Strategic Management

Prof Bharat Nadkarni

STRATEGIC MANAGEMENT (MOST IMPORTANT)
•Business Environment
•Strategy – Definition, Mintzberg’s 5 P’s.
•Strategic Management Process
•Vision Mission Values
•Environmental Scanning and Organisational Scanning
•SWOT Analysis, Capabilities, Core Competencies, USP
•Business and Corporate level strategies
•Mike Porter’s Five Forces Model
•Mike Porter’s Diamond Model
•Strategies – Growth, Stability, Turnaround.
•Growth Strategy
a. Ansoff Model
b. Horizontal and Verticle expansion
c. Diversification
d. Internationalisation/Globalisation – EPRG model,
e. JV, M & A
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• Stability – incremental improvements
• Turnaround.
• Mckinsey’s 7 S model – Strategy, Style, Structure, Systems,
Staff, Skills, Shared values.
• V U C A environment
Knowledge Management and Organisational
Transformation, Managing Change, Creativity &
Innovation
• Red Blue and Purple Ocean theories
• TQM and BPR and Six Sigma
• BCG, GE matrix(Nine windows),
• Balance Score Card
• Core Values for Most Admired Organisation
• Corp Sustainability – CSR – 3 P, 4 E models
• Decision Making – Intuition, Planned, Adaptive, Incremental,
Behavioral & Political.
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Reference Books : Strategic Management

• by Michael Hitt / Ireland / Hoskisson

• by Azhar Kazmi

• by Adhikari

• by Kesho Prasad

• by Michael Porter
Business Excellence

Prof Bharat Nadkarni

 Strategic Mgmt

Business Environment

1. Internal Environment
Org. Structure ( I P O)
Input = 5M (Money, Manpower, Material, Machine,
Management)
Process = Predictable, Repeatable, Measurable
Output = Q P S S
Major Functions
Production, Marketing, Finance, H R
R & D, I T, Business Development
Internal Stakeholder
Employees
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International Business Environment
2. External Environment
a. External Micro Environment
External Stakeholders
(Shareholders, Customers, Suppliers, Govt.,Society)
and
Competitors

b. External Macro Environment

STEPIN
(Social, Technical, Economical, Political, International,
and Natural)
Survival Rate for Globalised Corporates

Age in Percentage Perish Percentage surviving

Years
5 62 38
10 79 21
15 86 14
20 90 10
25 93 7
50 98 2
75 99 1
100 99.50 0.50
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Who are the Stakeholders of Business ?

• Shareholders and Promoters

• Customers

• Employees

• Suppliers and Partners (incl Contractors, Agents etc)

• Government

• Society
Most Admired Business
“Balancing and Exceeding the Expectations of all it’s
Stakeholders.”

Effectiveness of Business
Achievement of Objectives.

Efficiency in Business
Achievement of Results with the least amount of
Resources.

Innovation
NDB
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Continuous Improvement for Sustainable Business

• Product Quality
• Technology
• Productivity
• Processes
• Organisational Culture
• Leadership
• Safety

Approach towards Market Maximisation

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What is Strategy?
Strategy can be defined as the determination of the basic long
term goals and objectives of an enterprise, and the adoption of
courses of action and the allocation of resources necessary for
carrying out these goals. Decisions to expand the volume of
activities, to set up distant plants and offices, to move into new
economic functions, or to become diversified along many lines
of business involve the defining of new basic goals. New
courses of action must be devised and resources allocated and
reallocated in order to achieve these goals and to maintain and
expand the firm’s activities in the new areas in response to
shifting demands, changing sources of supply, fluctuating
economic conditions, new technological developments, and the
actions of competitors.
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Definitions
C K Pralhad
Strategy can be defined as the determination of the basic long
term goals and objectives of an enterprise, the adoption of
courses of action and the allocation of resources necessary for
carrying out these goals.
Glueck :
“A stream of decisions and actions which leads to the
development of an effective strategy or strategies to help achieve
corporate objectives”.
Hofer :
”The process which deals with the fundamental organizational
renewal and growth with the development of strategies ,
structures and systems necessary to achieve such renewal and
growth and with the organizational systems needed to effectively
manage the strategy formulation and implementation processes.”
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Ansoff :
“A systematic approach to a major and increasingly important
responsibility of general management to position and relate the
firm to its environment in a way that will assure its continued
success and make it secure from surprises.”
Sharplin :
“The formulation and implementation of plans and carrying out
of activities relating to the matters which are of vital , pervasive
or continuing importance to the total organization”
Harrison :
“The process through which organizations analyze and learn
from their internal and external environments, establish
strategic direction create strategies that are intended to help
achieve established goals and execute these strategies , all in
an effort to satisfy key organizational stakeholders.”
Mintzberg's 5 Ps for Strategy
Mintzberg's 5 Ps for Strategy
The word "strategy" has been used implicitly in different ways
even if it has traditionally been defined in only one. Explicit
recognition of multiple definitions can help people to
manoeuvre through this difficult field. Mintzberg provides five
definitions of strategy:
1.Plan

2.Ploy

3.Pattern

4.Position

5.Perspective.
1. Plan
Strategy is a plan - some sort of consciously intended course
of action, a guideline (or set of guidelines) to deal with a
situation. By this definition strategies have two essential
characteristics: they are made in advance of the actions to
which they apply, and they are developed consciously and
purposefully.

2. Ploy
As plan, a strategy can be a ploy too, really just a specific
manoeuvre intended to outwit an opponent or competitor.
 
3. Pattern
If strategies can be intended (whether as general plans or
specific ploys), they can also be realised. In other words,
defining strategy as plan is not sufficient; we also need a
definition that encompasses the resulting behaviour: Strategy
is a pattern - specifically, a pattern in a stream of actions.
Strategy is consistency in behaviour, whether or not intended.
The definitions of strategy as plan and pattern can be quite
independent of one another: plans may go unrealised, while
patterns may appear without preconception.
Plans are intended strategy, whereas patterns are realised
strategy; from this we can distinguish deliberate strategies,
where intentions that existed previously were realised, and
emergent strategies where patterns developed in the
absence of intentions, or despite them.
 4. Position
Strategy is a position - specifically a means of locating an
organisation in an "environment". By this definition strategy
becomes the mediating force, or "match", between
organisation and environment, that is, between the internal and
the external context.
5. Perspective
Strategy is a perspective - its content consisting not just of a
chosen position, but of an ingrained way of perceiving the
world. Strategy in this respect is to the organisation what
personality is to the individual. What is of key importance is
that strategy is a perspective shared by members of an
organisation, through their intentions and / or by their actions.
In effect, when we talk of strategy in this context, we are
entering the realm of the collective mind - individuals united by
common thinking and / or behaviour.
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Open System

Environment

Input Process Output

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Characteristics of Open System

1. Environment Awareness.
2. Feedback.
3. Cyclical Character – Money to Money.
4. Negative entropy.
5. Movement toward growth and expansion.
6. Balance of maintenance and adaptive activities.
7. Steady state.
8. Equifinality.
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Elements in Strategic Management Process

1. Establishing the hierarchy of strategic intent

2. Formulation of strategies

3. Implementation of strategies

4. Performing strategic evaluation and control

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1. Establishing the hierarchy of strategic intent

a. Creating and communicating a vision

b. Designing a mission statement

c. Defining the Business

d. Adopting the Business Model

e. Setting objectives
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2. Formulation of strategies
a. Performing environmental appraisal

b. Doing organisational appraisal

c. Formulation corporate level strategies

d. Formulating business level strategies

e. Undertaking strategic level analysis

f. Exercising strategic choice

g. Preparing strategic plan

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3. Implementation of strategies

a. Activating strategies

b. Designing the structure, systems and processes

c. Managing behavioural implementation

d. Managing functional implementation

e. Operationalising strategies
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4. Performing strategic evaluation and control

a. Performing strategic evaluation

b. Exercising strategic control

c. Reformulating strategies
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Vision
Vision is a clear and idealised description of expected results.
Vision helps organisation to create mental picture of the end
which the organisation is targeting and should create passion
among employees. But it does not specify the methods or
means to be used to reach the end result. It intends to answer
the basic question – “what do we want to become?
Vision should be
• Leader inspired
• Shared and supported
• Comprehensive and detailed
• Positive and inspiring
• Easy to communicate
• Flexible
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Mahatma Gandhi envisioned and fought for free India. He

achieved the vision with unconditional tools of nonviolence and
non co-operation. India’s freedom movement succeeded
because all the ingredients of vision stated above were
present.
Creating vision is regarded as the first step in evolving strategy
but, vision statement itself would not be enough. Vision if not
backed up by action becomes merely a dream. Un-attempted
vision creates serious issues of credibility for the leader. He
becomes ineffective as his own people refuse to believe him.
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Advantages of a Vision
• Identifies direction for the organisation
• Provides interest and commitment
• Encourages and builds confidence
• Builds loyalty
• Leads to creativity
• Provides competitive advantage

Mission
While the essence of vision is forward looking view of what an
organisation wishes to become, mission is what an
organisation is and why it exists.
Mission statement defines the purpose of why an organisation
Exists.
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Peter Drucker raised important philosophical questions related

to business: what is our business? what will it be? And what it
should be? These three questions though simply worded , are,
in reality the most fundamental questions that any organisation
can put to itself. The answers are based on an analysis of the
underlying need of the society that any organisation strives to
fulfil. The satisfaction of that need is, then, the business of the
organisation.
Mission statement should meet following criteria:
• It should have a market emphasis rather than product
emphasis
• It should be focused - not vague and too general
• It should be achievable
• It should be motivational and inspiring
• It should differentiate the organisation from others
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• It may change over a period of time – depending on
management focus, purpose of an organisation may
change. A mission should reflect this.
Thank you
 Managing early growth
A. Strategic planning skills
• Business mission
• Situation analysis - internal & external environment
analysis
• Goal formulation
• Formulation of programs and initiatives to meet the
goals
• Strategic plan implementation
• Feedback and control

B. Controls
• Financial control
• Inventory
• Human resource
• Marketing skills
• Time management
Competition
• Product quality

• Price

• Customer servce

• Technological superiority

• Financial strength

• Advertising effectiveness

• Dealer relationship