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Strategic vs.

Operational Management,
Levels of Strategy
Strategy and Operations
Strategic Management Operational Management
Organisation-wide Routinised
Conceptualisation of Techniques and actions
issues
Creating new directions Managing existing resources
Developing new Operating within existing
resources strategy
Ambiguous/uncertain Operationally specific
Long term Day to day issues

Prof. Nitin Bolinjkar 2


Strategy Levels
Corporate Level Strategy Business Unit Level
Strategy
‘Where’ to compete? ‘How’ to compete in an
industry?
• Definition of business & How to create and
deployment of maintain competitive
resources. advantage in selected
• Which businesses to industry.
add, retain, emphasize,
divest etc.

Prof. Nitin Bolinjkar 3


Characteristics of Strategic
Management Decisions
CORPORATE: Board of BUSINESS: Business FUNCTIONAL: Product,
directors, CEO & and corporate geographic, and
administration managers functional area
managers
- Responsible for firms - Help bridge - Implement the
financial performance, decisions at the overall strategy
achievement of non- corporate and formulated at the
financial goals, functional levels corporate and
enhancing firms image - Translate corporate business levels
Responsibi- and fulfilling it’s social level direction and - Involve action-
lities responsibilities. intent into concrete oriented and
- Essential focus is objectives and operational issues
exploiting firms strategies for SBU’s.
distinctive competencies
for shareholders and
society at large.

Prof. Nitin Bolinjkar 4


Characteristics of Strategic
Management Decisions (2)
CORPORATE: Board of BUSINESS: Business FUNCTIONAL: Product,
directors, CEO & and corporate geographic, and
administration managers functional area
managers
High; require large Less costly, risky, and Relatively low risk &
Risk/Cost/ amounts of the firm’s potentially profitable modest costs
Profit resources and often than corporate-level depending on
Potential affect the firm’s long- decisions availability of
term prosperity. resources.

Prof. Nitin Bolinjkar 5


Characteristics of Strategic
Management Decisions (3)
CORPORATE: Board of BUSINESS: Business FUNCTIONAL: Product,
directors, CEO & and corporate geographic, and
administration managers functional area
managers
Need for High Moderate Low
flexibility

Prof. Nitin Bolinjkar 6


Characteristics of Strategic
Management Decisions (4)
CORPORATE: Board of BUSINESS: Business FUNCTIONAL: Product,
directors, CEO & and corporate geographic, and
administration managers functional area
managers
Time horizons Long; 3 -5 years Short range Relatively short range

Prof. Nitin Bolinjkar 7


Characteristics of Strategic
Management Decisions (5)
CORPORATE: Board of BUSINESS: Business FUNCTIONAL: Product,
directors, CEO & and corporate geographic, and
administration managers functional area
managers
- Value oriented, How the firm will - Action oriented,
conceptual, less compete in the operational issues.
concrete. selected - Effectiveness of
- Which business firm product/market arena. production and
should be involved in, Plant location, marketing systems,
dividend policies, marketing quality of customer
Decisions
sources of long-term segmentation, and service, success of a
financing, and priorities distribution particular
for growth product/service in
increasing firms
market share,
inventory levels.

Prof. Nitin Bolinjkar 8


Management Skills
• Conceptual Skills – Cognitive ability to see the organization
as a whole and the relationships among its parts
• Human Skills – ability to work with and through other
people and to work effectively as a group member
• Technical Skills – understanding of and proficiency in the
performance of specific tasks

Prof. Nitin Bolinjkar 9


Formality in Strategic
Management
• Formality is the degree to which participation, responsibility, authority, and discretion in
decision-making are specified in strategic management
• Strategic Planning process can be less formal in smaller companies than larger
corporations. It is possible that heavy emphasis on structural plans can be dysfunctional in
a small enterprise because it detracts from the very flexibility that is a benefit of the small
size.
Mintzberg’s Decision Making Formality
Modes
Entrepreneurial Where decisions are taken by a powerful decision- smaller firms
maker.
Adaptive Where analysts integrate strategic decisions into medium size
systematic plans firms
Planning Where a coalition of decision-makers reacts to large firms
environmental pressures with small, disjointed steps

Most ventures begin in the Entrepreneurial Mode, and move towards the Planning Mode as the
company gets established, and finally moves towards the adaptive mode to continue its
strong growth. Also, one firm may have different modes, depending on product life cycles.
Prof. Nitin Bolinjkar 10
Forces Determining Formality
• Organizational Size
• Predominant Management Styles
• Complexity of Environment
• Production Process
• Problems in the Firm
• Purpose of the Planning System
• Stage of Firm’s Development

Prof. Nitin Bolinjkar 11


Strategic
Management as a Process
• Changes in any one component will affect other
components.
• Strategy formulation and implementation are
sequential.
• Necessity of feedback from institutionalization,
review, and evaluation to early stages of process
• Need to regard it as dynamic, involving constant
changes in interdependent strategic activities

Prof. Nitin Bolinjkar 12


The End