iimt greater noida Strategic management Notes BBA

1. ASHIMARATHEE

2. Concept of strategy
The term ‘Strategy’ is derived from the Greek word ’strategeos’, which mean
generalship-the actual direction of military force ,as distinct from the policy
governing its deployment.
In business parlance ,there is no definite meaning assigned to the strategy.
A strategy could be”
 A plan or course of action or a set of rules making a pattern or creating a
common thread;
 The pattern or common thread related to the organization’s activities which are
derived from the policies ,objectives and goals;
 Related to pursuing those activities which move an organization from its
current position to a desired state;
 Concerned with resources necessary for implementing a plan or following a
course of action;
 The planned or actual coordination of the firm’s major goals and action, in
time and space that continuously co-align the firm with its environment.

3. What is strategic management?
 The term strategy is almost used in a military work place.
 “Strategy is the art and science of combating the many
resources available to achieve the best match between an
organization and its environment.”
– Randall B.Dunham and John H. Pierce
 “ The determination of the basic long-term goals and
objectives in an enterprise and the adoption of courses of
action and the allocation of resources necessary for
carrying out these goals.”
-Alfred D. chandler

4.  Strategic management is to do with two things namely,
deciding the strategies to be taken and
implementing then using the company resources so
that successful survival, fruitful expansion and
enchanting growth is ensured.
 Strategic management is a process, directed by top
management , to determine the fundamental aims or
goals of the organization, and ensure a range of
decisions which will allow for the achievement of those
aims or goals of the organizations and ensure a range of
decisions which will allow for the achievement of those
aims or goals in the long-term, while providing for
adoptive response in the short-term.

5. Why strategic management?
 Companies are operating in age of discontinuing change -
an age of creative & constructive destruction.
 Business, technology and product life is shrinking.
 Demographic shift in terms of consumer preference and
requirements.
 A direct promotion from Agricultural economy to service or
Hi-tech economy in the new growth economy.
 A concept from liberalization, privatization &
Globalization (LPG) to regionalization.
 Shift from controlled economy to market driven economy.
 Rich countries adopt deindustrialization.
 Emergence of new Global Socio – economic system and
world orders.
 Knowledge is replacing Infrastructure
 Self-leadership is in, command and control out
 Networks are replacing hierarchies
 Wanted - employees with Emotional Intelligence.

6. 6
WHY STRATEGIC THINKING?
 Current Trends –
 Increasing environmental awareness
 Growing health consciousness
 Expanding seniors market
 Impact of the Generation Y boom let
 Declining mass market
 Changing pace and location of life
 Changing household composition
 Increasing diversity of workforce & market

7. 7
 STRATEGY: It is Unified, Comprehensive, and Integrated long
term plan that relates to the strategic advantages of the firm to
the challenges of the environment.
 STRATEGIC MANAGEMENT: It is a stream of decisions and
actions which leads to the development of an effective strategy to
help achieve the corporate objective. It is a continuous, iterative,
& Cross functional process of matching firm with its
environment.
 COMPETITIVE ADVANTAGE: is delivering superior value
advantage to your target customers relative to your competitors.
Or delivering equivalent customer value to your target customers
relative to your competitors , but at a lower cost.
Basic concepts

8. Deindustrialization
 A situation in which an economy begins producing more
services than goods. An analyst may say that
deindustrialization is occurring when decreases in
manufacturing are accompanied by increases in consulting
companies. This can be beneficial to some sectors; indeed,
some investors look for evidence of deindustrialization to
know what industries are likely to be profitable. However,
deindustrialization can be detrimental to some workers
and regions. For example, as the United States has
deindustrialized, the city of Detroit, which is home to
many automakers, has lost approximately half of its
population, and consistently maintains a high
unemployment rate relative to the rest of the country.

9. 9
Competitive success is transient...unless care is
taken to preserve competitive position
Only 16 of the 100 largest U.S. companies at
the start of the 20th century are still
identifiable today!
In a recent year, 44,367 businesses filed for
bankruptcy and many more U.S. businesses failed
Challenge of Strategic Management

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12.  Strategic management is that set of managerial
decisions and actions that determines the long run
performance of a corporation, it includes:
Environmental scanning
Strategy formulation
Strategy implementation
Evaluation and control
Strategic management aims at:
 long range planning
 Evaluation plans: strategies
 Building actions on the strength of company and
elimination of weaknesses. Forward looking approach

13. Business policy
 Business policy ,as defined by Christensen and others
,is “the study of the function and responsibilities of
senior management, the crucial problems that affect
success in the total enterprise and the decisions that
determining the directions of organization and
shaping its future.

14. BUSINESS POLICY
 Business policy has general management orientation and
has an inward looking approach that aims at to properly
integrate the corporation’s various functional activities.
Business policy presents a basic framework for
understanding strategic decisions making.
 The purpose of business policy is
 To integrate the knowledge gained in various functional areas
of management
 to adopt a generalist approach to problem solving
 to understand the complex linkages operating within an
organization through the use of system approach to decision
making.

15. CONCEPTUAL & FOUNDATION IN BUSINESS POLICY
 Fundamentally, business policy deals with the decision
regarding the future of an ongoing enterprise. These policy
decisions are taken at the top level only after in depth and
careful evaluation of the organizational strengths and
weakness in relations to its environment.
 “ A business policy is nothing more than a well developed
statement of directions and goals. Goals involve
definitions of precisely what the business is or should be,
and the particular kind of company it should be. Direction
guides the action of the firm to accomplish these goals.”
Prof. Peters and Wotrube.

16.  “A business policy is one which focuses attention on the
strategic allocation of scarce resources: human,
financial, physical or intangible. Conceptually
speaking, strategy in the direction of such resource
allocation while planning is the timing of allocation.”
David C.Rodgrs.
 “A business policy is a man-made or predetermined
course of action that is established to guide the
performance of work toward the organization’s
objectives. It is a type of standing plan that serves to
guide subordinates in the execution of their tasks.”
Prof. Edwin.P.Philipo

17. STRATEGIC MANAGEMENT, PROCESS, MODELS,& TYPES
 Strategic management is defined as the set of decisions
and actions that results in the formulation and
implementation of plans designed to achieve a
company’s objectivities. It comprises nine critical tasks.
1. Formulated the company’s mission, including broad
statements about its purpose, philosophy and goals.
2. Conduct an analysis that reflects the company’s
internal conditions and capabilities.
3. Assess the company’s external environment,
including both the competitive and the general
contextual factors.

18. 4. Analyze the company’s options by matching its resources
with the external environment.
5. Identify the company’s option by evaluation each option in
light of the company’s mission.
6. Select a set of long-term objectivities and grand strategies
that will achieve the most desirable options.
7. Develop annual objectives and short-term strategies that
are compatible with the selected set of long-term
objectives and grand strategies.
8. Implement the strategic choices by means of budgeted
resource allocations in which the matching of tasks,
people structures technologies and reward systems is
emphasized.
9. Evaluate the success of the strategic process as an input for
future decision making.

19. Strategic management process
The strategic management process is series of steps that
not only formalize the process, but also give a clear
path to the firm’s management activity as to how to
proceed. The step involved in SM are as follows:
1. Environmental scanning
2. Strategy formulation
3. Strategy implementation
4. Evaluation and control.

20. Environmental scanning
Environmental scanning and analysis is the process of
examining the organization’s environment to determine,
 strength
Weaknesses
Opportunities
Threats
This SWOT analysis basically consider the environment
like,
 General environment: social component, economic
component, political factors, technical availability

21.  Operating environment: International factors, suppliers, labor,
competition, customer etc.,
 Internal environment: organizational factor, Marketing
strategies, financial factors, manpower, production ability, etc.,
STRATEGY FORMULATION
what can be done to achieve organizational objectives more
effectively in the future? The answer to this question results in
the formulation of the strategy for the organization. This, it goes
beyond environmental analysis and includes the stage of planning
and selection. This question should be answered only after
managers have had plenty of opportunity to reflect on the answers
to the previous questions. It is said, managers can formulate
appropriate organizational strategies only when they have a clear
understanding of where the company wants to go, where the
organization is actually going, and what the environment in which
the organization operates is likely to be.

22. Strategy implementation
 Once the strategy has be formulated, then the task
remains of implementing those strategies. There are
several approaches that can be used to implement it,
 Commander approach
 Organizational change approach
 Collaborative approach
 Cultural approach
 Corrosive approach

23. Strategy evaluation and control
 In corporate strategy, johnson and scholes present a
model in which strategic options are evaluated against
three key success criteria
 Suitability (would it work)
 Feasibility (can it made to work?)
 Acceptability (will they work it?)

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Strategic Management Basic model
Four Basic Elements
Strategic management is the process of moving where you are
to where you want to be in future – through
sustainable competitive advantages
Options on
Competitive
Positioning
Learning
points from
deviations

25. Copyright © 2001 Houghton
Mifflin Company. All rights
reserved. 1-25
FIGURE 1.1
The Main
Components of the
Strategic Planning
Process

26. Different levels of strategy
CORPORATE
OFFICE
SBU A SBU B SBU C
FINANCE
MARKETIN
G
OPERATIO
NS
HRM
INFORMATI
ON
Levels of
strategy
CORPORATE LEVEL
BUSINESS -LEVE
FUNCTIONAL -LEVEL

27. Three levels/types of strategy
 Corporate level strategy
At the top of this hierarchy is the corporate level,
composed principally of a board of directors and the
chief executive and administrative officers.
Corporate strategy is the pattern of major objectives or
goals and essential policies or plans for achieving those
goals stated in such a way as to define what business the
company is in or is to be in and the kind of company it is
or is to be. Corporate level strategy determines
 Determine overall scope of the organization
 Add value to the different business units
 Meet expectations of stakeholders

28.  Business level strategy
Business level strategy identifies how a strategic business
unit or division will compete in its product or service
domain or a particular market. These are the actions
taken to provide customers value and gain a competitive
advantage by exploiting core competencies in specific,
individual product markets. The key issues in business
level strategy are-
 What good or service to offer customers
 How to manufacture or create the good or service.
 How to distribute the good or services in the marketplace.

29.  Functional strategy
Functional level strategy guides activities within one
specific area of operations. These areas may include
marketing, sales distribution, human resource etc.
They develop annual objectives and short-term
strategies in such areas with principally of managers
of product, geographic, and functional areas.

30. Corporate strategy
 Corporate strategy is made up of corporate level, business
unit level and operational level strategies to take the
corporation to the destination.
 Corporate strategy deals with,
1. The firm’s overall orientation towards growth, stability or
retrenchment-otherwise referred as directional strategy.
2. The industries or markets in which the firm competes
through its products and business unit other wise known as
port-folio strategy.
3. The manner in which management coordinates activities,
transfer resources, and cultivates capabilities among product
lines and business units which experts call it parenting
strategy

31. STRATEGIC PLANNING – PROGRAMMING, IMPLEMENTATION
EVALUATION & CONTROL
 Strategic planning is the process of corporate planning and
strategy is a managerial techniques in action to achieve what
was planned by the strategic planning.
 In 1970’s many large firms adopted a formalized top-down
strategic planning model. under this strategic planning
became a deliberate process in which top executives
periodically would formulated the firm’s strategy, then
communicated it down the organization for
implementation.
1. Mission
2. Objectives
3. Situation analysis
4. Strategy formulation
5. Implementation
6. control

32. vision
 Vision refers to those aspirations of an organization wants to achieve in future.
Vision is an mental perception for successfully achieving the mission of an
organization.It is broad framework of dreams to be achieved in future.
According to Kotter-”A vision is the description of something(an organization,
corporate culture, a business, a technology, an activity) in the future.

33. Vision
 Vision provides the 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.In other
words,it is a roadmap of company’s future providing
specifics about technology and customer focus,the
geographic and product markets to be pursued,and the
kind of company that management is trying to create.

34. Characteristics of vision
 Imaginable
 Desirable
 Focussed
 Feasible
 Flexible
 Communicable

35. What a vision should and should
not be
 A vision should be
 An organizational charter of core values and
principles
 Ultimate source of our priorities ,plans and goals
 A puller(not pusher) into the future
 A determination and publication of what makes us
unique
 A declaration of independence

36. What a vision should and should
not be
 A vision should not be
 A ’high concept’ statement, motto or literature or an
advertising slogan
 A strategy or plan and a view from the top
 A history of our proud past
 A ‘soft’ business issue
 Passionless

37. Advantages of a vision
 A good vision is both inspiring and exhilirating
 A vision states what policy should be adopted in future
for continous development
 It creates sense of purpose towards the objective
 A good vision is competitive,original and unique
 A good vision helps in taking risk and in
experimenting
 A good vision is beneficial to the company and society
as a whole.

38. Mission
 Mission occupies the second position in the hierarchy
of strategic management.
Mission of an organization states purpose of existence
of an organization.
Vision states what an organization wants to be in
future whereas mission indicates what are objectives
to be achieved for which an organization is in
existence.

39.  MISSION
In the strategy formulation process, the mission statement sets
the mood of where the company should go.
A good mission statement should be brief, specific and clear
enough to lead to action and must focus around customer needs
and utilities.
Mission statement need to be communicated throughout the
organization.
A clear mission statement can become critical component of the
corporate culture
Good mission tend to be simple and easy to understand at all levels
of the organization.
They stimulate enthusiasm and commitment amongst employees;
They are challenging;
They are short and easily absorbed and accepted; and
The are frequently repeated.

40.  What is our business?
 What should be our business?
 What will our business be?
e.g T.V Channels

41. Qualities of a mission
statement
 Short and simple
 Clear
 Feasible
 Precise
 Motivating
 Flexible
 Distinct

42. Importance of mission
statement
 Mission statement provides the boundary line for the
formation of strategy.
 It helps to pay attention on real strategic issues.
 Mission statement provides guidelines to organization with
fundamental thoughts regarding its objectives.it stimulates
the existence of an organization for a longer period of time.
 Mission statement provides assistance in taking decision.
 It inspires to maintain organizational unity and integrates
short term goals with long term goals.
 It prepares framework of ethics for individual behavior.

43. objectives
 Objectives are concrete goals that the organization seeks
to reach, for eg. Earning growth target. The objectives
should be challenging but achievable. They also should
be measurable so that the company can monitor its
progress and make corrections as needed.
 Objectives are short-term and specific intentions of the
various operational units of the organization, often said
as targets. They incorporate into annual plan or budget.

44. Situational analysis
 Once the firm has specified its objectives, it begins with
its current situation.
 Changes in external environment often present new
opportunities and new ways to reach the objectives.
 An environmental scan is performed to identify the
available opportunities.
 The external environment has two aspect:
 i. the macro-environment that affects all firms-includes
political, economic, social and technological factors.
(PEST)

45. ii. a micro-environment that affects only the firms in a
particular industry. The important aspect of the micro-
environmental analysis is the industry in which the firm
operates or is considering operating.
Michael porter devised a five forces framework that include
barriers to entry, customer, suppliers, substitute products
and rivalry among competing firms.
The internal analysis can be as;
Company culture, company image, organizational
structure, key staff, Access to natural resource,
position on the experience curve, operational
efficiency, capacity, brand awareness, Market share,
financial resources, exclusive contracts, patents and
trade secrets.

46. Strategy formulation
 Once a clear picture of the firm and its environment is in
hand, specific, strategic alternatives can be developed.
 While different firms have different alternatives
depending on their situation, there also exist generic
strategies that can be applied across a wide range of firms.
 Michael Porter identified cost leadership, differentiation
and focus as three generic strategies that may be
considered when defining strategic alternatives.

47. Implementation
 For an effective implementation, it needs to be translated into more
detailed policies that can be understood at the functional level of the
organization.
 The expression of the strategy in terms of functional policies also
serves to highlight any practical issues that might not have been visible
at a higher level.
 The strategy should be translated into specific policies for functional
areas such as;
 Marketing
 Research & development
 Procurement
 Production
 Human resource
 Information systems
 Allocation of available resources to the firm.

48. Control
 Once implemented, the results of the strategy need to
be measured and evaluated, with changes made as
required to keep the plan on track. Control systems
should be developed and implemented to facilitate
this monitoring.
 Standards of performance are set, the actual
performance measured, and appropriate action taken
to ensure success.

49. 49
FIRM
MACRO ENVIRO
APPRAISAL
MICRO ENVIRO
APPRAISAL OF
INDUSTRIES
MICRO ENVIRO
APPRAISAL OF
FIRM
BASIC
STRATEGIES
STRATEGIC
ALTERNATIVES
BUSINESS LEVEL
STRATEGIES
STRATEGIC
SELECTION
STRATEGIC
IMPLEMEMTATION
ORGANISATION
DESIGN
FUNCTIONALLEVEL
STRATEGIES &
RESOURCES
ALLOCATION
DEVELOPMENT
OF
CONTROL
Is
Strategy
Working?
STRATEGIC PLANNING DESIGN AND IMPLEMENTATION PROCESS
GAPVISION
MISSION
VALUE
GOAL