Strategic management

Definitions Determination of basic long term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals - Alfred D Chandler

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

Developing and communicating the companys unique position, making tradeoffs and creating fit among activities - Micheal E Porter

Study of functions and responsibilities of senior management Concerned with organizational problems which affects success of the enterprise Concerned with determination of future course of actions Involves choosing the purpose, molding the identity and character of organization Concerned with mobilization of resources Eg. Decision to start new business, new product, expansion ,wind-up, M&A, etc.

Evolution of B P / S M as a field of study - Can be traced back to 1911 when HBS introduced an integrative course of management - Introduced to B- Schools in USA, as a result of two reports Published in 1959 1) Gorden & Howell report, sponsored by Ford foundation 2) the Pearson report. - In 1969 American Assembly of Collegiate Schools of Business (AACSB) a regulatory body of B- Schools, made the course BP mandatory requirement for recognition.

Environmental changes that forced firms to form strategies Changes in technology Proliferation of new brands Faster commercialization of new product, ideas and patents Elimination of business boundaries Socio- political changes Govts role in conduct of business Emergence of global markets, brands and E- commerce New affluence of the consumers Changing tastes and preferences

Starting from day to day planning, managers tried to anticipate the future by preparing budgets, capital budgeting, MBO etc. How ever, these techniques were unable to emphasis the role of future adequately and long range planning came into use. Soon, long range planning was replaced by the term Strategic Planning, and later by strategic management, which describes the process of strategic decision making. It deals with the top management function of formulating growth strategies.

Tactical planning refers to the short range planning that is oriented towards operations and is concerned with specific and short range details. They are, routine and concerned with issues that are essentially internal to the firm do not touch the basic characteristics of the firm but concerned with tackling problems concerned with products, markets, production facilities etc. ..contd

can be altered when necessary at minimal cost without causing much damage to the organization. the impact is measurable and to some extent known in advance responsibility of middle/ lower level managers Repetitive, by nature

Future orientation - long range, deal with growth of the organization Often emerge from the perspective views about the economy and society, including regulatory environment, competition etc, as such it need external information for analysis Any alteration in the decision may cause much damage and far reaching consequences which are neither measurable nor able to see in advance The occasions of strategic decisions are few and are non- repetitive Responsibility of top managers such as BOD, CEO etc. .. contd

Characteristics .. Contd. Value orientation : affected by value system, business ethics and philosophy Means to achieve the ends, ie, mission and goals Resource commitment Strategic fit : b/n orgn and envt. Intent and stretch: A stretch emanating from strategic intent Competitive : aimed at gaining sustainable competitive edge Ramifications: consequence on operational and administrative decisions. Complexity and uncertainty Comprehensive and highly integrated

Establishing strategic intent Vision, mission, objectives and business definition

Formulation of strategies Environmental and organizational appraisal (SWOT) Corporate level, Business level, Strategic choice, strategic plan Strategy implementation Project, procedural, resource allocation, Structural, behavioral, functional and operational Strategic evaluation

Envision of an orgns future Mission and objectives help employees understand what the orgn stands for Makes employees realize what is expected of each SBU, division, functional department etc. Facilitate better delegation, coordination, monitoring, performance evaluation and control SWOT analysis help to take measure to overcome / minimize weaknesses and reinforce strengths. Also, to exploit opportunities and combat threats. .. Contd.

Constant monitoring of environment make the plans more realistic and effective. Enable a company to meet competition more effectively Make the management dynamic, result and future oriented Studies show that, companies with SM are more effective than others, generally.

Did not have much relevance till 1991due to limited competition and Govt control There after, a number of cos have changed their mission and objectives, portfolio strategies, organizational structure etc. Expansion , diversification, M&A etc were become very common. It was a fashion to speak of vision, mission, corporate strategy and the like.

Abolition of public sector monopoly in many industries such as . Delicensing, removal of import restrictions etc. Relaxations most of the MRTPA restrictions on entry, expansion, M&A etc opened a lot of business opportunities. Liberalization of policy towards foreign capital and technology, imports and accessing foreign capital markets.

Liberalization in other countries, expanding foreign markets, the growing competition, new policy environment etc. Grant of more autonomy to PSEs such as Navaratnas, increased the scope of SM. Threats due to the economic reforms Cos should be alert on SWOT, and formulate strategies that increase strengths, minimize weaknesses, utilize opportunities and protected from threats.

Corporate level: Activities which define the overall character and mission, product/ service segments, allocation of resources, and management of synergy among its SBUs. Business level ( S B U Level ): concerned with decisions pertaining to the product mix, market segment and competitive advantage for the SBU. ( SBUs of HUL: soaps and detergents, personal products, animal feeds, beverages, frozen foods etc. An SBU is an operating division of a firm which serves a distinct product/ service, or a market segment with authority to make strategic decisions under the corporate guidelines) Functional level: Eg. Mktg, Finance, H R, Operations