The document discusses various concepts related to strategy. It begins by defining strategy as a course of action to achieve objectives. It then discusses different levels of strategy like corporate, business unit, functional etc. It also discusses different schools of thought around strategy formation like design school, planning school etc. Finally, it discusses key elements of strategic management like establishing strategic intent through vision, mission and objectives setting, formulation, implementation, evaluation and control of strategies.
2. Strategy
Greek word ‘strategos’ means generalship
Literally means the art of the general
“Course of action” in other words is “Strategies”
3. Points to Consider
Certain variables are assumed to be constant
(Distorted Reality)
Rigidity; Committed towards a path but be blindfolded
towards emergent situations
4. Concept of Strategy -
Evolution of Thought
A plan or course of action or a set of decision rules
forming a pattern or creating a common thread,
The pattern or common thread related to the
organization’s activities which are derived from its
policies, objectives and goals,
Related to pursuing those activities which move an
organization from its current position to a desired
future state,
Concerned with the resources necessary for
implementing a plan or following a course of action,
5. Concept of Strategy -
Evolution of Thought
Connected to the strategic positioning of a firm,
making trade-offs between its different activities, and
creating a fit among these activities and
The planned or actual coordination of the firm’s major
goals and actions, in time and space that continuously
co-align the firm with its environment.
In simplified terms, strategy is the means to achieve
objectives.
6. Strategy as Paradox
Bob De Wit and Ron Meyer have written in their book
titled ‘Strategy Synthesis’
“At the heart of every set of strategic issues, a
fundamental tension between apparent opposites can
be identified”
Eg. Compete or Cooperate; Globalization or
Localization / Transnational strategy
According to them, strategy emerges as a synthesis out
of the process of intellectual churning of the two
opposing perspectives.
7.
8. Different levels of Strategy
Corporate Level Strategy : Overarching plan of action covers
the various functions performed by different SBUs.
Deals with objectives of the company,
allocation of resources and
coordination of the SBUs for optimal performance.
SBU Level Strategy : Comprehensive plan
providing objectives for SBUs,
allocation of resources among functional areas, and
coordination between them for making an optimal
contribution to the achievement of corporate level objectives.
9. Different levels of Strategy
Functional Level Strategy : Restricted plan
providing objectives for a specific function,
allocation of resources among different operations
within that functional area, and
coordination between them for optimal contribution to
the achievement of SBU and Corporate level objectives
10. Other Levels
Societal Strategy : Based on Mission statement, how
the corporation relates itself to society in terms of a
particular need or a set of needs that it strives to fulfill.
Higher Level than Corporate Level Strategy
Operations Level Strategy : Highly specific and
narrowly defined area. Eg. Operations area of
marketing could be sales, distribution, pricing,
product and advertising.
One step down the functional level
11. The TVS Group
Axles India Ltd.
Brakes India Ltd.
Delphi - TVS
Firestone TVS Pvt. Ltd.
India Japan Lighting
Pvt. Ltd.
India Motor Parts and
Accessories Ltd.
India Nippon
Electricals Ltd.
Irizar TVS Ltd.
Lucas-TVS Ltd.
Lucas Indian Service
Ltd.
Manufacturers
Equipment and Supply
Company
TV Sundaram Iyengar
& Sons Ltd.
TVS Auto Bangladesh
TVS Automobile
Solutions Ltd.
TVS Automotive Europe
Ltd.
TVS Automotive Ltd.
TVS AutoServ
TVS Credit Services Ltd.
TVS Dynamic Global
Freight Services Ltd.
TVS Electronics Ltd.
TVS Infrastructure Ltd.
TVS Interconnect
Systems Ltd.
TVS Motor Company
TVS Sewing Needles
TVS Supply Chain
Solutions
Wheels India Ltd., etc….
Southern Roadways
Ltd.
Sundaram Auto
Components Ltd.
Sundaram Brake
Linings Ltd.
Sundaram Dynacast
Pvt. Ltd.
Sundaram Fasteners
Ltd.
Sundaram Industries
Ltd.
Sundaram Textiles Ltd.
Sundaram-Clayton Ltd.
Turbo Energy Ltd.
TVS America Inc.
TVS Srichakra Ltd.
ZF Electronics TVS
(India) Pvt. Ltd.
12. Issues in Strategic Decision Making
Criteria for Decision Making
Maximizing Returns
Satisfaction
Incrementalism (continuous evolving)
Rationality in Decision Making
Criteria for consideration : Profit Maximization,
Constraints under which decision maker operates,
Bargaining process between different coalition groups in
an organization
Creativity in Decision Making
Original and Different, Novel, Untried
Achieve objectives in an exceptional manner
13. Issues in Strategic Decision Making
Variability in Decision Making : Different people reach
different conclusions
Person-related factors in Decision Making : Age,
Education, Intelligence, Personal Values, Cognitive
Styles, Risk-taking ability, Creativity
Individual vs. Group Decision Making : Size of
Organization and Complex nature of problem decides
14. Schools of Thought on Strategy
Formation
The Prescriptive Schools
1. Design School : Process of Conception (late 1950s &
60s)
2. Planning School : Formal Process (1960s ; divided into
substrategies and programs)
3. Positioning School : Analytical Process (1970s & 80s ;
basis of an analysis of competition and the industry)
15. Schools of Thought on Strategy
Formation
The Descriptive Schools
4. Entrepreneurial School : Visionary Process (1950s)
5. Cognitive School : Mental Process (1940s & 50s)
6. Learning School : Emergent Process (1950s - 90s)
7. Power School : Negotiation Process (1970s & 80s ;
political and cooperative process/pattern)
8. Cultural School : Collective Process (1960s)
9. Environmental School : Reaction Process (late 1960s
& 70s)
16. Schools of Thought on Strategy
Formation
The Integrative School
10. Configuration School : Process of Transformation
(1960s & 70s ; strategy is viewed in relation to a
specific context and could correspond to any other 9
schools of thought)
17. Definition
Strategic Management is the dynamic process of
formulation, implementation, evaluation and control
of strategies to realize the organization’s strategic
intent.
18. Elements in Strategic Management
Process
A. Establishing the hierarchy of strategic intent
1. Creating and communicating a vision
2. Designing a mission statement
3. Defining the business
4. Adopting the business model
5. Setting objectives
19. Elements in Strategic Management
Process
B. Formulation of Strategies
6. Performing environmental appraisal
7. Doing organizational appraisal
8. Formulating corporate - level strategies
9. Formulating business - level strategies
10. Undertaking strategic analysis
11. Exercising strategic choice
12. Preparing strategic plan
20. Elements in Strategic Management
Process
C. Implementation of strategies
13. Activating strategies
14. Designing the structure, systems and processes
15. Managing behavioural implementation
16. Managing functional implementation
17. Operationalising strategies
21. Elements in Strategic Management
Process
D. Performing strategic evaluation and control
18. Performing strategic evaluation
19. Exercising strategic control
20. Reformulating strategies
22.
23. Stakeholders in Business
Individuals and Groups who can affect and are affected
by, the strategic outcomes achieved and who have
enforceable claims on a firm’s performance.
Two-way relationship
Stake holders provide support and contribute;
Organization satisfies the expectations and legitimate
claims
Diversity of stakeholders’ expectations and claims which
varies over period of time under different conditions.
24.
25. Stakeholders’ Analysis
Not all stakeholders are equally important to organizations
Power to influence strategy formulation
Interest in the affairs of the organization
Legitimacy they hold to affect the organization
Limitation on the ability of an organization to satisfy
its stakeholders.
Not possible to satisfy all stakeholders equally;
expectations and claims are at variance. Eg. Employees
want higher wages; Customers want quality products at
lower prices; Shareholders want higher returns on their
investment.
26. Stakeholders’ Analysis
Identify the stakeholders
Identify the stakeholders’ expectations, interests and
concerns
Identify the claims stakeholders are likely to make on
the organization
Identify the stakeholders who are most important
from the organization’s perspective
Identify the strategic challenges involved in managing
the stakeholder relationship
27. Stakeholders’ Analysis Mapping
If there is significant effect and significant power with
a particular stakeholder, then that stakeholder is more
important to the organization.
28. Engagement Tactics
Process of fostering an effective relationship with the
stakeholders is termed as stakeholders’ engagement.
Higher profitability creates capability and flexibility for
the organization in satisfying multiple stakeholders
simultaneously.
Specific departments (corporate communications / public
relations) - in Large organizations
Open, honest, transparent communication builds trust
and fosters cooperation - success of engagement tactics
Apart from this NGOs (dependent on grants and funds
from external sources) need to have open
communication, invite participation, provide feedback to
donors to generate trust which is a long-term process
29. Engagement Tactics
Disseminating information on the website and
through other traditional means such as newsletters,
posters
Participation in public events, exhibitions,
Arrangement of corporate events such as seminars and
conferences
Digitization
30. Strategic Intent
Gary Hamel and CK Prahalad - 1989 - HBR Article
Purposes the organization strives for / Ambition
Also encompasses an active management process that
includes :
Focusing the organization’s attention on the essence of
winning,
Motivating people by communicating the value of the
target,
Leaving room for individual and team contributions,
Sustaining enthusiasm by providing new operational
definitions as circumstances change and
Using intent consistently to guide resource allocations.
31. Example
Reliance Group
Strategic Intent : Global leader by being low-cost provider
Achieved by pursuit of scale, vertical integration and
operational effectiveness
Coca-Cola, strategic intent has been to put a Coke within
“arm’s reach” of every consumer in the world.
When (construction and mining equipment) Caterpillar
threatened Komatsu in Japan, for example, Komatsu
responded by first improving quality, then driving down
costs, then cultivating export markets, and then
underwriting new product development.
32. Concepts
Stretch : Misfit between resources and aspirations
Leverage : Concentrating, Accumulating,
Complementing, Conserving and Recovering
Resources in such a manner that the meagre resource
base is stretched to meet the aspirations that an
organization dares to have
Fit : Positioning the firm by matching its
organizational resources to its environment
33. Strategic Intent - Long Run
Business Definition : Answers the questions raised by
Peter F.Drucker
What is our Business?
What will it be?
What should it be?
Understanding business helps in formulation of vision
and mission
Vision : Forward looking view of what an organization
wishes to become
Mission : What an organization is and why it exists
Business Model
35. Vision
Description of something in the future (Kotter, 1990)
Mental perception of the kind of environment an
individual , or an organization, aspires to create within
a broad time horizon and the underlying conditions
for the actualization of this perception (El-Namaki,
1992)
36.
37. Examples
Henry Ford wished to democratize the automobile
when he visualized that an affordable vehicle must be
available for the masses
Walt Disney wanted to make people happy
Jamshetji Tata dreamt of a self-reliant India in steel
making
Narayana Murthy wants to demonstrate that running a
business is legally and ethically possible in India
through entrepreneurship
38.
39. Mission
Role that an organization plays in the society
Refers to particular needs of the society
Scope of business activities a firm pursues
Essential purpose of the organization, concerning
particularly why it is in existence, the nature of the
business(es) it is in and the customers it seeks to serve
and satisfy (Thompson, 1997)
Purpose or reason for the organization’s existence
(Hunger and Wheelen, 1999)
40. Mission - Formulation
Eicher Consultancy : 1991, born with a mission
statement
HCL : 1991, felt the need because of competition and a
core management team set up
Marico Industries : 1990, triggered by divestment, CEO
outlined and a 3 day workshop of managers
Ranbaxy Laboratories : 1993, competition and
expansion for survival, CEO expressed in clear and
definite terms
Unit Trust of India : 1992, Corporate planning exercise
41. Mission - Communication
Equally important as Formulation
Posted on multiple locations within organization
Annual reports
Posters / Plaques
Employee manuals
Company information kits
Word-of-mouth publicity
Seminars and workshops
Newsletters
Advertisements
Reconsider and Reexamine to either change / discard and
evolve a fresh statement when mission becomes unclear
because of growth of the organization/market/technology
42. Mission - Characteristics
Feasible
Precise
Clear
Motivating
Distinctive
Indicate major components of Strategy
Indicate how Objectives are to be accomplished
43. Defining Business
Understanding business is vital
Ideas generated while defining and understanding
business can be used to frame vision and mission
Diversified Company can have a more accurate
business definition at the SBU Level
If Acquisition, Growth and Diversification are linked
through a business definition, results in synergy.
44. Dimensions of
Business Definition
(3 dimensional
model - Derek
Abell)
Customer groups
(Who)
Customer functions
(What)
Alternate
technologies
(How)
Who is being
satisfied?
Customer
Groups
How are
customer
needs being
satisfied?
Alternate
Technologie
s
Business
Definition
What is
being
satisfied?
Customer
Functions
Defining Business : Marketing &
Customer Oriented Approach
45. Defining Business : Product /
Service Orientation
Company assesses the user’s perception of its product or
service
Examples
HCL Ltd. Perceived computer not as a sophisticated
machine but as an everyday durable commodity
Bhadrachalam Paperboards Ltd. recognized paper as a
product and not as a commodity - dealt directly with
customers
Pearl Polymers visualized using polyethylene terephthalate
containers not just as an industrial product for storing oil
but as containers for modern kitchen creating a huge
market for its Pearl pet bottles and jars
46. Business Model
Representation of a firm’s underlying core logic and
strategic choices for creating and capturing value within
a value network
Companies in same industry can rely on different models
as a matter of strategic choice
TCS - traditional fixed-price, fixed-time business model,
where payments by clients are based on time related
milestones
Infosys and Wipro have a time and material business
model where clients pay on an ongoing basis, depending
on the amount of work done rather than the time elapsed.
47. Goals and Objectives
Goals : what an organization hopes to accomplish in a
future period of time; Generalized
Objectives are the ends that state specifically how the
goals shall be achieved; Concrete and Specific
48. Role of Objectives
Define the Organization’s Relationship with the
Environment
Provide basis for Strategic Decision Making
Helps Organization pursue its vision and mission
Provide standards for Performance Appraisal
Characteristics of Objectives
Understandable
Concrete and Specific
Related to Time Frame
Measurable and Controllable
Challenging
Correlate with each
other
Set within constraints
49. Issues in Objective Setting
Specificity
Multiplicity (org. levels, importance, ends, functions
and nature)
Periodicity
Verifiability / Measurable
Reality (Official & Operative)
Quality (Good : Provide direction and Basis for
Evaluating Performance)
50. What Objectives are set?
According to Drucker
Market standing
Innovation
Productivity
Physical and Financial
Resources
Profitability
Manager Performance and
Development
Worker Performance and
Attitude
Public Responsibility
Research (in Indian
Context)
Profit
Marketing
Growth
Employees
Social Responsibility
Customer expectations
and satisfaction
Quality
Product Cost
51. How Objectives are Formulated?
Forces in the Environment
Realities of Enterprise Resources and Internal Power
Relationships
Value System of the Top Executive
Awareness by the Management
Balance Scorecard Model
52.
53.
54. Critical Success Factors
Strategic Factors or Key factors for Success
Rockart - 3 step procedure for determining CSFs
Generate the success factors
Refining CSFs into Objectives
Identifying measures of performance
55. Key Performance Indicators
Measures or Metrics in terms of which the critical
success factors are evaluated
Benefits of KPI
Define and Measure progress towards obj.
Give a clear picture of what is important and what they
need to do to accomplish obj.
Motivate employees
To gauge business trends
Enable sophisticated IT based tools such as dashboards
that show organization performance at a glance
Benchmark performance with self and also with rivals
56. Corporate Governance
Governance of an organization that deals with the
relationship of different stakeholders, particularly
shareholders, directors on the board and managers
Key aspects
Transparency of corporate structures and operations
The accountability of managers and the boards to
share-holders
Corporate responsibility towards employees, creditors,
suppliers and local communities where the
corporation operates
57. Mechanisms used
Effective Board of Directors
Fostering transparency through disclosure of information
Framing code of governance and committing the
organization to its implementation
Designing sound internal control systems
Instituting effective auditing and evaluation systems within
the organization
Having proper risk management procedures
Encouraging whistle-blowing policies within organization
Designing fair compensation policies for managers
58. Social Responsibility
Strategic Planning provides answers to what an
organization might or can do
Personal values justify what an organization wants to do
Social responsibility along with business ethics, tells
what an organization ought to do
Drivers of CSR in India
Market based pressures and incentives
Civil society pressures
Regulatory environment in India
59. 4 Models of CSR - India
Gandhian Model : Voluntary commitment to public
welfare based on ethical awareness of social needs
Nehruvian Model : State-driven policies including
state ownership and extensive regulation and
administration
Milton-Friedman Model : Corporate responsibility
primarily focused on owner objectives
Freeman Model : Stakeholder responsiveness which
recognizes direct and indirect stakeholders’ interests
60. Social Responsiveness
Level of interest exhibited by an organization in
discharging social responsibility
Top management takes decisions regarding
Choice of social concerns to be addressed
Scope of social responsibility activities
Resource allocation to social responsibility programs
Align Social Responsiveness with Strategic
Management
All phases (Strategic intent, formulation,
implementation and evaluation) will be affected by
social responsiveness
61. Social Responsibility
Environmental Appraisal : Help forecast social
concerns and issues
Organizational Appraisal : Assist in assessing
corporate competencies available for tackling social
problems & in setting priorities for social
responsiveness