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Upendra Kachru
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An organizations can be either developed explicitly through a planning process or evolved implicitly.
What business are we in? What products and services will we offer? To whom? At what prices? On what terms? Against which competitors? On what basis will we compete?
If the organization asks these key questions and it has the answers, then there is a strategy in place.
Some Definitions
Strategic Management is a continuous activity of setting and maintaining the strategic direction of the organization and its business, and making decisions on a day-to-day basis to deal with changing circumstances and the challenges of the business environment.
Some Definitions
Strategic Management is a dynamic process of aligning strategies, performance and business results; it is all about people, leadership, technology and processes.
Strategic Management
Firm
Competitive Advantage Shareholder Value
Strategy
Profit
Strategic Management: goal and set of policies designed to achieve competitive advantage in a particular marketplace Competitive Advantage: ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors
Imperfect Competition
Few competitors, numerous suppliers and buyers Asymmetric Information Heterogeneous Products Barriers to entry
Supernormal Profits
Only one player and no competition. Creates absolute competitive advantage. Prof. Upendra Kachru
Characteristics of Strategy
Strategy is a comprehensive master plan stating HOW the firm will achieve competitive advantage and meet its objectives. Strategy has a number of dimensions to it that need to be considered in devloping the master plan.
Prof. Upendra Kachru
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Historical Evolution
The dominant theme, main issues, principal concepts and implications of strategy have evolved over time.
Period Dominant Theme 1950s Budgetary Planning & Control 1960s Long term Planning & Environmental Scanning 1970s Environment Scanning & Strategic Planning 1980s Strategic Planning Systems Approach 1990s The quest for Competitive Advantage
Main Issues
Portfolio Planning
Organizational Implications
Levels of Strategies
There are three levels at which strategy is enacted:
Corporate - a corporations overall direction and the management of its businesses. Business - emphasizes improving the competitive position of a corporations products or services in a specific industry or market segment. Functional - concerned with developing a distinctive competence to provide a company or business unit with a competitive advantage.
Prof. Upendra Kachru
Hierarchy of Strategy
Corporate Headquarters Corporate Strategy
Manufacturing
Finance
Marketing
Human Resources
Functional Strategy
Corporate Strategy
Business Strategy
Evolve business goals; Set objectives that are achievable; Evolve and develop a competitive strategy; Create an effective organizational structure and arrange resources; and Evaluate performance so that necessary corrective measures can be taken.
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Its aim is to form a view on the key factors that will have an affect on the future well being of the firm.
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Making choices and decisions is at the heart of strategic management process.
3
It is concerned with the translation of strategy into action.
Strategic Analysis
Internal Scrutiny
Strategic Analysis
Market
Evaluation
Implementation
1(a)
1(b) Examine and Evaluate the Current: Mission Objectives Strategies Policies
6(a)
SUMMING UP
Long term direction Achieve advantage Change scope of activities Commit major resources Build or stretch resources Major Impact outside the organization Entails significant risks Major effect on operational decisions Complex and cross-cutting interactions Changes values and expectations
Strategic Management co-ordinates and integrates business activities: It addresses the needs of the consumer, and provides greater efficiency and value for money to the stake holders. Strategic Management strengthens the competitive position: It helps develop and maintain meaningful assets and skills such that they form a sustainable competitive advantage. Strategic Management satisfies Customers: It sees how best the firm can satisfy the needs of the people that will use its services and products. Strategic Management works toward achieving Performance Targets: It evaluates the execution of activities related to strategic issues and goals. Strategic Management is adaptive: It keeps an organization relevant.
Strategy Formulation
Mission
Reason for existence
Strategy Implementation
Objectives
What results to accomplish by when
Strategies
Plan to achieve the mission & objectives
Policies
Broad guidelines for decision making
Internal
Structure Chain of Command
Programs
Activities needed to accomplish a plan
Budgets
Cost of the programs
Procedures
Sequence of steps needed to do the job
Performance
Feedback/Learning