Basic Concepts of Strategic Management

By Deepak Sharma
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Origin

The word strategy has been in use since Sun Tzu wrote the Art of War in the fourth Century B.C.

Sun Tzu was talking about military strategy.

The word strategy has been derived from strategos in Greek, which means art of the army general, or art of deploying army. Strategy signified the skill of planning the movements of armies before actual battle starts !

In 1960-70s the term strategy was used in business due to the outstanding work of Porter, Drucker, Mintzberg, DAvine Who saw business as a WAR and the Market the BATTLE GROUND for a business.
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What is Strategy?
PLC Sales Introduction Time Entire emphasis is on sustaining the business by generating demand The organisation tries to build systems which can make day to day operational decisions. Now top management wants to secure its position by grooming and developing competencies which cannot be copied easily. This is making strategy!
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Maturity

Growth

Decline

Von Neumann and Morgernstern

Thought of strategy as an elaborated game of moves and countermoves, bluffs and counterbluffs, between competing yet independent Business. Bryson A strategy is defined as a pattern, of purposes, policies, programmes, actions, decisions, or resource allocations that define what an organisation is, what it does, and why it does it. Strategies can vary by level function, and by time frame.
Alfred Chandler

The determination of the long-run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.
Kenneth Andrews Strategy is the pattern of objectives, purposes, or goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.
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Kenneth Andrews
define a strategy as the pattern or plan that integrates an organizations major goals, policies, and action sequences into a cohesive whole. The strategy helps to marshal and allocate an organizations resources into a unique and viable posture based on its relative internal competencies and shortcomings. Michael Porter (1996)
The essence of strategy is choosing to perform activities differently than rivals do.

DAveni (1994)
takes the view that strategy is not only the creation of advantage but also the creative destruction of the opponents advantage.

Glueck,
A unified , comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved.

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In Fact its difficult to define strategy in one way so different approaches are used Strategy is
a plan or a direction, a guide or course of action into the future to achieve specific objectives. a path to get from current position to desired position. a pattern that is consistent in behavior over time.

a perspective, namely an organizations fundamental way of looking at things.

a position, i.e it reflects decisions to design a particular product for a particular market, or how an organisation will offer value to its customers or how to compete.

These are called as 5 Ps of Strategy.

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Strategy is

A Plan that is intended to achieve a particular purpose.

Plan is consciously developed course of action

Are all plans Strategy? No!

Strategy has a pattern which is consistent in behaviour over a time span.
Amitab Bachan in 70s Signed only angry young mans movies .

For example

Just as ford Motor offered his model T only in Black.

Picasso painted blue pictures Amir Khan does only one movie at a time Plans dont have a pattern, they are independent of previous plans. Strategy starts with identifying desired ends and then working it backwards 2/13/2013 plans dont start with ends.

Strategy in general refers to

How a given objective will be achieved, it is concerned with the relationship between ends and means; i.e. between the results we seek and resources at our disposal. Is concerned with long term plan. Is consistent over time i.e. does not change.

Comes from top levels.

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What is Strategy in Management?

A companys strategy consists of the set of competitive moves and business approaches that management is employing to run the company
Strategy is managements game plan to To earn above average ROI. Stake out unique and valuable market position. Conduct activities differently to create unique value. Compete successfully by offering more value.

Achieve organizational objectives.

Attract and please customers.
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Strategic Management
Defined: Set of managerial decisions and actions that determines the longrun performance of a firm.

In essence, strategic Management has to do with understanding where an organization will go in the future and how it will get there.
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hreats

trengths Internal Factors

External Environment

Opportunities Weakness

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Strategic Management has Four basic Characteristics

First, strategy should include a clear set of long term goals.

Second it should define the scope of the business ( in terms of the types of products the firm will serve, or in terms of need that is satisfied by the firms products etc.) ayed http://thecoolpics.net/error.jpg Something was wrong !!! Check it again ures Thirdly, a strategy should have a clear statement of what or http://thecoolpics.net/vacation2.jpg <:-P which competitive advantage it will achieve and sustain. Finally, the strategy must represent the firms internal contest that will allow it to achieve a competitive advantage in the environment in which it has chosen to compete.

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Thinking Strategically: The Three Big Strategic Questions

Most Important

Where do we want to go?

Business(es) to be in and market positions to

stake out? Buyer needs and groups to serve? Outcomes to achieve? Where are we now? How do we get there?
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Be Careful

Top Mgmt. Strategic Manager

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A Review 1. Is their any relationship between the size of an organisation and the strategy formulation.

2. The management scholar in 2001 put 1,435 good companies through a rigorous performance analysis and discovered only 11 became great. Why? Sales Figs can be misleading 3. Impact of LPG crisis(1991) on strategy of Indian Companies like TATA Automobiles, BPL , & ONGC.

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McDonald's is a classic case in this regard! In the early 1960s, by redefining the way that hamburgers would be prepared and sold, and by being first to market, it created the fast food industry. And until new entrants into the market subsequently forced it down one step in the profit ladder, it was an amazingly profitable business! Today McDonald's is but one important differentiated brand name among an expanded field of important brand names. Similarly, as a result of its thirty-minute delivery innovation, Domino's Pizza in its early days enjoyed the above-average profits of a niche marketer. Once again, competition subsequently arose thus reducing Domino's original niche position to the more conventional differentiation level. The fact of entropy exists, then, in both the physical and the economic world.

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Strategic Inputs

Chapter 2 External Environment Strategic Intent Chapter 3 Internal Environment Strategic Mission

The Strategic Management Process

Strategy Implementation
Chapter 10 Corporate Governance
Chapter 12 Strategic Leadership Chapter 11 Structure & Control Chapter 13
Entrepreneurship

Strategy Formulation
Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 8 International Strategy Chapter 6 Corporate-Level Strategy Chapter 9 Cooperative Strategies

Strategic Actions

Chapter 7 Acquisitions & Restructuring

& Innovation

Outcomes

Strategic

Feedback

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Strategic Competitiveness Above Average Returns

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