Rift Valley University

Addis Ababa Gada Campus

Course Title: Strategic Marketing Management
Course Objectives
identify the features that set strategy apart from functional or specialist management.
assess how influential the organization‘s mission and objectives are in shaping its
strategy.
demonstrate the importance of the business environment in influencing the strategic
management process.
apply the basic steps that comprise the strategic management process.
describe how organizations in the same sector can develop and sustain different types of
advantage from different clusters of capabilities.
demonstrate the relationships between strategy formulation and implementation.
apply the controlling and evaluation process in strategic management.
Demonstrate the strategic planning process effectively.
analyze the importance of scanning the environment.
identify the factors that influence strategy formulation.
identify the generic strategies for overall cost leadership and differentiation.
apply the generic building blocks of competitive advantage.
know the distinctive competencies, resources and capabilities.
explain the impact of efficiency, quality, customer responsiveness and innovation on
company profits.
identify and appraise the process of strategy implementation.
 • Course Content
• Unit-One
 Introduction
 Defining Strategy
 Strategic Issues .
 The Distinctive Nature /features of Strategy
 Overview of Strategic Management Process/Steps
 The Levels /Stages of strategic Management
• Unit Two
• Types of Strategy
 Corporate Level Strategy
 Business/Competitive Level Strategy(Bargaining power of
buyers, suppliers, new entrats, substitute, rivalry among competitors)
 Functional /Unit Level Strategy
 Business ethics and social responsibility
 Unit Three
 Strategic Management Environmental Scanning
 Steps of Environmental Scanning
 SWOT Analysis
• Unit Four
Strategic Management Environment
Political Environment
Economic and Physical Environment
The Socio-Cultural and Demographic
Environment
Technological Environment

Competitive Analysis
Intensity/Degree of analysis
Level of Competition(Brand, industry,
Form,Generic)
 Unit Five
 Strategic Formulation
 Strategy Implementation
 Strategic Control
• The concept strategy has several meanings.
• Strategy can refer to the determination of long-run goals and adoption of a course
of action with the allocation of resources necessary to carry out the activities.
• Strategy is a well defined roadmap of an organization. It defines the overall
mission, vision and direction of an organization. The objective of a strategy is to
maximize an organization’s strengths and to minimize the strengths of the
competitors.
• Strategy, in short, bridges the gap between “where we are” and “where we want
to be”.
 It is the determination of the long run goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of resources necessary for carrying
out these goals.
 It is the pattern or plan that integrates and organization‘s major goals, policies, and
action sequences into a cohesive whole.
 Strategy relates to a company’s competitive initiatives and business approaches
(irrespective of the financial and competitive outcomes it produces), while the term
business model deals with whether the revenues and costs flowing from the
strategy demonstrate business viability.
 Without a strategy:
 • managers have no prescription for doing business,
 • no road map to competitive advantage,

• Strategic Issues
• Strategic issues are those which, if they are not addressed
appropriately, will severely handicap the organizations‘ ability to
function effectively.
• Strategic issues are those which are the most important
ones to the organization and have the biggest impact as
well as closet to the shared values.
 Strategic issues are identified because they have the
following benefits:
 creates pressure or tension in the organization.
 useful to identify the scope of the strategist‘s
task:
 gives a clue about how to resolve the problems
identified.
 enables management to see that there will be
consequences to the organization if the issues are not
handled well.
 gives attention to focus on which is really important to
the organization.
• Features of Strategy
• Strategy is Significant because it is not possible to
foresee the future. Without a perfect foresight, the
firms must be ready to deal with the uncertain events
which constitute the business environment.
• Strategy deals with long term developments rather than
routine operations, i.e. it deals with probability of
innovations or new products, new methods of
productions, or new markets to be developed in future.
• Strategy is created to take into account the probable
behavior of customers and competitors. Strategies
dealing with employees will predict the employee
behavior.
• Strategic management offers the following benefits:
 It allows for identification, prioritization, and exploitation
opportunities
 It provides an objective view of management problems.
 It represents a framework for improved coordination and control of
activities
 It minimizes the effect of adverse conditions and changes
 It allows major decisions to better support established objectives 6. It
allows more effective allocation of time and resources to identified
opportunities.
 It allows fewer resources and less time to be devoted to correcting
erroneous or ad hoc decisions.
 It creates a framework for internal communication among personnel
 It helps to integrate the behavior of individuals in to a total effort
 It provides a basis for the clarification of individual responsibilities
 It gives encouragement to forward thinking
 It provides a cooperative, integrated, and enthusiastic approach to
tackling problems and opportunities.
 It encourages a favorable attitude toward change.
 It gives a degree of discipline and formality to the management of a
business.
• Strategy is
 concerned with the determination of the nature, domain and scope of
an organization‘s activities, and
 concerned with evaluation of their success.
 concerned with effective match with the challenges of its environment,
 Forms the management network relationships with and between
stakeholders.
• Strategic choices are likely, therefore, to involve some or all of the
following topics,
 Determining the nature, domain and scope of activities
 Evaluating the success of activities
 Creating an effective match with the challenges of the environment
 Managing the network of relationships with and between its
stakeholders

• Determining the nature, domain and scope of activities

 What business is the organization in, or in what sector is it active?
 What services does the organization provide?
 How does the organization provide its service?
 What are the skills, capabilities, and competences it utilizes?
 Is it important that the organization is different from its competitors?
 If a particular strategy is pursued, is it reversible?
• Evaluating the success of activities
 How does the organization define success?
 To what extent can the future be predicted when establishing targets for success?
 Can quantifiable measures of success be established?
 Will there be adequate and reliable information available to allow for the evaluation of
success?
 How are the acquisition, allocation and commitment of a distinctive set of resources and
Capabilities be measured?
 How quickly must scarce resources and capabilities be replenished?
 If a new strategy is pursued, what new resources or capabilities will be required?
 Will these be acquired through purchase or internal development?
 How important are finance, skills, information, knowledge, or raw materials in the mix or
resources required?
 Once committed, can resources or capabilities be recovered?
 What competing claims are there for resources?
 How should the organization measure the effective use of these capabilities and
resources?
• Creating an effective match with the challenges of the environment
 To what extent do the organization’s skills and resources match
the needs of the environment?
 Can the organization influence or change the environment?
 Which organizations does it compete with?
 Is the organization like its competitors?
 To what extent does it rely on collaborators to provide skills?
 How does it manage its boundaries?
• Managing the network of relationships with and
between its stakeholders
• What objectives do the owners, financiers, employees; management,
suppliers, customers and competitors have for the organization?
 Are these stakeholders in conflict?
 What is the balance of power amongst stakeholders?
 How significant are the resources each contributes?
 What is the influence of, for example, regulators, and taxing
authorities planning bodies, politicians, voters, or the media?
• Strategies should be examined in terms of
 Assessing Suitability
 Assessing feasibility and
 Assessing acceptability.
• Assessing Suitability
• Assessing suitability consists of examining the extent to which the strategy: -
 exploits the opportunities in the environment and minimizes the threats.
 capitalizes on the organization‘s strengths and core competencies and
gives remedies to the weakness.
 Addresses the political issues of the country.
• Assessing Acceptability
• The acceptability of strategies can be assessed in
terms of
 forecasting the return on capital employed at specific time
after a new strategy is implemented.
 assessed against the possible risks that the organization
may face in pursuing a new strategy
 the cost- benefit analysis of the new strategies and
 the payback period of a significant capital injection
needed to implement the strategy.
 The strategic option should also be assessed against
stakeholder reactions. It is important to assess the likely
reactions of stakeholders to new strategies, because the
reactions could be crucial to the successful
implementation of the organization al strategy.
• Assessing Feasibility
• Assessing the feasibility of options is
concerned with
whether an organization has the
resources and competences to deliver a
strategy.
is fund flow analysis. This fund flow
forecast may be used to identify the funds
which would be required for any strategy
to be designed. This type of analysis
highlights whether the proposed strategy
is likely to be feasible in financial terms.
 • The Distinctive Nature of Strategy
• Strategy requires managers to adopt an
organization-wide perspective, together with a
longer time horizon than normally applies in
functional or specialist management. There
are a number of ways in which strategy is
distinctive when compared to the functional
disciplines of finance, marketing, human
resources, operations, information, etc. that
you may have already studied. These are
• Strategy is integrative and cross-functional.
• Strategy requires and ability to retain a balanced vision of the role
of all parts of the organization in its overall business, while
concentrating on those areas with strategic priority.
• Strategy concerns the whole organization interacting
with its environment.
• What happens in the environment affects the internal workings of the organization,
and Vice Versa.
• For example, if a competitor cuts prices across a range of products and the price cut
was not matched, it would be likely that the organization would need to make some
volume cuts in production. Therefore, a decision to expand into an overseas market
may require a cross-functional approach for expansion inside the organization:
 Cultural acclimatization or approval and recruitment of staff,
 Increased production
 Finance to fund the venture,
 Information system to provide management feedback and control,
 Lawyers to deal with legal requirements
 Local tax experts, and
 A logistics system to ensure proper distribution
• Finally, once these internal arrangements are made, it is unlikely that competitors in
the overseas will simply sit back and let a competitor expand at will; they will fight
back.
• Strategy has a long-time horizon and is concerned with projection and prediction
of an uncertain future.
• When this is taken to public administration the three levels of strategy are the
following.
• Ministry level strategy
 This strategy shows the overall purpose and scope of the ministry of organization.
 This may show how the organization or ministry is to be run in structural and financial
terms.
 It is designed to show how resources are to be allocated to different operations of the
organization or ministry across the country.
 This strategy also governs the whole organization or ministry and is a key basis of other
strategic decisions.
• Business unit level strategy.
• This refers to commission or unit with a distinct client group in the case of public
sector organizations.
 how customers of client needs can best be met.
 how to compete successfully in a particular area.
 what new opportunities can be identified or created in the area that the part or unit of
the organization is involved in.
 to what extent the services developed meet the clients needs in such away as to
achieve the objectives.
 This strategy is designed by departments of the ministry.
• The operational level strategies
• These are designed by the operating end of the organization such teams and
parts of a department.
• These strategies are concerned with how the component parts of the
organization interms of resources, processes, people and their skills are pulled
together to achieve the organizational and business strategic directions.
• Strategic Thinking
•
There are no substitutes for strategic thinking. Improving quality is
meaningless without knowing what kind of quality is relevant in competitive
terms. Nurturing corporate culture is useless unless the culture is aligned with
a company‘s approach to competing. Entrepreneurship unguided by a strategic
perspective is much more likely to fail than succeed.
• Strategic thinking cannot occur only once a year, according to a rigid routine.
It should inform a company‘s daily actions. Moreover, the information
necessary for good strategic thinking is equally vital to running a business,
designing marketing material, setting prices and delivery schedules, etc.
• In considering the relevance of planning to the practice of strategic thinking, it
is worth considering the impact of two different modes describing how
managers mentally process information when making strategy.
• A bottom – up information processing model- implies that strategic thinking
will be driven by the process of gathering information. The strategist will
examine all available information about a strategic problem or issue, review all
possible solutions, and make a decision after detailed consideration.
• Top-down information processing on the other hand, is driven by the recall and
application of theory and models to situations we encounter. In this case,
theories about how the world works, or what kind of strategy will be successful,
are built up by strategists from experience of the success of previous
strategies. In practice these theories are not elaborate; they are far more likely
to be simple, abstract rules-of-thumb (heuristics).
•
 • Unit Two
• Types of Strategic
• Since making strategy demands cross-functional, integrative management of
the whole organization in its environment, some analysis of the levels of which
strategy can exist within an organization is required. Strategy is concerned with
all levels, but it is helpful to create a classification that can help us focus our
attention at any one time. The levels are the following three.
• The corporate strategy is the highest-level strategy in an organization. It defines the
organization’s overall direction and the high-level ideas of how to move towards it.
• Corporate/Ministry Strategy – The management of the organization‘s
activities as a corporation, to gain maximum benefit from the combination of
related or unrelated business. This governs the entire corporation.
• At the corporate strategy however, management must not only consider how to gain a competitive
advantage in each of the line of businesses the firm is operating in, but also which businesses they
should be in in the first place. It is about selecting an optimal set of businesses and determining
how they should be integrated into a corporate whole: a portfolio. Typically, major investment and
divestment decisions are made at this level by top management.
• Mergers and Acquisitions (M&A) is also an important part of corporate strategy. This level of
strategy is only necessary when the company operates in two or more business areas through
different business units with different business-level strategies that need to be aligned to form an
internally consistent corporate-level strategy. That is why corporate strategy is often not seen in
small-medium enterprises (SME’s), but in multinational enterprises (MNE’s) or conglomerates.
• Business /Competitive Strategy – The Business-level
strategy is what most people are familiar with and is about the
question “How do we compete?”, “How do we gain (a sustainable)
competitive advantage over rivals?”
• At this level, we can use internal analysis frameworks like the
Value Chain Analysis and the VRIO Model((value, rarity, imitability,
and organization) is a business analysis framework for strategic
management. As a form of internal analysis, VRIO evaluates all the
resources and capabilities of a firm. It was first proposed by Jay
Barney in 1991) and external analysis frameworks like
Porter’s Five Forces and PESTEL Analysis. When good strategic
analysis has been done, top management can move on to strategy
formulation by using frameworks as the Value Disciplines,
Blue Ocean Strategy and Porter’s Generic Strategies. In the end, the
business-level strategy is aimed at gaining a competitive advantage
by offering true value for customers while being a unique and hard-
to-imitate player within the competitive landscape.
• Functional/Operational/Internal Unit Strategy – within
corporations and business, identifiable units are charged
with technical, specialist, operational or functional tasks. These
units need to have their own strategies for executing these
functions or operations, and enlisting support from staff and
other internal units. It also contributes to the success of
business and corporate strategy.
• Functional- strategy is concerned with the question “How do we support the
business-level strategy within functional departments, such as Marketing, HR,
Production and R&D?”.
• These strategies are often aimed at improving the effectiveness of a company’s
operations within departments. Within these department, workers often refer
to their ‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’.
• The goal is to align these strategies as much as possible with the greater
business strategy. If the business strategy is for example aimed at offering
products to students and young adults, the marketing department should target
these people as accurately as possible through their marketing campaigns by
choosing the right (social) media channels. Technically, these decisions are very
operational in nature and are therefore NOT part of strategy. As a consequence,
it is better to call them tactics instead of strategies.