Strategic Management

Structure of this session:

Course Outline

Group Formation

Individual Worksheets / Exercises

What is Strategy and Companys Vision & Mission?

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 Strategic Management

If you win, no need to explain. If you lose, you wont be there to

explain
(Adolf Hitler)

If you win, what will be the scenario?

Everyone will try to know how you have done it. They will utilise
their time and energy in understanding what all you did

If you lose, what will be the scenario?

You will not be there in the game. Others will not be interested in
you. However, some of them might try to understand the reasons
of your failure

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 Strategic Management
Origin of the concept of strategy is from military strategy in
military often refers to manoeuvring troops into position before
enemy attack

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 Strategic Management
Strategy as plan, ploy, pattern, position and perspective
(Minstzberg)

Plan Intended course of action

Ploy Specific manoeuvre intended to defeat a rival

Pattern Consistency in action

Position Best match between company and environment within

which company operates

Perspective The ways in which the members of the company are

viewing the external reality (world)
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 Strategic Management
A strategy is an integrated and coordinated set of commitments
and actions designed to exploit core competencies and gain a
competitive advantage (Hitt et al., 2012: 6)

When a value-creating strategy is implemented, the company is

bound to gain strategic competitiveness

There has to be a distinctive aha element in your strategy to be

successful than others

Synergy effect Binding all the organisational activities, that is, 2 +

2=5

Good Strategy + Good Strategy Execution = Good Management

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 Strategic Management
A companys strategy is all about how

How management intends to grow the business?

How it will build a loyal clientele and outcompete rivals?
How each functional piece of the business will be operated?
How performance will be boosted?

A companys strategy is always WIP (Work In Progress). In other

words, it is fluid in nature

Companys strategy evolves incrementally from managements

ongoing efforts

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 Strategic Management
Strategy involves the following:

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 Strategic Management

Mintzberg classifies strategy as intended strategy, realised strategy

and emergent strategy:

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 Strategic Management

(i) Intended strategy that is realized (achieved) is called a deliberate

strategy

(ii) Intended strategy that does not get realized due to reasons like out
of the reach anticipations, incorrect assessment of environment or
issues with implementation is termed as an unrealized strategy

(iii) Realized strategy that was not intended at the beginning or was
discarded due to reasons given in point (ii) is known as an emergent
strategy

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 Strategic Management

Strategy and Ethics go hand-in-hand?

Is it ethical for manufacturers of life-saving drugs to charge higher

prices?

Is it ethical for advertisers of alcoholic products to showcase their

products in front of underage / minor individuals?

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 Strategic Management

Strategies can be fraudulent (for instance, accounting practices) in

companies like Enron (Energy), WorldCom (Telecommunications),
Satyam (IT), etc.
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 Strategic Management

The concept of competitive strategy has been considerably influenced

by the work of Michael Porter of Harvard Business School

In 1980, Porter defined competitive strategy as a combination of the

ends (goals) for which the firm is striving and the means (policies) by
which it is seeking to get there

The 'Wheel of Competitive Strategy' formulated by Porter indicates

ten spokes on the wheel which denote the factors (means) through
which solutions (goals) can be achieved (1980)

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 Strategic Management
The Wheel of Competitive Strategy (Michael Porter)

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Context within which Competitive Strategy is Formulated

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Competitive advantage is the key to above-average profitability

When competitors are unable to imitate a companys strategy

because of reasons like cost or complexity, that company is said to
have achieved competitive advantage

Investors expect to achieve competitive advantage Returns more

than expected

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 Strategic Management
Stakeholders People who are affected by a firms performance and who
have claims on its performance

Capital Market Stakeholders

Shareholders, Capital
Supplier (e.g. Bank)

Product Market Stakeholders

Primary customers, Suppliers,
Host communities, Union

Organizational Stakeholders
Employees, Managers,
Non-managers
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 Strategic Management
Levels of Strategies or Types of Strategies

Corporate-level strategy

Business-level strategy

Operational-level strategy

What is a Strategic Business Unit (SBU)?

A 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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Strategies can be Reactive and Pro-active

Reactive It is already
Pro-active It might rain
raining

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Vision is about an entrepreneurs dream It is about the big

picture

There are three categories of people the person who goes into
the office, puts his feet up on his desk, and dreams for 12 hours;
the person who arrives at 5 am and works for 16 hours, never once
stopping to dream; and the person who puts his feet up, dreams for
one hour, then does something about those dreams

Steven Ross Time Warner (Media and Entertainment)

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Porsches Mission:

Ferry Porsche In the beginning, I looked around and could not

find the car I'd been dreaming of: a small, lightweight sports car
that uses energy efficiently. So I decided to build it myself

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Altering Companys Vision:

By modifying vision often, the company is altering its core beliefs

and values which regardless of business climate, profit or loss
should be kept constant

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Strategic leaders have opportunity to dream and act

Strategic Leaders: Are they the CEOs and other top level
managers?

People who are the closest to the action should be allowed to

take decisions delegation of strategic responsibilities at various
levels is necessary

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 Strategic Management
Mission: The mission of a company sets the direction for realising
the dream

It is the expression of the vision The vision of a company is spelt

out in the form of a mission statement

Mission conveys how vision will be achieved in terms of defining

the business, its customer group and about its technology and
competencies

Aditya Birla Group Mission is to deliver superior value to our

customers, shareholders, employees and society at large

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 Strategic Management
Hypercompetition This situation arises when the competition
escalates very rapidly

Is the spread of technology responsible for this?

Examples:
Technology diffusion and access to telephone, T.V. and internet in
India

Reverse innovation Handheld electro-cardiogram machines and

PC based ultra sound machine exported from developing countries
to developed countries

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 Strategic Management

Business Model: A companys business model explains the

rationale for why its business approach and strategy will be a
money-maker

Failure to deliver good profitability indicates that the strategy is

not viable and the survival of the business is in doubt

Example: McDonalds business model for fast food depends upon

economical quick-service meals at clean, convenient locations

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What is Strategic Management?
The SM is not only concerned with taking decisions about major
issues facing the organization but also concerned with ensuring
that the strategy is put into effect. It can be thought as having 3
main elements strategic position, strategic choice and strategic
implementation within it (Johnson and Scholes)

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Strategic Management

The Strategic Position

[Environment, Capability,
Culture, Purpose]

Strategic Choices
Strategy in Action
[Corporate-level,
[Processes, Resourcing,
Business-level,
Practice, Changing,
International,
Organising]
Innovation, Evaluation]

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