Name of Institution

Amity International Business School

IMBA Semester III

International Strategic Management

(Session 2)
CONCEPT OF STRATEGY AND STRATEGIC
MANAGEMENT
EVOLUTION OF STRATEGIC MANAGEMENT

Cmde R Bhandari (retd)

Tanvir Kaur
 WHAT IS STRATEGY? Name of Institution

A strategy is a fundamental pattern of present and planned

objectives, resource deployments, and interactions of an
organization with markets, competitors, and other environmental
factors, to attain defined goals.

STRATEGY SHOULD SPECIFY :

1.What (objectives / goals), and by When
2.Where (which industries/products/markets?),
3.How (allocation of resources and activities to gain competitive
advantage).

Strategic Management Process

The process by which managers choose a set of strategies that will
enable their company to achieve superior performance.
 INTEGRATED VIEW OF Name of Institution

STRATGEY

STRETCH STRATEGY
FACTORS

1.Marketing

2.Finance
ENVIRONMENT
3.Operations

4.R&D

FIT STRATEGY 5.Technology

 STRATEGIC MANAGEMENT MODEL
Name of Institution
Company Mission And
Social Responsibility
External environment Internal analysis
•Remote Possible?
•Industry (global & domestic)
F •operating F
Desired? E
E
E Strategic analysis and choice E
D D
B
B
A Long term objectives Generic & grand strategies
C A
K C
Short-term objectives; Policies that
Functional tactics K
reward system empower action

Restructuring, reengineering,
and refocusing the organization
Minor impact

Major impact Strategic control and

continuous improvement
 COMPONENTS OF STRATEGIC Name of Institution
MANAGEMENT
A GOOD STRATEGY CONTAINS

1.SCOPE: Should reflect the firm’s purpose or mission.

2.GOALS AND OBJECTIVES: Desired levels of accomplishment on one or more dimensions

of performance – i.e volume growth, profitability, ROI, market share etc – over specified
time periods; for each business/product and for the organization.

3.RESOURCE DEPLOYMENT: How the resources are to be obtained and allocated, across
businesses, product-markets, functional departments, and activities within each business or
product- market.

4.SUSTAINABLE COMPETITIVE ADVANTAGE: Market opportunities in each business and

product-market and the company’s distinct competencies or strengths relative to its
competitors.
5.SYNERGY: The total performance of the related businesses to be greater than it would
otherwise be: The whole becomes greater than the sum of its parts.
 THE STRATEGIC POSITION Name of Institution

THE STRATEGIC POSITION : The impact on strategy of the external environment, internal
resources and competences, and the expectations and influences of stakeholders.

The Expectations Resources &

Environment & Purpose Competences

THE STRATEGIC
Corporate –
POSITION
level Organising
strategies

Business- STRATEGIC STRATEGY

Enabling
level CHOICES IN ACTION
strategies
Development Managing
directions & change
methods
IMPACT ON STAKEHOLDERS
 STRATEGIC DECISION
MAKING Name of Institution

Strategic Decision Making Requires:

1. Setting goals: Challenging but achievable. Stretch or fit alternatives!

2. Rationality: Exercising best choice among alternatives
3. Creativity: Creative and original decisions through brainstorming
4. Variability/ flexibility : Every situation is unique, no ‘standard solutions’
5. Demographic factors : Age. Education, Intelligence, Values Cognition. Risk taking and
creativity of market and work force
6. Group decision making: Participative approach and buy in

Dimensions Of Strategic Decisions

1. Require top management decisions and commitment.

2. Require large amount of firm’s resources
3. Affect the firm’s long tem prosperity.
4. Are future oriented.
5. Usually have Multifunctional or Multibusiness consequences.
6. Consider the firm’s external environment.
 THE LEADING EDGE OF Name of Institution

STRATEGY
ASPECT OF STRATEGY ENVIRONMENT - LED RESOURCE - LED ‘
‘FIT’ STRETCH’
Underlying basis of Strategic fit between Leverage of resources to
strategy market opportunities improve value for
and organisation’s money
resources
Competitive advantage ‘Correct’ positioning Differentiation based on
through… Differentiation directed competencies suited to
by market or creating market need
How small players Find and defend a niche Portfolio of
survive… competences
Risk- reduction… Portfolio of products- Portfolio of
businesses competences
Corporate centre invests Strategies of business Core competences
in… units or subsidiaries
 BENEFITS/RISKS OF Name of Institution

STRATEGIC MANAGEMENT
Benefits Risks
1. Enhance problem solving abilities. 1. Time spent on thinking through and
deploying strategy may affect the
2. Group-think results in best choice
operational focus of line
among alternatives.
management.
3. Employee involvement in
2. If the formulators of strategy are
formulation improves
not involved in implementation,
understanding of productivity-
they may shirk responsibility for the
reward relationship and heightens
decisions.
their motivation.
3. Strategic managers must be trained
4. Gaps and overlaps among
to anticipate and respond to the
individuals and groups are reduced
disappointment of participating
as participation in strategy
subordinates over unattained
formulation clarifies roles in
expectations.
implementation
4. Risk anticipation, mitigation and
5. Reduces resistance to change
residual impact may curb boldness
among line managers
 Name of Institution

EVOLUTION OF STRATEGY
 STRATEGIC PLANNING PROCESS HAS EVOLVED Name of Institution
THROUGH VARIOUS STAGES

STAGE I: BASIC FINANCIAL PLANNING : Better operational control by

trying to meet budget
STAGE II : FORECAST BASED PLANNING : Improving planning for growth
by trying to predict the future beyond next year.
STAGE III : EXTERNALLY ORIENTED PLANNING ( STRATEGIC PLANNING ) :
improving responsiveness to markets and competition by trying to think
strategically.
STAGE IV : STRATEGIC MANAGEMENT : Seeking a competitive advantage
by also considering implementation and evaluation and control when
formulating strategy.
STAGE V : INTERNATIONAL / GLOBAL STRATEGIC MANAGEMENT :
Managing a worldwide competitive advantage
 STRATEGIC DECISION MAKING Name of Institution
Cognitive Biases as Obstacles

1.Fall back on rule of thumb

2.Prior Hypothesis bias --- Decisions based on beliefs rather than facts!
3. Escalating Commitment --- pump in more resources to achieve success, even
if failure is evident.
4. Reasoning by Analogy --- using simple analogies which may not be valid in the
new context.
5.Representativeness – adopting generalization from a small sample or even a
single incident --- eg all dotcoms will succeed like Amazon or Yahoo.
6.Availability Error – Estimating the probability of error or success based on ease
of visualising outcome.
 CURRENT APPROACH Name of Institution

Strategy must bear in mind:

1.Ideas and innovations..

2.Encourage analytical thinking,
3. ‘Older Hands’ tend to over emphasize the risks of social, political and cultural
constraints.
4.Analytic and evaluative techniques to establish direction and plan
implementation, eg:
•Devils advocacy --- review of both the plan and a critical analysis of the
plan
•Dialectic Enquiry --- generation of plan (thesis) and counterplan (antithesis)
with debate over same.
 REFERENCES Name of Institution

1. Johnson & Scholes, 2004, Exploring Corporate Strategy,

Pearson Higher Education Ch 1 p 3 - 36
2. Pearce John A & Robinson Richard B, Strategic Management:
Formulation, Implementation and Control, McGraw Hill, 2005
Ch 1 p 2 – 22
3. Fred R David, Strategic management, Concepts and Cases,
Prentice Hall, 2005 Ch 1p 2 - 47
4. www.quickmba.com
5. http://papers.ssrn.com/sol3/results.cfm
6. http://www.qdistrategies.com/growth.php
7. Opening Case study IKEA, Kamel Mellahi & J George Frynas,
Global Strategic Management, Oxford University Press p 4 -5
8. Current articles from McKinsey and others as downloaded
prior to the sessions