Business Strategy Intro i
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Transcript of Business Strategy Intro i
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I n t r o d u c t i o n I
BUSINESS STRATEGY
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THE GENESIS
In 1911 Harvard Business School created anintegrative course to create general managementcapability
Gordon & Howell Report sponsored by the FordFoundation recommended a capstone course which
will enable students to integrate their learnings inthe various fields of management
In 1969 the AACSB made this course mandatory in allMBA programmes
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EVOLUTION
Four paradigm shifts mark the evolution of StrategicManagement
Mid 1930s marked the period of Ad Hoc decisionmaking in policy when the business environment
was relatively simple- entrepreneur driven
In the late 1930s and the 1940s the ad hoc approachwas replaced by planned policy formulation
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EVOLUTION
Increasing complexity of the environment forcedstrategy formulation to be based on a critical look at
businesses and their relationships with theenvironment- 1960s
In 1980s strategy management had to focus on theintersection of strategic processes and theresponsibilities of general management
Just strategy development does not equip a managerto take many managerial actions in the course ofrunning a business
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A MODEL OF LOOKING AT STRATEGICMANAGEMENT
Hambrick & Frederickson ModelVision & Mission
Goals & Objectives
Strategy: Arenas, Vehicles, Differentiators, Staging,Economic Logic
Implementation Levers & Strategic Leadership
Accompanied by Internal & External Strategic
Analysis
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WHAT DO THESE TERMS MEAN?
Arenas: where will we active?- products, services,channels, geographic and other markets, technologyetc.
Vehicles: How will we get there? Acquisitions,alliances, internal development on variousdimensions
Differentiators: How will we win in the marketplace?The features, attributes of our products andservices- prices, quality, reliability etc.
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WHAT DO THESE TERMS MEAN?
Staging: the speed and sequence of our movesEconomic Logic: How will we get our returns? The
profit over & above the cost of capital.
Some Questions: do firms behave like rational actors?How are firms different? The heterogeneity amongfirms in the same competitive market?
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WHAT DO THESE TERMS MEAN?
Role of the Head Office in diversified firms?What determines success or failure in international
competition?
Gradually these questions and issues are becomingcritical for Indian Companies as they enter aglobalising environment
Pre Liberalisation: on the fringes of government
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INDIAN IMPERATIVES
Pre Liberalisation: follow the Government strategies1990s Transitional Euphoria & Reality Check
Post Liberalisation: Be a global maverick,
entrepreneurship with professionalism, demergebusinesses, decentralise, develop technologies,
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WHAT IS STRATEGY?
Creating a common thread and thrust among themany initiatives
To move from a current state to a desired future state
Achieve a trade off and fit among activitiesContinually aligning the organisation with the
environment without losing ones strategic goals
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SCHOOLS OF STRATEGY FORMATION
Prescriptive School- Design School, Planning School,Positioning School
Descriptive Schools- Entrepreneurial School,Cognitive School, Learning School ,Power School,Cultural School, Environmental School
Integrative School- Configurational School
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SCHOOLS OF STRATEGY FORMATION
Design School based on conceptualising a strategyheaded by the CEO
Planning School on strategy as a formal process led bythe analytical thinkers
Positioning School on generic positioning of theorganisation in a competitive scenario like inMichael Porter
Entrepreneurial School based on vision of theentrepreneur
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SCHOOLS OF STRATEGY FORMATION
Cognitive School based on intellectual process led bythe strategic thinker
Learning School based on strategy development as anemergent process resulting from the concreteexperience of the firm as in Prahalad
Cultural School on collective process of the seniormanagement with their unique perspective
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SCHOOLS OF STRATEGY FORMATION
Power School based on negotiations among theinfluence holders in the organisation
Environmental School on strategy as a reactiveprocess shaped by the environment
Configurational School with strategy formation as atransformative process with one of the proponentsof the above schools playing the lead role