Strategic Management : Preface.

Concept of Strategy.
Originated from Greek word Strategos that means Generalship. Hence it actually means Art of the General. May be a plan or course of action or set of decision rules making a pattern or creating a common thread. May be related to pursuing those activities that move an Organisation from its position to desired future state. May be a planned or actual coordination of the Organisations major goals and actions, in time and space that continuously co-align the firm with its environment. Hence it is used to mean a number of things.

Cont
As per Chandler : Determination of basic long term goals and objectives of an enterprise and adoption of the courses of action and allocation of resources necessary for carrying out these goals. As per Mintzberg : A pattern in a stream of decisions and actions and they can emerge from what an Organisation does without and formal plan. An Organisation may start with a deliberate design of strategy (Intended) and end up with another form that is actually realised (Emergent). As per Porter : A plan or course of action forming a pattern related to Organisations activities that are derived from its policies, objectives and goals related to pursuing those activities that move an Organisation from its current position to desired future state concerned with resources for implementing a plan or following a course of action connected to Strategic positioning of firm.

Pitfalls
Application of the concept of Strategy to real life situations may tend to oversimplify things. Actual situations are complex though. Concept of Strategy tends to distort reality. Generally blinds the Organisation to the emergent situations. So it would be better to move slowly, one step at a time, have continuous Control Checks.

Levels of Strategy formulation.

Corporate Level : It is plan of action covering the various
functions performed by various SBUs. Plan deals with Objectives of the Company, allocation of resources and coordination of SBUs for optimal performance.

Business Level : Comprehensive plan providing

Objectives for SBUs, allocation of resources among functional areas and coordination between them for making an optimal contribution to the achievement of Corporate level Objectives.

Functional Level : Deals with relatively restricted plan

providing Objectives for a specific function, allocation of resources among different operations within that functional unit and coordination between them for optimal contribution to the achievement of SBU and Corporate level Strategy.

Cont
Societal Strategies : Based on Mission
Statement, a Societal Strategy is a generalised view of how the Company relates itself to the Society in terms of a particular need or a set of needs that it strives to fulfill. Corporate level Strategy could be based on Societal Strategy. Societal Strategies are manifest in the form of Vision and Mission statements.

Mintzbergs 5Ps for Strategy

Cont

Strategic Decision Making

Difference between Conventional Decision Making and Strategic Decision Making! Objectives to be achieved. Alternative ways of attaining objectives. Evaluation of each alternative. Choosing the best alternative. Implementing the alternative. Continuous Control Checks.

Issue in Strategic Decision Making

1. 2. 3.

Key managerial processes are complex and mysterious rather than sequential. Hence no Model can actually be possible. Anyways issues: Criteria for Decision Making.
Maximisation : Maximisation of returns. Satisficing : Process of optimisation. Incrementalism : In small, logical and incremental steps.

Rationality in Decision Making. Creativity in Decision Making. Variability in Decision Making. Person related factors in Decision Making.
(Attributes like Age, Knowledge, Intelligence, creativity of a person do play a positive role).

Individual vs Group Decision Making.

School of Thought of Strategy Formation

Prescriptive School :
Design School : Process of Conception (Something unique). Planning School : Formal Process. Positioning School : Analytical Process (Formal process).

Descriptive School :
Entrepreneurial School : Visionary Process. Cognitive School : Mental Process. Learning School : Emergent Process. Power School : Negotiation Process. Cultural School : Collective Process. Environmental School : Reactive Process.

Integrative School :
Configuration School : Transformation Process.

Prescriptive School
Design School : Strategy is seen something as
unique which is in form of a planned perspective. Process is simple and informal and based on judgement (Conceptual Process). Lead role played by CEOs.

Planning School : Strategy is seen as a plan

divided into sub strategies and programs (Formal process). Lead role played by Planners.

Positioning School : Strategy is seen as a set of

planned positions chosen by company on basis of an analysis of competition and industry they work in (Analytical process). Lead role played by Analysts.

Descriptive School
Entrepreneurial School : Strategy is seen as
outcome of a personal and unique perspective often aimed at the creation of a niche (Visionary process). Lead role played by leader / entrepreneur.

Cognitive School : Strategy is seen as an

individual concept that is outcome of a mental perspective. Some what philosophical (Mental process). Lead role played by thinker / philosopher.

Learning School : Strategy is seen as a pattern

that is unique. Process of Strategy formation is emergent, informal (Emergent process). Lead role played by learner.

Descriptive School (Cont)

Power School : Strategy is seen as a political and
cooperative process or pattern (Negotiation process). Lead role played by person in power.

Cultural School : Strategy is seen as unique and

collective perspective (Collective process). Lead role played by collectivity in organisation.

Environmental School : Strategy is seen as

something generic and occupying a specific position or niche in relation to environment (Reactive process). Lead role played by environment as an entity.

Integrative School.
Configuration School : Strategy is viewed in
relation to a specific context and thus could be in form that corresponds to any process visualised under any of the other 9 schools (Transformation process). Lead role played by any actor from previous 9 schools.

Strategic Management
It is a stream of decisions and actions that lead to development of an effective Strategy to help Corporate Objectives. Formulation and implementation of plans and carrying out of activities relating to the matters which are of vital, pervasive or continuing importance to the Organisation. Process through which Organisations analyse and learn from their internal and external environments, establish strategic direction, create strategies that are intended to help achieve established goals, execute these strategies, all in an effort to satisfy key organisational stakeholders.

Phases in Strategic Management Process

Establishment of Strategic Intent. Formulation of Strategies. Implementation of Strategies. Strategic Evaluation. Strategic Control. In practice, different phases of Strategic Management may not be clearly differentiable from each other. Feedback from each phase is bound to revise, reformulate or redefine the previous phases.

Elements in SM Process.
Establishment of Strategic Intent.
Creating and Communicating the Vision. Designing a Mission Statement. Defining the Business. Adopting the Business Model. Setting Objectives.

Formulation of Strategies.
Performing Environmental appraisal. Formulate Corporate level Strategies. Formulate Business level Strategies. Undertaking Strategic Analysis. Exercising Strategic Choice. Formulating Strategies. Preparing Strategic Plan.

Cont
Implementation of Strategies.
Activating Strategies. Designing Structure, Systems, Processes. Managing Behavioral Implementation. Managing Functional Implementation. Operationalising Strategies.

Strategic Evaluation.
Performing Strategic Evaluation. Exercising Strategic Control. Reformulating Strategies.

Strategic Management Model.

Cont
Arenas : Where shall we be active. Like Products,
Services, Distribution Channel, Technology etc.

Vehicles : How will we get there? Like Acquisitions,

Alliances etc.

Differentiators : How will we win in Marketplace? Like Price, Quality, Reliability. Staging : What shall be our speed and sequence of moves? Like Timing and pace of Strategic Moves. Economic Logic : How will we obtain our Returns. Like : How profit will be created is the Economic Logic of firm.

Strategic Management Process Comprehensive Model.

Strategic Management Process Working Model.

Strategists and their Roles.

Strategists are individuals or groups who are primarily involved in formulation, implementation and evaluation of Strategy. Identification of 9 types of Strategists who, as individuals or in groups, are concerned with and play a role of Strategic Management.

Various Strategists
Board of Directors. Chief Executive Officer. Entrepreneur. Senior Management. SBU level Executives. Corporate Planning Staff. Consultants. Middle Level Managers. Executive Assistants.