Introduction & overview

• ILO- Gain understanding of the strategic

management process for a business
• Topics
1. The seven steps to strategy making
2. Ten schools of thought, 5 Ps and why
organizations need strategy
3. What is strategy
4. Origin of strategy

Strategic Management: 2020-22 Introduction and overview 1

Strategic Management
MBA 2020-22

Introduction and Overview

 The Learning Stairs

20th July 2021 MBA 2020-22: Teaching-learning 3

 Plan Prepare

Learning
from online
teaching
Perform Participate

Practice

20th July 2021 MBA 2020-22: Teaching-learning 4

 Science & Art of Strategy:
Oil of Olay of P&G
• The issues
In the late 1990s, when Procter & Gamble was
contemplating becoming a major player in the global
beauty care sector, it had a big issue:
– It lacked a credible brand in skin care, the largest and
the most profitable segment in the sector
– All it had was Oil of Olay, a small down-market brand
with an aging consumer base
– Sales < $800m in a market > $50b

Strategic Management: 2020-22 Introduction and overview 5

 Science & Art of Strategy:
Oil of Olay of P&G
Issue↓
1. Frame a choices↓
2. Generate possibilities↓
3. Specify conditions↓
4. Identify barriers↓
5. Design tests↓
6. Conduct the tests↓
7. Make your choice↓
Results
Strategic Management: 2020-22 Introduction and overview 6
 The Tale of Madhabh

1. Community milkman with two units, one at the city

& other at the village
2. Sales came down to 20% on lockdown
3. Gradually learned to make and sale Paneer, Chena-
Poda & Ghee along side milk
4. Success in new products – January 2021
5. New competition, next generation not interested in
milk business
6. What should Madhab do?

Strategic Management: 2020-22 Introduction and overview 7

 Ten Schools of Strategic Thought

Strategic Management: 2020-

Introduction and overview 8
22
 Five Ps of strategy:
Honda’s Entry Into US Motorcycle Market
Perspective: (Being a low cost producer, seeking to
attack new markets in aggressive ways), into a
Plan & Ploys:, in the form of an intended
Position: (to capture the traditional motorcycle
market in US and create a new one for small family
motorcycles), which was again realized through
integrated
Patterns: (lining up distributorships, developing the
appropriate advertising campaign of “You meet the
nicest people on a Honda”)
Strategic Management: 2020-22 Introduction and overview 9
 Why Organizations Need Strategy

• Setting direction
• Focusing effort
• Defining organization
• Providing consistency

Strategic Management: 2020-22 Introduction and overview 10

 Strategic Management And Career
Opportunities for MBA Students
• Business development
• Management consulting
• Business analysts
• Startups
All Require
• Analytical and diagnostic reasoning
• Analytical & creative problem solving skills

Strategic Management: 2020-22 Introduction and overview 11

 Origin of Strategy►

Background - Military Interpretation►

First Industrial Revolution►
Second Industrial Revolution►
World War-II era, Post WW-II►

Academic Underpinnings►

The Rise of Strategy Consultants►

Strategic Management: 2020-22 Introduction and overview 12

 Military Interpretations

• Ancient Greek origins

• Carl von Clausenwitz (early first half 19 Century) th

• General Giap and the Vietnamese war►

1-13
Strategic Management: 2020-22 Introduction and overview
 First Industrial Revolution
(mid-1700s to mid-1800s)

• Failed to induce strategic thinking or

behavior
• Companies lacked power to influence
market outcomes
• Adam Smith’s “invisible hand” ►

Strategic Management: 2020-22 Introduction and overview 14

 Second Industrial Revolution
(second half of 19th Century)

• Railroads built mass markets (1850)

• Improved access to capital and credit →
economies of scale
• Alfred D. Chandler, Jr. - “visible hand” superseded
“invisible hand”
• Large, vertically integrated companies
• Captains of industry articulated strategic
thinking
– GM - Alfred Sloan (1923-1946)
– New Jersey Bell - Chester Barnard (1930s) ►
1-15
Strategic Management: 2020-22 Introduction and overview
 World War II era (1939 - 1945)
• Allocating scarce resources across the economy was
problematic
• “learning curves” concept (1920s – 1930s)
• The Theory of Games and Economic Behavior (1944) -
John von Neumann, Oskar Morgenstern
• Strategic thinking guides management decisions -
Peter Drucker
– company could exert positive control over market forces
by using formal planning
• Post WWII - distinctive competence ►
1-16
Strategic Management: 2020-22 Introduction and overview
 Academic Underpinnings

• Eminent economists produced earliest academic

writings about strategy
– John Commons, Chester Barnard, Ronald Coase, Joseph
Schumpeter, Edith Penrose, George Albert Smith, Jr.,
C.Roland Christensen, Kenneth Andrews, Theodore Levitt,
Igor Ansoff
• Elite U.S. business schools emerged
– Wharton (1881), Harvard (1908)
• managers should be trained to think strategically
• required second-year course in Business Policy (1912)
• students gain a broader perspective faced by
1-17
Strategic
executives►
Management: 2020-22 Introduction and overview
 The Rise of
Strategy Consultants
BCG - 1963 McKinsey & Company
• Applied quantitative • Strategic Business Units
research methods to (SBU’s) – Industry
business strategy attractiveness – Business
• Experience (learning) curve Strength
(1965-1966) • GE/McKinsey nine-block
• Growth Share Matrix (early matrix
1970s) - Maintain balance • Fred Gluck’s Four Phases of
between “Cash Cows” and Strategy ►
“Stars”; Allocate resources
to “Question Marks”; Sell
off “Dogs”
Strategic Management: 2020-
Introduction and overview 18
22
 Business Policy, Strategic
Management and Strategy
• Business policy
– Set of management decisions oriented towards enhancing
and sustaining firm’s competitive advantage based on a
system of extrinsic and intrinsic values.
• Strategic Management
– The process of planning, programming, performing,
profiting from, and developing business policy.
• Strategy
– Pursuit of competitive advantage, i.e., faced with
competition, winning in the market place.

Strategic Management: 2020-22 Introduction and overview 19

 Structure of the Course

• Introduction
• Intended learning outcomes
• Session wise coverage
• Evaluation
• Learning resources

Strategic Management: 2020-22 Introduction and overview 20

 Next class

• Fundamental dimensions of strategy

• 3M: Profile of a Pioneer

Strategic Management: 2020-22 Introduction and overview 21