prikshit SM

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What is a Strategy?

´ Refers to the ideas, plans, and support that firms employ to compete successfully against its

rivals.

´ Strategy is designed to help firms achieve competitive advantage .

´ How to get edge over rivals?

´ Being followed from the olden days (example- King Akbar).

Strategy concepts

Distinctive Competence:-The special skills, capabilities, or resources that enable a firm to stand out from

its competitors; what a firm can do especially well to compete or serve its customers. Example-

McDonalds core business is hamburger (quality food and reasonable price).

Terrain:- The environment in which competition occurs. In a military sense, terrain is the type of

environment or ground on which a battle takes place. From a business sense, terrain refers to markets,segments, and products used to win over customers

What is strategic management?

Definition:- Strategic management is a stream of decisions and actions that lead to the development of

an effective strategy or strategies to help achieve corporate objectives. By Glueck.

´ Where we are today (current position)?

´ Where we want to go (Vision)?

´ What actions should we take to go there ( develop a plan or strategy)?

´ How can we bring out these actions ( Implement strategy)?

Six Ingredients of Strategy

Vision

Value creation planning & administration

Strategy

Global awareness stakeholder

Leveraging technology



Value Creation

´ V alue Proposition The products and services that meet customer needs at a price that

generates a positive economic return.

´ C ustomer Focus right customer + right product/services= Economic return.

´ C ompetitor focus Understanding the competitors.

Planning and Administration

´ Activity Fit Do we have all resources to perform activities?

´ Corporate Fit How to make our all business units to work together?

´ Alliance Fit Are we have right partners and whether their strategies are compatible with us?

´ People Fit Are our people are trained and skilled?

´ Communication Fit Do we promote clear and honest communication among our people?

Strategic management model

Strategic Management Process

´ The steps by which management converts a firms values, mission, and goals/objectives into a

workable strategy.

´ It consists of FOUR stages: analysis, formulation, implementation, and adjustment/evaluation.



Strategy Management Process

Analysis External Environment Opportunities, Threats

Internal Environment Strengths, Weakness

Formulation Mission Customers to be served

Capabilities to be

developed.

Policies Goals, guidelines for majoractivities.

Implementation Organization structure,

systems, culture, etc.

Adjustment/ Evaluation (Cycle to earlier steps)

VMGS

´ VISION provides clear view of what firm is trying to achieve for its customers. It

provides a direction of what the organization seeks to do or acquire.

´ MISSIONwho we are and what we do.

´ GOALS are high level statements that provide overall context for what the project is

trying to achieve and should align to business goals. This is non-measurable.

´ OBJECTIVES What is to be accomplish? Time in which to accomplish it. Quantified when

possible.



Nature of Strategic Management

´ SM related to formal and organized sector, especially in corporate sectors.

´ Very comprehensive and covers all the areas of the corporate business.

´ It is not specific but a holistic in nature.

´ Provides guidelines to all other functional areas.

´ Focuses into long-term goals, relatively broad.

´ SM is concerned to whole organization whereas operation management is related to

any specific functional area.

Importance of SM approach

´ Asks the manager about the goals of the organization and the strategy to fulfill it.

´ Future cannot be controlled but it can be anticipated.

´ Each of the external environment shall either constrain or facilitate an organization as it

seeks to implement policy.

´ Managers must be sensitive to the needs and respond to demands of constituents over

whom they have little or no control.

´ Concentrates on assuring a good fit between the environment and the organization.

Strategy Levels In organization

´ Corporate Strategy Market definition Diversification into new product of geographic

markets.

´ Business Strategy Market Navigation Attempts to secure competitive advantage in

existing product of geographic markets.

´ Functional Strategy Support of Corporate strategy and Business Strategy Information

systems, human resource practices and production processes that facilitate

achievement of corporate and business strategy.

Business and Corporate strategy

´ Multibusiness firm or Diversified firm General Electric in power generation, medical

equipment, plastic, lighting, water treatment, financial services, home appliances, and

transportation industries, etc.

´ Single-business firm or undiversified firm A firm that operates only one business in one

industry or market. Example is Dominos Pizza and Papa Johns International.



Corporate and Strategic Planning UNIT 2

Planning

j ACCORDING TO WILLIAM KING :

Planning is the process of thinking through and making expli cit the strategy, actions and relationships necessary to accomplish an overall objectives or purpose.

NATURE OF PLANNING

PLANNING IS GOAL-ORIENTED:

Planning is made to achieve the desired objectives of the business.

PRIMACYOF PLANNING:

Planning pervades all managerial activity,it is the function of every manager.It facilitates

organising,staffing,directing,and controlling.

PLANNING IS AN INTELLECTUAL PROCESS:

Planning is an intellectual process and the quality of planning will vary according to the quality

of the mind of the managers

SCOPE OF PLANNING

´ Management is basi cally concerned with achieving the objectives of the business by utilising the

available resour ces and human resour ces of the enterprise,by making optimum utilisation of

resour ces.Attaining maximum results with the minimum resour ces and the least wastage is the

ultimate end of every business,in order to achieve the goal of the organisation.

TYPES OF P LANNING

´ STRATEGIC PLANNING: A strategic planning is a framework for strategic thinking that he helps

a school stay competitive, live into its core value, ward off threats and take advantage of

opportunities.

´ OPERATIONAL PLANNING: To operationalize the vision and mission of the school through

specific workplace that lead to shared responsibility and accountability of specific goal.

´ FORMAL AND INFORMAL PLANNING: A planning in BLACK and WHITE is known as formal

planning. Informal planning is only thinking about it and nothing more.

´ CORPORATE PLANNING: The process of establishing corporate objective and formulating the

policies, strategies and resource allocation that will best achieve these objectives.

´ FUNCTIONAL PLANNING: FP is segmental, and it is undertaken for each major function of the

organisation like Production, Marketing, Finance, Human resource,etc.



SH ORT TE RM AND LONG RANGE

´ PLANNING: STP relates to a period of less than one year, MTP covers a period of over one year

but less than three year. A planning between three to five years is known as long term planning.

´ PROACTIVE PLANNING: PP involves designing suitable course of action in anticipation of likely

changes in the relevant environment. In India, cos like Reliance Industries, Hindustan lever,etchave adopted this kind of approach.

´ REACTIVE PLANNING: In RP, organisationss response come after the environmental changes

have taken place.After the changes take place,organisations start planning.

PROCESS OF PLANNING



STRATEGIC PLANNING

´ Is a systematic effort to produce fundamental decisions and actions that shape and guide what a

business organization is, what it does and why it does it. The objective of strategic planning is to

develop a chart by which to manage an organizations positioning.

´ It requires significant amount of time and can be quite frustrating .

´ But if done properly, it can enable a firm to recognize its most effective position within its

industry.

BENEFITS OF STRATEGIC PLANNING

´ Defines the purpose, goals, objectives and time frame.

´ Communication of goals and objectives to their stakeholders.

´ Develop a sense of ownership.

´ Emphasis on the effective use of the resources.

´ Provides a base to measure the progress.

DECISION MAKING

ACCORDING TO R.S.DAVAR..

Decision making may be defined as the selection based on some criteria of one behavior

alternative from two or more possible alternatives. To decide means to cut off or in practical content,

to come to a conclusion.

CHARACTERISTICS OF A DECISION

Decision is the choice of the best course among alternatives.

Decision is the end process preceded by deliberation and reasoning.

Decision making is a mental process because the final selection is made after thoughtful

consideration.

Decision is aimed at achieving the objectives of the organisation.

Decision relates the means to the end

prikshit SM

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