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Section I -Unit 1
Introduction to Strategic Management Concept of Strategy, Definition, Scope and Importance Central Concepts in Strategic Management Collecting Information on an External Environment Deciding the Scope of an Organisation

Acquiring Organisational Resources and the Skills to

Match External Opportunities and Threats Deciding the Investment Patterns for Future Nature of Strategic Management Scope and Importance of Strategic Management Strategic decision making Process of Strategic Management Levels at which strategy operates Role of a Strategist

Study this for better placement (Indian Author)

Strategic Management

R. Srinivasan

Study this for better placement (Indian Author)

Strategic Management

Francis Cherunilam

Study this for better placement (Foreign Author)

Strategic Management Theory

An Integrated Approach

Charles W. L. Hill
Gareth R. Jones

Fifth Edition

Concept of Strategy
The word strategy is derived from the Greek word strategia means the art and science of directing military force Strategy is a plan or course of action, which is of vital, pervasive, or continuing importance to an organisation as a whole Emergence of Strategy is a major component of management Strategy is the means used to achieve ends (objectives)

Concept of Strategy - Vyuuh

Chakra - Vyuuh

Chakra - Vyuuh
The Chakravyuha was specially difficult to penetrate since the attacker is not able to focus on a still target in front as the targets keep changing with the rotation of the Chakras. Even if an attacker can penetrate one ring and get inside the Chakravyuha, the rotating nature of the vyuha makes sure that the ring he has penetrated closes behind him. As a result, the attacker is trapped within the Chakravyuha.

Chakra - Vyuuh As it is said in the Mahabharat, only 4 people; Abhimanyu, Arjuna, Krishna and Pradyumna; knew how to breach this formation.

Since Ved Vyas, who recited the great epic, himself did not know the secret, how could he mention how it was supposed to be done in the story.

Garuda - Vyuuh


A Strategy is a unified, comprehensive and integrated plan that relates the strategic advantages of the firm to the challenges of the environment.


A Strategy is a unified, comprehensive and integrated plan that relates the strategic advantages of the firm to the challenges of the environment.

What is strategy?
An action a company takes to attain superior


Why do some firms succeed while others fail?

A central objective of strategic management is to

learn why this happens.

What is the strategic management process?

The process by which managers choose a set of

strategies for the enterprise to pursue its vision.

Strategic Planning
Rational planning by top management
Basic Strategic Planning Model
Defining the Mission and Setting Top-Level Goals External Analysis of Opportunities and Threats Internal Analysis of Strengths and Weaknesses Selection of Appropriate Strategies Implementation of Chosen Strategies

SWOT analysis of strengths, weaknesses, opportunities,and threats.


Definition of Strategy
Strategy is the direction and scope of an organisation over the long-term which achieves advantage for the organisation through its configuration of recources within a challenging environment, to meet the needs of markets and to fulfol stakeholders expectations Johnson & Scholes

Orientation of Strategy
What is our business? What should it be? What are our products and markets? What can our firm do to accomplish objectives?

How do we leverage the advantages offered by the

environmental parameters?
How do we stay clear of the threats posed by the


Orientation of Strategy
Strategic Management Ambiguity Complexity Non-routine Operational Management Routined

Organisation-wide Fundamental Significant change

Operationally specific

Small-scale change

Environment or Resource driven expectations driven

Strategic Management

Why? To ensure Growth with Profits in the long-run!

Creating & Sustaining Competitive Advantages, Globally


Strategic Management
Strategic Management refers to the managerial

process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy and then over time initiating whatever

corrective adjustments in the vision, objectives,

strategy and execution are deemed appropriate

The Main Components of the Strategic Planning Process

Mission and Goals

Sets out why the organization

exists and what it should be doing.

Major goals
Specify what the organization hopes

to fulfill in the medium to long term.

Secondary goals
Are objectives to be attained that lead to superior


External Analysis
Identify strategic opportunities and threats in the operating environment.

Immediate (Industry)



Internal Analysis
Identify strengths
Quality and quantity of resources available
Distinctive competencies

Identify weaknesses
Inadequate resources
Managerial and

organizational deficiencies

SWOT and Strategic Choice

Strengths and Weaknesses Opportunities and Threats (SWOT Analysis)

Strategic Choice
Business Functional Global Corporate

Business-Level Strategies
Cost leadership
Attaining, then using the lowest total cost basis as a

competitive advantage.

Using product features or services to distinguish the

firms offerings from its competitors.

Market niche focus

Concentrating competitively on

a specific market segment.

Functional-Level Strategies
Focus is on improving the effectiveness of operations within a company.
Manufacturing Marketing

Materials management
Research and development Human resources

Global-Level Strategies
Multidomestic International Global Transnational

Corporate-Level Strategies
Vertical integration Diversification Strategic alliances Acquisitions New ventures Business portfolio restructuring

Strategy Implementation
Designing organizational structure Designing control systems
Market and output controls Bureaucratic controls Control through organizational culture Rewards and incentives


Matching strategy, structure, and controls

Congruence (fit) among strategy,

structure, and controls


Managing Strategic Change

The only constant is change. Success requires adapting strategy and structure to a changing world. The feedback loop in Corporate strategic planning.
Operational Business


Strategic Managers
General managers
Responsible for the overall (strategic) performance

and health of the total organization.

Operations managers
Responsible for specific business

functions or operations.

Strategic Managers for All Levels

Strategic Leadership
Vision, eloquence, and consistency Commitment to the vision Being well informed Willingness to delegate and empower Astute use of power Emotional intelligence

Strategy as an Emergent Process

Strategy making in an unpredictable world
Creates the necessity for flexible strategic approaches.

Strategy making by lower-level managers

Strategy evolves through autonomous action.

Serendipity and strategy

Accidental discoveries and happenstances can have dramatic

effects on strategic direction.

Intended and emergent strategies

Realized strategies are combinations of intended and

emergent strategies.

Intended and Emergent Strategies

The Strategic Management Process for Intended and Emergent Strategies

Strategic Planning in Practice

Planning under uncertainty
Scenario planning for dynamic environmental change

Ivory tower planning

Lack of contact with operational realities The importance of involving operating managers

Procedural justice in the decision-making process Engagement, explanation, and expectations

Planning for the present: Strategic Intent

Recognition of the static nature of the strategic fit model Strategic intent in focusing the organization on winning by

achieving stretch goals

Improving Strategic Decision Making

Cognitive biases systematically influence the rationality of decision makers.

Groupthink and Strategic Decisions

Pitfalls of groupthink
Failing to question underlying assumptions.
Coalescing around a single person or policy. Filtering out conflicting information.

Developing after-the-fact rationalizations.

Having an emotional (nonobjective)

commitment to an action.

Techniques for Improving Decision Making

Two decisionmaking processes that counteract cognitive biases and groupthink.