar firms.

A mission statement identifies the scope of a
firm’s operations.
10.

External Opportunities and Threats

• Are factors which could harm or benefit the
organization.
• Comprise of the following:
• Economic
• Social
• Political
• Technological
• Cultural
• Demographic Environment
11. Internal Strengths and Weaknesses
• Controllable activities that are performed
especially well or poorly.
• Relate to functional area
• Marketing
• Management
• Finance/Accounting
• Production/Operations
• Strengths and weaknesses are determined

relative competitors.
• Relative deficiency or superiority is
important information
12. Long Term Objectives
• Objectives can be defined as specific results
that an organization seeks to achieve.
• Long term means more than five years.
Objectives are essential for organizational
success
13. Strategies
Are the means by which long term objectives
will be achieved.
Levels of Strategies
a. Corporate Strategy
b. Business Strategy
c. Functional strategy
d. Operational Strategy
14. Annual Objectives
• Annual objectives are short term milestones
that organizations must achieve to reach long
term objectives.

• Annual objectives should be stated in terms
of management, marketing,
finance/accounting, production/operations,
research and development and MIS
accomplishment.
15. Policies
• Policies are the means by which annual
objectives will be achieved.
• Policies include guidelines, rules, and
procedures established to support efforts to
achieve stated goals.
THE NATURE AND VALUE OF STRATEGIC
MANAGEMENT
Strategic Management comprises nine critical tasks:
1.
Formulate the company’s mission, including
broad statements about its purpose, philosophy, and
goals.
2. Conduct an analysis that reflects the company’s
internal conditions and capabilities.

3.
Assess the company’s external environment,
including both the competitive and general
contextual factors.
4. Analyze the company’s options by matching its
resources with the external environment.
5.
Identify the most desirable options by
evaluating each option in light of the company’s
mission.
6.
Select a set of long-term objectives and grand
strategies that will achieve the most desirable
options.
7.
Develop annual objectives and short-term
strategies that are compatible with the selected set of
long-term objectives and grand strategies.
8.
Implement the strategic choices by means of
budgeted resource allocations in which the matching
of tasks, people, structures, technologies, and
reward systems is emphasized.
9. Evaluate the success of the strategic process as
an input for future decision-making.

Benefits of Strategic Management
Chance favors the prepared mind --Louis Pasteur
1.
Strategy formulation activities enhance the
firm’s ability to prevent problems.
2. Group-based strategic decisions are likely to be
drawn from the best available alternatives.
3.
The involvement of employees in strategy
formulation improves their understanding of the
productivity-reward relationship in every strategic
plan and thus heightens their motivation.
4.
Gaps and overlaps in activities among
individuals and groups are reduced as participation
in strategy formulation clarifies differences in roles.
5. Resistance to change is reduced.

Strategic Mnagement Bml 206 lecture notes 1

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