Strategic Management Strategic management is a field that deals with the major intended and emergent initiatives taken

by general managers on behalf of owners, involving utilization of resources, to enhance the performance of rms in their external environments. Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. Strategic Management entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve the desired objectives, and then allocating resources to implement the policies and plans, projects and programs. STRATEGY The term strategy is derived from a Greek word strategos, which means generalship- the actual direction of military force. Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations. In other words, strategy is about: Where the business is trying to get to in the long-term (direction) Which markets should a business compete in and what kind of activities are involved in such markets? (markets; scope) How can the business perform better than the competitors in those markets? (advantage) What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete? (resources) What external, environmental factors affect the businesses' ability to compete? (environment) What are the values and expectations of those who have power in and around the business? (stakeholders) Strategy at Different Levels of a Business Corporate Level Strategy

Business Level Strategy Operational Level Strategy Corporate Strategy It is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a "mission statement". Business Level Strategy It is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. Operational Strategy It is concerned with how each part of the business is organized to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc. How Strategy is Managed - Strategic Management Strategy Diamond by Hambrick, Donald C. and Fredrickson, James W. ARENAS- Where we will be active? Arenas encompass choices made about where to compete: the external environment such as product or service markets, geographic markets or channels. Arenas also identify value chain activities or value creation stages that are in sourced or outsourced. For instance, a pharmaceutical firm may outsource new drug development to smaller biotech firms. DIFFERENTIATORS- How we will win in the market place. Differentiators are those factors that are believed to allow the firm to "win" in its targeted arenas, particularly external arenas. Differentiators can include image, price, reliablity, and other key inputs. VEHICLES- How will we get there? The vehicle thus, are the means for entering new arenas such as through acquisitions, alliances, merger or internal development.

STAGING & PACING What will be our speed and sequence of moves. Staging and pacing refer to the sequence and speed of strategic moves. This element helps identify decision points since strategic moves don't have a single possible pathway. For instance, a pharmaceutical firm might grow its global footprint by first broadening its product arenas then using this foundation to broaden its geographic market arenas. ECONOMIC LOGICHow will we obtain our returns. The economic logic element reflects how all the pieces tie together in a way that satisfies key stakeholders. Economic logic for profit-oriented firms can take the form of scale economies, premium pricing or some combination of these. For non-profit organizations, economic logic reflects how well the organization is achieving its mission and vision and serving its focal stakeholders. Strategic Management Process Hierarchy of Strategic Intent Strategic intent refers to the purposes the organization strives for. These may be expressed in terms of a hierarchy of strategic intent. The framework within which firms operate, adopt a predetermined direction and attempt to achieve their goal is provided by a strategic intent.

Establishing the hierarchy of strategic intent Creating and Communicating a Vision Designing a mission statement Defining the business Adopting the business Model Setting objectives Formulation of Strategies Performing environmental appraisal.

Doing organizational Appraisal Formulating corporate level strategies Formulating business level strategies Undertaking strategic analysis Exercising strategic Choice Preparing strategic plan Implementation of strategies Activating strategies Designing the structure, system, and processes. Managing behavioral implementation. Managing Functional Implementation Operationalising strategies Performing strategic evaluation and control Performing strategic evaluation Exercising strategic control Reformulating strategies Concept of Stretch, Leverage and Fit- Hamel and Prahalad Stretch is a misfit between resources an aspiration. Leverage refers to concentrating , accumulating, complementing, conserving and recovering resources in such a manner that the resource base is stretched to meet the aspirations that an organization dares to have. In Fit strategy becomes a compromise between what the environment has got to offer in terms o opportunities and the counter offer that the organization makes in the form of its capabilities. Fit means positioning the firm by matching its organizational resources to its environment. Fit is realistic where as stretch and leverage are idealistic approach. Vision

Vision outlines what the organization wants to be, or how it wants the world in which it operates to be (an "idealized" view of the world). It is a long-term view and concentrates on the future. It can be emotive and is a source of inspiration. For example, a charity working with the poor might have a vision statement which reads "A World without Poverty." Avon To be the company that best understands and satisfies the product, service and self-fulfillment needs of women - globally. Coal India Limited To emerge from the position of domestic leader to leading global player in the energy sector by adopting best practices from mine to market with due care to environmental and social sustenance. Ford Early 1900s: Democratize the automobile Current: To become the world's leading Consumer Company for automotive products and services. Honda 1970: We will destroy Yamaha Current: To Be a Company that Our Shareholders, Customers and Society Want Nike 1960s: Crush Adidas Current: To be the number one athletic company in the world Stanford University 1940s: Become the Harvard of the West Benefits of having vision - Parikh and Neubauer (1993) Good Vision are inspiring and exhilarating. Vision represents a discontinuity , a step function and a jump ahead so that a company knows what it is to be.

Good vision helps in the creation of a common identity and a shared sense of purpose. God vision are competitive , unique and original. Good vision foster long term thinking. Mission Thompson defines mission as the Essential purpose of the organization, concerning particularly why it is in existence, the nature of businesses it is in and the customers it seeks to satisfy. Features of Mission Statement It should be feasible. It should be precise. It should be clear. It should be motivating. It should be distinctive. It should indicate the major component of strategy. Mission statement should incorporate following elements: The basic product or service to be offered, Customer group and technology to be used in production. The fundamental concern for survival through sustained growth and profitability. Company philosophy in terms of beliefs and values. IBM: At IBM, we strive to lead in the invention, development and manufacture of the industry most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide. Cisco: Cisco enables people to make powerful connections whether in business, education, philanthropy, or creativity. Cisco hardware, software, and service offerings are used to create the Internet solutions that make networks possible-providing easy access to information anywhere, at any time . Google: Google mission is to organize the world information and make it universally accessible and useful.

Apple: Today, Apple continues to lead the industry in innovation with its awardwinning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone. Dell: Dell mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. Sony: Sony is a leading manufacturer of audio, video, communications, and information technology products for the consumer and professional markets. Its music, motion picture, television, computer entertainment, and online businesses make Sony one of the most comprehensive entertainment companies in the world. Business Definition Derek A bell, in a path breaking analysis , suggests defining a business along the three dimensions . Customer group relates to who is being satisfied. Customer function relates to what is being satisfied. Alternative technology is How the need is being satisfied. Goals Goals are the desired results we want to achieve to accomplish the mission, expressed in general terms. They are generally long-term, open-ended, and sometimes never totally achieved, because, as has been stated, the Strategic Plan is a living document. Goals can change, especially if they are not written well enough to achieve the Mission or provide appropriate parameters for the Objectives. Working toward our Goals takes us toward our vision and mission Goals should be: Derived from the mission statement, time sensitive goals should be set with a timeframe for achievement, formulated to achieve the mission and vision, broad in scope, but easily understood, clear and concise, realistic and achievable based on the resources, measurable, so they can be tracked and evaluated as to whether they have been achieved, goals should be outcomes focused.

Developing objectives to achieve goals is essential for several reasons: provides the target at which to aim so that all activities and efforts will be focused on achieving the objective, gives participants direction to where theyre going, provides a step-by-step guide to reaching the goal, provides means to evaluate the progress of achieving a goal, motivates leaders and teams to successfully complete an objective, because it is measurable. Goals and Objectives Goals denote what an organization hopes to accomplish in a future period of time. Objectives are the ends that specifically how the goals shall be achieved. Objectives are more concrete and specific as compared to goals. Goals are qualitative whereas objectives are quantitative. Goals Directly relates to the mission statement Short Statements , few words General and broad scope Covers longer time period (3 5 years) Difficult to measure. Intangible. Objectives Supports achievement of goals. Long sentences, more descriptive. Specific and narrow scope Covers shorter time period( 1 Year) Easily measured Tangible

Objectives must meet certain criteria to be worthwhile and useful. One method for developing and selecting objectives is the SMART approach. Specific Measurable Achievable Relevant Timely Role of Objectives Objective define the organizations relationship with its environment. Objectives help an organization pursue its vision and mission. Objective provide the basic for strategic decision making. Objective provide the standard for performance appraisal. Characteristics of Objectives Objective should be concrete and specific. Objectives should be understandable. Objectives should be related to a time frame. Objectives should be measurable and controllable. Different objectives should correlate to each other. Objectives should be set within constratints. Issues in Objective setting Specificity Multiplicity Periodicity Verifiability Reality Quality Objectives of IOC To serve the national interests in oil and related sectors in accordance and consistent with Government policies.

To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil refining, transportation and marketing activities and to provide appropriate assistance to consumers to conserve and use petroleum products efficiently. To enhance the country's self-sufficiency in crude oil refining and build expertise in laying of crude oil and petroleum product pipelines. Objectives of TATA Motors TATA said that the initial target production volume would be 250,000 cars per annum on two shifts, expandable to 350,000 per annum on three shifts. In earlier media interviews, Ratan Tata talked about a one million production target by 2010 Consumer focus reports that the car conforms with environmental protection, and will have the lowest emissions in India. Product focus Model versions The basic Tata Nano Std priced at 123,000 Rupees has no extras; The deluxe Tata Nano CX at 151,000 Rupees has air conditioning; The luxury Tata Nano LX at 172,000 Rupees has air conditioning, power windows, fabric seats and central locking Tata Motors will offer a version of the Nano with these safety-features, Including an airbag system in its electric version. The Nano has an all sheet-metal body made from Japanese and Korean steel, with safety features such as crumple zones, intrusion-resistant doors, seat-belts, strong seats and anchorages, and the rear tailgate glass bonded to the body. Tires are tubeless Introducing the car with an artificially low price through government subsidies and tax-breaks Critical Success Factors Critical success factors (CSFs) have been used significantly to present or identify a few key factors that organizations should focus on to be successful.

As a definition, critical success factors refer to "the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization (Rockart and Bullen, 1981).

Environmental Appraisal Concept of Environment

Environment literally means the surroundings, external objects, influences or circumstances under which some one or some thing exists. Characteristics of Environment Environment is Complex. Environment is Dynamic. Environment is Multifaceted. Environment has a far reaching impact. Internal and External Environment The internal environment refers to all the factors within an organization that impact strengths or cause weaknesses of a strategic nature. The external environment includes all the factors outside the organization which provide opportunities or pose threats to the organization. Internal Environment Strength is an inherent capacity which an organization can use to gain strategic advantage. Good reputation Ample resources

Assets Weaknesses is an inherent limitation or constraint which creates strategic disadvantage . Financial Deadlines Low Morale Overdependence on a single product line. External Environment Opportunity is a favorable condition in the organizations environment which enables it to consolidates and strengthen its position. Economic boom Demographic shifts Loosening of regulation Favorable global influences

Threat is an unfavorable condition in the organizations environment which creates a risk for , or causes damage the organization. Economic down turn Shift in consumer taste and preferences. Unfavorable political environment SWOT Analysis A simple application of the SWOT analysis technique involves the following steps: Setting the objectives of the organization Identifying its strengths, opportunities, weaknesses and threats. Asking four question How do we maximize our strengths How do we minimize our weaknesses How do we capitalize on the opportunities

How do we protect ourselves from threats General Versus Relevant Environment

General Versus Relevant Environment Wider perception of environment which includes local economy, social changes, demographic variables, political systems, technology energy sources, raw material availability is termed as general environment. A conscious identification of the relevant environment enables the organization to focus its attention on those factors which are immediately related to its mission, objectives and strategies. Classification of Environmental Sectors Economic Environment International Environment Market Environment Political Environment Regulatory Environment Socio Cultural Environment Supplier Environment Technological Environment Environmental Scanning Environmental scanning can be defined as the process by which organization monitor their relevant environment to identify opportunities and threats affecting their business for the purpose of taking strategic decisions. Factors to be considered.. Events Trends Issues Expectations