MGT 208: Business Strategy

Credits: 3 Lecture Hours: 48

Course Description
This course contains introduction, vision and mission, objectives and strategy,
strategic analysis, strategy formulation, Strategy Implementation.
Course Objective
This course aims to develop students’ understanding of the strategic management
by clearly explaining strategy concepts, analyzing and evaluating them to show
how these are applied in the business world.
 Course Details
Unit 1: Introduction LH 7
Concept and importance of strategic management, importance of
strategic decisions, elements of strategic management, Need for
strategy, company values, levels of strategy, strategic management
process, changes in the approach to strategic management, different
perspectives on strategy formulation, concept and features of strategic
planning.
 Unit 2:
Vision and Mission, Objectives and Strategy LH 7
Developing strategic vision, communicating the strategic vision,
crafting a mission statement, linking vision and mission with company
values, levels of objectives, crafting objectives.
Unit 3: Strategic Analysis LH 12
Concept, the general environment; scanning, monitoring and forecasting
the environment, Scenario planning, PEST analysis; The competitive
environment- Porter’s Five Forces Framework, the value net, strategic
groups, hyper competition, Internal environment analysis value-chain-
analysis, evaluating Value chain, SWOT analysis; concept of internal
environment, the resource-based view of strategy- resources,
competencies, core competencies and distinctive capabilities;
identifying sustainable competitive advantage, criticism of resource-
based view, knowledge management.
Unit 4: Strategy Formulation LH 14
Concept, Business level strategy- Generic competitive strategies, a
resource-based view to strategy formulation, the industry life-cycle;
corporate level strategies- Growth strategies, related and unrelated
diversification, implementing growth strategies, portfolio analysis-
Boston Consulting Group Matrix and The General Electric-Mckinsey
Matrix, strategy evaluation.
Unit 5: Strategy Implementation LH 8
Concept, organizational structures- the entrepreneurial, functional,
divisional, matrix and network, strategic leadership, leadership and
management, the learning organization, emotional intelligence and
leadership performance, leadership capabilities, impact of leadership on
vision, values and culture, corporate culture and leadership, leading
strategic change.
Text and Reference books:
• Henry, E.A. Understanding Strategic Management, Oxford.
• Jauch, L.R. and Glueck, W.F. Business Policy and Strategic Management, McGraw-
Hill.
• Pearce II, J.A., Robinson R.B and Mittal, A. Strategic Management: Formulation,
Implementation and Control, McGraw Hill.
• Thompson, A. Peteraf, M.A., Gamble, J.E., Strickland, A.J., and Jain A.K. Crafting
and Executing Strategy, McGraw-Hill.
• Kajmi, A. Business Policy and Strategic Management, Tata McGraw Hill
• Adhikari, D.R. Strategic Management, Buddha Publication.
• Wheelan, T.L. and Hunger J.D. Strategic Management and Business Policy,
Pearson.
Reference books:
Pant, P. R. Fundamentals of Business Environment in Nepal, Buddha
Academic Enterprises.
Agrawal, G. Dynamics of Nepalese Business Environment. M. K.
Publishers.
 Concept and Important of Strategic
Management
• The term of strategy is derived from a Greek word Strategos, which means
generalship and art of the general- the actual direction of military force.
• A strategy could be: a plan or course of action or set of decision rules making a
pattern.
• Strategy is a road map for future activities.
• Strategy is broad action plan for achivening objectives. It provides long term
direction and scope to the organization.
• Strategy is the central, integrated, externally oriented concept of how a firm will
achieve its objectives. It consists of an integrated set of choices.
• Long term objectives will be achieved. Implementation of organizational
purpose. Concerned with analyzing the environment.
Definition of Strategic management
• Strategic management is defined as the dynmic process of formulation,
implementation, evaluation and control of strategies to realize the
organiztional intent.
• It is a set of managerial decisions and actions that determines the long term
performance of a corporation.
• It is concerned with strategic decisions and action of top level management.
• Phases of strategic management:
1. Strategic planning
2. Strategic implementation
3. Strategic control
Objectives and Strategy

Objectives Where do we Desired End

want to be? Outcome Result

How do we Broad Means to

Strategy
get there? Action Achieve
Plan Objectives
Charecterists of Strategic Management
1. Long-term Horizon
2. Action Oriented
3. Value-addition
4. Strategy Decisions
5. Environmental Adaptation
6. Stakeholder Expectation
Importants of Strategic Management
1. Identifying Opportunities
2. Meet Competition
3. Strategic Fit
4. Performance Improvement
5. Effective Resource Management
6. Organizational Attractiveness
7. Change Management
Meaning of Strategic Decision
• Decision making is choosing the best course of action from among the
alternatives.
• Strategic decision making is the process of choosing the best strategic
course of action for achieving the long term goal of the organization.
It is choosen from the strategic alternatives.
• Strategic decision involves choosing the best course of action for the
long term future of the organization.
• Strategic decisions are made by top level management.
• They are unique and non- programmed decision.
Charectestics of Strategic Decision
• Non-programmed
• Future oriented
• Dynamic
• Top management oriented
• Competitive advantage
• Strategic fit
• choice
Importance of strategic decision
• Future oriented
• Strategic formulation
• Resource allocation
• Environmental positioning
• Managerial evaluation
• Strategic control
Need for Strategy in the Organization
To keep pace with changing environment
To boost employees motivation and efficiency
To furnish the strong base for unified decision making
To boost the organizational potentiality
To grab the new opportunity
To boost the research and innovation
Level of Strategy
1. Corporate level strategy: Corporate level strategy is concerned with
the overall purpose and scope of an organization and how value will
be added to the different part of the organization.
• Stability Strategy
• Expansion or Growth Strategy
• Retrenchment Strategy
• Combination Strategy
Cont....
2. Business level strategy: is about how to compete successfuully in
the particular markets. Is several businesses and their portfolio.
• Cost leadership Strategy
• Differentiation Strategy
• Focus Strategy
• Differentiation, cost and focus Strategy
Cont...
3. Functional level strategy: is concerned with each functions such as
production, marketing, finance, human resources etc.
• Production Strategy
• Human resource Strategy
• Marketing Strategy
• Finance Strategy
• R & D Strategy
Process of Strategic Management

Strategic Strategic Strategic

planning implementatation contraol

Feedback
Strategic management process

Establishment of Implement
Formulation of Strategic
strategic intent ation of
strategies evaluation
strategies

Strategic control
Strategic Management Process
Step 1: Strategic Intent
Step 2: Strategic Formulation
Step 3: Strategic Implementation
Step 4: Strategic Evaluation and Control
Elements of strategic management process
• Establishing the hierarchy of the strategic intent
• Creating and communicating a vision
• Designing a mission statement
• Defining the business
• Adopting the business model
• Setting objectives
• Formulation of strategies
• Performing environmental appraisal
• Doing organizational appraisal
• Formulating corporate-level strategies
• Formulating business level strategies
• Undertaking strategic analysis
• Exercising strategic choice
• Preparing strategic plan
Implementation of strategies
• Activating strategies
• Designing the structure systems and processes
• Managing functional implementation
Operationalizing strategies
Performing strategic evaluation and control
• Performing strategic evaluation
• Exercising strategic control
• Reformulating strategies
 Approaches to Strategic Decision
1. Intutive- emotional decision approach: Intution is an innate belief about
something without conscious consideration. According this approach
decision maker prefers the his/her habits, self- experience, gut feeling and
reflective thinking for decision making to do something. Decision maker
makes decision to do something because he/she feels that is right. Emotion
or inner sence are used to make the decisions. It is similar with entrepreur
decision making model.
2. Rational- analytical decision approach: In this approach, decision maker
chooses the best alternative after evaluating all the available feasible
alternatives. It is assumed that managers are logical and rational to make
decision in interest of organization. It is also known as conscious, systematic,
analytical and oldest model of decision making.
Cont.....
3. Satisfying/Satisficing approach: The term satisficing, a portmanteau of
satisfy and suffice, was introduced by Herbert A. Simon in 1956. This can be
referred to as a phenomenon/strategy that strives for satisfactory decision
making. It is aimed at taking decisions that are okay enough to tackle a
situation, but not the best possible decisions. Under this approach , decisions
or strategies are prepared for satisfactory or adequate result, rather than
optimum solution. It focuses on practical solution and realizing efforts.
Decision making is a very important aspect of business and the management
must practice effective decision making to keep the company sound. But when
the management has a number of alternatives at a juncture, it is not always
possible for it to take the best possible decision as it requires increased efforts,
costs and time.
Cont........
In such a situation, the management might take a decision which is just
'good enough' to tackle the situation, thus devoting lesser resources to
the problem. This act would be referred to as satisficing.
4. Political- behavioral approach: This approach suggested that
decision maker must consider a variety of pressure from variety of
stakeholders in a series of interdependent exchange relationship.
Decision maker considers to make decision incorpporating the
suggetions of customers, owners, suppliers, government and even
competitors to meet the demand of stakeholders.
Henry Mintzberg’s Models of strategic
decsion making
• Etrepreneurial mode: is made by powerful executive officer like a
entrepreneur. It is suppose that executive officer has quality of vision,
inspiration, creativity, risk taking and achievement oriented.
• Adaptive mode: is based on muddling through which means to
manage to do something although you are not organized and do not
know how to do it.
• Planning mode: is based on problem identifyiing, gathering
appropriate information and select the best course of action.
• Logical incrementalism mode: is a synthesis of planning, adaptive
and entreprenuer modes.
 Paradigm Shift
A paradigm shift occurs whenever there's a significant change in the
way an individual or a group perceives something, and the old
paradigm is replaced by a new way of thinking, or a new belief.
Paradigm shift is defined as a dramatic change in methodology or
practice. It often refers to a major change in thinking and planning,
which ultimately changes the way projects are implemented.
Kuhn T (1962) also defines it as a change in a model or pattern that has
been nearly universally accepted. For example, a change in consumer
buying habits from buying airline tickets through travel agents to
buying them over the Internet would be a paradigm shift.
Cont........
1. Change in industry boundary,
• Bank provides the merchant banking facility
• Colleges provides the professional course
• Internet company provides the TV
2. Shifts in mindset,
• a habitual or characteristic mental attitude that determines how you
will interpret and respond to situations
• We have to change people's mindsets and motivate them.
• Flexible working was part of the mindset of the company from the start.
Cont....
3. Change in national boundaries,
• International business environment
• Globalization
• Regionalization
4. Hyper competition
• very strong competition
• Innovate new products or services
• Strategic advantages
Cont.....
5. Enlarged opportunities,
• Cross the national boundary
• Opportunity from globalization
6. Product design, quality and service,
• New way of thinking of design
• product or service as requirement of customers
7. Heavy risks of globalization
• Draw back of globaliztion
Elements/ components of strategic
management
• Strategic planning
• Analysis of environment forces
• Maching orgnizational structure, managerial activities and policies
with the business strategy
• Managing resources strategically for achieving a competitive
advantage
• Strategy implementation
• Strategy control
Changes in the approach to Strategic
Management

1. Corporate Planning Perspective: during the 1950 to 1960, market

was considered as stable at the time strategy formulation.
2. Diversification Perspective: during 1960 to 1970, incresed in market
competition, companies engaged related and unrelated
diversification as in the form of strategic tools.
3. Industry based prespective: emerged in1980, companies strarted
to analyze their competitive forces inherent within the industry.
Main focus was gaining competitive advantage.
Cont....
4. Internal resource- based perspective: Michal Poter’s view,
focus on internal resources and compentencies to get the
competitive advantages.
5. Innovation perspective: during 1990, engaged in
contineous innovation, new product and service development.
6. Co-optition perspective: during 21st century, collaboration,
cooperation and joint alliances for improving competition.
Cooperation with stakehholders.
Company Values
• In essence, your company values are the beliefs, philosophies, and principles that
drive your business. They impact the employee experience you deliver as well as the
relationship you develop with your customers, partners, and shareholders. 
• Your company values are your company's DNA and they help you differentiate your
business from the competition. That's why you can't make any important business
decisions without having them in mind. 
• However, having company values doesn't mean having a polished communication
plan around nice values and principles.
• You have to truly honor your company values in everything you do and set the right
example for your employees. It's the only way you can build trust in the workplace.
Don't ask your employees to follow the company values you've set for your business
if you don't follow and integrate them into your daily work in the first place. 
Cont…..
• Integrity: we are truthful-we value honest and frequent feedback,
quality of being honest and having strong moral principle.
• Respect: in valuing each person as human being, we treat everybody
with courtesy and dignity. We value relationships that are
interdependent and mutual
• Responsibility: our behavior success and failure are the result of our
personal choices-we keep our commitments and hold each other
accountable for our choices and our performance
• Growth: we are committed to continual learning and improvement-
we embrace the accountability risk and change this demand
Changes in the approach to strategic
management

D1
D2

D5

D3
D4
• D1-Direct
• D2-Describe
• D3-Define
• D4-Deliver
• D5-develop
• D1 (Direct): The first dimension is called Direct and this
ensures that the overall direction and purpose of the
business are thought through and articulated in an
appropriate manner. This is arguably the most important of
the dimensions as it provides the foundation and context
for the other four. This dimension is concerned with vision,
mission and values statements for the business for these
state what the business wants to be like and indeed how it
believes it should be operating when it achieves this.
• D2 (Describe)-The second dimension translates the
vision and direction into enabling strategies and
operational strategies. By operational strategies we
mean the functional plans and approaches adopted by
each part of the business through which they deploy
their expertise to deliver their part of the business
strategy. Clearly the approach will differ across the
functions but the manner of delivery needs, as
mentioned earlier, to be consistent. Achievement of the
required level of consistency is determined by
adherence to the overall vision and direction and
facilitated by the enabling strategies.
• there are four principal enabling strategies that promote
and ensure the alignment necessary to achieve
constancy of purpose and consistency of approach.
• Resource Strategy
• Performance management strategy
• Reward strategy and
• Communication strategy
• D3 (Define)-The third dimension is usually the one that is
either overlooked or ignored in many organizations. The
first two dimensions are, by definition, strategic and this
is the area where people tend to want to operate
because of the kudos of having a strategic role. The third
dimension unfortunately, does not carry a similar level of
respect but it is nevertheless, vitally important to the
ongoing success of the organization. Indeed, without this
dimension the work of the strategists will probably never
achieve its full potential because it will not be converted
into operational practice.
• D4 (Deliver)-The fourth dimension is concerned with the
actual delivery of the business strategies as operationally
defined through the preceding three dimensions. It is
this dimension that ensures that the processes and
procedures are implemented in a manner that is
congruent with the overall vision and values of the
company. Simply defining the business processes is
insufficient to ensure commitment to follow them.
• D5 (Develop)-The fifth dimension sits above the
requirements for ongoing review and monitoring
processes and comes into operation when one of two
preconditions apply — when the strategy and objectives
have been achieved or, more commonly, when the
contingent circumstances of the organization change to
such an extent that the business strategy needs to be
reviewed.
Different PERSPECTIVES On STRATEGIC
FORMULATION
• Grattan (2011) include the Three Modes Of Formulation:
• (i) the Adaptive model: where strategy is a match between the
opportunities and threats in the environment and the capabilities of the
company.
• (ii) the Linear model: which focuses on planning through methodical,
directed, sequential actions, statistical tools and consisting of integrated
decisions, actions or plans that will establish and achieve viable
organizational goals
• (iii) the Interpretive model: which assumes that reality is socially
constructed and based on social contract view of the organization as a
collection of cooperative agreements (Chaffee, 1985)
Concept of Strategic plan
Strategic plan is a road map for future direction of the business
organization. It is a long range plan for more than five years. It is developed
by top level management. It provides broad direction to the organization in
the long run.
“Strategic planning results in actions designed to implement a strategy”
Azher Kazmi, .
Strategic plan establishes vision, mission, objectives and strategies for the
organization.
Strategic plan is a systematic approach to analyze the opportunities and
threats in the environment. It is the process of analyze the SWOT match
with the opportunities and prepare the strategic plan.
Cont...
Strategic planning is an organizational management activity that is used to
set priorities, focus energy and resources, strengthen operations, ensure
that employees and other stakeholders are working toward common goals,
establish agreement around intended outcomes/results, and assess and
adjust the organization's direction in response to a changing environment.
It is a disciplined effort that produces fundamental decisions and actions
that shape and guide what an organization is, who it serves, what it does,
and why it does it, with a focus on the future.
Effective strategic planning articulates not only where an organization is
going and the actions needed to make progress, but also how it will know if
it is successful.
Characteristic of Strategic Planning
• Future oriented
• Long term
• Environmental analysis
• Opportunities
• Core competencies
• Strategic decisions
• Facilates to control
Steps of Strategic Planning
• Strategic planning is a systematic approach to analyze the oppertunities
and threats in the environment, assessing organizational strenths and
weaknessesidentifying oppertunities of competative advantage, and
matching them with organizational expected resources in the long term
perspectives.
• Define organizational vision, mission, objectives and strategies
• Analyze internal environment
• Analyze external environment
• SWOT analysis
• Match strenghs with oppertunities
Process of strategic plan
• Define organization’s :
• Vision :where?
• Mission: what?
• Objectives: why?
• Strategies : how?
• SWOT analysis
• Analysis of external environment
• Analysis of internal environment
• Match strength with opportunities
• Finalize strategy
• Strategic planning option

Build on strength Exploit opportunities

Minimize weaknesses Avoid threats

• Mission: fred david, ‘a mission statement reveals the long-

term vision of an organization in terms of what it wants to
be and whom it wants to serve’
• Objectives: ‘objectives are the ends which the organization
seeks to achieve through the existence and operation’.
Jauch and glueek
 Case Study for Strategic Management
Evergreen Food Mart is an envisioned large departmental food store with the aim of
developing multiple chain stores across the cities of nepal by a group of established
entrepreneurs. It is being registered in a company model with 50 crore paid- up
capital with seventy percent stake of promoters and balance to be raised through
public offering. Company is to acqiure the property or go for long term lease to strat
the operation.
The first location point has been selected at Gaushala, Battisputali and the
launchhing is aimed just before upcoming Dashain festival.
Its sales strategy is to develop an effective and efficient retailing system selling food
merchandise through its own outlets and also appling door to door service for the
customers who purchase a month stock of food items. The extra space will be rented
for the fast food items where strict quality control is monitored by the store as well.
Cont...
Its basic strategy is to provide food merchandise at lowest possible price without
compromising in qualiity. ``everyday lower price`` is the tagline of the store and its
competitive edge as well.
The purchasing source of food items will be directly from firm, factory outlet and
imported from foreign nations. A seperate organic section is also being added. In the
long- run store aims to develop organic farm and sell the products through own
outlets.
Festival discount, seasonal discount, membership discount, festival fairs etc. Will be
organized in order to promote store. ``Healthly food to develop healthy physique``
will be the basic motto of the store.
The promoters plan to achieve 15% ROE in the first year opperation and by the third
year expectation ROE will be at least 25%.
Questions
1. Develop the vision, mission statement and objectives of Evergreen
Store.
2. What will be the appropriate business level strategy for the store
and why?
3. What fuctional strategies are required in order to implement the
objectives of store? Explain.
4. What could be the most likely implementing issues in order to gain
expected ROE for the store.