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Transcript of 30 Strategic Managemnent 1
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M.Com, B.Com & CA PE-IIFACULTY OF SRINIVAS COACHING CENTRE
STRATEGIC MANAGEMENT
FLOW CHART DOCUMENTSRIVINIVASA COACHING CENTRE
CA COACHING CENTREBANGALORE
WRITTEN, DRAWN & DESIGNEDBY
VENKATA NAGENDRA BABU.G
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Prof. K.V.RAMANA REDDY (HOD, Dept. of Commerce
Prof.APPA RAO.Prof. C.R.REDDY Prof.P.B.PANISHWARA RAJU( Dean, BOSof Commerce & Management Prof.P.SUBBA RAO Prof.A.V.RAMANAProf.D.ANJEENEYULProf.C.S.RAID
C.A. VENKATA SAVI KUMAR.V
OM SRIRAM
I would like thank my parents, teachers & friends who supported me .I would like dedicate this document on Strategic Management to all my beloved Professors of Sree Krishnadevaraya University
Special Thanks to
I would like to take active part in VISION 2020, I have selected teaching profession. I hope all the students who refer to this file with support in achieving my vision.
THE VISION OF PROVIDING EDUCATION TO ALL HUMAN BEINGS FORKNOWLEDGE
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BANGALORE
FACULTY OF SREENIVAS COACHING CENTREBANGALORE
FINANCIAL RESEARCH ANALYSTINVESTMENT ADVISORY DEPARTMENT
THMSON REUTERS
Photo taken at Sree Krishnadevaraya University library
VENKATA NAGENDRA BABU.GM.Com, B.Com & CA PE-II
M.Com GOLD MEDLIST (2005- 07)SREE KRISHNADEVARAYA UNIVERSITY
ANANTAPUR, A.P, INDIA
AUTHOR
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BUSINESS ENVIRONMENT
Business Environment
Definition Objectives Meaning Characteristics Influences
Survival Efficiency Complex Multi Faced PervasiveGrowth or Expansion Profitability Dynamic Far-reaching impact
Business Environment
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BUSINESS ENVIRONMENT
Goals Need Problem in understanding
Understanding the changes Decision making UncertaintyCollection of inputs Evaluating present strategy ComplexFacilitating strategic thinking Formulating future strategy Diversity
Setting strategic ObjectivesTo grow
Environmental Analysis
Meaning
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BUSINESS ENVIRONMENT
Organization Demographic Environment
Suppliers Economic environment
Intermediaries Political legal environment
Customers Socio-cultural environment
Market Technological environment
Competitors Global environment
Micro components Macro components
Business Environment
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BUSINESS ENVIRONMENT
Age Education Employment Status Wage structureIncome Sex Ratio Living standard Growth rate
Demographic Environment
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BUSINESS ENVIRONMENT
Economic Policies Economic Indexes Infrastructural Factors
Industrial GNP Financial InstitutionsMonetary GDP Banks
Mixed economy Fiscal Policies (taxes) Industrial Growth rate TransportationPercapita income Communication
Balance of payment
Recession 10 Years PlanDepression Annual Govt BudgetRecovery
SocialisticBoom 5 years Plan
Economic environment
Business Cycle Economic PlanningEconomic
structureCapitalistic
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BUSINESS ENVIRONMENT
Political System Political Structure Government intervention Political Goal Stability of the Govt
Polit ical Process Govt. Policies towards businessEffiency of Govt agencies Legislatures
Implementation of law
DemocracyMonocratic
Law & Order
Judiciary
Political & Legal Environment
Legal Structure
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BUSINESS ENVIRONMENT
Human Relationshipocieties & monarities
Education
EducationProductivity
Technological Environment
Technology needs. R&D needs Communications Cost Reduction Quality
Beliefs Social Attitude Values Cultural Values Norms
Socio-Cultural Environment
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BUSINESS ENVIRONMENT
Globalization
SARCNATOG 8
Global Legal System
Dynamic Approach
Trade & Commence Strategic interest nations System
Strategic Response to Environment
Approach of least residence Approach of Caution
Global Environment
Global Economic Forces International Geo Polit ical Nations Global financial Global Markets
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BUSINESS POLICIES AND STRATEGICMANAGEMENT
Functional Level StrategyCorporate Level Strategy Business Level Strategy
Levels of Strategies
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Stability Strategy Expansion Strategy Retrenchment Strategy Combine Strategy
Maintenance of Status Quo Sustainable growth strategy
Diversification Strategy Takeover Joint-ventures
Mergers
Concentric Diversification Conglometric diversification Backward integration Forward integration
Horizontal Diversification Vertical Diversification
Intensive Growth Strategy
Generic Strategic Alternatives
E
E
R
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BUSINESS POLICIES AND STRATEGICMANAGEMENT
Liquidation
Spin-off
Function/Tasks of S trategic Management
Turnaround Strategy Divestment
Process of Strategic Management
R
Step 1
Identifying/DefiningBusinessMission
Purpose &Objectives
Step 5
StrategyImplementa
tion
Step 2
Environmental
Analysis
Step 3
ReviseOrganizatio
nalDirection
Step 4
AlternativeStrategicChoice
Step 6
StrategicEvaluation& Control
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BUSINESS POLICIES AND STRATEGICMANAGEMENT
Top Management involment
resources Long term Prosperity & Environmental factorsof the firm Multi-Business
Strategic Decision Making
Allocation of Impact on Future Oriented Multifunctional Consideration of external
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1 12 List strengths 2 List Weakness3 34 4
1 1 12 List Opportunities 2 2
3 3 34 4 4
1 1 12 List Threats 2 23 3 34 4 4
ORGANISATION ANALYSIS
Or g a n i sa t iOn a na l y s is
Use the strengths toavoid threats
Minimize theWeaknesses and and
avoid threats
Use the strengths totake the advantage of
opportunities
Over come the weakness bytaking the advantage of
opportunities
Environmental Threats ST Strategies WT Strategies
TOWS Matrix
Always leave Blank
Organizational Strengths Organizational Weakness
Environmental opportunities SO Strategies WO Strategies
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1 Core Competencies in key areas 1 No clear strategic direction2 Adequate financial resources 2 Obsolete facilities3 Well thought of by buyers 3 Lack of managerial depth and talent4 An acknowledge market leader 4 Missing some key skills or competences5 Proprietary technology 5 Poor track record in implementing strategy6 Cost advantages 6 Falling behind in R & D
7 Product innovation skills 7 Weak market image8 Better advertising campaigns 8 Weak distribution network9 Better manufacturing capability 9 Lack of financial resources
10 Others 10 Others
1 Serve addition customer groups 1 Entry of lower-cost foreign competition2 Enter new markets or segments d 2 Rising sales of substitute products3 3 Slower market growth
44 Diversify into related products5 Vertical integration forward or backward 5 Vulnerability to recession and business cycle6 Fal ling trade barri ers in attractive foreign markets 6 Changing buyer needs and tastes7 Complacency among rival firms 7 Adverse demographic changes8 Faster market growth 8 Others9 Others ORGANISATION ANALYSIS
Expand product line to meet broader range of
customer needs Adverse shifts in foreign exchange rate and tradepolicies of foreign governments
The concept of SWOT Analysis is described in matrix form, S=Strengths, W=Weakness, O=Opportunities, and Threats
Potential Internal Strengths Potential Internal Weakness
Potential External Opportunities Potential External Threats
SWOT ANALYSIS
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ORGANISATION ANALYSIS
B u s i n e s s G r o w t h R a t e
H i g
hStars Questions Marks
L o w
Cash Cows Dogs
BCG Matrix
Relative Competition position (Market Share)
High Low
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ORGANISATION ANALYSIS
N e w M a r
k e t s
Market Development Diversification
Ansoffs Matrix
Existing products New Products
E x i s t i n g M a r
k e t s
Market Penetration Product Development
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ORGANISATION ANALYSIS
STRONG AVERAGE WEAK
Business Strength/Competitive Position
GE-NINE-CELL MATRIX
I n d u s t r y A t t r a c t i v e n e s s H
I G H
M E D I U M
L O W
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B u s i n e s s S t r e n g t h
H A R V E S T
Product Life Cycle Matrix
B u s i n e s s S t r e n g t h
H A R V E S T Dominant
HOLDStrong
B U I L D
Unacceptable ROI
Embryonic Growth Mature Decline
Embryonic = Introduction
ORGANISATION ANALYSIS
Product life cycle
B u s i n e s s S t r e n g t h
B U I L DFavoured
Tenable
Weak
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STRATEGIC ANALYSIS
Mc Kinsey's 7-S Framework
Structure
Supperordinate
Goals
Staff
StyleSkills
Strategy Systems
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STRATEGIC ANALYSIS
Functional Level
What are the strategic level and Who are persons at different levels of a Corporate
Corporate Level
Business Level
Board of Directors
Division BDivision A Division C
Bitmap Head of theDepartment B
Head of theDepartment A
Head of theDepartment B
Head of theDepartment A
Head of theDepartment A
Bitmap Head of theDepartment B
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STRATEGIC ANALYSIS
The analytical sequence of strategic analysis is as follows
Strategic Appraisal of Firm'sexternal and internal situation
Evaluation of Alternatives Choice of strategy
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STRATEGIC ANALYSIS
BLANCING OF INTERNAL PONENTIALS & ENVIRONMENTAL OPPORTUNITIES
INTERNAL POTENTIALENVIRONMENTALOPPORTUNITIES
STRATEGICANALYSIS
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STRATEGIC ANALYSIS
E x t e r n a l
S t r a t e g i c R i s
k
I n t e r n a l
RISK ANALYSIS
Short Term Long Term
Errors in interpreting theenvironment cause
strategic failure
Organizational capacityis unable to cope to cope
up with strategicdemands
Inconsistencies with thestrategy are developed
on account of changes ininternal capacities and
preferences
Changes in theenvironment lead to
obsolescence of strategy
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STRATEGIC ANALYSIS
What is situational analysis
SA Product analysis
SA Competitive situation
SA Distribution situation
SA Environmental Factors
SA Opportunity and issue
analysis
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STRATEGIC ANALYSIS
Form astrategicvision of
Where thecompany
need tohead
Identifypromisingstrategiction the
company
Select thebest
strategy andbusiness
model for
thecompany
Thinkingstrategically
about acompany's
externalenvironmental
Thinkingstrategically
about acompany's
internalenvironmental
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STRATEGIC ANALYSIS
Five-Forces Model of Competition
POTENTIAL NEW ENTRANTS
FIRM IN OTHER INDUSTIESOFFERING SUBSTITUTE
PRODUCTS
SUPPLIERS OF KEY INPUTSRIVALRY AMONG
COMPETING SELLERSPUCHASING POWER OF
BUYERS
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FUNCTIONAL STRATAGIES
FUNCTIONA L STRA TEGIES
Financestrategies
MarketingStrategies
InformationManagement
Strategy
FunctionalStrategies
ProductionStrategies
Research &Development
Strategies
HumanResourceStrategies
LogisticsStrategies
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FUNCTIONAL STRATAGIES
FINANCIAL DECESIONS
FinancialDecision
Source of Funds
CreditorsManagement
CapitalBudgeting
DividendPolicies
Cost of Capital
WorkingCapital
Budgeting
InternationalSources of
Funds
TreasuryManagement
Cash Level
DebtorsManagement
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FUNCTIONAL STRATAGIES
Questions to be answered effective Logistic Strategy
Logistics Strategies
Which source of Raw materials andcomponents are available?
How may manufacturing locations arethere?
What modes of transportation should beused for various products?
What is the nature of distributionfacilities?
What is the nature of materials handlingequipment possessed? Is it idea?
What is the method for deployinginventory in the logistics network?
Should the business organization ownthe transport vehicles?
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FUNCTIONAL STRATAGIES
Research & Development Strategy
R & D R&D Policies enhance
strategy
R & D
Emphasize product or
Process improvements
R & D Stress basic or applied
research
R & D Be leaders or followers
in R&D
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STRATEGIC IMPLEMENTATION
Implementation means "TRANSLATING DECESION INTO ACTION" CHANGE WILLCOME FROM IMPLEMENTATION BUT NOT BY PALN
Strategies
Plans
Progammes
Projects
Budgets
STRATEGIC IMPLEMENTATION
Some of the important statement for this captor are as follows
The Pyramid of Strategy Implementation
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STRATEGIC IMPLEMENTATION
What are issues in Strategic Implementation
What are issues
in StrategicImplementation
ProjectImplementation
StructuralImplementationProcedural
Implementation
ResourceAllocation
Functional andOperational
Implementation
BehavioralImplementation
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STRATEGIC IMPLEMENTATION
Strategic Implementation
A
C
B
D
EXCELLENT WEAK
What is the inter-relationship between strategy formulation and implementation
S T R A T E G Y F O R M U L A T I O N
S O U N
D F L A W E D
S O U N D
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STRATEGIC IMPLEMENTATION
Or g a ni z a t iOna l St r uc t ur eFunctional Structure
Public Relation
CEO
Marketing Production
Legal
Finance Personnel
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STRATEGIC IMPLEMENTATION
Finance
Divisional Structure
CEO
General Manager
Corporatelegal/PR
General Manager
Marketing
Operations Operations
Marketing
Personnel
Corporate finance
Personnel
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STRATEGIC IMPLEMENTATION
Personnel
Personnel
Strategic Business Unit
CEO
Head SBU 1 Head SBU 3Head SBU 2
DivisionDivisionDivision
BA C D E F
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STRATEGIC IMPLEMENTATION
Marketing
Marketing
FUNCTIONALSPECIALISTS
Matrix Structure
Marketing
CEO
Finance Marketing Personnel Production
Project ManagerA
Project Manager
B
Project ManagerC
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STRATEGIC IMPLEMENTATION
Network Structure
Region BProject Group N
Project Group M
Function Y
Function XRegion A
CORPORATE HEADQUARTER
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Case Study
Almost all business schools across the globe use the case method as the prime tecahing technique for the course on business policymanagement. Student of strategic management practice business policy and strategic management case analysis.
What is case?
A case is a description of management problem or situation as viewed or presented to a decision maker. It i s a pedagogical tool which involves adiscussion centered around the case. It sets a situation with all the ancillary facts, figures, emotions, opinions, views grapevine and the like.
Need for case method in management p ractices
Prof. Charles Gragg observed that managerial skill and expertise can not be acquired through mere listening to lectures and reading books. Hesuggested that readymade answers about the practice of management cannot be found in text books. This is because of the fact that eachmanagerial situation is different from others with unique aspects, requiring its own diagnosis and judgment. Cases provide the tomorrowsmanagers with a valuable way to practice wresting with the actual problems of actual managers in actual companies.
Most of the management students have no or limited knowledge about the practical aspects of management. Cases brined this gap to some
extent and help the students to substitute for practical knowledge by
Giving broader exposure to different types of situations, companies and industries Placing the students in different roles of case Providing an opportunity to apply principles ,concepts and techniques of management to problem situations Including the students to prepare managerial action plans and to deal with related issues.
Objectives of Case Analysis:
The objectives of the case analysis are: To increase the understanding of the students of what managers hold and should not do in guiding a business to success To build the student skills in conducting strategic analysis in a variety of situations, companies and industries. To provide the student valuable practice in diagnosing strategic issues, evaluating strategic alternatives with the help of SWOT analysis and
formulating practicable plans of action based on the ground realities To enhance the students sense of business judgment as opposed to accepting the opinion of the teacher or back of the book answers
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To provided the student an in-depth exposure to a variety of companies and industries, thereby gaining something close to actual businessexperience.
How to analyze a Case?
The student can follow the approach discussed below
Read the case material quickly to get familiarity Read the case a second time for full command of the facts, information, opinions, views, company values etc. Read the exhibits, appendices etc. carefully Study the case ( Student should be very clear on the words read and study ) Identify the strategic issues Diagnose the key issues
Check the diagnosis Support diagnosis and opinions with reasons and evidence Checkout conflicting opinions and make some judgment about the validity of the data and information provided Start analysis of the issues Identify and make notes of data and information required to solve the problem diagnosed Compare the data and information available in the case with the data required to offer recommendations Fill-in the gaps Re-check the diagnosis Use tools and techniques of s trategic analysis Analyze the case
Generate alternative solutions Evaluate the alternative solutions Rank of solutions Select the best solution Prepare an action plan Communicate the results to parties concerned.
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Contact
SRINIVASCOACHING CENTR 080-23469376
VENKATA NAGENDRA BABU.G e mail: [email protected] Mobile .+91-900889332
Feedback e mail: [email protected] Subject Feedback SM