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Strategic Management
Introduction
Module I

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What is a strategy?

Mona Chaudhary
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Strategic Management
The set of managerial decisions and
actions that determines the long run
performance of a corporation.

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The term ‘Strategy’ is derived from the Greek word ‘Strategos’

which means science of guiding & directing military forces.
In management there is yet no definite meaning, the different
views can be categorized in two broad groups:

1. Narrow concept of Strategy: Objective Exclusion

Definition: Acc. to William F.Glueck, “A Strategy is a
unified, comprehensive & integrated plan designed to assure
that the basic objectives of the enterprise are achieved.”

Acc. to this approach, Strategy is the means used to achieve the

ends (objectives). It is a unified plan which ties all the parts of
the enterprise together. It covers all major parts of the
enterprise.
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Broad concept of Strategy: Objective Inclusion Strategy-

Strategy is the direction and scope of an organization over the
long term, which achieves advantage in a changing
environment through its configuration of resources &
competences with the aim of fulfilling stakeholder
expectations.
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Strategic Management
• The top management of an organization is concerned with
selection of a course of action from among different
alternatives to meet the organizational objectives. The process
by which objectives are formulated and achieved is known as
Strategic Management and Strategy acts as the means to
achieve the objective.

• Therefore, Strategy is the grand design or an overall ‘plan’

which an organization chooses in order to move or react
towards the set objectives by using its resources.
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Phases in Strategic
Management
Process
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Model of Strategic Management

Strategy Strategy Strategic
Strategic intent
Formulation Implementation Evaluation
• Vision, Mission • Environmental • Project,
• Business Appraisal Procedural
Definition & • Organizational
Model • Resource
Appraisal Allocation
• Objectives
• Strategic • Structural,
Analysis & Behavioral,
choice Functional &
Operational

Strategic Control
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• Includes –
- Environmental Scanning ( internal &
external)
- Strategic Formulation
- Strategic implementation
- Evaluation & control

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In order to achieve organizational success, it

focuses on INTEGRATING management of
marketing
finance, accounting
product & operations
research & development
information management system, etc.

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 Importance of Strategy Name of Institution

• An organization is considered efficient and operationally

effective if it is characterized by coordination between
objectives and strategies.

• Strategy helps the organization to meet its uncertain situations

with due diligence.

• Without a strategy, the organization is like a ship without a

rudder. It is like a tramp, which has no particular destination to
go to. Without an appropriate strategy effectively implemented,
the future is always dark and hence, more are the chances of
business failure.
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Strategic Management
• Strategic management is the study of why
some firms outperform others
– How to compete in order to create competitive
advantages in the marketplace
– How to create competitive advantages in the
market place
• Unique and valuable
• Difficult for competitors to copy or substitute
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Evolution of Strategic
Management
 The Evolution of Strategic Management
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1950s 1960s-early 70s Mid-70s-mid-80s Late 80s –1990s 2000s

Budgetary Corporate Positioning Competitive Strategic

DOMINANT
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.
TOOLS Financial planning. Experience curve Shareholder Complexity.
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
 Development of Strategic Management
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In 1950’s & 1960’s: Alfred Chandler recognized the importance of coordinating

various aspects of management. Thus gave the concept of “structure follows
strategy”.
• In 1957, Philip Selznick – matched Internal / External factors thus came the concept
of SWOT analysis given by Andrews at Harvard Business School.
• Igor Ansoff, built Product/mission matrix.
In 1970’s: Portfolio theory – started at GE
• BCG analysis- early 1970
• Later GE 9 cell
In 1980’s:
• Michael Porter- 5 Force Analysis, Generic Strategies, Value Chain Analysis
• Realized vast knowledge pool in military and then took guidance from – Art of War
(Military Strategy Books) learned the tactical sides of military perspectives.
In 1990’s:
Mintzberg ‘s “Deliberate, Emergent & Realized Strategies
Charles Handy identify two strategic change: Strategic Drift & Transformational
change
 Model of Strategic Management Name of Institution

Strategy Strategy Strategic

Strategic intent
Formulation Implementation Evaluation
• Vision, Mission • Environmental • Project,
• Business Appraisal Procedural
Definition & • Organizational
Model • Resource
Appraisal Allocation
• Objectives
• Strategic • Structural,
Analysis & Behavioral,
choice Functional &
Operational

Strategic Control
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• intended strategy-- plan for action

• emergent strategy-- process
• realized strategy--- outcome

- source- Henry Mintzberg, 1987

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Different Kinds of Strategy

Deliberate

Intended Strategy

Unrealized
Strategy
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Different Kinds of Strategy

Deliberate

Intended Strategy

Emergent
Strategy
Unrealized
Strategy
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Different Kinds of Strategy

Deliberate

Intended Strategy Realized

Strategy

Emergent
Unrealized Strategy
Strategy
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Levels of Strategy
Levels of Strategy Name of Institution

Corporate Level

Business Level

Functional Level

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LEVELS OF STRATEGY

 Corporate level
• Determine overall scope of the organisation
• Add value to the different business units
• Meet expectations of stakeholders
 Business level (SBU)
• How to compete successfully in particular markets
 Operational/ Functional Level
• How different parts of organisation deliver strategy
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Definition of strategic business units
The SBUs are the natural ‘grouping’ of part of a corporation.
• The SBU has a range of related products/services which
has similar technologies and production processes.
• The products/services are sold in similar or related market
segments.
• The production/services are sold against a well-defined
set of competitors.
• An SBU is managed by an SBU manager, largely as an
independent unit.
• The SBU has its own set of goals and strategies.
• Each SBU in a particular organization should be able to
operate independently of any other SBU.
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Strategic Business Unit (SBU)

A strategic business unit (SBU) is a part of an

organisation for which there is a distinct external
market for goods or services that is different from
another SBU
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1. level: The corporate level

At this level the fundamental task is to develop a
balanced portfolio of businesses which will achieve the
goals of the corporation and satisfy its stakeholders.
2. level: The strategic business unit level (SBU)
At this level the business, or set of activities is given
and the major task for strategic planner at this level is
for business to succeed against competitors and also
satisfy corporate success criteria.
3. level: The functional level:
At this level the major task is to provide an appropriate
functional strategies ( finance and accounting,
marketing, R+D, production, personnel) for SBU or
corporate level strategy.
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Corporate- Business- Functional

level Plan level Plan level Plan

Goal Corporate Divisional Functional

Setting mission & goals goals goals

Strategy Corporate- Business- Functional-

Formulation level strategy level strategy level strategy

Design of Design of Design of

Corporate Business-unit Functional
Strategy
Structure Structure Structure
Implementation Control
Control Control
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• Corporate level planning is done by top

managers.
– Also approve business and functional level
plans.
– Top managers should seek input on corporate
level issues from all management levels.
• Business and functional planning is done by
divisional and functional managers.
– Both management levels should also seek
information from other levels.
– Responsibility for specific planning may lie at a
given level, but all managers should be
involved.
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THANK YOU !

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