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Strategic Management - I: Session 1 The Concept of Strategy
Strategic Management - I: Session 1 The Concept of Strategy
Strategic Management - I: Session 1 The Concept of Strategy
STRATEGY
STRATEGY is the long-term direction and scope of an organisation to achieve advantages by using its resources in a changing environment. In general, there is no higher-level statement of an organisations objectives.
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THREE PARTS OF SM
There are three parts of STRATEGIC MANAGEMENT function: Formulation of strategy Implementation of strategy: managing the organisation Managing the implementation and formulation in a changing environment: managing strategy itself
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LONG-TERM
All decisions about the long term are STRATEGIC DECISIONS, because they address issues other than those addressed by OPERATING or TACTICAL decisions, and require different tools for taking these decisions.
ORGANISATION
The nature of the organisation.
The values and beliefs of the people in
ADVANTAGES
This is the Strategic intent why the organisation wants to pursue a strategy, based on the SWOT and PESTEL analyses. It could be for a specific advantage, or to ward off a disastrous threat. It could be for Survival, Profits or Growth
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RESOURCES
Matching of the resources and activities of
RESOURCES -II
ASPECT OF STRATEGY
Underlying basis
FIT
Fit between market and org.
Proper direction of resources
STRETCH
Leverage resources to improve VFM or EVA/MVA Creating competence or market need
Advantage through
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RESOURCES - III
ASPECT OF STRATEGY
Small players survival
FIT
Find and defend a niche
STRETCH
Change the rules of the game Portfolio of competences Core competences
Risk reduction by Portfolio of products/ businesses Corporate investment in Strategies of business units
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ENVIRONMENT
Ever-changing The PESTEL framework
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organisation about what is it that we are trying to do Making everyone more alert to new opportunities and threats
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VOCABULARY OF STRATEGY
VISION: the desired future state also
called the Strategic Intent MISSION: what the organisation will do to achieve its basic purpose GOAL: general and simple statement of aim or purpose OBJECTIVE: more precise statement of goal, quantified when possible
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VOCABULARY OF STRATEGY- II
BUSINESS UNIT STRATEGY: it is about
how to compete successfully in particular markets STRATEGIC BUSINESS UNIT: is a part of an organisation for which there is a distinct external market for goods or services that is different from another SBU
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PATTERNS OF STRATEGY - I
To outcompete rivals
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PATTERNS OF STRATEGY - II
To define how the company manages R&D,
production, sales and marketing, finance, and other key functions To strengthen resource base and competitive capabilities Related/ unrelated diversification
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APROACHES TO STRATEGY-MAKING
Design the range of influences on an
organisations performance can be best understood by analysis Experience how an organisation performs depends mostly on what experience it has built up, even in new areas of operations Ideas order and innovation emerge from the variety and diversity in and around the organisation.
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APPROACHES TO FORMULATION
The Chief Architect approach one person takes
the full charge of the vision The Delegation approach the manager in charge delegates big parts of the work to trusted subordinates and teams The Collaborative or Team approach a strategy team is put in charge of evolving strategy The Corporate Intrapreneur approach encourage individuals and teams to come up with new initiatives and approaches
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