Strategy Terms-Unit 1
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Transcript of Strategy Terms-Unit 1
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Dr.S.SakthivelA.M.I.I.M.,P.G.D.B.A.,M.M.M.,M.Phil.,Ph.D
Sr. Professor / Hallmark Business School
Good Morning
Best Wishes for Bright Career
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Conceptual Framework for StrategicManagement,
the Concept of Strategy and
the Strategy Formation Process
Stakeholders in Business
Vision, Mission and Purpose
Business Definition, Objectives and Goals Case Study.
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Managers Old Concept :
To-days decisions for To-days Business
Latter Managers have to prepare to face thechallenges by introducing new methodology
for survival ,which turnout Strategic Planningand subsequently Strategic Management toexcel .
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Importantly, the realisedstrategy of the organisationwas not directly related to
the intended, deliberatestrategy, the precise andexplicit plan of theorganisation, but more anoutworking of the non
deliberate and hugelyvariable strategies of thework force; emergentstrategy.
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Its success mainly depends on
IndustryContest National Contest
Self Resources , Capabilities and Strategies.
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Strategic Planning is a critical, evolving, andongoing process for setting the futuredirection of the Department.
In addition to shaping its future, it directlysupports the effectiveness of the Department
in accomplishing its mission of providing andmaintaining the excellent transportationsystem Georgians have come to expect.
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Strategic Management is the effort totransform the high level directions of
Strategic Planning into well aligned actionsof the working units of the Department, usingperformance measurements and performancebased management as a business process.
Performance measurement supports thedecision making process to continuallyimprove transportation services for ourcustomers.
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1. BHEL is Planning to expand its range of supercriticalpower projects to cater the need of the country.
2. LG Electronics India Limited signed a MOU withMaharashtra Government to expand its manufacturingfacility at Pune for Rs. 900 Crores
3. Maruti Udyog slashed the price of Maruti-800 in smallcar segment (Rs. 160000)
4. Lenova a computer giant in china acquired IBM in
China.5. Tata Steel entered Joint Venture agreement with
Iranian Mines and Mining Industries
6. Developments and Renovation Organization.
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The prime task is to think through theoverall mission of a business.
Peter Drucker
Imagination is more important thanknowledge, because knowledge is limited,
whereas imagination embraces the entireworld.
. . . . Albert Einstein.
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What is strategic management?
Strategic Management can be defined as
the art and science of formulating,implementing and evaluating cross-functionaldecisions that enable an organization to
achieve its objective.
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The on-going process of formulating,implementing and controlling broad plans
guide the organizational in achieving thestrategic goods given its internal and externalenvironment.
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1. Globalization is the survival for business
2. E-Commerce becomes a business tool
3. Earth environment has become a majorstrategic issue
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1. Corporate Strategy
2. Business Strategy
3. Functional Strategy
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Corporate Strategy - is concerned with the overall purpose andscope of the business to meet stakeholder expectations.This is acrucial level since it is heavily influenced by investors in thebusiness and acts to guide strategic decision-making throughout
the business.C
orporate strategy is often stated explicitly in a"mission statement".
Corporate strategy refers to the overarching strategy of thediversified firm. Such a corporate strategy answers the questions
of "which businesses should we be in?" and "how does being inthese businesses create synergy and/or add to the competitiveadvantage of the corporation as a whole?
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Business Unit Strategy - is concerned morewith how a business competes successfully in
a particular market. It concerns strategicdecisions about choice of products, meetingneeds of customers, gaining advantage overcompetitors, exploiting or creating new
opportunities etc.
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The Greek Word Strategos
Strategy in English and Chinese
Strategy in Management, Administration, andNational Defense
Also named Business Policy, Corporate
Management,Corporate Strategy, BusinessStrategy, Strategic Management
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Top level, LongTerm Plan/Intent, regarding
OverallCorporate Direction
Defines Scope, and focus, of activities
Often about winning, out-performing
Competitors
Building on resources
Affected by values, expectations & power
Sustainable not casually changed.
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Basic Financial Planning
Forecasting-based Planning
Externally Oriented Planning
Strategic Management
- Meeting annual budgets
- Incorporating predictions beyond next year
- Thinking strategically, Strategic Planning
- Considering also the implementation & control
aspects when formulating strategies
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1960s Design School
1970s BCG Portfolio Management
1980s Porter Positioning School
Early 1990s Resource-based View
(Core Competence), & Learning Organization
Mid 1990s Stretching ambition, not justpositioning/Fit
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GettingThings Done Through People
Corporate level: Purpose and scope,
LongTerm Survival
Business Level: Competition
Operations Level: Action plans and implemen-
tation for human resources, financing, R&D,manufacturing, etc.
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Mission purpose, scope Vision/Intent, desired future state Goal Strategies - long term direction, plans Policies Clear guidelines for decisions and actions Objectives end results of planned activities, Should be compatible with Mission, probably
quantified: To achieve 10% annual growth in earnings per share
T
o achieve 20%
return on equity. To achieve 27% return on capital employed. To capture 45% market share within three years.
Programmes
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Identify Structural Drivers of Change
PEST Framework (PESTEL)
Political, Economic, Social, Technological,Environmental, Legal, .
Political-Legal
Economic-Global
Social-Cultural Technological
Legal Scenarios Planning
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PoliticalLegal (Governments Positions)
Possible trade protection / customs measures ?
Lobby-able consumer protection, environment ?
Usable Export Promotion ?
Economic Trend
Demographics: younger / older population
Peoples disposable income
Exchange rate stability
Those of e.g. neighbouring countries
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Social-Cultural
Lifestyle
Fascination
Attitudes towards foreign products, pollution,wastages, ..
Technological
Flexibility in product changes
Flexibility in packaging changes New food and drug laws, environmental laws, local
and overseas
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1. Threat of New Entrants vs. Barrier to Entry:
economies of scale; capital requirement; access todistribution channels; experience; expectedretaliation; government action; differentiation(customer preference)
2. Threat of Substitutes
Product-for-product substitution (letter-email)
Substitution of need (scissors-sharpening service) Generic substitution (competing for disposable
income)
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3. Power of Buyers
Concentrated Buyers
Large number of small vendors
Undifferentiated alternative sources of supply
Constitute significant portion of total cost
Low cost of switching
Threat of backward integration by the buyer
4. Power of Suppliers
Concentrated suppliers
High switching cost
Powerful brand of supplier
Threat of forward integration by supplier
Fragmented buyers
5. Competitive Rivalry
Balance of power, market growth rates, fixed costs,
increments of extra capacity, differentiation, exit barriers
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Strategic Groups and Organizational Fields
(Supply Chain, Distribution Chain, Clusters)
Markets, market segments, new markets
Consumer needs:
brand reputation,
after-sales service,
delivery reliability,
quality, .. Plus taken-for-granted factors
Any other S.W.O.T. ?
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Portfolio
Culture
Competence
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