 Strategy and its types

 Strategic management,nature,scope.
 Process of strategic management.
 Business policy , its characteristics,importance and
types.
 Norms of strategy making
 Corporate objectives, its characteristics,role and
types.
 Strategy making
 Strategic advantage, factors of common concern.
 Internal analysis.
 Derived from greek word strategos (means
generalship)
 Plan or action designed to achieve a long
term objective or overall aim.
 It bridge the gap from “ where we are” to
“where we want to”
A method or plan chosen to bring
about a desired future, such as
achievement of a goal or solution
to a problem.
(businessdictionary.com)
 Corporate
Headquarters
Corporate - General Electric
Division A Division B Division C

Business - Home Appliances

R&D R&D R&D

HR HR HR

Finance Finance Finance

Functional - Production, HR etc.
Production Production Production

Mktg/Sales Mktg/Sales Mktg/Sales

4
 Strategic making is the multistage process of
decision making identifying broad areas of
path to be taken first and applying additional
criteria to decide the final strategy.
 Insights coming from external and internal
analysis helps in decision making in addition
to the mission and vision
 A strategy should leverage existing assets and
capabilities
 Difficult for competitors to imitate
 Based more on intangible assets of firm
 Strategy should be the one that generate or use safe
substitutes of natural resource
 Must be aligned with mission, vision, and strategic
objectives
 Should ensure that risk are manageable and should not
threaten the survival of the firm
 Must engage society or customer segments in positive
way
 A strategy should result in enough cash surplus to
cushion unexpected shocks and give desired ROI
 In 1911 ,harvard business school introduced
an integrative course in management aim at
creation of general management capability.
 The course was based on case studies.
 In 1969,american assembly of collegiate
school of business ,a regulatory body for
business schools made business policy a
manadatory course.
 Later on different terms were used for the
course including strategic
management,corporate strategy etc.
Strategic Management: a set of managerial decisions
and actions that determines the long-run performance
of a corporation.

Includes:
 Internal and external environment scanning
 Strategy formulation
 Strategy implementation
 Evaluation and control

Prentice Hall, 2012 4/12/2019 1-8

 Understanding how firms create, capture, and
sustain competitive advantage.

 Analyzing strategic business situations and

formulating strategic plans.

 Implementing strategy and organizing the firm

for strategic success.

9
 Benefits of Strategic Management:
 Clearer sense of strategic vision for the firm
 Sharper focus on what is strategically important
 Improved understanding of a rapidly changing
environment.
 Improved organizational performance
 Achieves a match between the organization’s
environment and its strategy, structure and
processes
 Important in unstable environments

1-
Prentice Hall, 2012 4/12/2019 10
 •Vision, mission, business defination, adopting business model, setting
objective
Establishing
strategic intent

•Swot analysis,corporate business level strategy

Strategy •Organizational analysis,enviromental analysis
formulation

•Project, procedural,functional,behavioural
Strategy
implementation

•Evaluation, strategic control,reforming strategy.

Strategy
evaluation
 An organization’s strategic intent is the
purpose that it exists and why it will continue
to exist, providing it maintains a competitive
advantage.
 Strategic intent differs from strategic fit in a
way that while strategic fit deals with
harmonizing available resources and
potentials to the external environment,
strategic intent emphasizes on building new
resources and potentials so as to create and
exploit future opportunities
 Mission statement is the statement of the role
by which an organization intends to serve it’s
stakeholders.
 It describes what the organization does (i.e.,
present capabilities), who all it serves (i.e.,
stakeholders) and what makes an
organization unique (i.e., reason for
existence).
 Microsoft’s mission is to help people and
businesses throughout the world to realize
their full potential.
 A vision statement identifies where the
organization wants or intends to be in future
or where it should be to best meet the needs
of the stakeholders. It describes dreams and
aspirations for future.
 Microsoft’s vision is “to empower people
through great software, any time, any place,
or any device
 Strategy formulation refers to the process of
choosing the most appropriate course of
action for the realization of organizational
goals and objectives and thereby achieving
the organizational vision
 Internal environment : refers to all the factors
within an organization that impact strength
or cause weakness.
 The external environment includes all the
factors outside the organization which
provides opportunities or pose threats to the
organization.
 Porters 5 forces,PESTLE analysis
 Asking four questions
 How do we maximise our strengths.
 How do we minimise our weakness.
 How do we capitalise on the opportunities in
our external environment.
 How do we protect ourselves from the threat
in our external environment.
 Done through Ansoff model.
 Developing an organization having potential
of carrying out strategy successfully.
 Disbursement of abundant resources to
strategy-essential activities.
 Creating strategy-encouraging policies.
 Employing best policies and programs for
constant improvement.
 Linking reward structure to accomplishment
of results.
 Making use of strategic leadership
 strategy

plans

programs

projects

budgets

Policies,procedures,rules and regulations

 Strategic evaluation is the assessment
process that provide executives and
managers performance information about
programs, projects and activities designed to
meet business goals and objectives.
 Include three steps.
 Fixing benchmark of performance.
 Measurement of performance.
 Analyzing the varaince.
 It is the aggregate of the policy guidelines of
different functional areas viz. production,
marketing, finance etc. in a company.
 It is the major guidelines drawn by the board of
directors to regulate the overall direction in which
company should move.
Or
 It is a statement or general understanding which
provides guidance in decision making to members
of organization in relation to the course of action.
 Helps in right decision
 Ensures uniformity
 Minimize deviations from goal
 Knowledge of internal and external
environment and how it effects functioning of
organization
 Application of generalised approach to deal
with wide variety of situations
 Specific- Policy should be specific/definite
 Clear- Policy must be unambiguous
 Reliable/Uniform- Policy must be uniform enough so that it
can be efficiently followed by the subordinates.
 Appropriate- Policy should be appropriate to the present
organizational goal.
 Simple- A policy should be simple and easily understood by
all in the organization.
 Flexible- Policy should be flexible in operation/application
 Stable- Policy should be stable else it will lead to
indecisiveness and uncertainty in minds of those who look
into it for guidance.
 Originated & Derived
 Biased
 Public
 Private
 General
 Rigid & flexible
 Top down & bottom up
 Appealed & implied
 Refers to desired result that an organization
wishes to accomplish by a desired set of
action.
Or
 Objectives are organization performance
targets - The results and outcomes it want to
achieve
 Should define the organization relation with
environment
 Should facilitate towards achievement of
mission and purpose
 Provides standards for performance
appraisal
 Should be related to time frame
 Should be challenging
 Should be set with constraints
 Should correlate with each other
 External/ institutional : define impact of
organization on environment.
Eg.. To develop high degree of customer
confidence by sustaining high standard of
quality
 Internal: how much is to be expected with
the resources that organization has.
Eg.. to raise the avearge rate of investment
by 15%
 If a company has a strategic advantage that
means it has that particular characteristics or
way of doing things that make it more
successful than its competitors.
 Organizational capability that make it
superior than others.
 Strategic advantage is a result of
organizational capabilities . The advantages
can be measured in terms of profit, market
share, growth etc. negative results indicate
strategic disadvantages. When compared with
known identified rivals the strategic
advantage is also known as competitive
advantage.
 Financial : Availibility of fund, usage of fund and
management of fund.(eg.. Reliance, Tata group)
 Marketing : Pricing, Promotion, Marketing,
Distribution,(4P’s), (eg.. Parle, Jio).
 Operation: product layout, technology, quality, R&D,
control operation. (eg.. Dell).
 Personnel : Recruitment, selection, employee
characteristics, training, grievance handling, industrial
relation. (eg.. Infosys, PNB)
 Informational system : Flow of information, reliability
(eg.. SBI,GE)
 General management : Leadership style (eg.. Google).
 The process by which organization monitor
the relevant environment to identify the
threats and opportunities.
Factors involved
 Political
 Social-cultural
 Market
 Economic
 Technical
 Economic policies such as fiscal, monetory.
 Economic planing such as five year plans.
 Economic indices such as national income,
distribution of income, GDP and GNP.
 Economic structure adopted such as
capitiaistic, socialistic.
 Effect of poverty and recession.
Market :
 Customer factors like needs, wants interest of
customers.
 Product factors: demand , image,
features,utility function, design and lifecycle.
 Marketing intermediary: level and quality of
customer service,middleman, distribution
channels and logistics cost.
 Competitor related factors: different type of
competitors,entry and their exist , nature of
competition.etc.
 Nature of political system,political parties,
centre of power.
 The political structure, goals and stability.
 Government role in business.
 Political process like operation of party
system, elections , funding of elections etc.
 Legislation like workman compensation act,
trade union act etc.
 Demographic characteristics like population,
density distribution age etc.
 Socio cultural attitude and values such as
expectation of society from business
,changing lifestyle pattern and materialism.
 Role and position of men, women child etc.
 Educational level,awareness and
consciousness of rights,work ethics.
 Sources of technology like company sources,
external sources and foreign sources, cost of
technology.
 Technological development, stages of
development, rate of change of technology.
 Impact of technology on human being and
environment.
 Communication and infrastructural
technology.
 Employee engagement.
 Systematic : information for environmental
scanning is collected systematically.for ex.:
information related to markets and
customers, legislative
information,government policy, political
issues.
 Ad hoc: organization conduct special surveys
and studies to deal with specific
environmental issues from time to time. Ex :
for special projects.
 Organization use information in processed
form available from different sources.
 Also known as internal appraisal,resource
audit ,organizational appraisal,organzational
analysis, is a process of determining the
organization capability in terms of strength
and weakness.
 Internal sources : company manual, IMS files ,
documents, database ,balance sheets.

 External sources: market Intermediaries,

suppliers,marketing research agency.
 (Ex: employee govt reports, newspapers and
magazines.)
 Capacity of strategist.
 Size of organization.
 Internal environment of organization
(conflicts, cohesiveness )
 Marketing/distribution

Finance and accounting

Production,manfacturing and engineering

Internal
analysis Personal and labour relations

Research and development

Corporate resources and management.

 Competitive position and market share
 Product line
 Product life cycle
 Pricing strategy
 Nature of market
 Channels of distribution
 Brand image
 Market research
 Packaging
 Marketing policy
 Financial resources and strength
 Capital structure and cost of capital
 Relationship with owners(shareholders)
 Financial planning and budgeting
 Accounting system and audit procedure
 Tax planning and tax advantages
 Cost of operations
 Capacity utilisation
 Production facilities
 Cost and availability of material and
components.
 Plant location.
 Purchasing and inventory control.
 Operations procedures
 Production control and management
information
 Facilities created
 R&D expenditure
 Result of R&D efforts
 Technical expertise and personnel
 Work environment
 Nature of R&D projects
 Organizational climate
 Employee performance record
 Personnel policies and practices
 Managerial leadership style
 Union-management relation
 Corporate image
 Managers
 Organisational climate
 Organisational competence
 Set of interlinked value creating activities
 Primary activities : related to flow of product to the customers.
 Secondary activities: activities provided to support primary activities.

Primary activities Secondary activities

Inbound logistics Infrastructure

Operations HRM

Outbound logistics Technology

Marketing and sales Procurement

service
 Valuable : Organizational capabilities that help it to generate
revenues by utilising opportunities and neutralising threats.

Eg. Ability to generate revenue by amicable relationship with

government.

Rare: organization capability that is possessed by firm

uniquely or just by few other firms .
Eg. Plant location.
Inimitable : Organization capability possessed by firm that is
very difficult or impossible by the competitors to imitate.
Eg. Brand image.

 Organised for usage: organization capability possessed by the

firm that could be used through appropriate organization
structure,business process etc.

Eg . Expertise personnel that can be used for manufacturing of

innovative products.
 Consist of analysing the critical dimensions
of management and assessing the strength
and weakness on that basis .
Facilities Personne Operation Managemen
equippe l skills al t capabilities
d capabilitie
s
General
manage
ment
and
finance
R&D
Producti
on
 Synergistic effect: synergy is an idea that whole is greater or
lesser than sum of its part. Can be expressed as two plus two is
equal to five or three effect.
 Mission : a statement that define the role an organization plays
in a society.
Or
a purpose or reason for which organization exist.
 Vision : it is what a firm or person whould like to become.
Or
it articulates a position that a firm would like to attain in a
distant future.
 Involves evaluation of organizational
performance from four perspectives

 Financial
 Internal business perspective
 Customer perspective
 Innovation /learning