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Strategic Management
Strategic Management
Strategic Management
STRATEGIC MANAGEMENT
LT P C
3003
UNIT- I
Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
Goals - Corporate Governance and Social responsibility-case study.
UNIT II
COMPETITIVE ADVANTAGE
External Environment - Porters Five Forces Model-Strategic Groups Competitive Changes during Industry
Evolution-Globalisation and Industry Structure - National Context and Competitive advantage ResourcesCapabilities and competenciescore competencies-Low cost and differentiation Generic Building Blocks of
Competitive Advantage- Distinctive Competencies-Resources and Capabilities durability of competitive
Advantage- Avoiding failures and sustaining competitive advantage-Case study.
UNIT - III
STRATEGIES
10
The generic strategic alternatives Stability, Expansion, Retrenchment and Combination strategies Business level strategy- Strategy in the Global Environment-Corporate Strategy-Vertical IntegrationDiversification and Strategic Alliances- Building and Restructuring the corporation- Strategic analysis and
choice - Environmental Threat and Opportunity Profile (ETOP) - Organizational Capability Profile - Strategic
Advantage Profile - Corporate Portfolio Analysis - SWOT Analysis - GAP Analysis - Mc Kinsey's 7s
Framework - GE 9 Cell Model - Distinctive competitiveness - Selection of matrix - Balance Score Card-case
study.
UNIT IV
Managing Technology and Innovation- Strategic issues for Non Profit organisations. New Business Models
and strategies for Internet Economy-case study
Total: 45
TEXT BOOKS
Thomas L. Wheelen, J.David Hunger and Krish Rangarajan, Strategic Management and Business policy,
Pearson Education., 2006
Charles W.L.Hill & Gareth R.Jones, Strategic Management Theory, An Integrated approach, Biztantra,
REFERENCES
Fred.R.David, Strategic Management and cases, PHI Learning, 2008.
Upendra Hachru , Strategic Management concepts & cases , Excel Books, 2006.
Adriau HAberberg and Alison Rieple, Dtrategic Management Theory & Application,
Oxford University Press, 2008.
4.
Arnoldo C.Hax and Nicholas S. Majluf, The Strategy Concept and Process A
Pragmatic Approach, Pearson Education, Second Edition, 2005.
5.
Harvard Business Review, Business Policy part I & II, Harvard Business School.
6.
Saloner and Shepard, Podolny, Strategic Management, John Wiley, 2001.
7.
Lawerence G. Hrebiniak, Making strategy work, Pearson, 2005.
8.
Gupta, Gollakota and Srinivasan, Business Policy and Strategic Management
Concepts and Application, Prentice Hall of India, 2005.
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UNIT- I
Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
Goals - Corporate Governance and Social responsibility-case study.
Strategic management is not a box of tricks or a bundle of techniques. It is analytical thinking and commitment of
resources to action.
Peter Drucker
Definition:
The on-going process of formulating, implementing and controlling broad plans guide the
organizational in achieving the strategic goods given its internal and external environment.
Alfred D Chandler (1962)
, Chandler defined strategy as: The determination of the basic long-term goals and objectives of an enterprise
and the adoption of the courses of action and the allocation of resources necessary for carrying out these
goals. Note that Chandler refers to three aspects
Features of strategic Management
1. On-going process:
Strategic management is a on-going process which is in existence through out the life of organization.
2. Shaping broad plans:
First, it is an on-going process in which broad plans are firstly formulated than implementing and finally
controlled.
3. Strategic goals:
Strategic goals are those which are set by top management. The broad plans are made in achieving the goals.
Evolution of strategic management
From his extensive work in the field, Bruce Henderson of the Boston Consulting Group concluded that
intuitive strategies cannot be continued successfully if
(1) the corporation becomes large,
(2) the layers of management increase, or
(3) the environment changes substantially.
Phase 1 - Basic financial planning: Seek better operational control by trying to meet budgets.
Phase 2 - Fore-cast based planning: Seeking more effective planning for growth by trying to predict the future
beyond next year.
Phase 3. Externally oriented planning (strategic planning): Seeking increasing responsiveness to markets and
competition by trying to think strategically.
Phase 4. Strategic management: Seeking a competitive advantage and a successful future by managing all
resources.
Phase 4 in the evolution of the strategic management includes a consideration of strategy implementation and
evaluation and control, in addition to the emphasis on the strategic planning in Phase 3.
General Electric, one of the pioneers of the strategic planning, led the transition from the strategic planning to
strategic management during the 1980s. By the 1990s, most corporations around the world had also begun the
conversion to strategic management.
In general, a corporate strategy has the following characteristics:
It is generally long-range in nature, though it is valid for short-range situations also and has short-range
implications.
It is action oriented and is more specific than objectives.
It is multipronged and integrated
It is flexible and dynamic.
It is formulated at the top management level, though middle and lower level managers are associated in their
formulation and in designing sub-strategies.
It is generally meant to cope with a competitive and complex setting.
It flows out of the goals and objectives of the enterprise and is meant to translate them into realities.
It is concerned with perceiving opportunities and threats and seizing initiatives to cope with them. It is also
concerned with deployment of limited organizational resources in the best possible manner.
It gives importance to combination, sequence, timing, direction and depth of various moves and action
initiatives taken by managers to handle environmental uncertainties and complexities.
It provides unified criteria for managers in function of decision making.
Framework
The basic framework of strategic process can be described in a sequence of five stages as shown in the figure
- Framework of strategic management:
The five stages are as follows:
Stage one: This is the starting point of strategic planning and consists of doing a situational analysis of the
firm in the environmental context. Here the firm must find out its relative market position, corporate image,
its strength and weakness and also environmental threats and opportunities. This is also known as SWOT
(Strength, Weakness, Opportunity, Threat) analysis. You may refer third chapter for a detailed discussion on
SWOT analysis.
Stage two: This is a process of goal setting for the organization after it has finalised its vision and mission. A
strategic vision is a roadmap of the companys future providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create. An organizations Mission states what customers it serves, what
need it satisfies, and what type of product it offers.
Stage three: Here the organization deals with the various strategic alternatives it has.
Stage four: Out of all the alternatives generated in the earlier stage the organization selects the best suitable
alternative in line with its SWOT analysis.
Stage five: This is a implementation and control stage of a suitable strategy. Here again the organization
continuously does situational analysis and repeats the stages again.
competencies and competitive advantages in its fight for survival and growth.
It seeks to prepare the corporation to face the future and even shape the future in its favour. Its ultimate burden
is influencing the environmental forces in its favour, working into the environs and shaping it, instead of
getting carried away by its turbulence or uncertainties.
THE TASK OF STRATEGIC MANAGEMENT
The strategy-making/strategy-implementing process consists of five interrelated managerial tasks. These are
Setting vision and mission: Forming a strategic vision of where the organization is headed, so as to provide
long-term direction, delineate what kind of enterprise the company is trying to become and infuse the
organization with a sense of purposeful action.
Setting objectives: Converting the strategic vision into specific performance outcomes for the company to
achieve.
Crafting a strategy to achieve the desired outcomes.
Implementing and executing the chosen strategy efficiently and effectively.
Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives,
strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.
Strategy Formation Process
Simple model
Working model of strategic planning process
Since organizations are deliberate and purposive creations, they have some objectives; the end results
for which they strive. These end results are referred to as mission, purpose, objective, goal, target,
This contextual difference among various terms is important in understanding their nature relevant for
managerial actions.From planning point of view, an organization must define why it exists, how. it justifies
that existence, and when it justifies the reasons for that existence. The answers of these questions lie in the
organizations:
1. Mission and purpose,
2. Long-term objectives, a
A Strategic vision is a road map of a companys future providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create
The three elements of a strategic vision:
1. Coming up with a mission statement that defines what business the company is presently in and
conveys the essence of Who we are and where we are now?
2. Using the mission statement as basis for deciding on a long-term course making choices about Where
we are going?
3. Communicating the strategic vision in clear, exciting terms that arouse organization wide commitment.
How to develop a strategic vision
The entrepreneurial challenge in developing a strategic vision is to think creatively about how to prepare a
company for the future.
Forming a strategic vision is an exercise in intelligent entrepreneurship.
Many successful organizations need to change direction not in order to survive but in order to maintain their
success.
A well-articulated strategic vision creates enthusiasm for the course management has charted and engages
members of the organization.
The best-worded vision statement clearly and crisply illuminate the direction in which organization is head
Mission
According to Glueck & Jauch mission is answer to the question what business are we in that is faced by
corporate-level strategist
A companys Mission statement is typically focused on its present business scope who we are and what we
do; mission statements broadly describe an organizations present capabilities, customer focus, activities,
and business makeup.
Social responsibility
Social Responsibility towards different Interest groups: 1. Responsibility towards owners: Owners are the persons
who own the business. They contribute capital and bear the business.
Run the business efficiently
Proper utilization of capital and other resources.
Regular and fair return on capital invested.
Responsibility towards Investors: Investors are those who provide finance by way of investment in shares, bonds, etc. Banks,
financial institutions and investing public are all included in this category Ensuring safety of their investment Regular payment
of interest. Responsibility towards employees: Business needs employees or workers to work for it. If the employees
are satisfied and efficient, then the business can be successful.
Timely and regular payment of wages and salaries.
Opportunity for better career prospects.
Proper working conditions
Timely training and development
Better living conditions like housing, transport, canteen and crches.
Responsibility towards customers: No business can survive without the support of customers.
Products and services must be able to take care of the needs of the customers.
There must be regularity in supply of goods and services.
Price of the goods and services should be reasonable and affordable
There must be proper after sales-service
Grievances of the consumers if any must be settled quickly.
Responsibility towards competitors: Competitors are the other businessmen or organization involved in a similar type
of business.
Not to offer to customers heavy/discounts and or free products in every sale.
Not to defame competitors through false advertisements.
Responsibility towards suppliers: Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders.
Giving regular orders for purchase of goods
Availing reasonable credit period
Timely payment of dues.
8. Responsibility towards Government: Business activities are governed by the rules and regulations framed by the
government. Payment of fees, duties and taxes regularly as well as honestly Conforming to pollution control norms set
up by government Not to indulge in restrictive trade practices. 9. Responsibility towards society: A society consists of
individuals, groups, organizations, families etc. They all are the members of the society.
To help the weaker and backward sections of the society.
To generate employment.
To protect the environment
. To provide assistance in the field of research on education, medical science, technology etc.
9. Responsibility towards society: A society consists of individuals, groups, organizations, families etc. They all are
the members of the society.
To help the weaker and backward sections of the society.
To generate employment.
To protect the environment
. To provide assistance in the field of research on education, medical science, technology etc