Chapter 1
WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?
Screen graphics created by:
Jana F. Kuzmicki, PhD
Troy University - Florida and Western Region
Quote . . .
“Without a strategy the
organization is like a ship
without a rudder, going
around in circles.”
Joel Ross and Michael Kami
Chapter Outline
 What Is Strategy?
 What Does the Strategy-Making, Strategy-Executing
Process Entail?
 Phase 1: Developing a Strategic Vision
 Phase 2: Setting Objectives
 Phase 3: Crafting a Strategy
 Phase 4: Implementing and Executing the Strategy
 Phase 5: Evaluating Performance and Initiating Corrective
Adjustments
 Corporate Governance: Role of Board of Directors in the
Strategy-Making, Strategy-Executing Process
 Why Crafting and Executing Strategy Are Important Tasks
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What Is Strategy?
 Consists of the combination of competitive
moves and business approaches used by managers
to run the company
 Management’s “game plan” to
 Stake out a market position
 Attract and please customers
 Compete successfully
 Conduct operations
 Achieve target objectives
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Developing a Strategic Vision
Phase 1 of the Strategy-Making Process
 Involves thinking strategically about
 Future of company
 Where are we going?
 Developing a strategic vision entails
 Creating a roadmap of where the
company is headed and why
 Deciding what position the company
needs to stake out in the marketplace
 Providing long-term direction
 Giving company a strong identity
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Mission vs. Strategic Vision
 A mission statement
focuses on current
business activities -- “who
we are and what we do”
 Current
product and
service offerings
 Customer

Markets to be pursued

Future technologyproduct-customer focus

Kind of company
management is
trying to create
needs being
served
 Technological
and business
capabilities
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 A strategic vision concerns
a firm’s future business
path -- “where we are
going”
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Setting Objectives
Phase 2 of the Strategy-Making Process
 Purpose of setting objectives
 Converts vision into specific performance targets
 Creates yardsticks to track performance
 Pushes firm to be inventive, intentional, and
focused in its actions
 Setting challenging, achievable
objectives guards against
 Complacency
 Internal confusion
 Status quo performance
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Characteristics of Objectives
 Represent commitment to achieve specific
performance targets
 Spell-out how much of what kind
of performance by when
 Well-stated objectives are
 Quantifiable
 Measurable
 Contain a deadline for achievement
Establishing objectives converts the
vision into concrete performance outcomes!
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Crafting a Strategy
Phase 3 of the Strategy-Making Process
 Strategy-making involves entrepreneurship –
searching for opportunities
 To do new things or
 To do existing things in new or better ways
 Strategizing involves
 Picking up on happenings in the external environment and
 Steering company activities in new directions dictated by
shifting market conditions
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Levels of Strategy-Making
in a Diversified Company
Corporate-Level
Managers
Corporate
Strategy
Two-Way Influence
Business-Level
Managers
Business Strategies
Two-Way Influence
Functional
Managers
Functional Strategies
Two-Way Influence
Operating
Managers
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Operating Strategies
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Implementing and Executing Strategy
Phase 4 of the Strategy-Making Process
 Action-oriented, operations-driven activity aimed at
shaping performance of core business activities in a
strategy-supportive manner
 Tougher and more timeconsuming than crafting strategy
 Key tasks include
 Improving efficiency of the strategy being executed
 Showing measurable progress in achieving targeted results
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Evaluating Performance and
Making Corrective Adjustments
Phase 5 of the Strategy-Making Process
 Tasks of crafting and implementing the strategy are
not a one-time exercise
 Customer needs and competitive conditions change
 New opportunities appear; technology
advances; any number of other
outside developments occur
 One or more aspects of executing the
strategy may not be going well
 New managers with different ideas take over
 Organizational learning occurs
 All these trigger the need for corrective actions and
adjustments on an as-needed basis
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Corporate Governance:
Strategic Role of a Board of Directors
 Exercise strong oversight to ensure the five tasks of
strategic management are executed to benefit
 Shareholders or
 Stakeholders
 Make sure executive actions are
not only proper but also aligned
with interests of stakeholders
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Benefits of a “Strategic
Approach” to Managing
 Good strategic thinking and management of the
strategy-making, strategy-executing process
 Guides entire firm regarding “what it is
we are trying to do and to achieve”
 Helps unify numerous strategy-related
decisions across the company
 Creates a proactive atmosphere
 Promotes development of an
evolving business model focused
on bottom-line success
 Provides basis for determining how
best to allocate company resources
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