Strategic management

What is strategic management? Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resources and performance in external environments. It 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 these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders. Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment." Strategic Management can also be defined as "the identification of the purpose of the organization and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business

enterprise. It involves formulating and implementing strategies that will help in aligning the organization and its environment to achieve organizational goals.

Concept of strategic management

Strategic management can depend upon the size of an organization, and the proclivity to change of its business environment. These points are highlighted below:

A global/transnational organization may employ a more structured strategic management model, due to its size, scope of operations, and need to encompass stakeholder views and requirements.

An SME (Small and Medium Enterprise) may employ an entrepreneurial approach. This is due to its comparatively smaller size and scope of operations, as well as possessing fewer resources. An SME's CEO (or general top management) may simply outline a mission, and pursue all activities under that mission.

Whittington (2001) highlighted four approaches to strategic management. These are Classical, Processual, Evolutionary and Systemic approaches.

Mintzberg stated there are prescriptive (what should be) and descriptive (what is) approaches. Prescriptive schools are "one size fits all" approaches that designate "best practice" while descriptive schools describe how strategy is implemented in specific contexts.

No single strategic managerial method dominates, and remains a subjective and contextdependent process

MINTZBERGS 5 Ps OF STATERGY

Management expert, Henry Mintzberg, argued that it's really hard to get strategy right. To help us think about it in more depth, he developed his 5 Ps of Strategy five different definitions of (or approaches to) developing strategy. About the 5 Ps Mintzberg first wrote about the 5 Ps of Strategy in 1987. Each of the 5 Ps is a different approach to strategy. They are: 1. Plan. 2. Ploy. 3. Pattern. 4. Position. 4. Perspective. By understanding each P, you can develop a robust business strategy that takes full advantage of your organization's strengths and capabilities. In this article, we'll explore the 5 Ps in more detail, and we'll look at tools that you can use in each area.

1. Strategy as a Plan Planning is something that many managers are happy with, and it's something that comes naturally to us. As such, this is the default, automatic approach that we adopt brainstorming options and planning how to deliver them. This is fine, and planning is an essential part of the strategy formulation process. Our articles on PEST Analysis, SWOT Analysis and Brainstorming help you think about and identify opportunities; the article on practical business planning looks at the planning process in more detail; and our sections on change management and project management teach the skills you need to deliver the strategic plan in detail. The problem with planning, however, is that it's not enough on its own. This is where the other four Ps come into play.

2. Strategy as Ploy Mintzberg says that getting the better of competitors, by plotting to disrupt, dissuade, discourage, or otherwise influence them, can be part of a strategy. This is where strategy can be a ploy, as well as a plan. For example, a grocery chain might threaten to expand a store, so that a competitor doesn't move into the same area; or a telecommunications company might buy up patents that a competitor could potentially use to launch a rival product.

Here, techniques and tools such as the Futures Wheel, Impact Analysis and Scenario Analysis can help you explore the possible future scenarios in which competition will occur. Our article on Game Theory then gives you powerful tools for mapping out how the competitive "game" is likely to unfold, so that you can set yourself up to win it.

3. Strategy as Pattern Strategic plans and ploys are both deliberate exercises. Sometimes, however, strategy emerges from past organizational behavior. Rather than being an intentional choice, a consistent and successful way of doing business can develop into a strategy. For instance, imagine a manager who makes decisions that further enhance an already highly responsive customer support process. Despite not deliberately choosing to build a strategic advantage, his pattern of actions nevertheless creates one. To use this element of the 5 Ps, take note of the patterns you see in your team and organization. Then, ask yourself whether these patterns have become an implicit part of your strategy; and think about the impact these patterns should have on how you approach strategic planning. Tools such as USP Analysis and Core Competence Analysis can help you with this. A related tool, VRIO Analysis, can help you explore resources and assets (rather than patterns) that you should focus on when thinking about strategy. 4. Strategy as Position

"Position" is another way to define strategy - that is, how you decide to position yourself in the marketplace. In this way, strategy helps you explore the fit between your organization and your environment, and it helps you develop a sustainable competitive advantage. For example, your strategy might include developing a niche product to avoid competition, or choosing to position yourself amongst a variety of competitors, while looking for ways to differentiate your services. When you think about your strategic position, it helps to understand your organization's "bigger picture" in relation to external factors. To do this, use PEST Analysis, Porter's Diamond, and Porter's Five Forces to analyze your environment - these tools will show where you have a strong position, and where you may have issues. As with "Strategy as a Pattern," Core Competence Analysis, USP Analysis, and VRIO Analysis can help you craft a successful competitive position. You can also use SWOT Analysis to identify what you do well, and to uncover opportunities.

Note: There can be a lot of overlap between "Strategy as Position" and other elements of the 5 Ps. For instance, you can also achieve a desired position through planning, and by using a ploy. Don't worry about these overlaps - just get as much value as you can from the different approaches. 5. Strategy as Perspective

The choices an organization makes about its strategy rely heavily on its culture just as patterns of behavior can emerge as strategy, patterns of thinking will shape an organization's perspective, and the things that it is able to do well. For instance, an organization that encourages risk-taking and innovation from employees might focus on coming up with innovative products as the main thrust behind its strategy. By contrast, an organization that emphasizes the reliable processing of data may follow a strategy of offering these services to other organizations under outsourcing arrangements. To get an insight into your organization's perspective, use cultural analysis tools like the Cultural Web, Deal and Kennedy's Cultural Model, and the Congruence Model. Using the 5 Ps Instead of trying to use the 5 Ps as a process to follow while developing strategy, think of them as a variety of viewpoints that you should consider while developing a robust and successful strategy. As such, there are three points in the strategic planning process where it's particularly helpful to use the 5 Ps: When you're gathering information and conducting the analysis needed for strategy development, as a way of ensuring that you've considered everything relevant. When you've come up with initial ideas, as a way of testing that that they're realistic, practical and robust. As a final check on the strategy that you've developed, to flush out inconsistencies and things that may not have been fully considered.

Using Mintzberg's 5 Ps at these points will highlight problems that would otherwise undermine the implementation of your strategy. After all, it's much better to identify these problems at the planning stage than it is to find out about them after you've spent several years and millions of dollars implementing a plan that was flawed from the start

Strategic formation
The initial task in strategic management is typically the compilation and dissemination of the vision and the mission statement. This outlines, in essence, the raison d'etre of an organization. Additionally, it specifies the organization's scope of activities and the markets a firm wishes to serve. Follow-on strategy formation is a combination of three main processes which are as follows:

Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.

Concurrent with this assessment, short- and long-term objectives are set. These objectives should include completion dates.

Implementation plans then detail how the objectives are to be achieved.

Strategy evaluation and choice An environmental scan will highlight all pertinent aspects that affect an organization, whether external or sector/industry-based. Such an occurrence will also uncover areas to capitalise on, in addition to areas in which expansion may be unwise. These options, once identified, have to be vetted and screened by an organization. In addition to ascertaining the suitability, feasibility and acceptability of an option, the actual modes of progress have to be determined. These pertain to:

The basis of competition Companies derive competitive advantage from how an organization produces its products, how it acts within a market relative to its competitors, or other aspects of the business. Specific approaches may include:

Differentiation, in which products compete by offering a unique combination of features. Apple's products typically compete via differentiation.

Cost, in which products compete to offer an acceptable list of features at the lowest possible cost.

Segmentation, in which products are tailored for the unique needs of a specific market, instead of trying to serve all consumers.

Evaluating strategy Johnson, Scholes and Whittington present a model in which strategic options are evaluated against three key success criteria:

Suitability; does the strategy effectively address the mission? Feasibility; can it be made to work? Acceptability; will stakeholders accept the strategy?

Suitability Suitability deals with the overall rationale of the strategy.

Does the strategy address the mission?

Does it reflect the organization's capabilities? Does it make economic sense?

Evaluation tools include strength, weakness, opportunity, threat (SWOT) analysis. Feasibility Feasibility is concerned with whether the organization has the resources required to implement the strategy. Resources include capital, people, time, market access and expertise.

Evaluation tools include :

cash flow analysis and forecasting break-even analysis resource deployment analysis

Acceptability Acceptability is concerned with the expectations of the identified stakeholders (shareholders, employees and customers, etc.) with the expected financial and non-financial outcomes. Return deals with stakeholder benefits. Risk deals with the probability and consequences of failure. Employees are particularly likely to have concerns about non-financial issues such as working conditions and outsourcing.

Evaluation tools include:

what-if analysis stakeholder mapping

Implementation While products and services that fit the strategy may receive additional investment, those that don't must also be addressed, either via consolidation with another product/service, divestment to another firm, immediate retirement or harvesting without further investment.

Additionally, the exact means of implementing a strategy needs to be considered. These points range from:

Alliances with other firms to fill capability/technology/legal gaps Investment in internal development Mergers/acquisitions of products or firms to reduce time to market

Countries such as India and China require market entrants to operate via partnerships with local firms. Strategic implementation and control Implementing a strategy involves organising, resourcing and employing change management procedures. Organizing Implementing a strategy may require organizational changes, such as creating new units, merging existing ones or even switching from a geographical structure to a functional one or vice versa.

Resourcing Implementation may require significant budget shifts, impacting human resources and capital expenditure. Change management Implementing a strategy may have effects that ripple across an organization. Minimizing disruption can reduce costs and save time. One approach is to appoint an individual to champion the changes, address and eventually enlist opponents and proactively identify and mitigate problems. Alignment In 2010 the Rotterdam School of Management together with the Erasmus School of Economics introduced the S-ray Alignment Scan, which is a visual representation of strategy measured against the level of understanding and implementation of various parts of the organization. In 2011 Erasmus University of Rotterdam introduced S-ray Diagnostics, a spin-off of this cooperation, focused on measuring strategic alignment of organizations.

Growth strategy
1. Market segmentation Market segmentation simply means picking a sub-set of the entire marketplace that you can organize your sales efforts around. Out of all the people in the world, who will you try to sell to? Most big businesses are good at carving out their corner of the market. Then they do whatever they can to own that space. Red Bull gets its energy drinks in front of a young, adventurous crowd: its segment of the market. Have you wondered why Red Bull owns a Formula One racing team? Thats why. Pepsi was losing its battle with Coca-Cola to become the heavyweight cola company. Instead of trying to beat Coke at its own game, Pepsi focused on a young, fun-loving demographic. Many Pepsi commercials show younger music stars, celebrities or other young status symbols. In other words, Pepsi stopped targeting the over-30 crowd and segmented its market. Coke is still the top dog, but thanks partially to market segmentation; Pepsi has built a very successful brand as well. Most small business owners would be happy with building the next Pepsi, but many are afraid to eliminate part of a potential market. It can seem scary, but you need to focus on your core customer if you want a clear path to growth. Segmenting your market comes down to making choices. Who will you serve? Who will you avoid? And which segment can you focus on to improve profitability?

2. Leveraging partnerships Some small business owners love to complain about how they can't compete with the vendor relationships that the big guys enjoy. Its true you can't "pay to play" like the Fortune 500s, but you can leverage partnerships in a savvy way. For example, let's say your small business makes tennis balls and you have a technology that makes the balls bounce better and last longer. You have a great product, but you don't have a manufacturing facility, a distribution channel or any of the other parts of the tennis-ball supply chain. All you have are great tennis balls. You may not be able to compete with the big industry players like Wilson, Penn or Prince for sponsorships or tournament partnerships, but you could partner with a tennis-ball factory and a distribution company. In fact, you could partner with them without having to pay a cent for your own factory or distribution. Just pay your partners a portion of the profit every time you sell a tennis ball. The result? You negotiate for mainstream production and distribution without paying the huge upfront cost of building a plant or hiring a shipping company. Now you can focus on selling tennis balls instead of worrying about making them. Big businesses can pay for partnerships up front. Small businesses have to negotiate for partnerships that pay per sale. 3. Use checklists

Big businesses have massive facilities, complex supply chains and large equipment. Managing the day-to-day operations in these environments is too complex for one person. There are too many variables to track. Guess what? Small businesses are the same way. Small business owners have to wear many hats. If you don't hold yourself accountable and remind yourself to do something that "brings home the bacon," then it's easy to get caught up doing things that aren't essential. In the rush of a normal day, it's also easy to forget to do a critical task. Take a page from big business and develop process lists or checklists for specific tasks and jobs. Give yourself a guide to success and a reminder to do the essentials each day. 4. Acquisitions Perhaps the primary way that most big businesses grow is through acquisitions. Before you think I'm off my rocker by suggesting this move for small businesses, let me explain. First, acquisitions are tough. You can easily break the bank with one bad purchase. That said, acquisitions can be a massive source of profit and a means to growth if you make a few key moves. You know what's a good buy in your industry. Follow tip No. 3 and keep to a specific list of characteristics that you're looking for. Don't let emotion or ego play a role in a major purchase. Stick to the checklist. Secondly, do you have the budget to buy up everyone in the industry? Probably not. I'm not suggesting that you buy something you can't afford. But you can afford some businesses, especially those that you can improve. Don't dismiss acquisitions just because you're small.

5. Become a leader in the industry Big businesses often make their name by leading an industry. They make moves when other businesses sit by the wayside. I was recently talking with the employees of a large distribution company that wants to do business in China. There's just one problem: The distribution company ships products for other companies and those businesses don't trust the distribution channels in China yet. As a result, the distribution company isn't selling in that region. If there are no products to ship to an area, the company doesn't set up distribution in that area. But if theres no reliable distribution network, nobody ships products. It becomes a chicken or egg problem where neither side wants to move first. So what does this company do? They say, "We know you don't like the distribution there, so we're going to fix it. Then, you can give us all of your business in China." Is it a bold move? Yes. Is it an expensive move? Yes. Is anyone else currently doing it? No. Does that mean that there is a huge opportunity for growth? Yes. What's the lesson for small businesses? Don't be afraid to solve the hard problems that everyone else avoids. There is a lot of money to be made when you're the first person to fix something.

Case study big bazaar

Company profile Kishore Biyani led the companys foray into organized retail with the opening up of the BigBazaar in the year 2001.

It is a unit of Pantaloon Retail (India) Ltd and caters to the Great Indian Middle Class. It was started as a hypermarket format head quartered in Jogeshwari, Mumbai with approx. 50,000 sqft of space. Its values and missions are to be the best in Value Retailing by providing the cheapestprices and hence go the tag-lineIs se sasta aur achcha kahin nahinIt sells variety of merchandise at affordable rates, the prices of which it claims are lowest in thecity. Usually the items are clubbed together for offers as on the lines of Wal-Mart and Carrefour,offer weekend discounts and works on the same economy model as Wal-Mart and hasconsiderable success in many Indian cities and small towns.It currently operates out of more than 150 stores and top 25 stores register a cumulative foot fall of 30 lakh a month on an average.There is always a first mover advantage in an upcoming sector. In India, that advantage goes toBig Bazaar. It has brought about many changes in the buying habits of people. It has created formats which provide all items under one roof at low rates, or so it claims.Also, with the ever increasing array of private labels, it has opened the doors into the world of fashion and general merchandise including Home furnishings, utensils, crockery, cutlery, sports goods and much more at prices that will surprise you. First Food Bazaar format was added as Shop-In-Shop within Big Bazaar in the year 2002.Big Bazaar and Food Bazaar blend the look feel and touch of Indian Bazaar with

modern retail concepts of choice, convenience and quality.And this is just the beginning. Big Bazaar plans to add much more to complete your shopping experience

Target audience Big Bazaar targets higher and upper middle class customers The large and growing young working population is a preferred customer segment Targets specifically working women and home makers who are the primary decision makers

Big bazaar usp 1Billion population.

Availability of Liquid Cash \Disposable Income among Young Generation

Affordable man power Craze, Passion among Mr. Customer (Consumer)

More products .Under ONE roof

Affordable price

Schemes buy 1 get 1 free

Strategy by big bazaar

The strategic decisions that lead to building of Big Bazaar were:-

Real estate game

For a retailer, location is one of the most important things. According to KB, real estate costshould be less than 5 % of total sales of store in order to provide maximum benefits to customer.The strategic decisions to secure spaces before other retailers join in have resulted in cost-saving.Also, it has created early presence in market. Nurturing relationships KB follows strategy to develop trust and nurture relationships with suppliers. This trust ledto strategically correct decisions most of the time. Whoever works with Future Group, eitherleaves in initial deals or continues forever. Use of technology, scenario planning and story-telling Big Bazaar planning and design used advance technologies like scenario planning andstorytelling. These techniques were mainly used for store-design layout, store-location selection.The strategy to use user-focused, prototype-based development tool made the brand adapt to thefast-changing external environment.

Design management

Design-led thinking helped Big Bazaar to achieve customer-first objective and ultimately lead to better financial performance. Big Bazaar strategy to focus on design led to creation of Idiom,an independent design and consultancy firm, based in Bangalore. They are one of the few organizations in India having economist, ethnographers and sociologists working across variousteams as a part of Design management team. Backend operations, supply chain HarvardBusiness School just did a case study on Pantaloons' supply chain and it says that Pantaloons' is the most cost-effective supply chain in the world. India may not have a modern supply chain but it definitely has a cost-effective one. Retailers have made use of the existing supply chain.

Big bazaar marketing strategy Big Bazaar has launched new marketing strategy which is based on Guerrilla Marketing. Guerrillamarketing warfare strategies are a type of marketing warfare strategy designed to weardown the enemy by a long series of minor attacks, using principles of surprise and hit-and-run tactics. Attack,retreat, hide, then do it again, and again, until the competitor moves on to other markets. Hereinguerrilla force is divided into small groups that selectively attack the target at its weak points.Corporate like Coke, Pepsi, etc have been using the same for quite some time now and the latestentrant is Future Group- Big Bazaar, Pantaloons, Future Bazaar, eZone are all part of this groupand they are taking on the biggies like Shoppers Stop, Lifestyle, and Tatas Westside.In order to do the same, Future Group have come up with 3 catchy/cocky and cheeky adcampaigns which surely do catch our eyes and surely one cant resist appreciating the same

Challenges Waiting time in terms of Billing at Big Bazaar outlets is a concern and more so during the weekends. And during our personal observation while observing the operations(Though it was for 3-4 hours which is a short period of time),it was noted that few customers who had little to purchase, left their trolleys due to long queue at the counter The store has too many things at the same place. The floor plan has to be structurally laid out so that merchandising can be efficiently handled and displayed.

Availability of most exclusive brands under all categories

Product Uniqueness- Offer merchandise of highest quality

After Sale Service

Uniqueness Shopping Experience: The Store personnel should be more friendly and easy approachable, you should also offer drinking water, lime soda or tea to the customers once they enter in the store

Introduce best Promotional campaigns which make sense and also understandable to attract distant city crowd

Recommendation After analysing the retail market in India as well as understanding the consumer buying behavior as well as consumer understandings few recommendations made which can help big retail players to make sustainable existance in near and far future in the highly cometitive market.

Retailing through Internet & web based technologies.

Big Bazaar needs to focus more on Customer Relationship Management {CRM} and improved in-store assistance (Building loyal customers base and developing a more profitable loyalty cycle).

Customer Care Centre to guide and counsel about customer loyalty program.

Training must be provided to sales personnel not only of their counters but for other functions also. Job rotation and training will enhance their knowledge, job profile and boost the morale of employees to effectively perform their duties and the responsibilities.

Stress Buster Exercises must be organized during evenings in sessions as employees have to stand all throughout the day.

More hoardings could be placed that could bring awareness to people (at metro station).

More brands should be included.

Exchange offers must be made clear as the consumers are often not clear about how touse them.

Seating arrangements must be made for customers as well as for employees also.

Customers usually face problem in billing their purchased goods. Waiting in long queues forces them to leave certain products thereby loss of sale to Big Bazaar. So billing counters must be increased and employees at the billing should be given training so that they could bill the products in much lesser time and the people at the billing stations should have the information about the special offers and the events that are being conducted at the store so that the customer inflow can be accordingly handled

Care to be taken to maintain proper inventory levels and the varieties and offer thecustomer what is needed rather than offering what is available.(Brands like Nike, Adidas,Reebok,etc)

Invest in supply chain infrastructure

Ease distribution infrastructure creation

Aggressive expansive plans in II tier cities will open up new world of opportunities

Added on facilities like Home Delivery and to an extent credit it plays an important rolein Customer Acquisition and retention programs.

Offer most exclusive brands under all categories

Conclusion
Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment." Strategic Management can also be defined as "the identification of the purpose of the organisation and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organisation and its environment to achieve organisational goals.

Bibliography
www.wikipedia.com

www.scribd.com Strategic Planning for Public and Nonprofit Organizations - John M. Bryson