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Strategy Management
What is Management?
Strategy Management
What is Management?
What is Management?
What is Management?
What is Administration?
Basically it is direction of affairs
having 3Elements
• Formulation of goals
Business Organization Administration
• The choice of ways and means
• The direction of the people in
some group purpose
Strategy Management
2) Satisfaction of Customers
Objectives of
Management? 3) Adequate return on Capital
Evolution
of SM • Catering to unique set of customers
Defining
Strategy
Strategy Management
Chandler(1962)
• Strategy is the determinator of the basic long-term
goals of an enterprise, and the adoption of courses
of action and the allocation of resources necessary
Defining
for carrying out these goals.
Strategy
Strategy Management
Igor Ansoff(1965) :
Henry Mintzberg(1987) :
Prahlad (1993)
• Strategy is more then just fit and allocation of
resources.
• It is stretch and leveraging of resources.
Strategy Management
Michael E Porter(1996) :
Hierarchy of Strategies
Strategy Management
Environmental Corporate mission
Factors Corporate
strategy
Corporate Goal & Obj Corporate Dev Srtgy Resource deployment
Strategy Management
Corporate strategy
Describes a company’s overall direction in terms of its
general attitude toward growth and the management of
its various businesses and product lines.
Hierarchy of
Strategies For example, Coco cola, Inc., has followed the growth
strategy by acquisition. It has acquired local bottling
units to emerge as the market leader.
Strategy Management
Environmental Corporate mission
Factors Corporate
strategy
Corporate Goal & Obj Corporate Dev Srtgy Resource deployment
Business strategy
Usually occurs at the business unit or product level, and
it emphasizes improvement of the competitive position of
a corporation’s products or services in the specific
Hierarchy of industry or market segment served by that business unit.
Strategies
For example, Apple Computers uses a differentiation
competitive strategy that emphasizes innovative product
with creative design
Strategy Management
Environmental Corporate mission
Factors Corporate
strategy
Corporate Goal & Obj Corporate Dev Srtgy Resource deployment
Mktg Srtgy for R&D Srtgy & HR Srtgy & OP Srtgy &
Prdt-Mkt entry Plans Plans Plans
Functional
strategy
Strategy Management
Functional strategy
Is the approach taken by a functional area to achieve
corporate and business unit objectives and strategies by
maximizing resource productivity.
Hierarchy of
Strategies It is concerned with developing and nurturing a
distinctive competence to provide the firm with a
competitive advantage
Strategy Management
Environmental Corporate mission
Factors Corporate
strategy
Corporate Goal & Obj Corporate Dev Srtgy Resource deployment
Mktg Srtgy for R&D Srtgy & HR Srtgy & OP Srtgy &
Prdt-Mkt entry Plans Plans Plans
Functional
Tactical Operating strategy
Plan strategy
Strategy Management
Operating Strategy
These are concerned with how the component parts of
an organization deliver effectively the corporate,
business and functional –level strategies in terms of
Hierarchy of resources, processes and people.
Strategies
They are at departmental level and set periodic short-
term targets for accomplishment
Strategy Management
Responsibility of
corporate-level managers
Hierarchy of Responsibility of
Strategies business –level general
managers
Allocation of resources
Strategy Management
• 3M
Strategy Management
Four
important
aspects of
Strategy
Strategy Management
Nature of
• Strategy is blend of study of internal & external
Strategy
factors, Opportunities & Threats
(Areas
covered)
• Face opportunities & threats provided by external
factors, internal factors are matched with them.
Strategy Management
Nature of
Strategy • Strategy is combination of actions to solve certain
(Areas problem to achieve a desirable end.
covered)
• Strategy may involve contradictory actions
simultaneously or with a gap of time like closing
down some operations and expanding some at
same time.
Strategy Management
1. Strategy is a PLAN
• Consciously intended course of action, a guideline
(or set of guidelines) to deal with a situation.
Mintzberg’s
5Ps of
strategy • By this definition, strategies have two essential
characteristics: they are
• developed consciously
• purposefully.
Strategy Management
2. Strategy as a PLOY:
3. Strategy is a PATTERN:
4. Strategy is a POSITION:
5. Strategy is a PERSPECTIVE:
.
Mintzberg’s 5Ps of strategy Strategy Management
Plan provides the roadmap by which the firm intends to achieve its goals.
Ploys add a dimension of feint and manoeuvre, where one firm's gain is
another's loss and CA is critical.
Perspective provides an insight onto how the firm and its strategists are
informed by their own professions, their perceptions of
business, and the unique characteristics of each firms own
"world."
Strategy Management
Strategic management
the art and science of
Defining
– formulating, implementing, and evaluating
Strategic
Management – cross-functional decisions
– that enable an org to achieve its objectives
Strategy Management
Defining
• A strategic plan results from
Strategic
Management – tough managerial choices among numerous
good alternatives, and
– it signals commitment to
• specific markets,
• policies,
• procedures,
• operations.
Strategy Management
Competitive advantage
• anything that a firm does especially well
compared to rival firms
Key Terms in
Strategic
Management Strategists
• Individuals who are most responsible for the
success or failure of an organization
Vision statement
• Answers the question “What do we want to
become?”
• often considered the first step in strategic
planning
Strategy Management
Mission statements
• Long-term statements of purpose that
distinguish one business from other similar
Key Terms in
firms
Strategic
Management • Identifies the scope of a firm’s operations in
product and market terms
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
Strategy Management
Strategies
• The means by which long-term objectives will
be achieved
Key Terms in
Strategic • May include
Management – geographic expansion,
– diversification,
– acquisition,
– product development,
– market penetration,
– retrenchment,
– divestiture,
– liquidation,
– joint ventures
Strategy Management
Annual objectives
• Short-term milestones that organizations must
achieve to reach long-term objectives
Key Terms in
Strategic
Management • Should be measurable, quantitative,
challenging, realistic, consistent, and prioritized
Policies
• The means by which annual objectives will be
achieved
Key Terms in
Strategic
Management • Include guidelines, rules, and procedures
established to support efforts to achieve stated
objectives
Develop a Monitor,
Craft a Implement
Strategic Evaluate,
Set Strategy and
Vision and Take
Objectives to Achieve Execute
and Corrective
Objectives Strategy
Mission Action
Strategic control
Strategy Management
IV Strategy evaluation
• Reviewing external and internal factors that are the
Phase bases for current strategies,
Stages
SM • Measuring performance, and taking corrective
actions
Strategy Management
Pitfalls in
• Delegating planning to a “planner” rather than
Strategic
involving all managers
Planning
• Employees become
– more trustworthy,
– more committed,
– more satisfied can co-relate well with each org task.
• They can understand the
– reaction of Env changes on the org and
– probable response of the org with the help of SM
Strategy Management
Strategic responsibilities
• Formulation of mission
• Designing organizational structure
Defining
SM- BOD • Selection of top executives
Stakehold • Financial sanctions
ers role • Link between external environment and company
• Role
• Strategy formulation
• Linking strategy with consequent corporate action
• Supporting new strategies, mobilizing res, protecting
org from outside threat, & linking powerful outsiders
• Formulating vital strategies like M&A, takeovers,
acquisitions
Hierarchy of strategic intent
Strategic Intent
• Org strategic intent is the purpose that it exists and why it will
continue to exist, providing it maintains a CA
• Strategic intent gives a picture about what an org must get into
immediately in order to achieve the company’s vision.
Strategic Intent
VISION
• Vision and mission statements are powerful shapers of effective
corporate cultures, for many organizations.
Characteristics of Vision:
• Vision is developed through sharing across an org
Famous stories of successful vision involve visions that have been
widely shared across entire organizations.
Individual leader, founder has a powerful impact on the others.
• Change Agents:
Organizations must redefine themselves through updated visions
of the future through new objectives and strategies.
3.Management Mission & Vision
98
3.Management Mission & Vision
Kind of
company
to create
3.Management Mission & Vision
Vision Examples
• General Motors’ vision is to be the world
leader in transportation products and related
services.
• PepsiCo’s responsibility is to continually
improve all aspects of the world in which we
operate—environment, social, economic—
creating a better tomorrow than today.
• Dell’s vision is to create a company culture
where environmental excellence is second
nature.
• Procter & Gamble’s vision is to be, and be
recognized as, the best consumer products
company in the world
3.Management Mission & Vision
Vision Examples
• General Motors’ vision is to be the world
Good statement
leader in transportation products and related
services.
• PepsiCo’s responsibility is to continually Statement is too vague;
it should reveal beverage
improve all aspects of the world in which we and food business
operate—environment, social, economic—
creating a better tomorrow than today. Statement is too vague; it
should reveal computer
• Dell’s vision is to create a company culture buss in some manner; the
where environmental excellence is second word Env is generally used
nature. to refer to Natural Env so
is unclear in its use here
• Procter & Gamble’s vision is to be, and be
recognized as, the best consumer products Statement is too vague and
company in the world readability is not that good
3.Management Mission & Vision
Mission Statement:
• A declaration of an organization’s reason for being.
Characteristics of a Mission
Feasible:
The mission should be realistic and achievable.
• For instance, UTI declared its mission as "to encourage saving and
investment habits among common man".
Characteristics of a Mission
Precise:
A mission statement should not be narrow or too broad.
Clear:
A mission statement should lead to action.
• BSNL'S mission of ‘connecting India' leads it to a variety of service
with varied tariff structure so as to cater to the preferences of
mobile phone users.
3.Management Mission & Vision
Characteristics of a Mission
Motivating:
The mission should be motivating for the employees to be inspired
for action.
Characteristics of a Mission
Distinctive:
A mission statement will indicate the major components of the
strategy to be adopted.
Characteristics of a Mission
1. Customers
• We believe our first responsibility is to the doctors, nurses,
patients, mothers, and all others who use our products and
services. (Johnson & Johnson)
2. Products or Services
• AMAX’s principal products are molybdenum, coal, iron ore, copper,
lead, zinc, petroleum and natural gas, potash, phosphates, nickel,
tungsten, silver, gold, and magnesium.
(AMAX Engineering Company)
• Standard Oil Company (Indiana) is in business to find and produce
crude oil, natural gas, and natural gas liquids; to manufacture high-
quality products useful to society from these raw materials; and to
distribute and market those products and to provide dependable
related services to the consuming public at reasonable prices.
(Standard Oil Company)
3.Management Mission & Vision
3. Markets
• We are dedicated to the total success of Corning Glass Works as a
worldwide competitor.
(Corning Glass Works)
4. Technology
• Control Data is in the business of applying micro-electronics and
computer technology in two general areas: computer-related
hardware; and computing-enhancing services, which include
computation, information, education, and finance. (Control Data)
6. Philosophy
• Our world-class leadership is dedicated to a management
philosophy that holds people above profits.
(Kellogg)
• It’s all part of the Mary Kay philosophy—a philosophy based on the
golden rule. A spirit of sharing and caring where people give
cheerfully of their time, knowledge, and experience.
(Mary Kay Cosmetics)
3.Management Mission & Vision
7. Self-Concept
• Crown Zellerbach is committed to leapfrogging ongoing
competition within 1,000 days by unleashing the constructive and
creative abilities and energies of each of its employees.
(Crown Zellerbach)
3.Management Mission & Vision
Pepsi Co Mission
Pepsi Co Mission
Dell Mission
Dell Mission
P&G Mission
P&G Mission
L’Oreal Mission
L’Oreal Mission
6. To translate purposes into obj in such a way that cost, time, and
performance parameters can be assessed and controlled.
3.Management Mission & Vision
Vision
• “Our vision is to be a leading pharmaceutical company in India and to
become a significant global player by providing high quality, affordable
and innovative solutions in medicine and treatment.”
Mission
• “We will discover, develop and successfully market pharmaceutical
products to prevent, diagnose, alleviate and cure diseases.
132
3.Management Mission & Vision
Intel
Vision
Getting to a billion connected computers worldwide,
millions of servers, and trillions of dollars of e-commerce.
Mission
is being the building block supplier to the Internet
economy and spurring efforts to make the Internet more
useful. Being connected is now at the center of people’s
computing experience. We are helping to expand the
capabilities of the PC platform and the Internet.
Business definition – Abell 3 dimension
.
Business definition – Abell 3 dimension
Business definition – Abell 3 dimension
Customer Needs:
• This leg of the model identifies and lists down all the customer
needs that are relevant to the company in question.
Technologies:
Customer Groups:
OBJECTIVES:
Objectives
OBJECTIVES:
• An obj indicates the result that the org expects to achieve in long
run. It is an end result, the end point, aim for and try to reach
OBJECTIVES:
IMPORTANCE OF OBJECTIVES
• Obj help to define the org in its environment: The org justify
their existence to their stakeholders in the environment like
customers, government, creditors and society at large.
IMPORTANCE OF OBJECTIVES
• Obj provide not only the direction to move to the org but also
provide ultimate goals & targets that org is expected to achieve.
• These targets and goals become the standards to judge the org
performance.
• Org, without clear obj will not have basis for evaluating their
performance or success.
Goals
Goals
Goals
Goals
KPI
• A key performance indicator (KPI) is a business metric used to
evaluate factors that are crucial to the success of an organization.
KPI
• A good KPI should act as a compass, helping team understand
whether on the right path toward strategic goals.
KPI
To measure financial performance:
KPI
To understand customers:
KPI
To gauge market and marketing efforts:
27. Market Growth Rate
28. Market Share
29. Brand Equity
30. Cost per Lead
31. Conversion Rate
32. Search Engine Rankings (by keyword) and click-through rate
33. Page Views and Bounce Rate
34. Customer Online Engagement Level
35. Online Share of Voice (OSOV)
36. Social Networking Footprint
37. Klout Score
KPI
KPI
To measure your operational performance:
38. Six Sigma Level 49. Time to Market
39. Capacity Utilization Rate (CUR) 50. First Pass Yield (FPY)
40. Process Waste Level 51. Rework Level
41. Order Fulfillment Cycle Time 52. Quality Index
42. Delivery In Full, On Time (DIFOT) Rate 53. Overall Equipment
43. Inventory Shrinkage Rate (ISR) Effectiveness (OEE)
44. Project Schedule Variance (PSV) 54. Process or Machine
45. Project Cost Variance (PCV) Downtime Level
46. Earned Value (EV) Metric 55. First Contact Resolution
47. Innovation Pipeline Strength (IPS) (FCR)
48. Return on Innovation Investment (ROI2)
KPI
KPI
To understand your employees and their performance:
56. Human Capital Value Added (HCVA)
57. Revenue Per Employee
58. Employee Satisfaction Index
59. Employee Engagement Level
60. Staff Advocacy Score
61. Employee Churn Rate
62. Average Employee Tenure
63. Absenteeism Bradford Factor
64. 360-Degree Feedback Score
65. Salary Competitiveness Ratio (SCR)
66. Time to Hire
67. Training Return on Investment
KRA
KRA
Are those things that absolutely, positively must be done to fulfill
responsibilities and achieve business goals.
4.External Assessment
4.External Assessment
4.External Assessment
Competition
Supplier
Distributor
Economic forces Creditor
Customer
Social, cultural, Employees
demographic, Communities
environmental, Managers Organizations
political, Stockholders Opportunities &
governmental, legal, Unions Threats
Government
Technological Forces Trade Association
Special interest group
Competitive forces Products
Services
Markets
Natural environment
4.External Assessment
• Choice of Buss to
Acquire or Sell.
3.Management
4.External
Mission
Assessment
& Vision
Enables
Id & Eval To
Org to To Dev Policies
Ext Opp To Design Achieve
Dev To Achieve annual
& Strategies Long-
clear objectives.
Threats term Obj
Mission
Economic Forces
Economic factors have a direct impact on the potential
attractiveness of various strategies.
• When interest rates rise, funds needed for capital expansion
become more costly or unavailable.
• Small, large, for-profit, & nonprofit org in all industries are being
staggered and challenged by the opportunities and threats
arising from changes in social, cultural, demographic, and
environmental variables.
Technological Forces
The Internet has changed the very nature of Opp and threats by
• Altering the life cycles of products,
• Increasing the speed of distribution,
• Creating new products and services,
• Erasing limitations of traditional geographic markets, and
• Changing the historical trade-off between production
standardization and flexibility.
• Economies of scale, changing entry barriers, and redefining the
relationship between industries and various suppliers, creditors,
customers, and competitors.
4.External Assessment
Technological Forces
Technological Forces
Technological Forces
Technological Forces
The Internet has changed the very nature of Opp and threats by
• Altering the life cycles of products,
• Increasing the speed of distribution,
• Creating new products and services,
• Erasing limitations of traditional geographic markets, and
• Changing the historical trade-off between production
standardization and flexibility.
• Economies of scale, changing entry barriers, and redefining the
relationship between industries and various suppliers, creditors,
customers, and competitors.
4.External Assessment
Technological Forces
Competitive Forces
Competitive Intelligence
Competitive Intelligence
Potential
Entrants
Relative Power
of Unions, Threat of
Governments, New Entrants
Other etc
Stakeholders Industry Bargaining Power
Competitors of Buyers
Buyers
Threat of
Substitute products
or services
Substitutes
4.External Assessment
– enhancing quality,
– adding features,
– providing services,
– increasing advertising.
4.External Assessment
• Barriers to entry
4.External Assessment
2. Potential entry of new competitors
Barriers to entry
• Procter & Gamble for Tide and Ariel, create high entry barriers
through their high levels of advertising and promotion.
• Govt Policy: Govt limit entry into an industry thru licensing req by
restricting access to raw materials, such as oil-drilling sites in
protected areas.
4.External
Business
Assessment
strategy
Leader Firm
To Id potential new firms
entering the market,
To monitor the new rival firms’ HOW?
strategies, to counterattack as
needed, and
To capitalize on existing
strengths and opportunities.
4.External Assessment
Porter’s The Five-Forces Model of Competition
2. Potential entry of new competitors
Leader Firm
To Id potential new firms
entering the market,
To monitor the new rival firms’ HOW?
strategies, to counterattack as
needed, and
To capitalize on existing
strengths and opportunities.
4.External Assessment
Porter’s The Five-Forces Model of Competition
2. Potential entry of new competitors
Leader Firm
To Id potential new firms
entering the market, Fortify their positions such as
To monitor the new rival firms’ Lowering prices,
HOW?
strategies, to counterattack as Extending warranties,
needed, and Adding features,
To capitalize on existing Offering financing specials.
strengths and opportunities.
4.External Assessment
• The price of tea thus puts a price ceiling on the price of coffee.
4.External Assessment
5. If they have discretion in if & when they can purchase the product
Porter’s Five forces Model
Threat of substitute
products
Threat of new entrants : Low
• Regulatory changes to bring
product patents so entry barriers
for companies with no patented
products.
Threat of substitute
products Threat of Substitute Products :
High
Threat of substitute
products Bargaining power of buyers : Low
SWOT Analysis
• The most renowned tool for audit and analysis of the overall
strategic position of the business and its environment.
• Its key purpose is to identify the strategies that will create a firm
specific business model that will best align an organization’s
resources and capabilities to the requirements of the
environment in which the firm operates.
SWOT