"Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations".

Strategic management is a set of managerial decisions and actions that determines the long run performance of a corporation which includes external and internal environmental scanning, strategy formulation, strategy implementation and evaluation and control

what is strategy?

1. Strategy is a large scale, future – oriented plans for interacting with the competitive environment to achieve company objectives.

2. Strategy is – a) determination of long term goals and objective b)Determination of courses of action c)Allocation of resources for carrying actions.

UNDERSTANDING CONCEPT OF STRATEGY

The term strategy has been derived from a Greek word “strategos”

which means “Generalship” – is actual direction of military force, as

distinct from policy of government.

A strategy could be • A plan or course of action or a set of decision rules

making a pattern or creating a common threat.

• A pattern to the organization activities which are derived from the policies , objectives and goals.

• Which makes organization to move towards desired future status.

Definition of strategy

• A definition of strategy Goal-directed decisions and actions in which capabilities and resources are matched with the opportunities and threats in the environment.

• An integrated and coordinated set of commitments and actions designed to exploit core competencies and gain competitive advantage.

• Strategic Management is “A stream of decisions and actions, which leads to the development of an effective strategy or strategies to help achieve corporate objectives” – Glueck.

1. Alfred D. Chandler - coordinating the various aspects of management under one all encompassing strategy.

2. Philip Selznick introduced the idea of matching the organization's internal factors with external environmental circumstances. (SWOT analysis)

3. Peter Drucker – emphasized importance of objectives (MBO) setting objectives and monitoring the progress towards the entire organization, top to bottom.

What is strategic management?

Strategic Management Process

The full set of commitments, decisions, and actions required for a firm to achieve strategy competitiveness and earn above-average returns

Examples

a) LG Electronics India ltd., (LGEIL) signed a MoU with Maharashtra Government to expand manufacturing facility at Pune for Rs.900 crores.

b) The worlds’ largest steel manufacturers Mittal Steel company is to become the second largest stakeholders in a Chinese steel firm in Hunan province in China

c) BHEL is planning to expand its range to 1200 MW supercritical power projects

d) Lenovo (cpu) acquired IBM (logo)

Important Definitions

Competitive Advantage

When a firm implements a strategy that its competitors are unable to duplicate or find too costly to try to imitate. eg.Gilitte Blades (TURBO,MACH 3) BHEL, SONY etc.

Stakeholders - Individuals and groups who can affect, and are affected by, the strategic outcomes achieved and who have enforceable claims on a firm’s performance.(Customers, shareholders, suppliers).

Different Terms in Strategic Management

1. Policy – is a guide for action, contingent decisions.2. Strategy – is a rule for making decisions. And it is delegation and implementation.Eg. Hotel Oberoi group (takeover of existing hotel and construction of new hotel)

3.Tactics – It is related to strategy – an efficient utilization of various organizational resources

4.SBU – strategic Business unit means multi product companies organized as different divisions or product groups or profit centres.eg. Reliance, TVS motors, HUL etc.

single product co. Gillette India ltd, Ashok Leyland etc.(corporate strategy – Functional strategy)

PHASES OF STRATEGIC MANAGEMENT

1. BASIC FINANCIAL PLANNING

2. FORECAST BASED PLANNING

3. EXTERNALLY ORIENTED STRATEGIC PLANNING

4. STARTEGIC MANAGEMENT

THREE LEVELS OF STRATEGY

1. corporate strategy (CEO, BOD, administrative officers – financial performance and objectives are framed for the co.)

2. Business level strategy ( Directions are shown, how the firm should compete in selected product market arena)

3. Functional strategy (developing annual objectives, short term strategies in areas such as production, marketing, operations , research and development and human resources management).

4.Operational strategies - HUL & Tata group of companies ,

conglomerate of 120 companies with combined turnover of

200 cr.(GEO &BRC’s) meeting in thrice a year with BOD.

Eg.Relaince, Gillette ,HUL, Ashok Leyland, Kodak films etc.

Thus business level managers centre their attention On “ Doing the right things”, managers at functional level centre their attention on “ doing things right”.

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Basic Model of Strategic Management

Four Basic Elements

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1. Environmental Scanning

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2. Strategy Formulation• Mission Statement

– Setting Objectives & Goals– A statement of purpose

(strategic intent) committing the organization to ambitious overarching (stretch) objectives.

• Provides a sense of direction and purpose.

• Drives strategic decision making and resource allocations.

• Forces the seeking of significant performance improvements to attain objectives

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2. Strategy Formulation• Selecting Strategy

– Corporate strategy (Stability, Growth, Retrenchment)

– Business strategy (Competitive, Cooperative)

– Functional strategy (Technological Leadership, Technological Followership)

• Defining Policies– Guidelines for decision making that

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3. Strategy Implementation

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Programs

Budgets

Procedures

4. Evaluation & Control - Continuous process

STRATEGIC MANAGEMENT PROCESS

Establishing strategic IntentVision, mission, business definition

Formulation of strategiesEnvironmental analysis

SWOT analysis – Levels of strategy

Strategy ImplementationProject ,Procedural, Resource allocation,

structural, Behavioural and Functional Implementation

Strategic Evaluation

STRATEGIC INTENT

• creating and communicating a vision• Designing a mission statement• Defining the business• Setting objectives

makes it clear what an organization stands for, purpose of serving, what to be achieved in long run.

Vision and Mission• Vision– A enduring picture of what the firm wants to

be and, in broad terms, what it wants to ultimately achieve.(Stretches and challenges people and evokes emotions and dreams)

• Effective vision statements are:– Developed by a host of people from across the

organization.– Clearly tied to external and internal

environmental conditions.– Consistent with strategic leaders’ decisions

and actions.

• Mission (what is our business? What will it be after 5 years? Why are we in business?) – purpose of business, role played by organization in the society., philosophies of business.

Definition of Mission Thompson defines mission as “ the essential

purpose of the organization, concerning particularly why it is existence, the nature of the business it is in, and the customers it seeks to serve and satisfy

The mission statement should guide the actions of the organization, spell out its overall goal, provide a sense of direction, and guide decision-making. It provides "the framework or context within which the company's strategies are formulated

Mission statements often include the following Information:

• Purpose and aim(s) of the organization

• The organization's primary stakeholders: clients/customers, shareholders, congregation, etc.

• How the organization provides value to these stakeholders, for example by offering specific types of products and/or services

Examples of mission statements that clearly include the 3

essential components:

• McDonalds - "To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere.“

– Key Market: The fast food customer world-wide– Contribution: tasty and reasonably-priced food

prepared in a high-quality manner - Distinction: delivered consistently (world-wide) in a low-key décor and friendly atmosphere

CHARACTERSTICS OF MISSION STATEMNET

• It should be feasible – should be realistic and achievable

• It should be precise – not too narrow or broad

• It should be clear

• It should be motivating – employees should be inspired and customer satisfaction is important

• It should be Distinctive – indicates major components of strategy and unique. Eg. HCL

• It should both goals and objectives.

NIKE Inc.Mission Statement

To Bring Inspiration and innovation to every athlete in the world.

MicrosoftMission Statement

At Microsoft, we work to help people and businesses throughout the world realize their full potential. This is our mission. Everything we do reflects this mission and the values that make it possible

ONGC – “to become a world class oil and gas company integrated in energy business with dominant Indian leadership and in global business”.

Bajaj Autos – “Value for money, for years.

BUISNESS DEFINITION

Dimensions of Business Groups customer functions

customer groups Alternate technologies

STRATEGISTS & THEIR ROLES

• BOARD OF DIRECTORS• CEO• ENTREPRENEURS• SENIOR MANAGEMENT• S B U – LEVEL EXECUTIVES• CORPORATE PLANNING STAFF• ROLE OF CONSULTANT• ROLE OF MIDDLE LEVEL MANAGERS• ROLE OF EXECUTIVE ASSISTANT

STRATEGIC PLANNING – “Strategic Gap”The strategic gap is the difference between the firm's current position and its desired positions. desired position

• Strategic planning is the management task concerned with growth and future of a business enterprise. It ensures that the organization keeps moving in the right direction

• Strategic planning offers a methodology by which, firm could anticipate and project the future, and be internally

equipped to face it.

STEPS IN STRATEGIC PLANNING

• Assessing the current position • Identifying the desired positions• Evaluating strategic gaps• Formulating strategies & actions

1. Assessment of the company's current position • what business is the company currently in?• how well is the company doing in this business?• appraisal of the firm's operating and financial performance• Evaluation of the internal environment and external environment• SWOT analysis is a good tool to determine current market place

opportunities

2. DESIRED POSITION

Desired position by mapping the firm's strategic vision of itself against the opportunities, threats, and risks that shape its business Environment.

The company desired position sets objectives in the following Areas:

• industry/marketplace position• revenue size and growth rate• products and services produced• financial performance• technological objectives• organization structure and culture

chart showing to identify desired position

3. Evaluating Strategic GapsThe gap is a measure to identify the difference between the stated target values

and the

current values of the firm's primary objectives.Strategic Planning Element

Plan Actual Critical Issues

Mission Within 7-10 years becoming a leading manufacturer and distributor of a high-quality full line of salted snack foods

Among the top 3 leading regional manufacturers and distributors of a limited line of mixed-quality salted snack foods

Significant level of geographical, product line, and people growth required

Strategy Become the lowest-cost salted snack food manufacturer

Grow geographically via acquisitions

Medium-cost range manufacturer of salted snacks

Two minor acquisitions in past ten years

Significant level of capital investment and technological know-how required

Limited acquisition experience

4. Formulating Strategies and Actions

The firm requires to formulate the specific actions that will be

carried out to implement each strategy. The action steps are:

• specific strategy• time frame for action• individual responsible• resources required

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