SM Merged File

Strategic Management
COMPILED BY
DR. M.VENKATESAN
Managing Across Borders
Organizational Models
Sumantra Ghoshal and Christopher Bartlett
High Global Transnational

Views the world as single Specialized facilities permit local
market. Operations are responsiveness. Complex
Pressures controlled centrally from coordination mechanisms
for global the corporate office provide global integration
integration
International Multinational
Uses existing capabilities to Several subsidiaries operating as
Low
expand into foreign markets stand-alone business units in
multiple countries
Low High
Pressures for local responsiveness
6
Source
❖ Christopher A. Bartlett and Sumantra

Goshal. Managing across border: The
Transnational Solution. (Boston. HBS,
1991)
❖ Anne-Wil Harzing, “An Empirical Analysis
and extension of Bartlett and Ghoshal
typology of multinational companies,
Journal of International Business Studies,
31 (1), 2000. pp101-20
International Model
❖ Composed of company’s overseas

subsidiaries and characterized by greater
control by the parent company over the
research function and local product and
marketing strategies.
Multinational Model
❖ It consists of the subsidiaries in each

country in which a company does
business, with ultimate control exercised
by the parent company
Global Model
❖ It consists of a company’s overseas

subsidiaries and characterized by
centralized decision making and tight
control by the parent company over most
aspects of worldwide operations; typically
adopted by organizations that base their
global competitive strategy on cost
considerations
Transnational Model
❖ It is characterized by centralizing certain

functions in locations that best achieve
cost economies; basing other functions in
the company’s national subsidiaries to
facilitate greater local responsiveness;
and fostering communication among
subsidiaries to permit transfer of
technological expertise and skills
Strategy
❖ The determination of the basic long term

objectives of an enterprise and the
adoption of courses of action and
allocation of resources necessary to
achieve these goals
❖ SM involves the ‘major intended and

emergent initiatives taken by general
managers on behalf of owners involving
utilization of resources to enhance the
performance of firms in their external
environments’
❖ -Nag.et.all 2007
1-13
Defining Strategic Management
❖ Strategic management
the art and science of formulating, implementing,
and evaluating cross-functional decisions that
enable an organization to achieve its objectives
A process that involves managers from

all parts of the organization in the
formulation and implementation of
strategic goals and strategies
❖ Strategic management is used

synonymously with the term strategic
planning.
❖ Sometimes the term strategic
management is used to refer to strategy
formulation, implementation, and
evaluation, with strategic planning
referring only to strategy formulation.
❖ A strategic plan is a company’s game

plan.
❖ A strategic plan results from tough
managerial choices among numerous
good alternatives, and it signals
commitment to specific markets, policies,
procedures, and operations.
❖ Basic concepts of strategy:

 Strategy
• a comprehensive plan guiding resource
allocation to achieve long-term organization
goals
 Strategic intent
• focusing all organizational energies on a unifying
and compelling goal
Stages of Strategic Management
Strategic Strategy Strategy Strategy

Analysis formulation implementation evaluation
Strategic Analysis
❖ The General Environment
❖ The Competitive Environment
❖ The Internal Environment
❖ The External Environment
❖ Assessing Organizational Performance
 includes developing a vision and mission, identifying an
organization’s external opportunities and threats,
determining internal strengths and weaknesses,
establishing long-term objectives, generating alternative
strategies, and choosing strategies to pursue
Strategic Analysis
❖ Deciding what new businesses to enter,
❖ What businesses to abandon,
❖ How to allocate resources,
❖ Whether to expand operations or diversify,
❖ Whether to enter international markets,
❖ Whether to merge or form a joint venture,
❖ How to avoid a hostile takeover.
Strategy formulation
❖ Building Competitive Strategies through Business
Level Strategy
❖ Business Level Strategy and Industry Environment
❖ Strategy and Technology
❖ Strategy in the Global Environment
❖ Corporate Level Strategies-
❖ Horizontal and Vertical Integration, Strategic
Outsourcing
❖ Related and Unrelated Diversification
Strategy implementation
❖ Organizational Systems and Strategic Change
❖ Organizational Structure
❖ Strategic Leadership
❖ Corporate Governance
❖ Implementing Strategies: Management, Operations,
and HR Issues
❖ Implementing Strategies: Marketing, Finance/
Accounting, R&D and MIS Schemes
❖ Strategy evaluation
 reviewing external and internal factors that
are the bases for current strategies,
measuring performance, and taking
corrective actions
 Strategy Review
 Evaluation
 Control
❖ Strategy Analysis, formulation,

implementation, and evaluation activities
occur at Four hierarchical levels in a large
organization: corporate, divisional or
strategic business unit, and functional
❖ Strategic management helps a firm
function as a competitive team
Integrating Intuition and Analysis
❖ Most organizations can benefit from

strategic management, which is based
upon integrating intuition and analysis in
decision making
❖ Intuition is particularly useful for making
decisions in situations of great uncertainty
or little precedent
Adapting to Change
❖ The second-largest bookstore chain in the

United States, Borders Group, declared
bankruptcy in 2011 as the firm had not adapted
well to changes in book retailing from traditional
bookstore shopping to customers buying
online, preferring digital books to hard copies
❖ Borders was on the brink of financial collapse
before being acquired in July 2011 by Direct
Brands
Case let. 1. Game Plan of Britannia
❖ With a turnover of Rs.1666 crores in 2004, Britannia’s turnover

grew to Rs. 4974 crores by 2012, a three-fold increase in eight
years. This feat is achieved despite the stiff competition from Parle,
ITC, Priyagold, Kraft’s Oreo, and United Biscuit’s McVitie. The
growth is attributed to shifting the firm from a biscuit company to a
food company with the compelling tag line “Eat Healthy, Think
Better”. There were two choices; eat healthy, live better or eat
healthy, think better. The former was connected to the body only,
whereas the latter was connected to body and mind. A health-
based drink ‘Anlene’ was rolled out aimed at women to combat
osteoporosis. However, this milk-based product did not go beyond
test market stage, as the company learnt that consumer’s mind
space was dominated by diabetes and heart diseases, which was
an insight from the ‘Anlene’ experiment.
1-29
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall
❖ The Company assessed its internal capabilities by

asking the question, ‘is the company using the assets it
has in the most effective and productive manner?’ The
answer to this question gave the insight that the brand,
the consumer insight, and the way to market its existing
products were assets not fully utilized. Britannia looked
deeper into its existing product ‘Nutri Choice’ that has
health in its brand name. It has ingredients like oats
and ragi with low glycaemic index. The packaging was
changed to sachet form from boxes for easy transport
and to make it within reach.
❖ Brittania started a ‘Britannia Nutrition Foundation’ after

collaborating with a UN project as part of world food program,
making a calorie-and nutrition-rich biscuits. Britannia fortified its
brands such as ‘Tiger’ with iron and ‘Milk Bikis’ and ‘Marie’ brands
with iron and vitamins. The company focused on ‘removing the bad
while adding the good’ by eliminating trans-fat in its products.
Health is the concept around which the position is done, hoping to
grow on the back of increasing health awareness. The company
also has the insight that just health alone will not take it where it
ought to go. Health platform combined with the taste platform is
needed to play a major role in the Indian organized snack food
market of Rs15,000 crores. The per capita consumption of biscuits
is only 2 kg per person in India compared to 4 kg in Sri Lanka.
Health snacks are growing at 35% in India in the trend of
increasing health consciousness.
Key Terms in Strategic Management
❖ Competitive ❖ Strategists
advantage  the individuals
 anything that a who are most
firm does responsible for the
especially well success or failure
compared to rival of an organization
firms
❖ Vision statement
 answers the question “What do we want to
become?”
 often considered the first step in strategic
planning
❖ Mission statements
 enduring statements of purpose that
distinguish one business from other similar
firms
 identifies the scope of a firm’s operations in
product and market terms
 addresses the basic question that faces all
strategists: “What is our business?”
❖ External opportunities and external

threats
 refer to economic, social, cultural,
demographic, environmental, political, legal,
governmental, technological, and competitive
trends and events that could significantly
benefit or harm an organization in the future
Some Opportunities and Threats
❖ Computer hacker problems are increasing.

❖ Intense price competition is plaguing most
firms.
❖ Unemployment and underemployment rates
remain high.
❖ Interest rates are rising.
❖ Product life cycles are becoming shorter.
❖ State and local governments are financially
weak.
❖ Internal strengths and internal

weaknesses
 an organization’s controllable activities that
are performed especially well or poorly
 determined relative to competitors
❖ Objectives
 specific results that an organization seeks to
achieve in pursuing its basic mission
 long-term means more than one year
 should be challenging, measurable,
consistent, reasonable, and clear
❖ Strategies
 the means by which long-term objectives will
be achieved
 may include geographic expansion,
diversification, acquisition, product
development, market penetration,
retrenchment, divestiture, liquidation, and
joint ventures
❖ Annual objectives
 short-term milestones that organizations
must achieve to reach long-term objectives
 should be measurable, quantitative,
challenging, realistic, consistent, and
prioritized
 should be established at the corporate,
divisional, and functional levels in a large
organization
Sample Strategies in Action in 2011
General Electrics
❖ GE Company recently sold its appliance business to Sweden based
Electrolux AB for $3.3 billion, leaving GE focused almost entirely on
finance and big-ticket industrial equipment, such as power turbines,
locomotives, and aircraft engines. GE’s CEO Jeff Immelt, when
asked “What’s GE”, recently responded with the word energy, rather
than insurance, plastics, media, consumer finance, or appliances.
Founded by Thomas Edison in 1889 and originally named Edison
General Electric Company, GE is returning to its roots as an energy
company. The Company has spent about $14 billion lately buying
oil-and–gas service companies, while divesting dishwashers, radios,
stoves, microwaves, and toasters.
Chuy’s (CHUY)
❖ Chuy’s is a chain of 59 small Mexican Restaurants scattered across the
USA. It is not “fast casual”, like Chipotle Mexican Grill; rather, it is a sit-
down, table service restaurant that is uniquely festive, including, for
example. Elvis shrines and complimentary Happy Hour nacho bars served
out of makeshift car trunks. The décor also includes walls that feature
customer submitter snapshots of their pet dogs. Chuy’s uniqueness and
strategies are working great, as revenue soared 20 per cent to $64.1
million in its latest quarter. The company opened 11 more locations in the
last 12 months. At the individual restaurant level. Chuy’s reported a 3 per
cent improvement in comps, comprised of a 1.3 per cent increase in
customers and a 1.7 per cent bump in the average check. Chuy’s
comparable restaurant sales have increased for 17 consecutive quarters.
Unlike Chipotle, which recently increased prices. Chuy’s has absorbed
numerous commodity increases, keeping most of its menu items below
$10.
The Strategic-Management Model
Where are we now?
Where do we want to go?
How are we going to get there?

A Comprehensive Strategic-
Management Model
Benefits of Strategic Management
❖ Historically, the principal benefit of

strategic management has been to help
organizations formulate better strategies
through the use of a more systematic,
logical, and rational approach to strategic
choice
Benefits of Strategic Management
❖ Communication is a key to successful

strategic management
❖ Through dialogue and participation,
managers and employees become
committed to supporting the organization
Benefits to a Firm That Does
Strategic Planning
Financial Benefits
❖ Businesses using strategic-management

concepts show significant improvement in
sales, profitability, and productivity
compared to firms without systematic
planning activities
❖ High-performing firms seem to make more
informed decisions with good anticipation of
both short- and long-term consequences
Nonfinancial Benefits
❖ It allows for identification, prioritization,

and exploitation of opportunities.
❖ It provides an 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.
Nonfinancial Benefits
❖ 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.
❖ It creates a framework for internal
communication among personnel.
Why Some Firms Do No
Strategic Planning
❖ Lack of knowledge in strategic planning
❖ Poor reward structures
❖ Firefighting
❖ Waste of time
❖ Too expensive
❖ Laziness
❖ Content with success
Why Some Firms Do No
Strategic Planning
❖ Fear of failure
❖ Overconfidence
❖ Prior bad experience
❖ Self-interest
❖ Fear of the unknown
❖ Honest difference of opinion
❖ Suspicion
Pitfalls in Strategic Planning
❖ Using strategic planning to gain control over

decisions and resources
❖ Doing strategic planning only to satisfy
accreditation or regulatory requirements
❖ Too hastily moving from mission development
to strategy formulation
❖ Failing to communicate the plan to employees,
who continue working in the dark
❖ Top managers making many intuitive decisions
that conflict with the formal plan
Pitfalls in Strategic Planning
❖ Top managers not actively supporting the

strategic-planning process
❖ Failing to use plans as a standard for
measuring performance
❖ Delegating planning to a “planner” rather than
involving all managers
❖ Failing to involve key employees in all phases
of planning
❖ Failing to create a collaborative climate
supportive of change
Guidelines for Effective Strategic
Management
Comparing Business and
Military Strategy
❖ A fundamental difference between military
and business strategy is that business
strategy is formulated, implemented, and
evaluated with an assumption of
competition, whereas military strategy is
based on an assumption of conflict
❖ Both business and military organizations
must adapt to change and constantly
improve to be successful
Excerpts from Sun Tzu’s The Art
of War Writings
❖ War is a matter of vital importance to the
state: a matter of life or death, the road
either to survival or ruin. Hence, it is
imperative that it be studied thoroughly
❖ Know your enemy and know yourself, and in
a hundred battles you will never be defeated
❖ Skillful leaders do not let a strategy inhibit
creative counter-movement
Book reference- Strategic management
(8th edition)
Charles W.L. Hill

Gareth R. Jones
Chapter-1-Introduction
 Strategy
Strategy is a series of actions by a firm that are decided according
to the particular situation.
Strategy is the determination of the basic long-run goals and
objectives of an enterprise, and the adoption of courses of action
and the allocation of resources necessary for carrying out those
goals.
Strategy is an action that managers take to attain one or more of
the organization’s goals.
Strategy is the forging of company missions, setting objectives for
the organization in light of external and internal forces, formulating
specific policies and strategies to achieve objectives, and ensuring
their proper implementation so that the basic purposes and
objectives of the organization will be achieved.
 Strategy
Strength
Apply, sustain opportunity
Discover
Strategy
Weakness
Overcome Threat
Avert
 Management
Management is the process of designing and maintaining an
environment in which individuals, working together in groups,
efficiently accomplish selected aims.
 Strategic management
Strategic management is a process of analyzing, formulating,
implementing and evaluating some set of actions taken or to be
taken for the achievement of predetermined organizational goals
and objectives.
It focuses on integrating management, marketing, finance,
accounting, productions/operations, research and development and
CIS to achieve organizational success.
 Strategic planning
A strategic planning is a process which describes how a firm will
adapt to take advantages of opportunities in its constantly changing
environment, in order to maintain a strategic fit between the firm’s
goals and capabilities and these market opportunities.
◦ Corporate level:
CEO, other senior Head office
executives and
corporate staff
Division-B Division-C
Division-A
◦ Business level:
Divisional manager
Business function Business function Business function
◦ Functional level:
functional manager
 Strategic Management Process
 Select the corporate mission and major

corporate goals.
 Analyze the organization’s external competitive
environmen t to identify organization’s
opportunities and threats.
 Analyze the organization’s internal operating

environment to identify organization’s strengths
and weaknesses.
 Select strategies that build on the organization’s

strengths and correct its weaknesses in order to
take advantage of external opportunities and
counter external threats.
 Implement the strategy.
 Strategic intent
Strategic intent refers to an obsession with achieving an
objective that stretches the company and requires it to build
new resources and capabilities.
 Vision, mission, goal and objective
Vision- The highest aspirations and ideals of a person or
organization; what a firm wants to be. Vision statements
often describe the firm or organization in lofty, even
romantic or mystical tones.
Mission- An organization’s mission is an overall goal of the
organization that provides a sense of direction and a guide
to decision making for all levels of management.
It should define the organization line of products, identifying
its products or services and specify the markets it serves at
present and within a time frame work.
 Mission statement should include the
following components:
 Target customers and markets.
 Principal products and services.
 Geographic domain.
 Core technologies.
 Concern for survival , growth and maturity.
 Organizational self concept.
 Desired public image.
 Values and guiding standard.
 Major goals and objectives.
 Goals-
A goal is a desired future state or objective that a company
attempts to realize. The purpose of goals is to specify with
precision what must be done if the company is to attain its
mission or vision.
Characteristics of well constructed goals-
SMART-
o Specific.
o Measurable.
o Attainable.
o Realistic and
o Timeliness.
Qualities of a strategic leader
 Vision, eloquence, and consistency
 Articulation of the business model
 Commitment
 Being well informed
 Willingness to delegate and empower
 The astute use of power
 Emotional intelligence (self awareness, self-regulation,
motivation, empathy, social skills
 Self awareness: The ability to understand one’s own
moods, emotions, and drives as well as their effect on
others.
 Self-regulation: The ability to control or redirect

disruptive impulses or moods, that is , to think before
acting.
 Motivation: A passion for work that goes beyond money

or status and a propensity to pursue goals with energy and
persistence.
 Empathy: Understanding the feelings and viewpoints of

subordinates, and taking those into account when making
decision.
 Social skills: Friendliness with a purpose.

 Cognitive biases and strategic decision
making
 Prior hypotheses bias: Prior hypothesis biases refers to the
fact that decision makers who have strong prior belief about
the relationship between two variables tend to make decisions
on the basis of these beliefs, even when presented with evidence
that their beliefs are wrong.
Moreover, they tend to seek and use information that is
consistent with their prior beliefs while ignoring information that
contradicts these beliefs.
 Escalating commitment: It occurs when decision makers

having already committed significant resources to a
project, commit even more resources if they receive feedback
that the project is failing.
 Reasoning by analogy: It involves the use of simple
analogies to make sense out of complex problem .
 Representativeness: It is a bias rooted in the tendency to

generalize from a small sample, or even a single vivid
anecdotes.
 Illusion of control: It is the tendency to overestimate

ability to control events. Top level management seems to be
particularly prone to this bias, having risen to the top of an
organization, they tend to be overconfident about their
ability to succeed.
 Availability error: The availability error arises from our

predisposition to estimate the probability of an outcome
based on how easy the outcome is to imagine.
 Technique for improving decision making
Devils advocacy
Expert plan
Devil’s advocate
criticizes
Devil’s advocate
criticizes
 Dialectic inquiry
Expert plan-1 Expert plan-2

(Thesis) (Antithesis)
Debate (synthesis)
Final plan
Business
Environment
Compiled by
Prof. M. Venkatesan
BASIS FOR COMPARISON INTERNAL ENVIRONMENT EXTERNAL ENVIRONMENT
Meaning Internal Environment refers to all External Environment is a set of all the
the inlying forces and conditions exogenous forces that have the
present within the company, which potential to affect the organization's
can affect the company's working. performance, profitability, and
functionality.
Nature Controllable Uncontrollable
Comprise of Strengths and weaknesses Opportunities and threats
Affects Company only All companies operating in the industry
Bearing on Business Strategy, functions and Business survival, growth, reputation,

decisions expansion, etc.
Environmental Analysis
• Environmental Screening
• Environmental Uncertainty: Lack of information
needed to understand / predict the future
• Environment Scanning: Searching for and sorting
through information about the environment
Scenario Development: A
narrative that describes a
particular set of future
conditions
Environmental
Analysis…
Benchmarking: The
process of comparing an Forecasting: Method for
organizations practices predicting how variables
and technologies with will change the future
those of other companies
• Adapting to the environment: changing
Responding oneself
to the • Influencing environment through self
• Changing the environment to be with
Environment
• Choosing a response approach
Approaches to Managing Uncertainty
Stable Dynamic
Complex Decentralized Decentralized
Bureaucratic Organic
(standard skills) (Mutual adjustment)
Simple Centralized Centralized
Bureaucratic Organic
(Standardized work processes) (Direct Supervision)
Adapting to Environment
1 2
Adapting at the boundaries Adapting at the core
• Buffering: Creating supplies of excess • Flexible processes: Methods for adapting
resources in case of unpredictable needs the technical core to changes in the
• Smoothing: Leveling normal fluctuations environment
at the boundaries of the environment
Independent Action
Strategy Process Issues
Competitive Exploiting a distinctive Aggressive pricing,
Aggression competence or improving internal comparative advertising
efficiency for competitive
advantage
Competitive Independent action to improve Helping competitors find
Pacification relations raw materials
with competitors
Public relations Establishing and maintaining Sponsoring sporting events

favorable images in the minds of
those making up the environment
Independent Action
Voluntary action Voluntary commitment to various Johnson and Johnson donating

interest groups, causes and social supplies to tsunami victims
problems
Legal action battle Engaging company in private legal Warner Music Lawsuits
against illegal music
Copying
Political Action Efforts to influence elected Issue advertising; lobbying at

representatives to create a more state and national levels
favorable business environment or
limit competition
Cooperative Action

Contraction Negotiation of an agreement between Contractual marketing systems
the organization and another group to
exchange goods, services, information,
patents etc.,
Cooptation Absorbing new elements into the Consumer and labor representations
organizations leadership structure to and bankers on boards of directors
avert threats to its stability or existence
Coalition 2 or more groups that coalesce and act Industry associations, political
jointly with respect to some set of issues initiatives of the business roundtable
for some period of time and ICCI, FICCI
Diversification: A
firm’s investment Merger: One or
in a different more companies
product, business combining with
Changing the or geographic
area
another
environment
to be with Acquisition: One Divestiture: A firm
firm buying selling one or
another more businesses
Thank you
Corporate Level Strategies
Additional Points
Compiled by
Dr. M.Venkatesan
Business Level Strategies
Compiled by
Dr. M.Venkatesan
Core The resources and capabilities that have been
Competency determined to be a source of competitive
advantage for a firm over its rivals.
An integrated and coordinated set of

Strategy actions taken to exploit core competencies
and gain a competitive advantage.
Actions taken to provide value to

Business customers and gain a competitive
Level advantage by exploiting core
Strategy competencies in specific, individual
product markets.
Basis for Customer Segmentation
Consumer Markets
1. Demographic factors (age, income, sex, etc.)
2. Socioeconomic factors
(social class, stage in the family life cycle)
3. Geographic factors
(culture, region or country differences)
4. Psychological factors (lifestyle, personality traits)
5. Consumption patterns
(heavy, moderate, and light users)
6. Perceptual factors
(benefit segmentation, perceptual mapping)
7. Brand loyalty patterns
Basis for Customer Segmentation
Industrial Markets
1. End use segments (identified by Standard Industrial Classification, SIC code)
2. Product segments (based on technological differences or production economics)
3. Geographic segments (defined by boundaries between countries or by regional
differences within them)
4. Common buying factor segments (cut across product/market and geographic
segments)
5. Customer size segments
Generic Business Level Strategies
Source of Competitive Advantage
Cost Uniqueness
Broad Cost Differen-

Target
Market
Leadership
Leadership tiation
Breadth of
Competitive Scope
Narrow
Focused
Focused
Target Differen-
Market Low Cost
tiation
Cost Leadership Business Level Strategy
Key Criteria:
Relatively standardized products
Features acceptable to many customers
Lowest competitive price

Requirements:
Constant effort to reduce costs through:
Building efficient scale facilities

Tight control of production costs and overhead
Minimizing costs of sales, R&D and service
State of the art manufacturing facilities
Monitoring costs of activities provided by outsiders
Simplification of processes
How to Obtain a Cost Advantage
1. Determine and Control Cost Drivers
2. Reconfigure the Value Chain as needed
Alter production process New raw material

Change in automation Forward integration
New distribution channel Backward integration
New advertising media Change location relative
Direct sales in place of to suppliers or buyers
indirect sales
Choices That Drive Costs
Economies of scale Product features
Asset utilization Performance
Capacity utilization pattern Mix & variety of products
- Seasonal, cyclical Service levels
Interrelationships Small vs. large buyers
- Order processing
and distribution Process technology
Value chain linkages Wage levels

- Advertising & Sales Product features
- Logistics & Operations
Hiring, training, motivation
Three Key Questions
1. How can an activity be performed differently or even

eliminated?
2. How can a group of linked value activities be regrouped

or reordered?
3. How might coalitions with other firms lower or eliminate

costs?
Gallo sold wine through grocery stores rather than liquor stores because
they were more efficient distributors
Effective Cost Leaders can remain profitable even
when the
Five Forces appear unattractive
Effective Cost Leaders can remain profitable even when
the Five Forces appear unattractive
Threat of
New
Entrants
Can frighten off New Entrants

due to the need to:
* Enter at large scale to

be Cost Competitive
* Take time to move down
the “Learning Curve”
Can frighten off New Entrants due

Threat of to the need to:
New * Enter at Large Scale to be
Cost Competitive
Entrants
* Take time to move down the
“Learning Curve”
Can mitigate Buyer Power by: Bargaining

Power of
* Driving prices far below competitors Buyers
may cause exit and shift power back
to firm

Well positioned relative to Threat New
of to the need to:
* Enter at Large Scale to be
Substitutes in order to: Entrants Cost Competitive
* Make investments to create substitutes first “Learning Curve”
Buy patents developed by potential

* substitutes Bargaining
Power of
Lower prices to maintain value Buyers
* position
Can mitigate Buyer Power by:
Driving prices far below

Threat of competitors which may
cause exit and shift power
Substitute back to firm
Products

Threat of to the need to:
Bargaining New * Enter at Large Scale to be
Cost Competitive
Power of Entrants
Suppliers “Learning Curve”
Can mitigate Supplier Power by: Bargaining

Power of
Buyers
* Low cost position makes them better
able torelative
Well positioned absorb
to cost increases Can mitigate Buyer Power by:
Substitutes in order to:
* More likely to make very large purchases
* Make investments to create substitutes
Threat of
Driving prices far below
competitors which may
* which reduces chance of
Can buy patents developed by supplier power
Substitute cause exit and shift power
potential substitutes
back to firm
* Lower prices to maintain Products
value position
Competitors avoid
price wars with Cost
Can mitigate Supplier Power by: Leaders, which creates
Threat of higher
to the need profits
to: for
* Low cost position makes them
better able to absorb cost increases New * Enter at Large Scale to be
* More likely to make very large Entrants entire industry

Cost Competitive
purchases which reduces chance “Learning Curve”
of supplier power
Bargaining Rivalry Among Bargaining

Power of Competing Firms Power of
Suppliers in Industry Buyers
Well positioned relative to Can mitigate Buyer Power by:

Substitutes in order to:
* Make investments to create substitutes Driving prices far below
Threat of competitors which may
* Can buy patents developed by Substitute cause exit and shift power
potential substitutes back to firm
* Lower prices to maintain Products
value position
Major Risks of Cost Leadership
Business Level Strategy
Dramatic technological change could take

away your cost advantage
Competitors may learn how to imitate

Value Chain
Focus on efficiency could cause Cost Leader

to overlook changes in customer preferences
Differentiation Business Level Strategy
Effectiveness with Differentiation
grows out of Value Chain activities
Examples:
Heineken beer Raw materials
Steinway pianos Raw materials & Workmanship
Mercedes Benz autos Technology and Workmanship
Intel microprocessors Technological superiority
Caterpillar tractors Service buyers’ needs quickly

anywhere in the world
Create Value with Differentiation by:
Lowering Buyers’ Costs
Raising Buyers’ Performance
Creating Sustainability through:

• Creating barriers by perceptions of uniqueness
• Creating switching costs through differentiation
Drivers of Differentiation
Examples:
Unique product features

Unique product performance
Exceptional services
New technologies
Quality of inputs
Exceptional skill or experience
Detailed information
Effective Differentiators can remain
profitable even when the
Five Forces appear unattractive
Effective Differentiators can remain profitable even
when the Five Forces appear unattractive
Threat of
New
Entrants
Can fend off New Entrants

because:
* New products must

surpass proven products
* Or be equal to performance
at lower prices
Can fend off New Entrants because:
Threat of New products must
*
New surpass proven products
Entrants * Or be equal to performance
at lower prices
Can mitigate Buyer Power because: Bargaining

Power of
Well differentiated products reduce Buyers
customer sensitivity to price increases
*
at lower prices
Well positioned relative to
Substitutes because:
Bargaining
* Brand loyalty tends to Power of
reduce new product trial Suppliers
and brand switching
Can mitigate Buyer Power
because well differentiated
Threat of products reduce customer
Substitute sensitivity to price increases
Products
*
at lower prices
Bargaining Can mitigate Supplier Power by:

Power of
Suppliers
* Absorbing price increases dueBargaining
to
higher margins Power of
Well positioned relative to Suppliers
* Passing on higher supplier prices
Substitutes because:
because
* Brand buyers
loyalty tends to
reduce new product trial
are brand loyal
Can mitigate Buyer Power
and brand switching
Threat of because well differentiated
products reduce customer
Substitute
sensitivity to price increases
Products
Can mitigate Supplier Power by:

Threat of Can fend off New Entrants because:
Absorbing price increases
*
due to higher margins
New Brand
New
loyalty
products must
*
*
Entrants overcomes much
surpass proven products
Passing on higher supplier prices
because buyers are brand loyal * Or be equal to performance
price competition
at lower prices
Bargaining Rivalry Among Bargaining

Power of Competing Firms Power of
Buyers in Industry Suppliers
Well positioned relative to

Substitutes because: Can mitigate Buyer Power
Threat of because well differentiated
* Brand loyalty tends to products reduce customer
reduce new product trial Substitute sensitivity to price increases
and brand switching Products
Major Risks of a Differentiation
Business Level Strategy
Customers may decide that the

cost of “uniqueness” is too great
Competitors may learn how to

imitate Value Chain
The means of uniqueness may no

longer be valued by customers
Key Criteria:
Value provided by unique features

and value characteristics
Command premium price

High customer service
Superior quality
Prestige or exclusivity
Rapid innovation
Requirements:
Constant effort to differentiate products through:
Developing new systems and processes
Shaping perceptions through advertising
Quality focus
Capability in R&D
Maximize Human Resource contributions

through low turnover and high motivation
Value Creating Activities Common to a
Firm Infrastructure
Activities
Support
Human Resource Management
Technological Development
Procurement
Service
Operations
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics
Primary Activities
Inbound
Logistics
Simplified Planning Relatively Few
Cost Effective
MIS Systems Firm Infrastructure
Practices to Reduce
Highly Efficient
Planning Costs
Management Layers to
Reduce Overhead
Systems to Link
Activities
Support Effective Training Programs
Human Resource
Consistent Policies to
Reduce Turnover Costs toManagement
Suppliers’
Improve Worker
Efficiency and Effectiveness
Products with the
Easy-to-Use Manufacturing Investments in Technology in order
Technologies Firm’s
Technological Development Production
to Reduce Costs Associated with
Manufacturing Processes
Processes
Systems and Procedures to find the
Raw Materials
Procurement
Lowest Cost Products to Purchase
Frequent Evaluation Processes to
Monitorin
Located Suppliers’
ClosePerformances
Highly Efficient Efficient Plant Proximity with
Delivery Schedule
Small, Highly Effective Product
Service
Systems to Link Scale to Minimize that Reduces
Suppliers Trained Sales Installations to
Operations
Suppliers’
Outbound
Marketing
Logistics
Manufacturing Costs Force Reduce Frequency

Inbound
Logistics
Inbound
& Sales
Products with the Costs and Severity
Logistics
Firm’s Production Selection of Low Products Priced to of Recalls
Processes Timing of Asset Cost Transport Generate Sales
Purchases Carriers Volume
Located in Close Policy Choice of Efficient Order National Scale

Proximity with Plant Technology Sizes Advertising
Suppliers
Organizational Interrelationships
Learning with Sister Units
Primary Activities
Operations
Efficient Plant
Cost Effective
Firm
Practices to Reduce Scale to Minimize
Infrastructure
MIS Systems Planning Costs Reduce Overhead
Mfg. Costs
Activities
Reduce Turnover CostsTiming of Asset
to Improve Worker
Easy-to-Use Manufacturing Purchases

Investments in Technology in order
Technologies to Reduce Costs Associated with
Policy Choice of
Lowest Cost Products toProcurement
Purchase
PlantProcesses
Frequent Evaluation Technology
to
Monitor Suppliers’ Performances
Raw Materials
Highly Efficient Efficient Plant Delivery Schedule
Organizational
Small, Highly Effective Product
Service
Systems to Link Scale to Minimize that Reduces Learning Installations to
Trained Sales
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics

Suppliers
Primary Activities
Outbound
Logistics
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Delivery Schedule
that Reduces Costs
Activities
Human Resource ManagementSelection of Low
Reduce Turnover Costs to Improve Worker
Easy-to-Use Manufacturing Cost Transport

Investments in Technology in order
Manufacturing Processes Carriers
Systems and Procedures to find the Efficient Order
Raw Materials
Procurement
Sizes
Highly Efficient Efficient Plant Delivery Schedule Small, Highly Effective Product
Interrelationships
Service
Systems to Link Scale to Minimize that Reduces Trained Sales Installations to
Operations
Outbound
Suppliers’ with Sister Units
Outbound
Marketing
Logistics
Logistics
Inbound
& Sales
Logistics

Suppliers
Primary Activities
Marketing
Relatively Few
& Sales
Simplified Planning
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Small, Highly
Trained Sales Force
Activities
Products Priced
to Generate Sales
Volume
Procurement
Frequent Evaluation Processes to National Scale
Raw Materials Advertising
Service
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
Sales
Logistics
& Sales
&
Suppliers
Primary Activities
Cost Effective
Simplified Planning
Firm Infrastructure
Practices to Reduce
Relatively Few
Service
MIS Systems Planning Costs Reduce Overhead Effective Product
Activities
Support Effective Training ProgramsInstallations to
Human
Reduce Turnover Costs ResourcetoEfficiency
Management
Improve Worker
and EffectivenessReduce
Easy-to-Use Manufacturing Investments in Technology in Recalls

order
Procurement
Raw Materials
Service
Service
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics

Suppliers
Primary Activities
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Activities

Procurement
Raw Materials
Procurement
Service
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics
Processes Procurement
Timing of Asset
Purchases
Cost Transport
Carriers
Generate Sales
Volume
Systems and Procedures to Find Frequent Evaluation
theProximity
Lowest with Cost
PlantProducts to
Technology Sizes Processes to Monitor
Advertising
Suppliers
Purchase Raw Materials Suppliers’ Performances
Primary Activities
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Activities

Procurement
Raw Materials
Service
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics
Easy-to-Use
Firm’s Production Investments in Technology in
Selection of Low Products Priced to of Recalls
Manufacturing Purchases Carriers
order to Reduce Costs Associated
Volume
Technologies with Manufacturing Processes
Suppliers
Primary Activities
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Activities
Human ResourcetoEfficiency
Management
Improve Worker
Reduce Turnover Costs
and Effectiveness

Human Procurement
Resource Management
Raw Materials
Consistent Policies
Highly Efficient Efficientto
Plant Effective Training Programs
Delivery Schedule Small, Highly Effective Product
Service
Operations
Reduce
Suppliers’Turnover Costs to Improve Worker Reduce Frequency
Outbound
Marketing
Manufacturing Costs Force
Logistics
Inbound
& Sales
Products with the Costs Efficiency and Effectiveness and Severity
Logistics

Suppliers
Primary Activities
Cost Effective
Practices to Reduce
Planning Costs
Reduce Overhead
Activities

Firm Infrastructure
Technological
Technologies Development to Reduce Costs Associated with
CostSystems
Effective Simplified
and Procedures to find the Planning Relatively Few
Cost Products toProcurement
MIS Lowest
Systems
Raw Materials
Purchase
Practices Monitor
to Reduce Management Layers
Suppliers’ Performances
Highly Efficient Planning

Efficient Plant Costs
Delivery Schedule Small, Highly to Reduce Overhead
Effective Product
Service
Operations
Suppliers’
Outbound
Marketing
Logistics
Inbound
& Sales
Logistics

Suppliers
Primary Activities
Focused Business Level Strategies
Focused Business Level Strategies involve the same basic
approach as Broad Market Strategies.
However, opportunities may exist because:
Large firms may overlook small niches

Firm may lack resources to compete industry-wide
May be able to serve a narrow market segment

more effectively than industrywide competitors
Focus can allow you to direct resources to certain

value chain activities to build competitive advantage
May be able to retrofit old factories to keep costs

down
Minimize R&D costs by copying innovators
Examples:
Bang & Olufsen Upscale electronic components

Snap-on tools High quality mechanics’ tools
Iams Company Premium pet foods

Focused Differentiators may thrive by selecting a

small market that is underserved by large players
Example:
Custom manufacturers of parts for

Harley-Davidson motorcycles
Major Risks Involved With a Focused
Firm may be “outfocused” by competitors
Large competitor may set its sights on your

niche market
Preferences of niche market may change to

match those of broad market
Generic Business Level Strategies
Source of Competitive Advantage
Cost Uniqueness
Broad Cost Differen-

Target
Market Leadership tiation
Breadth of Integrated Low
Competitive Cost/
Scope Differentiation
Narrow Focused Focused
Target Differen-
Market Low Cost
tiation
Integrated Low Cost/Differentiation Strategy
Firms using an Integrated Strategy may:
Adapt more quickly
Learn new skills and technologies
Utilize Flexible Manufacturing Systems to create

differentiated products at low costs
Leverage core competencies through Information
Networks across multiple business units
Utilize Total Quality Management (TQM) to

create high quality differentiated products which
simultaneously driving down costs
Recognize that the Integrated Low Cost/

Differentiation business level strategy involves a
Compromise
The risk is that the firm may become “Stuck in

the Middle” lacking a strong commitment to or
expertise with either type of generic strategy
Southwest Airlines
Low Cost Differentiation
Use a single aircraft model
Focus on customer
(Boeing 737)
satisfaction
Use secondary airports
High level of employee
Fly short routes dedication
No meals
New flight services for
15 minute turnaround time
business travelers
No reserved seats (phones and faxes)
No travel agent
Strategy
Implementation
Compiled by
Dr. M.Venkatesan
Strategy Review, Evaluation, and Control
Strategic Management:
Concepts & Cases
13th Edition
Fred David
Strategic Management Process
Strategic Evaluation is defined as the process of

determining the effectiveness of a given strategy in
achieving the organizational objectives and taking
corrective action wherever required.
Strategy evaluation is the final step of strategy

management process .The key strategy evaluation
activities are: appraising internal and external factors
that are the root of present strategies, measuring
performance, and taking remedial / corrective actions.
Nature of Strategic Evaluation
•Nature of the strategic evaluation and control process is to test

the effectiveness of strategy.
•During the strategic management process, the strategists

formulate the strategy to achieve a set of objectives and then
implement the strategy.
•There has to be a way of finding out whether the strategy being

implemented will guide the organisation towards its intended
objectives. Strategic evaluation and control, therefore, performs
the crucial task of keeping the organisation on the right track.
Strategy Review, Evaluation,
and Control
The best formulated and best implemented strategies

become obsolete as a firm’s external and internal
environments change. Therefore, it is essential for
strategists to systematically review, evaluate, and control
the execution of strategies.
Strategy Review, Evaluation, and
Control
Strategy Evaluation is vital to an organization’s well
being. Timely evaluations can alert management to
potential or actual problems before a situation
becomes critical.
Strategy Evaluation includes three basic activities:

(1) Examining the underlying bases of a firm’s
strategy.
(2) Comparing expected results to actual results.
(3) Taking corrective actions to ensure that
performance conforms to plans.
Control
Strategy Evaluation
◼ Adequate and timely feedback is the
cornerstone of effective Strategy Evaluation.
◼ Strategy Evaluation is important because
organizations face dynamic environments in
which key external and internal factors can
change quickly and dramatically.
◼ Strategy Evaluation is essential to ensure that
the stated objectives of an organization are
being achieved.
Through the process of strategic evaluation and
control, the strategists attempt to answer set of
questions, as below
• Is the strategy guiding the organization towards its intended
objectives?
•Are the organization and its managers doing things which
ought to be done?
• Is there a need to change and reformulate the strategy?
•How is the organization performing?
• Are the time schedules being adhered to?
•Are the resources being utilized properly?
•What needs to be done to ensure that resources are utilized
properly and objectives met?
Importance of Strategic Evaluation
• Strategic evaluation can help to assess whether the

decisions match the intended strategy requirements.
• The process of strategic evaluation provides a considerable

amount of information and experience to strategists that can
be useful in new strategic planning.
Participants in Strategic
Evaluation
➢Shareholders
➢ Board of Directors
➢ Chief executives
➢ Profit-centre heads
➢ Financial controllers
➢ Company secretaries
➢External and Internal Auditors
➢Corporate Planning Staff or
Department
➢Middle-level managers
and Control
Consistency
Richard Rumelt’s Consonance

4 Criteria
Feasibility
Advantage
and Control
Consistency
◼ Strategy should not present inconsistent

goals and policies
and Control
Consonance
◼ Need for strategists to examine sets of

trends, as well as individual trends
and Control
Feasibility
◼ Neither overtax resources nor create

unsolvable subproblems
and Control
Advantage
◼ Creation or maintenance of competitive

advantage
Fortune Top 20 Companies in the World by 2020 and previous year ranking
1 Apple 1
2 Amazon 2
3 Microsoft 6
4 Disney 4
5 Berkshire Hathaway 3 Category:Brand Popularity
6 Starbucks 5
7 Alphabet 7 Region:Global
8 JPMorgan Chase & Co. 9
9 Costco 12
Ranking Type:positive
10 Salesforce 14
11 Southwest Airlines 11
12 Coca-Cola 15 2020
13 Nike 13
14 American Express 16
Logo Name
15 FedEx 10 Last Sync Force
16 Netflix 8 Customer
17 Marriott International 23
18 Walmart 25
19 Delta Air Lines 28
20 Nordstrom 20
and Control
Strategy Evaluation Should –
◼ Initiate managerial questioning of expectations and

assumptions
◼ Trigger a review of objectives & values
◼ Stimulate creativity in generating alternative strategies
and formulating criteria for evaluation
◼ Be performed on a continuing basis, rather than at the
end of specified periods of time or just after problems
occur.
and Control
Review of Underlying Bases of Strategy –
◼ Develop revised IFE Matrix
◼ Develop revised EFE Matrix

and Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
◼ Are our strengths still strengths?

◼ Has our organization added additional strengths?
◼ Are our weaknesses still weaknesses?
◼ Has our organization developed other
weaknesses?
and Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
◼ Are our opportunities still opportunities?
◼ Have other opportunities developed?
◼ Are our threats still threats?
◼ Have other threats emerged?
Strategy Evaluation Framework
◼ Table 9-3 summarizes strategy evaluation

activities in terms of key questions that should
be addressed, alternative answers to those
questions, and appropriate actions for managers
to take. Note that corrective actions are needed
except when (1) external and internal factors
have not changed significantly and (2) the firm is
making satisfactory progress toward achieving
its objectives.
◼ Relationships among strategy evaluation
activities are illustrated in Figure 9-2.
and Control
Measuring Organizational Performance
◼ Compare expected to actual results

◼ Investigate deviations from plan
◼ Evaluate individual performance
◼ Examine progress toward stated objectives
and Control
Quantitative Criteria for Strategy Evaluation
Strategists use financial ratios to:

❑ Compare a firm’s performance over different time
periods
❑ Compare a firm’s performance to competitors’
performance
❑ Compare a firm’s performance to industry averages
Strategy Review, Evaluation, and Control
Some key financial ratios that are useful for evaluating strategies
are:
◼ Return on ◼ Debt to equity

investment (ROI) ◼ Earnings per share
◼ Return on equity (EPS)
(ROE) ◼ Sales growth
◼ Profit margin ◼ Asset growth
◼ Market share
Taking Corrective Action
◼ Taking corrective action is the final strategy
evaluation activity. It requires making changes to
competitively reposition a firm for the future.
Examples of changes that may be needed are
altering an organization’s structure, replacing one or
more key employees, selling a division, devising new
policies, issuing stock to raise capital, allocating
resources differently, or revising the firm’s mission.
◼ Taking corrective action is necessary to keep an
organization on track toward achieving its
objectives.
Control
The Balanced Scorecard is a strategy evaluation
tool. It uses both quantitative and qualitative
measures to evaluate strategies.
A Balanced Scorecard analysis requires firms to
answer these questions:
1. How well is the firm continually improving and
creating value along measures such as innovation,
technological leadership, product quality,
operational process efficiencies, etc.?
2. How well is the firm sustaining or improving upon
its core competencies and competitive advantages?
3. How satisfied are the firm’s customers?
The Balanced Scorecard
◼ An example of a Balanced Scorecard

appears in Table 9-6. Note that in this
example the firm examines six key issues in
evaluating its strategies: (1) customers, (2)
managers/employees, (3)
operations/processes, (4) community/social
responsibility, (5) business ethics/natural
environment, and (6) financial.
◼ The basic form of a Balanced Scorecard may
differ for different organizations.
Table 9-6
Process of Strategic Evaluation
1) Fixing benchmark of performance
• While fixing the benchmark, strategists encounter questions
such as - what benchmarks to set, how to set them and how to
express them.
• In order to determine the benchmark performance to be set,
it is essential to discover the special requirements for
performing the main task.
•The organization can use both quantitative and qualitative
criteria for comprehensive assessment of performance.
• Quantitative criteria includes determination of net profit,
ROI, earning per share, cost of production, rate of employee
turnover etc. Among the Qualitative factors are subjective
evaluation of factors such as - skills and competencies, risk
taking potential , flexibility etc.
2)Measurement of performance
The standard performance is a bench mark with which the actual
performance is to be compared .The reporting and communication
system help in measuring the performance. For measuring the
performance, financial statements like - balance sheet, profit and
loss account must be prepared on an annual basis.
3) Analyzing Variance
While measuring the actual performance and comparing it with
standard performance there may be variances which must be
analyzed.
The strategists must mention the degree of tolerance limits
between which the variance between actual and standard
performance may be accepted.
4)Taking Corrective Action
Once the deviation in performance is identified, it is essential to
plan for a corrective action. If the performance is consistently less
than the desired performance, the strategists must carry a
detailed analysis of the factors responsible for such performance.
Techniques of Strategic Evaluation
1)Gap Analysis
•The gap analysis is one strategic evaluation technique
used to measure the gap between the organization’s
current position and its desired position.
• The gap analysis is used to evaluate a variety of aspects
of business , from profit and production to marketing,
research and development and management information
systems.
• Typically, a variety of financial data is analyzed and
compared to other businesses within the same industry
to evaluate the gap between the organization and its
strongest competitors.
2)SWOT Analysis
• The SWOT analysis is another common strategic evaluation
technique used as a part of the strategic management process.
The SWOT analysis evaluates the organization’s strengths,
weaknesses , opportunities and threats.
• Strengths and weaknesses are internal factors, while
opportunities and threats are external factors.
• This identification is essential in determining how best to focus
resources to take advantage of strengths and opportunities and
combat weaknesses and threats.
3) PEST Analysis
Benchmarking
• Benchmarking is the process of improving performance by
continuously identifying , understanding and adopting
outstanding practices found inside and outside the organization
•Organizations may benchmark themselves against other

organizations within the same industry, or they may benchmark
themselves against their own prior situation.
• A variety of performance measures, as well as policies and

procedures, may be evaluated regularly to identify where
adjustments are necessary to maintain the sustainable
competitive advantage.
Strategic control is a term used to describe the
process used by organizations to control the
formation and execution of strategic plans; it is a
specialised form of management control, and
differs from other forms of management control
"Strategiccontrol focuses on the dual questions of

whether: (1) the strategy is being implemented as
planned; and (2) the results produced by the strategy
are those intended.“
Types of strategic control
1)Premise Control
Every strategy is based on certain planning premises or
predictions.
Premise control has been designed to check systematically and
continuously whether or not the premises set during the planning
and implementation process are still valid.
It involves the checking of environmental conditions. Premises are
primarily concerned with two types of factors :a . Environmental
factors (for example, inflation, technology ,interest rates,
regulation, and demographic/social changes).b. Industry factors
(for example, competitors, suppliers , substitutes, and barriers to
entry)
2)Implementation Control
Implementing a strategy takes place as a series of steps, activities,

investments and acts that occur over a lengthy period.
As a manager, you'll mobilize resources, carry out special projects
and employ or reassign staff.
There are two types of implementation controls: strategic thrusts
or projects, and milestone reviews. Strategic thrusts provide you
with information that helps you determine whether the overall
strategy is shaping up as planned. With milestone reviews, you
monitor the progress of the strategy at various intervals or
milestones.
3) Strategic Surveillance
Strategic surveillance is designed to observe a wide range of

events within and outside your organization that are likely to
affect the track of your organization's strategy. It's based on the
idea that you can uncover important yet unanticipated
information by monitoring multiple information sources. Such
sources include trade magazines, journals such as The Wall Street
Journal, trade conferences, conversations and observations.
4)Special Alert Control
Another type of strategic control is a special alert control.
"A special alert control is the need to thoroughly, and often
rapidly, reconsider the firms basis strategy based on a sudden
, unexpected event.
(i.e., natural disasters , chemical spills, plane crashes, product
defects, hostile take over etc.).
An example of such event is the acquisition of your
competitor by an outsider. Such an event will trigger an
immediate and intense reassessment of the firms strategy.
Form crisis teams to handle your company’s initial response
to the unforeseen events.

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Strategic Management

High Global Transnational

❖ Christopher A. Bartlett and Sumantra

❖ Composed of company’s overseas

❖ It consists of the subsidiaries in each

❖ It consists of a company’s overseas

❖ It is characterized by centralizing certain

❖ The determination of the basic long term

❖ SM involves the ‘major intended and

A process that involves managers from

❖ Strategic management is used

❖ A strategic plan is a company’s game

❖ Basic concepts of strategy:

Strategic Strategy Strategy Strategy

❖ Strategy Analysis, formulation,

❖ Most organizations can benefit from

❖ The second-largest bookstore chain in the

❖ With a turnover of Rs.1666 crores in 2004, Britannia’s turnover

❖ The Company assessed its internal capabilities by

❖ Brittania started a ‘Britannia Nutrition Foundation’ after

❖ External opportunities and external

❖ Computer hacker problems are increasing.

❖ Internal strengths and internal

Where are we now?

Where do we want to go?

How are we going to get there?

❖ Historically, the principal benefit of

❖ Communication is a key to successful

❖ Businesses using strategic-management

❖ It allows for identification, prioritization,

❖ It allows major decisions to better support

❖ Using strategic planning to gain control over

❖ Top managers not actively supporting the

Charles W.L. Hill

 Select the corporate mission and major

 Analyze the organization’s internal operating

 Select strategies that build on the organization’s

 Self-regulation: The ability to control or redirect

 Motivation: A passion for work that goes beyond money

 Empathy: Understanding the feelings and viewpoints of

 Social skills: Friendliness with a purpose.

 Escalating commitment: It occurs when decision makers

 Representativeness: It is a bias rooted in the tendency to

 Illusion of control: It is the tendency to overestimate

 Availability error: The availability error arises from our

Expert plan-1 Expert plan-2

Bearing on Business Strategy, functions and Business survival, growth, reputation,

Public relations Establishing and maintaining Sponsoring sporting events

Voluntary action Voluntary commitment to various Johnson and Johnson donating

Political Action Efforts to influence elected Issue advertising; lobbying at

Strategy Process Issues

An integrated and coordinated set of

Actions taken to provide value to

Broad Cost Differen-

Relatively standardized products

Features acceptable to many customers

Lowest competitive price

Building efficient scale facilities

1. Determine and Control Cost Drivers

2. Reconfigure the Value Chain as needed

Alter production process New raw material

Value chain linkages Wage levels

1. How can an activity be performed differently or even

2. How can a group of linked value activities be regrouped