80e08Module One-Evolution of Strategic Management & Concept of Strategic Planning

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Amity Business School

1

Amity Business SchoolMBA(M&S) Class of 2011, Semester III

Strategic Management

Dr. Himani Sharma




What is Strategic

ManagementStrategic Management entails three ongoing processes:

1.Analysis:

- Analysis of strategic goals and the external

and internal environments

2.Decisions:

- What industries to compete?

- How should we compete?

3.Actions:

- Actions to implement decisions




Strategic Management

Strategic management consists of the

analyses, decisions, and actions anorganization undertakes in order to

create and sustain competitive

advantages.






Four Key Attributes of StrategicManagement

Directs the organization toward overall goals

and objectives Includes multiple stakeholders in decision

making

Needs to incorporate short-term and long-term

perspectivesRecognize trade-offs between efficiency and

effectiveness






Strategy consists of competitive moves and business

approaches used by managers to run the company

Strategy involves making analysis and choices

The hows that define a firm's strategy ± How to grow the business

± How to please customers

± How to outcompete rivals

± How to manage each functional piece of the business (R&D,production, marketing, HR, finance, and so on)

± How to respond to changing market conditions

± How to achieve targeted levels of performance



Amity Business SchoolThinking Strategically

Three Big Central

Questions

1. What¶s the company¶s present situation?

- industry conditions and competitive pressure

- current performance and market standing

- resource strength and capabilities and competitive weaknesses

2. Where does the company need to go from here?

± Business(es) to be in and market positions to stake out

± Buyer needs and groups to serve

± Direction to head

3. How should it get there?

± A company¶s answer to ³howwill we get there? ´ is its strategy




Strategy as an Emergent Process Strategy making in an unpredictable world

± Creates the necessity for flexible strategic approaches.

Strategy making by lower-level managers ± Strategy evolves through autonomous action.

Serendipity and strategy

± Accidental discoveries and happenstances can have

dramatic effects on strategic direction. Intended and emergent strategies

± Realized strategies are combinations of intended and

emergent strategies.




Intended and Emergent Strategies

S ource: Reprinted from ³Strategy Formation in an Adhocracy,´by Henry Mintzberg and Alexandra McGugh, published in

AdministrativeS cience Quarterly , Vol. 30, No. 2, June 1985, bypermission of Administrative S cience Quarterly .




The Strategic Management Process for Intended and Emergent Strategies




Strategy Making : Design or Process?Strategy as Design

Planning and

rational choice

INTENDED

STRATEGY

Many decision makers

responding to multitude of

external and internal forces

REALIZED STRATEGY

EMERGENT

STRATEGY

Strategy as Process

Mintzberg¶s Critique of Formal Strategic Planning:

The fallacy of predicti on ± the future is unknown

The fallacy of detachment -- impossible to divorce formulation from

implementation

The fallacy of f ormalizati on --inhibits flexibility, spontaneity,

intuition and learning.




Strategy Making Processes within theCompany: Multiple Roles of Strategy

Strategy as Decision

Support

Strategy as Coordination

and Communication

Strategy as Target

Improves the quality

of decision making

Creates consistency

and unity

Improves perform-

ance by setting

high aspirations




Strategic Problem-Solving Model

Data

Intuition

ManagingTeam

Client

Self

LeadershipVision

Inspiration

Delegation

Problem Solution

ImplementationDedication

Reaction

Completion

Iteration

Business NeedCompetitive

Organizational

Financial

Operational

AnalyzingFraming

Designing

Gathering

Interpreting

PresentingStructure

Buy-in




Strategic Planning in Practice Planning under uncertainty

± Scenario planning for dynamic environmental change

Ivory tower planning

± Lack of contact with operational realities ± The importance of involving operating managers

± Procedural justice in the decision-making process Engagement, explanation, and expectations

Strategic Intent: Planning for the present ± Recognition of the static nature of the strategic fit

model

± Strategic intent in focusing the organization on winningby achieving stretch goals




The Evolution of Strategic Management

DOMINANT

THEME

1950s 1960s- early 7 0s M id - 7 0s- mid -80s Late 80s ±1990s 2000s

Budgetary Corporate Positioning Competitive Strategic

planning & planning advantage innovation

control

Financial Planning Selecting Focusing on Reconciling

control growth &- sectors/markets. sources of size with

diversification Positioning for competitive flexibility &

leadership advantage agility

Capital Forecasting. Industry analysis Resources & Cooperative

budgeting. Corporate Segmentation capabilities. strategy.

Financial planning. Experience curve Shareholder Complexity.planning Synergy Portfolio analysis value. Owning

E-commerce. standards.

² Knowledge Management²

Coordination Corporate Diversification. Restructuring. Alliances &

& control by planning depts. Global strategies. Reengineering. networks

Budgeting created. Rise of Matrix structures Refocusing. Self -organiz

systems corporate Outsourcing. ation & virtualplanning organization

MAIN

ISSUES

KEY

CONCEPTS

&TOOLS

MANAGE-

MENT

IMPLIC-

ATIONS






Strategic management

process

Identifying

and analyse

current: Mission

Objective

Strategies

Analyse external

and internal

environments: Industry and

external

environment

(opportunities and

threats)

Organisationalresources and

capabilities

(strengths and

weaknesses)

Revise

mission and

objectives& select

new

strategies:

Corporate

Business

Functional

Implement

strategies:

Corporategovernance

Manage-

ment

systems and

practices

Strategicleadership

Evaluate

results:

Strategiccontrol

Renew

strategic

management

process

Strategy formulation ±

creating strategies

Strategy implementation ±

putting strategies into action




External Audit

Internal Audit

Long-TermObjectives

Generate,

Evaluate,Select

Strategies

Implement

Strategies:Mgmt Issues

ImplementStrategies:Marketing,Fin/Acct,R&D, CIS

Measure &Evaluate

Performance

Vision&

Mission

Strategic management model




The Basic Framework

Strategy: the Link between the

Firm and its Environment

THE FIRM

Goals &

Values

Resources &

Capabilities

Structure &

Systems

THE

INDUSTRY

ENVIRONMENT

Competitors

Customers

Suppliers

STRATEGY



Amity Business SchoolA Framework for Analyzing

Organizations

Figure 16.1

People Structure

Systems Culture

External Analysis

Strategy

Internal Analysis

PerformancePerformance

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80e08Module One-Evolution of Strategic Management & Concept of Strategic Planning

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