What is Strategy???

Before Understanding Strategy –

lets be sure – we know …

What is Business Management?

 BM as Economics of Organization
Business Management Economics of Organization
Economics is - Study of “RATIONAL” Human “BEHAVIOR”

Rationality within the PROFIT (asset) Maximization (relatively high

definition (bound) of or under some constraints) (at some ones
Economics means cost/liability)
Behavior means - Set of “Anticipated/unanticipated” Responses/
Reactions
Organization means A Collection of Man and Material (essentially
Factors of Production - LEKL) – sequenced or
planned efficiently and effectively – for
definitive or emerged purpose(s)
More specifically, we are Studying the Firm (a commercial enterprise)
that is Performing some ACTIVITIES (incurring liabilities or obligations towards
payments i.e. picking up costs) – Performing some other ACTIVITIES (to pass on
the cost incurred) (i.e. Selling) = Enjoying (or crying) over the Results (Profit or
loss)

SP (Y) = CP (X) + MR + ε

Dependent Variable (Sale Price/Revenue) = Independent Variable (Cost

Price/Cost) + Profit Margin + Intended/unintended Consequences
Obvious Question
• Where are the different functional areas like
• Operations
• Finance
• Marketing
• HR
• Information Systems
• And something called Strategy
• Fitting into 
SP (Y) = CP (X) + MR + ε
Marketing Operations Finance CSR
and Sales Accounting &
Team New
Information
Opportunities
Accounting Systems

HRM

Where is Strategy or Strategic Management??? ---

Economics, OB
Easy Way of Understanding Strategy

Revenue (Y)
Marketing
↑= Cost (X)
Operations
↓+ Profit ↑
Finance
+ ε
CSR
and Sales Accounting &
Team New
Information
Opportunities
Accounting Systems
Making Some
HRM
New Business out
of it....

Increasing Revenue, Controlling the Cost, Maximizing Profit –

on a SUSTAINED BASIS – Y.O.Y. = Strategy (some say…)
 In Fact, Holistically…
Strategic Management
(R↑T↑)

Financial Models CSR

Marketing & Consumer

Accounting
Behavior
R = Profit Margin
OR & IS OB
T = Time Period of
Investment
Econometrics HRM

(R↑T↓) Economics Psychology (R ↓ T↑)

Study of Rational Human Behavior Study of Emotional Human Behavior

The Science of Human Sociological Aggregation - Forming, Storming, Norming etc..

With Respect to Strategic Management Course
as Whole, we shall learn the following…
Course Content and Administrative Issues
• Course SM = SM1 (2 Credits in T-II) + SM2 (3 Credits in T-III) + Strategy Simulation
Game (3 Credits in T-IV)
• SM1: Business Strategy = Conceptual baby steps – trying to manage ONE BUSINESS using ONE
legal entity called FIRM – tasked with the CHOICE OF – procuring – processing – producing –
distributing – a single or a family of goods or services – and getting/making money in the process!!!
• SM2: Corporate Strategy = Focus on GROWTH beyond ONE FIRM – ONE BUSINESS – involving
activities like Product x Market based Innovations, Organic Growth, Inorganic Growth like Mergers
and Acquisitions, Intermediate Forms like JVs, Strategic Alliances, Internationalization etc.
• Strategy Simulation Game = Whatever you learnt in SM 1 & 2, how to apply the learning in the
presence of dynamic competitors (your classmates) to get money.

• Focus – Firm (company/organization/corporation) and Environment (market, industry etc)

Course Content and Administrative Issues
SM1 Fundamental Concepts
We Acknowledge, Borrow and
• Strategic Decision or CHOICE
Integrate concepts from all the
• Activities involving: Functional and Feeder Disciplines of
• Procuring Management
• Processing
• Producing THAT’S WHAT CEOs DO!!!
• Distributing

• By Firm – operating in an Environment, with

• Strategic Management objective of Getting/Making MORE $$ than others
Therefore we have proudly Build Upon…
SM1 Fundamental Concepts
• Strategic Decision or CHOICE of Scale/Scope Economies, Consolidation/Expansion, B&F Integration, Switching Costs, Path
Dependency, Competitive Retaliation, Entry/Exit Barriers, Trade Offs (from Economics)

• Procuring of Raw Material in Bulk or Specialized Lots, LIFO-FIFO, Planning (from Accounting, Operation Management,
Industrial Engineering, Transaction Cost Economics etc.)
• Processing involving Speed and Motion Study, Economic Ordered Quantity, Labour Management and Manpower Deployment (from
Operations, HRM and Psychology etc.)
• Producing innovative goods and services from Business Policy (SM subsequently)
• Distributing from Logistics (OM) and Marketing & Sales
• Firm from Legal perspectives
• Getting/Making MORE $$ - from Economics and Finance
 Choice What is Strategy? Making more $
Input Process Observed Outcome

Strategic Decisions Strategy Strategic Management

What is a Decision? Why SD is IMP

Stimulus induced neural Actual Actions/Activities done How and why – some firms
reactionary processes inside a firm by its constituent outperform others
(i.e. decision) taken under Elements (Land, Labour, Capital &
Fast Changing (Volatile) & Entrepreneur) How do they sustain such
Incomplete set of Plan performances, i.e.
Ploy (a) How to obtain Super Normal
Information (Uncertain)
Position Returns
That are Contradictory in (b) How to use and develop
nature (Complex) Interpretation of Actions by an
Critical Resources
And convoluted and Outsider
(c) How to ensure Sustainable
difficult to even recognize Pattern Competitive Advantages
(Ambiguous) Perspective
Procuring, Processing, Producing, Distributing

Feedback
29/06/2022
Guide to Analysing a Case
• What is the Nature of Strategic Decision – OR, Dilemma in Strategic Decision?

• What are the environmental/INDUSTRY level Challenges – including those from competitors?

• What are the Strategies (as set of activities) Adopted by the Firm – given its internal
Resource and Capabilities?
• And whether, given the Strategies adopted/activities performed, will the firm be able to create
SUSTAINABLE VALUES by
• Create Super Normal Returns/Rents
• Create and Leverage Critical Resources
• Create Sustainable Competitive Advantages

• Therefore, what would be Your Recommendations

Questions…