Chapter 1 Introduction to

Strategic Management
Session # 3
 Topics for the Day
• 1.8 Schools Of Strategic Formulation And
Implementation & Evaluation

• 1.9 Components of Strategic Management

• 1.10 Levels of Strategy

• Case Study
 1.8 Schools Of Strategic Formulation And
Implementation & Evaluation
• Many companies dedicated staff for strategy
formulation.

• Important – as it tells the future direction

• 10 school of thoughts
 1. The Design School
• Looks at strategy formation as a process of conception.

• Internal capabilities and external potentials. SWOT

• The CEO develops & controls.

• Simple, Clear and formal.

• It is complete once a strategy is formulated.

• Can be implemented once they are fully formulated.

• Laid the foundation of strategic planning.

 1. The Design School
• Critical View
• Top-down driven strategy

• Inflexible to change

• Detaches thinking from acting.

(Formulation gets separated from
implementation)
 2. The Planning School
• Done in Rigorous manner & firm advances
forward.

• Is documented from the start to finish.

• Distinctive processes.

• Plan is given more importance to take new

decisions.

• Clear direction to move ahead to move forward

 2. The Planning School
• Critical View
• Internal or external variable changes, then the
complete plan gets affected.

• Hence, proper prediction is most essential when

using the planning school of thought.
 3. The Positioning School
• Positioning of a Product or Service

• Critical View:
• Assumes that market will remain as it is

• Can fail if major changes in B.Env.

 4. The Entrepreneurial School
• Visionary process

• CEO’s vision as the key determinant of strategy

• Leader maintaining close personal control

• Organization responds to leader’s directives

• Critical View
• Where to find a mature, experienced, talented and
honest leader?
 5. The Cognitive school
• Importance to people’s perception and behavior.

• Better business can be done by understanding of

their employees, suppliers and customers.

• Corporate communication plays an important

role.

• Once customers demand known – sending the

right signals becomes easy for them.
 5. The Cognitive school
• Critical View:
• Not practical beyond a certain point.

• Cannot rely on surveys and marketing research

reports alone

• Keeping a tab on each movement in market is

not possible.
 6. The Learning school
• Depends a lot on their experiences and market
happenings

• Make strategies looking at the past; not

necessarily their own past

• Take cues from strategies in market which

became successful or failed.
 6. The Learning school
• Critical View:
• Not Advisable to depend on past – change is
constant

• Can be used when the firm is stable, and wants

to work on auto mode
 7. The Power school
• Power centered: People in power take the
decisions

• Power centers can be customers, suppliers,

worker’s unions or leaders in the organization

• Political process for negotiating, forming

alliances and promoting one’s own interests

• Strategy formation – by using power and politics.

 7. The Power school
• Critical View:
• Problem happens when the powerful people
stop listening to feedback from others
i.e. stop implementing measures of improvement

• At such times, the power needs to change

 8. The Cultural school
• Human capital is most important

• Positive culture harnesses innovations and

entrepreneurial culture in organizations

• Based on the beliefs and understandings

• Believes in involving as many departments

possible
 8. The Cultural school
• Critical View:
• People resist it because they get used to a
typical culture

• Difficult to unit people in organizations

• Only school of thought which introduces a

collectivist dimension of social process in
strategy formation.
 9. The Environmental school
• Gives most importance to the environment.

• Example: In IT industry expertise of people

matters and the knowledge of people needs
regular upgradation

• Total dependence on environmental factors.

• Critical View:
• Process entirely depends on the environment
which constantly changes.
 10. The Configuration school
• Most preferred

• Basic premise is that strategy needs to be configured

• Lot of facts and cannot be derived from simple statistical data

and values

• Organizations undergo cycles of stable phases, disturbed phases

and transitional phases.

• key to strategic management is to sustain stability or at least

adapt strategic change

• Periodically recognizing the need for transformation

 10. The Configuration school
• Critical View:
• Too rigid in its distinction between phases of
stability and transition phases.
1.9 Components of Strategic Management

1. Mission Statement

2. Vision

3. Goals and Objectives

 Example: Tesla

• “To accelerate the world’s transition to sustainable transport.”

• However, in mid-2016, under Elon Musk’s leadership, the company

changed the corporate mission to

• “To accelerate the world’s transition to sustainable energy.”

• This new statement indicates a slight but significant shift in the

company’s business, to address market opportunities for
renewable energy.

• In a way, the new corporate mission recognizes the relevance of

the firm’s batteries and related energy storage products in
markets in addition to the electric vehicle market.
 Tesla Inc.’s mission statement has the following notable
components

• 1. To accelerate:
• Toward advanced technologies for sustainable business and
products that rely on renewable energy.

• 2. The world’s transition:

• Indicates the company’s expectation of successful
dominance in the global market for electric automobiles and
related products.

• 3. From “sustainable transport” to “sustainable energy”:

• Evolves to match the current strategic objectives of the
business.
 Tesla’s Vision Statement
• “To create the most compelling car company
of the 21st century by driving the world’s
transition to electric vehicles.”

• emphasizes the company’s focus on

renewable energy.
 Components in Tesla Inc.’s vision statement
• 1. Most compelling
• Indicates leadership and excellence in the business

• 2. Car company
• Efforts on designing and manufacturing cars

• 3. 21st Century
• Electric vehicle design and production

• 4. The world’s transition to electric vehicles:

• Plans for new factories in developing regions in Asia.
 Analysis
• Mission: Tesla, Inc.’s mission statement is satisfactory in terms of presenting
the company’s goals.

• It adequately covers the kinds of products that the company sells, the
market scope of the business, and the market position of the company.

• Vision: Tesla Inc.’s vision statement effectively describes business aims.

• However, it does not cover current business endeavors. For example, while
the corporate mission statement has already changed to consider
“sustainable energy,” the corporate vision still focuses on “electric vehicles.”

• In this regard, a recommendation is to adjust Tesla Inc.’s vision statement to

reflect the organization’s increasing interest in products other than electric
vehicles.
 TCS
• Mission Statement
• To help customers achieve their business objectives by providing
innovative, best-in-class consulting, IT solutions and services. To make it
a joy for all stakeholders to work with us.

• Vision Statement
• To decouple business growth and ecological footprint from its
operations to address the environment bottom-line. The green
approach is embedded in our internal processes and services
offerings...... From green buildings to green IT to a green supply chain,
our mantra is to grow sustainably and help our customers achieve
sustainable growth through our green solutions and service offerings
1.10 Levels of Strategy
Time for Case Study
• Select any organization of your choice &
decode their Vision & Mission Statement