Strategic Management

Revision pointers
What is strategy?
• Set of coordinated actions (plan) designed for achieving a goal
• Hambrick and Fredrickson (2001) provide a framework for defining
strategy consisting of five dimensions- Arena, Vehicle, Differentiator,
Staging, and Economic Gains
Strategy at different levels of an organization
• Top-level (Corporate strategy)
• Middle-level (Business strategy)
• Lower-level (Functional strategy)
What do you understand by the term
strategic?
• Decisions taken in an organization are classified into four types,
depending upon the scope and commitment involved
 Strategic (high scope, high commitment)
 Tactical (low scope, high commitment))
 Neo-Strategic (high scope, low commitment)
 Operational (low scope, low commitment)
Strategic management process
• Vision and Mission
• Defining objectives
• Internal and external analysis
• Strategy formulation
• Strategy implementation
• Strategy control
Vision and mission
• Vision- concerned with what the company wants to be in the future,
its reason for existence
• Mission- concerned with the products and customers a company
wants to focus on
External environment
• The macro-environment (generic) is generally analyzed using PESTLE
(Political, Economic, Social, Technological, Legal and Ecological), while
environmental uncertainty, defined using the two dimensions of
complexity and dynamism, is also utilized to evaluate this component.
• The micro-environment (industry) is generally analyzed using Porter’s
five (sometimes six, depending upon the context) forces. Collectively
they determine the attractiveness of an industry.
Internal analysis
• A firm must understand the resources (atomic factors that are in
possession) and the capabilities at its disposal (actions that a firm
performs)
• Combination of resources gives rise to capabilities
• A firm’s capabilities may just remain that or move ahead to become a
competence/core competence/distinctive competence
• VRIN/(O) determines the nature of competitive advantage that may
be rendered by a resource/capability (ranges from competitive
disadvantage to sustained competitive advantage)
SWOT/TOWS
• SWOT analysis provides an overview of a firm’s overall environment
using the strengths, weaknesses (both internal components),
opportunities, threats (both external components).
• TOWS intends to build upon the SWOT analysis by combining the
internal and external dimensions (SO, ST, WO, WT being the primary
strategies)
Value-chain
• Activities performed by a business (every stage) that add value to the
product.
• Classified into two categories- primary and secondary.
• Vary as per the industry in which a firm operates
Corporate strategy
• Stability
• Growth
• Retrenchment
Growth
• Products
 Supply-chain
 Value-chain
• Market
 Geographical
 Cultural
Growth options
• Internal expansion
• Contracting
• Joint venture
• Mergers & Acquisitions
Supply-chain based diversification
• Vertical integration
 Forward integration
 Backward integration
• Horizontal integration
Value-chain based diversification
• Single-business
• Dominant-business
• Related constrained
• Related fit/related linked
• Unrelated
Retrenchment
• Turnaround
• Spin-off
• Sell-off
• Split-off
• Liquidation
Business-level strategies
• Cost leadership
• Differentiation
• Focused cost leadership
• Focused differentiation
• Integrated
Strategy implementation
• Aligning strategy to structure
• Culture
• Strategic leadership
Strategy control
• Balanced scorecard
 Financial perspective
 Internal perspective
 Learning and innovation perspective
 Customer orientation perspective
• Comparison of value-chain activities
References
• David, F., & David, F. R. (2016). Strategic management: A competitive
advantage approach, concepts and cases. Pearson–Prentice Hall.
• Hambrick, D. C., & Fredrickson, J. W. (2005). Are you sure you have a
strategy?. Academy of Management Perspectives, 19(4), 51-62.