1 of 35

MODULE-1

MEANING AND NATURE OF STRATEGIC MANAGEMENT

STRATEGIC MANAGEMENT

2 of 35

STRATEGIC MANAGEMENT

OBJECTIVES

  • To provide insights into the core concepts of strategic management.

​

  • To evaluate various business strategies in dynamic market environments.

​

  • To gain insights into various strategic management model.

3 of 35

STRATEGIC MANAGEMENT

STRATEGIC-

 -A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem. The art and science of planning and marshalling resources for their most efficient and effective use.

4 of 35

STRATEGIC MANAGEMENT

STRATEGY-

  • Strategy refers to the determination of the purpose and basic long term objectives of an enterprise

​

  • Involves adoption of different courses of action, with proper allocation of resources.

​

  • Strategy is a means to achieve an organization's missions and objectives.

​

5 of 35

​

  • Sun Tzu’s Military Strategy and Management

​

“An army shouldn’t go to war, unless it is certain that it has an advantage over the enemy.”

  • Lesson: Management should not only know their own internal capability but also the resources and competences of their competitors.

“A territory must be conquered as quickly as possible, and unnecessary blood shed should be avoided.”

  • Lesson: Management should avoid unnecessary waste of time and resources.

​

6 of 35

How to Use Military Strategy to Build Better Habits

7 of 35

STRATEGIC MANAGEMENT

STRATEGY-

  • It involves making choices about which industries to participate in, what products and services to offer, and how to allocate corporate resources to achieve a sustainable competitive advantage.

​

  • And its primary goal is to create value for shareholders and other stakeholders by providing customer value (de Kluyver, 2000).

​

8 of 35

STRATEGIC MANAGEMENT

STRATEGY-

​

  • Consists of the combination of competitive moves and business approaches used by managers to run the company

​

  • Management’s “game plan” to -
    • Attract customers
    • Stake out a market position
    • Compete successfully
    • Grow the business
    • Achieve targeted objectives

​

9 of 35

STRATEGIC MANAGEMENT

STRATEGY-

​

  • We set strategies to fulfill our mission and to progressively realize our vision.

​

  • Organization also set strategies to alter our reality.

​

  • Strategies have to be implemented effectively to be meaningful. This means strategies must be realizable.

​

10 of 35

STRATEGIC MANAGEMENT

STRATEGY-

​

  • Strategies are just complex decisions for telling the importance things to be done and for guiding actions.

​

  • Strategies have to base on purpose, wish and reality.
    • Mission is our ultimate purpose

​

    • Vision is our ultimate wish

​

    • Our environment and situation are the current reality

​

11 of 35

Definition of Strategy

  • “Strategy is the direction and scope of an organisation over the long term: which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.” (Johnson and Scholes, 2005:9).

12 of 35

STRATEGIC MANAGEMENT

What is Strategic Management?

“Strategic Management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve its objectives”

David Fred (2003: 5)

​

13 of 35

Nature of Strategic Management

  • Direction

​

  • Framework for plans

​

  • Need for operational planning

​

  • All perspective

​

14 of 35

Importance of Strategic Management

  1. To the shape the Future of business

​

  • Effective strategic idea

​

  • Mangers and employer are innovative and creative

​

  • Its decentralized the Management

​

  • Its helps to increase the productivity

​

  • To Makes discipline

​

  • To Make control

15 of 35

Levels of strategy

16 of 35

Dimensions of Strategic Decisions

Strategic Managers for All Levels

17 of 35

Corporate level strategy

  • Formulated at the top-level, corporate.
  • Ideal for those organizations having more than one business unit.
  • Two approaches in the formulation of strategy are
  • Value-based approach: Value-based approach takes into account the individual's beliefs and helps to do business ethically.
  • Corporate portfolio approach: The top management evaluates business units on the basis of marketplace and organizational strategy

​

18 of 35

Business level strategy

  • Business strategy focuses on a firm's competitiveness in the marketplace.

​

  • Developed by the heads of respective departments, and approved by the top management;

​

  • These strategies are designed in response to the changing environment and competitive conditions.

​

19 of 35

Functional level strategy

  • Functional strategies are designed to emphasize functional competencies so that firms can gain the competitive advantage.

​

  • These strategies are designed and developed by the functional heads, and are approved by the top management.

​

20 of 35

  • A strategy is a comprehensive master plan stating HOW the corporation will achieve its mission and objectives. There are three types:
  • Corporate - a corporation’s overall direction and the management of its businesses.

​

  • Business - emphasizes improving the competitive position of a corporation’s 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.

21 of 35

Characteristics of �Strategic Management

Characteristic

Levels of strategy

​

Corporate

Business

Functional

Type

Conceptual

Mixed

Operational

Measurability

Value judgments dominants

Semi quantifiable

Usually quantifiable

Frequency

Periodic or sporadic (irregular)

Periodic or sporadic-(irregular)

Periodic

Profit potential

Large

Medium

Small

22 of 35

Characteristic

Levels of strategy

 

Corporate

Business

Functional

Cost

Major

Medium

Modest

Time horizon

Long range

Medium range

Short range

Flexibility

High

Medium

Low

Cooperation

Considerable

Moderate

little

Adaptability

Low

Medium

High

Relation to present activities

Innovative

Mixed

Supplementary

Risk

Wide range

Moderate

Low

23 of 35

The Strategic Management Process

24 of 35

The Strategic Management Process

STRATEGIC MANAGEMENT

ANALYSIS

FORMULATION

CONTROL

IMPLIMENTATION

INTERNAL ANALYSIS

1.SWOT ANALYSIS

2.VALUE CHAIN ANALYSIS

3.BENCH MARKING

EXTERAL ANALYSIS

1.COMP’S EXTERNAL ENVIOR

2.INDUSTRY ANALYSIS

3.PORTER’S DOMINANT ECONOMIC FEATURES

4.PORTER’S 5 FORCE MODEL

5.KEY SUCCESS FACTORS

GENERIC STRATEGY

1.LOW COST STRATEGY

2.FOCUSED LOW COST

3.BEST COST PROVIDER

4.DIFFERENTIATION

5.FOCUSED DIFFERENTIATION ON STRATEGY

GRAND STRATEGY

1.INTENSIVE STRATEGY

2.INTEGRETTED

3.DEFENSIVE

4.INTERNATIONAL LEVEL BUSINESS

BCG MATRIX

GE NINE CELL GRID

STRUCTURE

SYSTEM

PEOPLE

CULTURE

STRATEGIC SURVIVALANCE

PREMISE CONTROL

SPECIALALERT CONTROL

IMPLIMENTATION

25 of 35

The Strategic Management Process

  • Step 1: Identifying the organization's current mission, objectives, and strategies
    • Mission: the firm’s reason for being
      • Who we are,
      • What we do, and
      • Where we are now
    • Goals: the foundation for further planning
      • Measurable performance targets

​

  • Step 2: Conducting an internal analysis
    • Assessing organizational resources, capabilities, activities and culture:
      • Strengths (core competencies) create value for the customer and strengthen the competitive position of the firm.
      • Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.

​

26 of 35

​

  • Step 3: Conducting an external analysis
    • The environmental scanning of specific and general environments
    • Focuses on identifying opportunities and threats

​

Steps 2 and 3 combined are called a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats)

​

27 of 35

S-W-O-T

STRENGHTS: Factors that give an edge for the company over its competitors.

WEAKNESSES: Factors that give limitation can be harmful if used against the firm by its competitors.

OPPORTUNITIES: Favorable situations which can be bring a competitive advantage.

THREATS: Major unfavorable situations in the firms environment.

28 of 35

  • Step 4: Formulating strategies
    • Develop and evaluate strategic alternatives
    • Select appropriate strategies for all levels in the organization that provide relative advantage over competitors
    • Match organizational strengths to environmental opportunities
    • Correct weaknesses and guard against threats

​

29 of 35

  • Step 5: Implementing strategies
    • Implementation: effectively fitting organizational structure and activities to the environment
    • Effective strategy implementation requires an organizational structure matched to its requirements.

​

  • Step 6: Evaluating results
    • How effective have strategies been?
    • What adjustments, if any, are necessary?

​

30 of 35

  • Four of Activities of the Strategic Management Process:
    1. Review and define the organizational mission.
    2. Set long-range goals and objectives.
    3. Analyze and formulate strategies to reach objectives.
    4. Implement strategies through projects

​

31 of 35

Relationship b/w a Company’s Strategy & its Business Model

  • Company’s Strategy
  • The term "business strategy" describes the methods a business uses achieve its mission and objectives. A business' mission encompasses its overall purpose, core values and long-term goals. 
  • Business Model
  • A company's business model describes the basic means by which it creates value, delivers value to consumers and collects revenue from customers to make a profit. Business models can vary greatly from one company to another. 

32 of 35

33 of 35

34 of 35

Thinking Strategically

The Three Big Strategic Questions

1.Where are we now?

2. Where do we want to go?

Business(es) to be in and market positions to stake out Buyer needs and groups to serve Outcomes to achieve

3. How will we get there?

A company’s answer to “how will we get there?” is its strategy

​

35 of 35