1. Why do some
organization
succeed while
others fail?
Dell Computers, performing better when it compares with
other players in personal computer industry
South West Airline Manages to get profits in good and bad
times
In Retail Industry Kmart is out performed by Wal-Mart
In Software market, Microsoft still maintains strong market
position
These organizations have taken ”Actions” to achieve superior Performance relative to rivals
Prof. Vijay K S, MBA Programme`-BIET, Davangere
2. Actions /
Decisions ?
Low-cost Production
Increasing quality
Increase their distribution
Wider product line
Enhance performance of their product / service
Through value added services
Styling their product / service to increase their attraction
Offers value for money
Focusing on narrow market niche
…….Many more
Prof. Vijay K S, MBA Programme`-BIET, Davangere
3. What do we
call these
Actions as?
Strategy ….
Prof. Vijay K S, MBA Programme`-BIET, Davangere
5. Think
Strategically
means
There are three Big Strategic Questions
- Where are we now?
- Where do we want to go?
- How will we get there?
A Company’s answer to “How will we get there?” - Is its
strategy
Prof. Vijay K S, MBA Programme`-BIET, Davangere
6. The strategy
is how to ….
How to please customer?
How to respond to changing market conditions
How to out compete rivals
How to grow the business
How to manage each functional piece of the
business and develop needed organizational
capabilities
How to achieve strategic and financial objectives
Prof. Vijay K S, MBA Programme`-BIET, Davangere
7. Strategy?
………the Action that managers take
To attain one or more of the organizational goals
To achieve superior performance relative to rivals
By having superior performance, said to have Competitive position
It is Unified, Comprehensive, and Integrated long term plan that
relates to the strategic advantages of the firm to the challenges of the
environment.
In essence, the strategic plan is a company’s game plan
Prof. Vijay K S, MBA Programme`-BIET, Davangere
8. Strategic
Management?
“…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”
Art & science of formulating, implementing, and evaluating,
cross-functional decisions that enable an organization to
achieve its objectives
Prof. Vijay K S, MBA Programme`-BIET, Davangere
9. “…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”
- Profitability - return that it makes on the capital
invested. The more efficient a company is, higher are its profitability.
- profitability is greater than the
average profitability of all firms in its industry.
– When the firm maintains
above-average profitability for a number of years.
Superior Performance
Competitive Advantage
Sustained Competitive Advantage
Strategic
Management?
Prof. Vijay K S, MBA Programme`-BIET, Davangere
10. Competitiveness
Competitive
Advantage – The
Focal Point of
Strategy
Differentiation
Cost Leadership
Quick Response
Competitive
Advantage
Economic
Value
Added
Market
Value
Added
Value Created for Customers
Financial Performance
Value Captured for Investors
Prof. Vijay K S, MBA Programme`-BIET, Davangere
11. At the basic
level….
Strategy is concerned with understanding the relationship
between Prices, Customer demand and Cost structure and
manipulating these variables in a way that lead to higher
profitability
Cost
Structure
Customer
Demand
Price
Prof. Vijay K S, MBA Programme`-BIET, Davangere
12. Meaning of
Strategic
Management
Strategic Management is a set of managerial decisions and actions
that determines the long-run performance of a corporation. It
includes environmental scanning (both external and internal),
strategy formulation (Strategic and long-range planning), strategy
implementation and evaluation and control.
It emphasizes the monitoring and evaluating of external
opportunities and threats in light of a corporation’s strengths
and weaknesses
Prof. Vijay K S, MBA Programme`-BIET, Davangere
13. Nature of
Strategic
Management
Strategic management is
Strategic management is both an of
SM allows to take that facilitate an
organization to accomplish its objectives.
it demands awareness to the
"big picture" and a rational assessment of the future options.
well-organized approach
Art and Science
formulating, implementing, and evaluating
cross-functional decisions
Prof. Vijay K S, MBA Programme`-BIET, Davangere
14. Nature of
Strategic
Management
SM offers
a strategic direction endorsed by the team and stakeholders
a clear business strategy and vision for the future
a structure for governance at the different levels
a logical framework to handle risk in order to guarantee
business continuity
the capability to exploit opportunities
react to external change by taking ongoing strategic
decisions.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
15. Importance of
Strategic
Management
Identification, prioritization, and exploitation of opportunities.
Objective view of management problems.
It represents a framework for improved coordination and
control of activities.
It minimizes the effects of adverse conditions and changes.
It allows major decisions to better support established
objectives.
It allows more effective allocation of time and resources to
identified opportunities.
It allows fewer resources and less time to be devoted to
correcting erroneous or ad hoc decisions.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
16. Importance of
Strategic
Management
It creates a framework for internal communication among
personnel.
It helps to integrate the behavior of individuals into a total
effort.
It provides a basic for the clarification of individual
responsibilities.
It gives encouragement to forward thinking.
It provides a cooperative, integrated, and enthusiastic
approach to tackling problems and opportunities.
It encourages a favourable attitude towards change.
It gives a degree of discipline and formality to the management
of a business.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
17. Characteristic
s ofStrategic
Management
Has support of organization’s executive officer.
Long Term Process
Is fresh and continuous, not static and stale.
Is participatory, not left to planners.
Is flexible.
Leads to resources decisions. Resource Mobilization and
Application
Integrated System
Hierarchical Strategy
Proactive and not a quick fix
Management by Process
Analytical tools are used every time
BCG, Five Force Model
Prof. Vijay K S, MBA Programme`-BIET, Davangere
18. Relevance of
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.
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.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
19. Strategic
Management
Process?
“…is the process by which managers choose a set of strategies
for a company that will allow it to achieve Superior
performance and to have Competitive Advantage”
Prof. Vijay K S, MBA Programme`-BIET, Davangere
20. Feedback and Control
Strategic Management Process / Model
Environmental Scanning
Or Analysis
Strategy Formulations Implementation of Strategy Evaluate & Control
External Opportunities
and Threats
Natural Environment
Resources and Climate
Social Environment
General force
Task Environment
Industry Analysis
Internal Strengths &
Weaknesses
Structure:
Chain of Command
Culture:
Belief, expectations,
values
Resources:
Assets, Skills,
Competencies, knowledge
Mission
Objectives
Strategies
Policies
Programs
Performance
Procedures
Budgets
Reason
for existence
What results
to accomplish
by when Plan to achieve
mission and
Objectives Broad
guidelines
for decision
making
Activities
Needed to
accomplish a
plan
Cost of the
programs
Sequence
of steps
needed to
do the job
Actual
Results
Prof. Vijay K S, MBA Programme`-BIET, Davangere
21. Relationship
between
Companies
Strategy and
Its Business
Model
Business Model is usually composed of five elements
Who it serves?
What it provides?
How it makes money?
How it differentiates and sustains competitive advantage?
How it provides its product/service?
Prof. Vijay K S, MBA Programme`-BIET, Davangere
22. Relationship
between
Companies
Strategy and
Its Business
Model
Business Model in context of Stretegy
A Company’s business model is management’s story line for how the
strategy will be a Money Maker
Is strategy is capable of earning profit?
How will business generates revenue?
Is revenue enough to cover cost?
Value to customer @ Profitable price?
The Business Model is more narrowly focused than the concept of Strategy
Companies Strategy is relates broadly to its competitive initiatives and action plans
The bottom Line result of Strategy is “Business Model” i.e. Making Profit
Prof. Vijay K S, MBA Programme`-BIET, Davangere
23. Relationship
between
Companies
Strategy and
Its Business
Model
Business Model is a outcome or result of your strategy, but
not itself, a strategy.
Strategy is a firm’s contingent plan as to the business model
it will use
Prof. Vijay K S, MBA Programme`-BIET, Davangere
25. Feedback and Control
Strategic Management Process / Model
Environmental
Scanning
Or Analysis
Strategy Formulations
Implementation of
Strategy
Evaluate &
Control
External Opportunities
and Threats
Natural Environment
Resources and Climate
Social Environment
General force
Task Environment
Industry Analysis
Internal Strengths &
Weaknesses
Structure:
Chain of Command
Culture:
Belief, expectations,
values
Resources:
Assets, Skills,
Competencies, knowledge
Mission
Objectives
Strategies
Policies
Programs
Performance
Procedures
Budgets
Reason
for existence
What results
to accomplish
by when Plan to achieve
mission and
Objectives Broad
guidelines
for decision
making
Activities
Needed to
accomplish a
plan
Cost of the
programs
Sequence
of steps
needed to
do the job
Actual
Results
Prof. Vijay K S, MBA Programme`-BIET, Davangere
26. Strategic
Management
Model /
Process
Scanning
Where are we now?
Strategy Formulation
Where do we want to be?
Strategy Implementation
How do we get there?
Evaluation / Control
How do we measure our progress?
Prof. Vijay K S, MBA Programme`-BIET, Davangere