Introduction to Strategic Management
Course Objectives• Explain What is Strategic Management• Explain What is a Strategy• Describe the Strategy Statement and its Components• Explain the Steps of Strategic Management Process• Describe the Components of Strategic Management Process• Differentiate between Strategy Formulation and Strategy Implementation• Differentiate between Strategic, Administrative and Operational Decisions• Describe the Qualities of a Strategic Leader• Explain What is a Business Policy• Describe the Structure of BCG Matrix• Describe the Factors of SWOT Analysis• Explain Porter’s Five Forces Model of Competition• Explain What is Corporate Governance• Explain What is Business Ethics• Describe the Core Competency Theory of Strategy
Introduction
• Helium Inc. is a leading manufacturer of electrical safety equipments such as Miniature Circuit Breakers (MCBs), Molded Case Circuit Breaker (MCCBs) etc. for the past six decades.
• It has carved a niche for itself in this area and captures the largest market share in its industry and segment.
Introduction
• However, now Helium wants to venture into the mobile and Smartphone market.
• It has decided to launch a range of mobiles and Smartphone that will cater to the various segments of the society.
Introduction
• What do you think Helium should do to become successful in its venture?
• Yes, a careful strategy planning will help Helium recognize its position in the market, its competitors, and challenges etc. to help it become successful in its new venture.
Let us look at each in detail.
Strategy Statement and its Components
Mission
Strategic Intent
Statement of MissionVision
Statement
Goals
and
Objec
tives
Goals and Objectives
Mission
Goals
and
Objec
tives
Goals:A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain its mission or vision. Goals make mission more prominent and concrete. They co-ordinate and integrate various functional and departmental areas in an organization.
Objectives:Objectives are defined as goals that organization wants to achieve over a period of time. These are the foundation of planning. Policies are developed in an organization so as to achieve these objectives. Formulation of objectives is the task of top level management.
The following are the features of well defined goals:
• They are precise and measurable.
• They look after critical and significant issues.
• They are realistic and challenging.
• They must be achieved within a specific time frame.
• They include both financial as well as non-financial components.
Real Life Example
Vision
Vision:
“To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services.”
VisionVision
Real Life Example
Mission
Mission:
“Sony is committed to developing a wide range of innovative products and multimedia services that challenge the way consumers’ access and enjoy digital entertainment. By ensuring synergy between businesses within the organization, Sony is constantly striving to create exciting new worlds of entertainment that can be experienced on a variety of different products.”
Components of Strategic Management ProcessThe image given below shows the components of the Strategic Management Process.
Environmental
ScanningStrategy
Formulation
Strategy
ImplementationStrategy
Evaluation
Let us look at each component in detail.
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Real Life Example
Globus Inc. is a leading manufacturer of economy class cars.
It has recently decided to launch
a new car ‘Flash’ which will be a
low-priced car catering to the
low-budget consumers.
However, monitoring and
analysis of the external
environment indicates that
original forecasts of the
prices of the raw materials
that are involved in making
the car are no more credible.
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Real Life Example
The prices of many of the raw materials are likely to go up by at least 15%.
How do you think these changes
affect the launch of ‘Flash’ by
Globus?
Such analysis of the external
environment helps Globus
carry out a more focused
scanning, forecasting and
analysis to create a more
trustworthy prediction about
the input costs.
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Real Life Example
Then, based on the input costs depicted, Globus can decide to either to raise the cost price of the car or to make any alterations in the design or features offered to keep the price same.
Thus, you can see that analysis
of the environment plays a key
role in formulating strategies
that help make an organization
successful.
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Strategy Formulation Process
The following are the six steps of strategy formulation process:
Let’s look at each in detail.
Setti
ng
Org
aniz
ation
s’
obje
ctive
s
Eval
uatin
g th
e O
rgan
izati
onal
En
viro
nmen
t
Setti
ng
Qua
ntita
tive
Targ
ets
Aim
ing
in
cont
ext w
ith th
e di
visi
onal
pla
ns
Perf
orm
ance
An
alys
is
Choi
ce o
f St
rate
gy
Did You Know?
People learn more from their failures than from their success. Hence, one of the best approaches to avoid copying best practices is to create a process involving frank discussion about worst practices. This will help create very effective strategies because people debate on the merits of different examples of good practice, scout the organizations for promising practices that may already be bubbling up and then develop a view of what next practice should be.
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