© 2010 John Wiley & Sons, Inc.

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Learning Objectives
 Describe the key elements in the strategic
management process.
 Discuss the three different perspectives or
approaches used in understanding strategy,
including the traditional perspective, the resource-
based view, and the stakeholder view.
 Understand strategy formulation at the corporate,
business, and functional level.
 Explain the difference between strategic thinking
and strategic planning.
 Characterize and explain the key players in the
lodging and foodservice industries.
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Definition of Strategic Management
 Strategic management is a process
through which:
 Organizations analyze and learn from their
internal and external environments,
 Establish strategic direction,
 Create strategies that are intended to move the
organization in that direction, and
 Implement those strategies
 All in an effort to satisfy key stakeholders
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Three Perspectives on Strategic
Management
 Traditional Perspective
 Origin
 Economics, other business disciplines, and consulting firms
 View of Firm
 An economic entity
 Approach to Strategy Formulation
 Situation analysis of internal and external environments leading to
formulation of mission and strategies
 Source of Competitive Advantage
 Best adapting the organization to its environment by taking advantage
of strengths and opportunities and overcoming weaknesses and threats

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Traditional Strategic Management
Process
Situation Analysis
(external environment)

Strategic Strategy Formulation Strategy Implementation

Direction (take advantage of (development &
(mission strengths/overcome execution of
& goals) weaknesses & threats) implementation plans)

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Strategy Fundamentals
 Traditional View  Contemporary
 Environmental View
determinism (the best  Enactment (firms can
strategy is determined by influence their
the environment) environments)
 Firms should adapt to the  A firm should pursue
environment actions to make the
 Strategy is deliberate environment more
(intended) hospitable
 Strategy emerges from a
stream of decisions as
firms learn

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Three Perspectives on Strategic
Management
 Resource-based View
 Origin
 Economics, distinctive competencies and general management capability
 View of Firm
 A collection of resources, skills and abilities
 Approach to Strategy Formulation
 Analysis of organizational resources, skills and abilities. Acquisition of
superior resources, skills and abilities
 Source of Competitive Advantage
 Possession of resources skills and abilities that are valuable, rare and
difficult to imitate by competitors

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The Organization as a Bundle of
Resources
General Organizational
Resources
• Firm Reputation
• Brand Names and Patents
• Contracts
• Stakeholder Relationships

Financial Resources Physical Resources

• Internal and External Organizational • Plants and Equipment
Sources of Knowledge • Organizational Locations
Financing and Learning • Access to Raw Materials
• Financial Strength

Human Resources
• Skills, Background and
Training of Managers
and Employees
• Organization Structure

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Three Perspectives on
Strategic Management
 Stakeholder View
 Origin
 Business ethics and social responsibility
 View of Firm
 A network of relationships among the firm and its stakeholders
 Approach to Strategy Formulation
 Analysis of the economic power, political influence, rights and demands of
various stakeholders
 Source of Competitive Advantage
 Superior linkages with stakeholders leading to trust, goodwill, reduced
uncertainty, improved business dealings and ultimately higher firm
performance

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A Typical Stakeholder Map
Activist Competitors
Local
Groups Communities

The Organization
Owners/Board of Directors
Suppliers Managers Customers
Employees

Unions The Media

Financial Government Agencies

Intermediaries and Administrators

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Can External Stakeholders Be
Managed?
 Internal Stakeholder  External Stakeholder
Management Management
 Nature of Relationship  Nature of Relationship
 Contractual  Contractual, legal or
 Physical Location informal
 Predominantly inside  Physical Location
organization structure,  Predominantly outside
sometimes geographically organizational structure;
diverse sometimes included
 Motivation to Perform  Motivation to Perform
 Regular payments,  Regular payments,
retention, bonuses, retention, incentives,
common purpose, bonuses, common purpose,
persuasion persuasion
 Direct Control  Direct Control
 Schedules, plans,  Schedules, plans, less often
sometimes direct direct supervision
supervision
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Can External Stakeholders Be
Managed?
 Internal Stakeholder  External Stakeholder
Management Management
 Communication  Communication
 E-mail, face-to-face,  E-mail, face-to-face,
telephone, memos, telephone, memos,
directives, policies directives, policies
 Involvement in Organizational  Involvement in Organizational
Decisions Decisions
 Employee involvement  External stakeholder
varies from organization to involvement varies from
organization, but it is organization to
increasing organization, but it is
 Importance of Trust increasing
 High  Importance of Trust
 High

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A Combined Perspective of
Strategic Management
 Process
 Firms conduct external and internal analysis (situation analysis), which
include analysis of stakeholders. On the basis of information obtained,
they create strategic direction, strategies, tactics for implementing
strategies and control systems
 Origin
 Traditional, resource-based and stakeholder perspectives
 Adaptation vs. Enactment
 Influence the environment when it is economically feasible to do so. Take
a proactive stance with regard to managing external stakeholders.
Monitor, forecast and adapt to environmental forces that are difficult or
costly to influence.
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A Combined Perspective of
Strategic Management

 Deliberate vs. Emergent

 Firms should be involved in deliberate strategy-creating
processes. However, they should learn from past decisions and
be willing to try new things and change strategic course
 Source of Competitive Advantage
 superior resources, including knowledge-based resources,
superior strategies for managing those resources and/or
superior relationships with internal or external stakeholders
(which are another type of resource)
 Creation of Strategic Alternatives
 Develop strategies to take advantage of strengths and
opportunities or overcome weaknesses or threats.
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The Strategic Management Process
Analyze the Environment,
Stakeholders and
Organizational Resources
(Chs. 2 & 4)

Establish Formulate Strategies Implement Strategies

Strategic Business-Unit (Ch. 5) & Establish Controls
Direction Corporate-Level (Ch. 6) (Chs. 7 & 8)
(Ch. 3)

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Strategy Formulation in a
Multibusiness Organization
Entire Corporation
(Corporate Level:
Domain Definition)

Business 1 Business 2
(Business Level: (Business Level:
Domain Direction/Navigation) Domain Direction/Navigation)

Marketing Finance Operations Research Human Resources

(Functional Level: Implementation and Execution)

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Strategic Planning Process vs.
Strategic Thinking

 The strategic planning process is often rigid

and unimaginative, with detailed instructions
pertaining to every aspect of the process
 Strategic thinking leads to creative solutions
and new ideas
 The best firms use both!

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 Elements of Strategic Thinking
 Intent Focused
 Strategic intent--a managerial vision of where the firm is going
 Comprehensive
 A “systems” perspective. Envisions the firm as a part of a larger
system of value creation.
 Opportunistic
 Seizes unanticipated opportunities
 Long-term Oriented
 Looks several years into the future at what the firm will become
 Built on Past and Present
 learns from the past and builds on a foundation of the realities of the
present
 Hypothesis Driven
 Creative ideas are then critically evaluated. Takes risks
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Major Concepts in Chapter 1
 The strategic management process involves
analysis of the environment and organization,
creation of strategic direction, strategy formulation,
strategy implementation and strategic control
 Strategic thinking is a creative process that should
be encouraged
 The strategic management model used in this book
is built on three perspectives: traditional, resource-
based and stakeholder. These perspectives
complement each other.

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Major Concepts in Chapter 1
 Organizations should learn from and adapt to
aspects of their environment that would be
difficult or too expensive to change, but can
influence (enact) other aspects of their
environments
 Strategy is part deliberate and part emergent
 Superior organizational resources lead to
superior organizational performance
 Organizations sit at the center of a network of
stakeholders. Effective stakeholder
management can lead to acquisition of superior
resources and other positive outcomes 20
Major Concepts in Chapter
1
 Trustworthy firm behavior leads to positive outcomes
 Globalization continues to increase as foreign
environments become more hospitable to investment
and organizations search for world-class opportunities
and resources
 Strategic thinking involves intuition and creativity. It
is intent focused, comprehensive, opportunistic, long-
term oriented, built on past and present, and
hypothesis driven. Organizations should encourage
this kind of thinking.

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