1.1 What is Strategic Management

8/6/2019 1.1 What is Strategic Management

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What is Strategic

Management?

Why it matters?

Prof.P.V.S.SAI.

Siva Sivani institute of Management

Secunderabad.


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Managing Organizations according to astrategy is known as Strategic

Management. Then What is a Strategy?

It consists of Competitive moves andbusiness approaches, that managers

employ to attract and please customers,Compete successfully, Grow thebusiness, Conduct operations and

Achieve targeted objectives.


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Hows of Strategy

Wide Product Lines Vs. Limited Product Lines

Targeting High end Segments Vs. Targeting Low endSegments

Competitive Advantage on the basis of low cost Vs. onthe basis of Product Differentiation, Personalized Serviceor added convenience.

Present in one part of the Value Chain Vs. Present in theentire Value Chain

Confining to Local Markets Vs. Extending to national andinternational markets.

Operating in only one industry Vs. Entering into variousindustries through related or unrelated diversification.


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Offensive Vs. Defensive

Strategies Companies which try to gain market share by

beating the competition will go for OffensiveStrategy.

Conservative and Risk Avoiding companiesprefer Defensive Strategy.

Offensive strategies focus on frequentlaunching of new initiatives while defensive

strategies concentrate on gradual gaining of themarket, fortifying companys market positionand defending against the competitorsstrategy.


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Identifying a Company

Strategy What to look for Action to respond to changing market conditions

Action to enter new geographic or product markets or exitexisting ones

Action to merge with or acquire rival companies Action to form strategic alliance and collaborative

partnerships

Effort to pursue new market opportunities and defendagainst threats to the companys well being

Action to manage research and development

Action to strengthen companys competitive strengthsand to overcome weaknesses

Action to diversify companys revenues and earnings byentering new business

Action to gain sales and market share via lower prices.


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Strategic Approaches

Four of the most frequently used strategicapproaches are

1. Being the industrys low cost provider

2. Outcompeting rivals through differentiating onthe basis of quality, wider product selection,added performance, better service, moreattractive styling, technological superiority orunusually good value for the money.

3. Focusing on a narrow market and winning acompetitive edge.

4. Developing expertise and resource strengthsthat give the company competitive abilities


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Strategy is partly Proactive

and Partly Reactive

Proactive TATA SONS

Reactive HLL


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Company Strategy emerges incrementally

and then evolves over time

Changing circumstances and ongoing

management efforts to improve the strategy

cause a companys strategy to emerge andevolve over time a condition that makes the

task of crafting a strategy a work in progress,

not a one-time event.

A companys strategy is driven partly by

management analysis and choice and partly bythe necessity of adapting and learning by doing.


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The Relationship between a Companys

Strategy and its business model

A companys business model relates to

whether the revenue-cost-profit

economics of its strategy demonstratethe viability of the business enterprise as

a whole.


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What makes a strategy a

Winner? How well does the strategy fit the companys

situation?

Is the strategy helping the company achieve asustainable competitive advantage?

Is the strategy resulting in better company

performance?

A winning Strategy must fit the enterprisesexternal and internal situation, build sustainable

competitive advantage and prove company

performance.


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Why are crafting and

executing strategy important? There is a compelling need for managers to proactively

shape, how the companys business will be conducted.

A strategy focused organisation is more likely to be a

strong bottom line performer. Our competitors are acquired with the same

fundamental concepts and techniques andapproaches that we follow and they are free topursue them as we are.

More often than not, the difference between their

level of success or ours lies in the relativethoroughness and self disciplines with which we andthey develop and execute our strategies for thefuture.


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GOOD STRATEGY ANDGOOD STRATEGY

EXECUTIO

N =GOOD

MANAGE

ME

NT

Excellent execution of an excellent

strategy is the best test of managerial

excellence and the most reliable recipefor turning companies into standout

performers.


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1.1 What is Strategic Management

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