strategic managemnt

Module : STRATEGIC MANAGEMENTBlock-6, Semester 3rd, MBA

Module Leader: Vimal Babu

Overview

of

Strategic Management

Objectives of the session:

• Define what is meant by strategy and strategic management

• Discuss the nature of Strategy formulation, implementation, and evaluation activities.

• Understand process of strategic management• Describe the nature and role of vision and mission

statements in strategic management.• Understand how clear vision and mission statements can

benefit strategic management activities.• Explain how strategic priorities vary by level: corporate,

business and operational; and understand what distinguishes strategic management from operational management

Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

Strategic Management –Defined

Purpose of Strategic Management

To exploit and create new and different opportunities for tomorrow


In essence, the strategic plan is a company’s game plan

3 Stages of the Strategic Management Process• Strategy formulation

• Strategy implementation

• Strategy evaluation

Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

Issues in Strategy Formulation

Businesses to enter Businesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint venturesAvoidance of hostile takeover

Businesses to enter Businesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint venturesAvoidance of hostile takeover

Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

Strategy Implementation Steps

• Developing a strategy-supportive culture

• Creating an effective organizational structure

• Redirecting marketing efforts

• Preparing budgets

• Developing and utilizing information systems

• Linking employee compensation to organizational performance

Issues in Strategy Implementation Action Stage of Strategic

Management

Mobilization of employees & managers

Most difficult stage

Interpersonal skills critical

Action Stage of Strategic Management

Mobilization of employees & managers

Most difficult stage

Interpersonal skills critical

Strategy Evaluation

Internal Review

External Review

Performance Measurement

Corrective Action

Peter Drucker: Think through the overall mission of a business. Ask the key question:

“What is our Business?”

Prime Task of Strategic Management

The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty

Integrating Intuition & Analysis

Intuition is based on:– Past experiences– Judgment– Feelings


Intuition is useful for decision making in conditions of: Great uncertainty Little precedent Highly interrelated variables Several plausible alternatives

Involve management at all levels

Intuition & Judgment

Influence all analyses


Organizations should continually monitor internal and external events and trends so that timely changes can be made as needed

Adapting to Change

Key Terms in Strategic Management• Competitive advantage

• Strategists

• Vision and mission statements

• External opportunities and threats

• Internal strengths and weaknesses

• Long-term objectives

• Strategies

• Annual objectives

• Policies

Anything that a firm does especially well compared to rival firms

Strategic Management is Gaining and Maintaining Competitive Advantage

1. Continually adapting to changes in external trends and events and internal capabilities, competencies, and resources

Achieving Sustained Competitive Advantage

2. Effectively formulating, implementing, and evaluating strategies that capitalize on those factors

Strategists

Gather Information

Analyze Information

Organize Information

Vision Statement –What do we want to become?

Mission Statement –What is our business?

Vision and Mission Statements

Our VisionTo be a Premier University of Integral and Transformational Learning for Future Leaders

Our MissionA center for higher education, the University is focused on providing:

TO STUDENTS - an environment for self-development; an institution that nurtures their potential based on their aptitudes and interests.

TO FACULTY - a platform to be mentors and guides who shape the country's future leaders by imparting knowledge and skills; opportunities for research on emerging trends and industry practices.

TO THE INDUSTRY AND COMMUNITY - students with intellectual competence, reality-based knowledge and personal integrity; students who strive for excellence and aspire to become socially responsible leaders.

The Vocabulary of StrategyApril 22, 2023

Source: (Johnson, G.,Scholes, K.,Whittington, R.(2008), Exploring Corporate Strategy, Pearson Education. pp 9.)

Strategic Management Process

External Opportunities and Threats

Analysis of Trends– Economic

– Social

– Cultural

– Demographic/Environmental

– Political, Legal, Governmental

– Technological

– Competitors

Basic Principle of Strategic Management

External Opportunities and Threats

Strategy Formulation

Take advantage of External Opportunities

Take advantage of External Opportunities

Avoid/minimize impact ofExternal Threats

Avoid/minimize impact ofExternal Threats

Controllable activities performed especially well or poorly

Determined relative to competitors

Internal Strengths and Weaknesses

• Typically located in functional areas of the firm

– Management

– Marketing

– Finance/Accounting

– Production/Operations

– Research & Development

– Management Information Systems


Assessing the Internal Environment


Internal Factors

Performance Measures

Ratios

Industry Averages

Survey Data

Specific results that an organization seeks to achieve in pursuing its basic mission

Long-term means more than one year

Long-Term Objectives

Long-Term Objectives• Essential for ensuring the firm’s success

– Provide direction

– Aid in evaluation

– Create synergy

– Reveal priorities

– Focus coordination

– Provide basis for planning, organizing, motivating, and controlling

Short-term milestones that firms must achieve to reach long-term objectives

Annual Objectives

Means by which annual objectives will be achieved

Policies


• Communication is a key to successful strategic management

Benefits of Strategic Management

• Nonfinancial Benefits– Enhanced awareness of threats– Improved understanding of competitors’ strategies– Increased employee productivity– Reduced resistance to change– Clearer understanding of performance-reward

relationship– Enhanced problem-prevention capabilities

Why Some Firms Do No Strategic Planning

• Lack of knowledge of strategic planning

• Poor reward structures

• Waste of time

• Too expensive

• Laziness

• Content with success

Why Some Firms Do No Strategic Planning (continued)

• Fear of failure

• Prior bad experience

• Fear of the unknown

• Honest difference of opinion

• Suspicion

Pitfalls in Strategic Planning

Strategic planning is an involved, tricky, and complex process that takes an organization into uncharted territory

Comparing Business and Military Strategy• Strategic planning started in the military

• Similarity – Both business and military organizations must

adapt to change and constantly improve

• Difference – Business strategy assumes competition

– Military strategy assumes conflict

Emergent Strategy and Deliberate Strategy

• Based on Porter’s Five Forces, pick up any small scale company; feel free to decide its present industry and also choose to enter into a new industry seeing the opportunity.

• How would (think of ways-strategies) you like to apply the Porter’s model in formulating the strategy to do business in the new industry.

• It is a group-based classroom activity.

(You may like to use internet sources for data and information, but do remember to quote sources)

• (a) Pick up a firm of your choice and share your views mentioning its offering and its strengths and weaknesses. (b) Compare it with the closest market competitor. (c) Analyze any 02 strategies that you observed in the growth of the company.

• Microsoft is a dominant firm in the operating systems segment of the software industry. Read about Microsoft on the Internet and prepare a brief interactive session in the class on this firm’s product and market strategies, particularly in the last 5 years.

• Devise and sustain arguments that Microsoft is proactively managing its industry environment?

• Jack Welch, former CEO of General Electric, is often cited as a good example of an effective strategic leader. Read about Jack Welch’s years at General Electric and make judgments by presenting your views describing what he did can be characterized as effective strategic leadership.

• Analyze the failure (poor strategies) of Kodak and success of Intel (innovative strategies)

strategic managemnt

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