STRATEGIC MANAGEMENT

MANAGEMENT

 What is Management?
STRATEGY

• Derived from the Greek “strategos”

-----narrow sense as the "art of the general“,
OR
'the art of arrangement' of troops.
Military strategy deals with the planning and conduct
of campaigns, the movement and disposition of
forces, and the deception of the enemy.
CONTD..

Military strategy is :
 To plan and execute of the contest between very large groups of armed
adversaries.
 To involve each opponent's diplomatic, informational, military, and economic
resources wielded against the other's resources to gain supremacy or reduce the
opponent's will to fight.It is a principal tool to secure national interests.
 A contemporary military strategy is developed via military science.It is a
subdiscipline of warfare and of foreign policy.
WHAT IS STRATEGY?

Johnson and Scholes define strategy as follows:

 "Strategy is the direction and scope of an organisation over the long-term: which
achieves advantage for the organisation through its configuration of resources
within a challenging environment, to meet the needs of markets and to fulfil
stakeholder expectations".
DEFINITIONS:

 William F Glueck (1972) :

“U+ C+I”=
“A unified , comprehensive and integrated plan designed to assure that the basic
objectives of the enterprise are achieved.”
WHAT IS STRATEGY FOR THESE COMPANIES?
STRATEGY IS ABOUT:
LEVELS OF STRATEGY
CONTD..

Strategies exist at several levels in any organisation - ranging from

the overall business (or group of businesses) through to
individuals working in it.
 Corporate Strategy - is concerned with the overall purpose and
scope of the business to meet stakeholder expectations. This is a
crucial level since it is heavily influenced by investors in the
business and acts to guide strategic decision-making throughout
the business. Corporate strategy is often stated explicitly in a
"mission statement".
CONTD..

 Business Unit Strategy - is concerned more with how a business

competes successfully in a particular market. It concerns strategic
decisions about choice of products, meeting needs of customers,
gaining advantage over competitors, exploiting or creating new
opportunities etc.
 Operational Strategy - is concerned with how each part of the
business is organised to deliver the corporate and business-unit
level strategic direction. Operational strategy therefore focuses on
issues of resources, processes, people etc.
DIMENSIONS OF LEVEL OF STRATEGY

Level of strategy
Dimensions
Corporate Business Functional Operating

Time horizon Very Long Medium Short Very short

Operating / day to
Type of decision Philosophical Mixed Functional
day

Risk Involved High Medium Low Very low

Impact Significant Major Insignificant Insignificant

Profit Potential Very High Medium Low Very Low

Levels of decision making Highest Middle Upper Middle Lower Lower

HOW STRATEGY IS MANAGED - STRATEGIC
MANAGEMENT

Glueck (1984) defines strategic management as “a

streams of decisions and actions which lead to the
development of an effective strategy or strategies to
help achieve corporate objectives”.
Sharplin (1985) says,” strategic management is the
formulation and implementation of plans and carrying
out of activities relating to the matters which are of
vital, pervasive or continuing importance to the total
organization”
CONTD..

 In its broadest sense, strategic management is about taking "strategic decisions" -

decisions that answer the questions above.
 In practice, a thorough strategic management process has three main
components, shown in the figure below:
 1950s 1960s-early 70s Mid-70s-mid-80s Late 80s –1990s 2000s

DOMINANT Budgetary Corporate Positioning Competitive Strategic

THEME planning & planning advantage innovation
control

MAIN Financial Planning Selecting Focusing on Reconciling

ISSUES control growth &- sectors/markets. sources of size with
diversification Positioning for competitive flexibility &
leadership advantage agility

KEY Capital Forecasting. Industry analysis Resources & Cooperative

CONCEPTS budgeting. Corporate Segmentation capabilities. strategy.
& Financial planning. Experience curve Shareholder Complexity.
TOOLS planning Synergy Portfolio analysis value. Owning
E-commerce. standards.
— Knowledge Management—

Coordination Corporate Diversification. Restructuring. Alliances &

MANAGE-
MENT & control by planning depts. Global strategies. Reengineering. networks
IMPLIC- Budgeting created. Rise of Matrix structures Refocusing. Self-organiz
ATIONS systems corporate Outsourcing. ation
& virtual
planning organization
STRATEGIC MANAGEMENT PROCESS

 Strategic management process is a method by which managers conceive of and

implement a strategy that can lead to a sustainable competitive advantage.
 “It is a process by which an organization establishes its objectives, formulates
actions (strategies) designed to meet these objectives in the desired timescale,
implements the actions, and assesses progress and results.
 As managers attempt to better deal with their changing world, a firm generally
evolves the following four phases of Strategic management:
 A. Environmental scanning
 B. Strategy formulation
 C. Strategy Implementation
 D. Strategy Evaluation and control:
STRATEGIC MANAGEMENT DEVELOPMENT
PROCESS

 Establishing the hierarchy of strategic intent:

 Creating & communicating vision

 Designing mission statement

 Defining businesses

 Adopting business model

 Setting objectives
 Strategy Formulation:
 External Environmental scanning

 Organizational Appraisal

 Undertaking strategic analysis

 Formulation of corporate level strategies

 Formulation of business unit level strategies

 Formulation functional level strategies

 Strategy Implementation
 Activating strategies

 Designing structure, system, procedures

 Managing behavioural issues in implementation

 Managing functional implementation

 Operationalizing Strategies
 Strategic evaluation and control
 Strategic evaluation

 Strategic control
STRATEGIC MANAGEMENT OPERATIONAL MANAGEMENT

Ambiguous / Uncertain Routine

Complex Operationally specific

Fundamental Change Non Radical Change

Organization wide Short Term implications

Fundamental / Basic / Core Lead by resources

Lead by environment or expectation

Long term implications

Adapted from - Jhonson and Scholes, “exploring corporate strategy”, Prentice – Hall India
MINTZBERG'S 5 PS FOR STRATEGY

The word "strategy" has been used implicitly in different ways even
if it has traditionally been defined in only one. Explicit recognition
of multiple definitions can help people to manoeuvre through this
difficult field. Mintzberg provides five definitions of strategy:
•
5 P’S OF STRATEGY
IST P IS :PLAN

 Strategy is a plan –

some sort of consciously intended course of action, a guideline (or set of guidelines)
to deal with a situation. By this definition strategies have two essential
characteristics: they are made in advance of the actions to which they apply, and
they are developed consciously and purposefully.
IIND P IS :PLOY

IInd P is :Ploy
As plan, a strategy can be a ploy too, really just a specific manoeuvre intended to
outwit an opponent or competitor
IIIRD P IS :PATTERN

 Strategy is a pattern - specifically, a pattern in a stream of actions. Strategy is

consistency in behaviour, whether or not intended.Plans are intended strategy,
whereas patterns are realised strategy.
IV P IS :PERSPECTIVE

 Strategy is a perspective - its content consisting not just of a chosen position,

but of an ingrained way of perceiving the world.
VTH P IS :POSITION

 Strategy is Position ; that is, it reflects decisions to offer particular products or

services in particular markets. Strategy is also a position ; specifically a means of
locating a firm in its environment. Position is often defined competitively
BENEFITS OF STRATEGIC MANAGEMENT