strategic management


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  • Created by: Aisha
  • Created on: 27-01-14 14:21

Introduction to Strategic Management

what is strategy? 

 - plan of action by which  an organisiation aims to achieve its objectives

what  is strategic management?

- Strategic managemnt is the process of identifying a plan  of action to enable  the organisation to meet its objective

what does it involve ?

-Analysing internal/external enviorment       -setting objectives      -monitoring of performance

Stages in developing a stratergy      

mission--> Aim-->objectives-->strategies--> Tactics


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What  is Mission?

This means the overall purpose of the organisation - reason for being/exisiting


What  is Mission statement?

Sets out purposes and values of the organisaton.



why are mission statement written?

-summerise aims, purposes and values of the business

-helps when coming to plan business activities

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Mission statement Examples

excellence in everything

to provide the best customer service to ensure customers feel happy

to make sure our food is delisiously  tasty

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Aim and Objectives

what is an aim?

Is the prime business objective  for example .... survive, grow, make a proffit

what are objectives

specific target an organistion sets for itself

exampe to increase sales by 10% by the end of 2014

smart objectives

Specific - a clear statement what is to be achived

measurable -  the desired outcome that can be measured

agreed- staff and  departments cocur the rarget attainable

realistic -  has to be achivable

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Main Objectives

Corporate -  targets the whole business is trying to achieve


Stakeholder-  the aim of any group with an interest in organisations performance


 Stategic- long term objectives

Tactical- short term objectives




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Business objectives  may change  through time  

  • may achieve an objective and will need to move onto another one

(e.g. survival in the first year may lead to an objective of increasing profit in the second year).

  • The competitive environment might change, with the launch of new products from competitors.
  • Technology might change product designs, so sales and production targets might need to change.
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Tactics and strategy


plan by which aims and objectives will be put into action.

importance  of these

- helps plan

-motivational tool

element of focus


specific programs of work/activites which help to achieve objectives.


strategic -    long term                                   tactical- short term




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long term ... here is an example

increase sales by 30% by 2014


short term.... here is an example

have point of sale displays in 90% of supermarkets by 2015

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Factors influencing startegy

In deciding on a strategy managers take into account of ...............

  • stakeholders attitudes to risk and reward


  • the mission, aims ect


  • maturity of the business


  • internal/external envioroment


  • risk and reward.
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Risk and reward


to take a chance of loosing




something given in return for work done



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Factors influencing risk

  • ethics
  • attitude
  • culture
  • nature of market
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What is planning?

management process of establishing objectives and selecting strategies/tactics required to achieve them.

purpose of planning

  • look ahead
  • assess current position
  • identify appropiate future actions
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done on the 18th march 14

An audit is an investigation into an area of  business activity.

types of audits undertaken in situational analysis.

- pest analysis

- competitor analysis

- swot analysis

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pest analysis

what is pest analysis <3 ?

pest analysis is an sudit of the political economic social and technoligical factors in the firms external enviorment.

aim of pest

identifies and assesses the likely impact of external factors beyond the control of the firm which may constrain  its business activites.

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SWOt analysis


is as assesment of the firms current internal operational strengths and weaknesses and oppertunities and threats.

outcome of swot analysis

used to help inform strategy



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relate to the organisations own internal current operations


for example its..

- resources,

-  caperbilities

distinctive competencies.

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WEAKNESSES     (p.s jonny i did do these cards)

Are current the business does less well and cause competitive disadvantage


for  example

- poor reputation 

- out of date equipment  

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 are external events that offer potentiaal to meet objectives


- economic upturn

-opening up of over seas

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external evetns that present a challenge to the firms economic downturn. managers adapt strategy to take action to overcome weaknesses and threats.

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stakeholders objectives

Stakeholders are any gruop with an interest in an organisations performance






the community



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stakeholders objectives

what does each stakeholder want ?

customers ?

suppliers ?





local communtiy?

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stakeholders objectives

stakeholder Conflict

something good to one stakeholder but the opposite to another




-  price rise may increase profits  for ownwer and managers

-  however may also dissapoint some   customers.



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Shareholder objectives

what is a shareholder?

-  shareholder is a part owner of a company.

E.G   a business buying a share in another busienss


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Risk and Reward

it is important  for a busines to asses the potential risks and rewards before carrying out a particualr business activity.

 how can risk and uncertainty be reduced

-    research and planning can reduce but not eliminate risk and uncerainty 

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Business analysis

Market analysis




what is market structure?

 characteristics of a market e.g the number of firms in an industry, barriers to entry and he extent of the competition.

main catorgories of market structure

perfect competition - firms producing identical products

monoploisitc compettion -  firms producing slightly different products

oligopoly -  a few large firms dominate the market

monopoly -   a single firm supplies the market

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barriers to entry

barriers to entry are obstacles that restrict firms breaking into a market and competing with establish firms.

 types of this are

-   the law

-   high entry costs    e.g  hiring staff, equipment ect

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impact of increased competition on consumers

+   more choice

+    lower prices

+    improved products

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impact of increased competition on producers

they have to

-    maintain low prices

- low prices = higher demand

high prices= lower demand

what is product differentiation?

occurs when firms make their product distinctively diff from good or services offered by rivals.

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porters 5 forces model

How  can the competitiveness of an  industry be assessed?

Porters 5 Forces model


-  The threat of entry

- the threat of substitutes

-the bargaining power of buyers

-The bargaining power of suppliers

- the drgree of rivalry between existing competitors

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 Time Series anallysis


what is forecasting?

attempt to estimate future value of a variable e.g sales

used ?

it can be used in planning

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Benefits of forecasting

- enables firm to have in place appropriate ....

-- production

-- stock

-- staff cash flow levels



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forcasts accuracy

-  forcasts are only a prediction

- external factors  make forecast uncertain

-- economical factors

-- changing consumer tastes / trends

-- natural disasters.

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two main types of predicting future events


use personal judgement and business eperiences.


 use past data

e.g. time series analysis

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Time series analysis

what is it ?

  • It is a forecasting tool
  •  it helps businesses to control their stock more effectively.
  • helps provide an accurate forecast
  • enabales more effective budgeting
  • common method used by managers

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Limits of time series


  •   only reliable depending on the quality of the info used.
  • assumes history will repeat itself
  • doesnt take into account changes in business objectives
  • -   external enviorment
  • its not an ideal forecasting tool.
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Moving averages

this method (ts) can create some fluctuations in the data and so make figures appear smoother. technique called moving averages is applied.

trend - underlying movement of data

cyclical variaition- only applied  to annual data

seasonal variation- changes during a particualr time of year

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Decision making

its the process of selecting course of action between several alternatives

Examples of decision making

  • disributing or retaining profit
  • targeting domestic or overseas markets
  • locating production in the uk or overseas
  • spending it's promotion budget on advertising or direct sales
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it involves risk and uncertainty as decisions are taken on the basis of available data and assumptions about the future.

(these below are about where decisions are taken in the chain of commond)

centralisation-decisions are taken at the top of the hierachy.

decentralisation- authority is delegated down the chain of command.

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how can risk and uncetainy be reduced?

research analysis and the use of decision tools such as decision trees and forecasts.


involving key stakeholders is motivational and improves the quality of decision.

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Its the cost of making a certain decision


buying new machines to replace workers

oportunity cost = it will be expensive and other workers may leave due to feeling like business isnt loyal to its workers. but if business didnt replace macinery with workers productivity would remain low.

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Ansoff's Matrix

it outlines potetial growth strategies by increasing sales in existing or new markets with existing or new products.

ansof matrix identifies four options for achieving growth.

  • market penetration
  • product development
  • diversification
  • market penetration
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this is where firm focuses its activites on building sales of an exsiting product in a market in which the business is alrady operating

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seeks to find a new market for an existing product.

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Product development

launching a new or improved product to an existing market

e.g orange flavoured KIT KITS

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this involves targeting a new market with a new product.

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its the method of collecting processing storing and and communicating data for use in decision making.

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