BA9110

STRATEGICMANAGEMENT

LTPC
3003

UNITI
STRATEGYANDPROCESS
9

Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
GoalsCorporateGovernanceandSocialresponsibilitycasestudy.

UNITII
COMPETITIVEADVANTAGE
9

External Environment PortersFiveForcesModelStrategicGroupsCompetitive ChangesduringIndustry

EvolutionGlobalisation and Industry Structure National Context and Competitiveadvantage Resources
Capabilities andcompetenciescore competenciesLowcostanddifferentiationGenericBuildingBlocksof
Competitive Advantage Distinctive CompetenciesResources and Capabilities durability of competitive
AdvantageAvoidingfailuresandsustainingcompetitiveadvantageCasestudy.

UNITIII
STRATEGIES
10

The generic strategic alternatives Stability, Expansion, Retrenchment and Combination strategies
Business level strategy Strategy in the Global EnvironmentCorporate StrategyVertical
IntegrationDiversification and Strategic Alliances Building and Restructuring the corporation Strategic
analysis and choice Environmental Threat and Opportunity Profile (ETOP) Organizational Capability
Profile Strategic Advantage Profile Corporate Portfolio Analysis SWOT Analysis GAP AnalysisMc
Kinsey's 7s Framework GE 9 Cell Model Distinctive competitiveness Selection of matrix Balance
ScoreCardcasestudy.

UNITIV
STRATEGYIMPLEMENTATION&EVALUATION
9

The implementationprocess, Resource allocation, Designing organisational structureDesigning Strategic

Control SystemsMatchingstructureandcontroltostrategyImplementingStrategicchangePoliticsPower
andConflictTechniquesofstrategicevaluation&controlcasestudy.

UNITV
OTHERSTRATEGICISSUES
8

Managing Technology and Innovation Strategic issues for Non Profit organisations. New Business
ModelsandstrategiesforInternetEconomycasestudy

Total: 45

TEXTBOOKS

Thomas L. Wheelen, J.David Hunger and Krish Rangarajan, Strategic Management and Business
policy,PearsonEducation.,2006
Charles W.L.Hill & Gareth R.Jones, StrategicManagementTheory,AnIntegratedapproach,Biztantra,

WileyIndia,2007.
AzharKazmi,StrategicManagement&BusinessPolicy,TataMcGrawHill,ThirdEdition,2008.

REFERENCES

1.
Fred.R.David,StrategicManagementandcases,PHILearning,2008.
2.
UpendraHachru,StrategicManagementconcepts&cases,ExcelBooks,2006.
3.
Adriau HAberberg and Alison Rieple, Dtrategic Management Theory & Application, Oxford
UniversityPress,2008.
4.
Arnoldo C.Hax and Nicholas S. Majluf, The Strategy Concept and Process A Pragmatic
Approach,PearsonEducation,SecondEdition,2005.
5.
HarvardBusinessReview,BusinessPolicypartI&II,HarvardBusinessSchool.
6.
SalonerandShepard,Podolny,StrategicManagement,JohnWiley,2001.
7.
LawerenceG.Hrebiniak,Makingstrategywork,Pearson,2005.
8.
Gupta, Gollakota and Srinivasan, Business Policy and Strategic Management Concepts and
Application,PrenticeHallofIndia,2005.


UNITI
STRATEGYANDPROCESS
9

Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
GoalsCorporateGovernanceandSocialresponsibilitycasestudy.

Strategicmanagementisnotaboxoftricksorabundleoftechniques.Itisanalyticalthinkingandcommitmentof
resourcestoaction.
PeterDrucker

Definition:

Theongoingprocessofformulating,implementingandcontrollingbroadplansguidethe
organizationalinachievingthestrategicgoodsgivenitsinternalandexternalenvironment.

AlfredDChandler(1962)
,Chandlerdefinedstrategyas:Thedeterminationofthebasiclongtermgoalsandobjectivesofanenterprise
andtheadoptionofthecoursesofactionandtheallocationofresourcesnecessaryforcarryingoutthese
goals.NotethatChandlerreferstothreeaspects

FeaturesofstrategicManagement

1.Ongoingprocess:
Strategicmanagementisaongoingprocesswhichisinexistencethroughoutthelifeoforganization.

2.Shapingbroadplans:
First,itisanongoingprocessinwhichbroadplansarefirstlyformulatedthanimplementingandfinally
controlled.

3.Strategicgoals:
Strategicgoalsarethosewhicharesetbytopmanagement.Thebroadplansaremadeinachievingthegoals.

Evolutionofstrategicmanagement
From his extensive work in the field, Bruce Henderson of the Boston Consulting Group concluded that
intuitivestrategiescannotbecontinuedsuccessfullyif
(1)thecorporationbecomeslarge,
(2)thelayersofmanagementincrease,or
(3)theenvironmentchangessubstantially.

Phase1
Basicfinancialplanning:Seekbetteroperationalcontrolbytryingtomeetbudgets.

Phase 2
Forecastbasedplanning:Seekingmoreeffectiveplanningforgrowthbytryingtopredictthefuture
beyondnextyear.

Phase 3
. Externally oriented planning (strategic planning): Seeking increasingresponsivenesstomarketsand
competitionbytryingtothinkstrategically.

Phase 4.
Strategic management: Seeking a competitive advantage and a successful future by managing all
resources.

Phase 4 in the evolution of the strategicmanagementincludesaconsiderationof strategyimplementationand

evaluationandcontrol,inadditiontotheemphasisonthestrategicplanninginPhase3.
GeneralElectric,oneofthepioneersofthestrategicplanning,ledthetransitionfromthestrategicplanningto
strategicmanagementduringthe1980s.Bythe1990s,mostcorporationsaroundtheworldhadalsobegunthe
conversiontostrategicmanagement.

Ingeneral,acorporatestrategyhasthefollowingcharacteristics:

It is generally longrange in nature, though it is valid for shortrange situations also and has shortrange
implications.

Itisactionorientedandismorespecificthanobjectives.

Itismultiprongedandintegrated

Itisflexibleanddynamic.

Itisformulatedatthetopmanagementlevel,thoughmiddleandlowerlevelmanagersareassociatedintheir
formulationandindesigningsubstrategies.

Itisgenerallymeanttocopewithacompetitiveandcomplexsetting.

Itflowsoutofthegoalsandobjectivesoftheenterpriseandismeanttotranslatethemintorealities.

It is concerned with perceiving opportunities and threats and seizinginitiativestocopewiththem.Itisalso

concernedwithdeploymentoflimitedorganizationalresourcesinthebestpossiblemanner.

It gives importance to combination, sequence, timing, direction and depth of various moves and action
initiativestakenbymanagerstohandleenvironmentaluncertaintiesandcomplexities.

Itprovidesunifiedcriteriaformanagersinfunctionofdecisionmaking.

Framework

Thebasicframeworkofstrategicprocesscanbedescribedinasequenceoffivestagesasshowninthefigure

Frameworkofstrategicmanagement
:

Thefivestagesareasfollows:

Stage one:
This is the starting point of strategic planning and consists of doing a situational analysis of the
firm in the environmental context. Here the firm must find out its relative market position, corporate image,
its strength and weakness and also environmental threats and opportunities. This is also known as SWOT
(Strength, Weakness, Opportunity, Threat) analysis. You may refer third chapter for a detailed discussionon
SWOTanalysis.

Stage two:
This is a process of goalsettingforthe organizationafterithasfinaliseditsvisionandmission.A
strategic vision is a roadmap of the companys future providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, andthekindof
company thatmanagementistryingtocreate.AnorganizationsMissionstateswhatcustomersitserves,what
needitsatisfies,andwhattypeofproductitoffers.

Stagethree:
Heretheorganizationdealswiththevariousstrategicalternativesithas.

Stagefour:
Outofallthealternativesgeneratedintheearlierstagetheorganizationselectsthebestsuitable
alternativeinlinewithitsSWOTanalysis.

Stagefive:
Thisisaimplementationandcontrolstageofasuitablestrategy.Hereagaintheorganization
continuouslydoessituationalanalysisandrepeatsthestagesagain.

6.2ImportanceofStrategicManagement

Strategic management provides the framework for all the major business decisions of an enterprise such as
decisions on businesses, products and markets, manufacturing facilities, investments and organizational
structure.

In a successful corporation, strategic planning works as the pathfinder to various business opportunities
simultaneously, it also serves as a corporate defence mechanism, helping the firm avoid costly mistakes in
productmarketchoicesorinvestments.S
trategic management has the ultimate burden of providing a business organization with certain core
competenciesandcompetitiveadvantagesinitsfightforsurvivalandgrowth.

It seeks to prepare the corporation to face the future and even shape the future in its favour. Its ultimate
burden is influencing the environmental forces in itsfavour,workingintotheenvironsandshapingit,instead

ofgettingcarriedawaybyitsturbulenceoruncertainties.

THETASKOFSTRATEGICMANAGEMENT

Thestrategymaking/strategyimplementingprocessconsistsoffiveinterrelatedmanagerialtasks.Theseare

Setting vision and mission:
Forming a strategic vision of wheretheorganization isheaded, soasto provide
longterm direction, delineate what kind of enterprise the company is trying to become and infuse the
organizationwithasenseofpurposefulaction.

Setting objectives: Converting the strategic vision into specific performance outcomes for the company to
achieve.

Craftingastrategytoachievethedesiredoutcomes.

Implementingandexecutingthechosenstrategyefficientlyandeffectively.

Evaluating performance and initiating corrective adjustments in vision, longterm direction, objectives,
strategy,orexecutioninlightofactualexperience,changingconditions,newideas,andnewopportunities.

StrategyFormationProcess

Simplemodel

Workingmodelofstrategicplanningprocess

Step1:Identifyingtheorganisations
currentmission,objectives,and
strategies

Mission:
thefirmsreasonforbeing

Thescopeofitsproductsandservices

Goals:
thefoundationforfurtherplanning

Measurableperformancetargets

Step2:Conductinganexternalanalysis

Theenvironmentalscanningofspecificandgeneral

environments

Focusesonidentifyingopportunitiesandthreats


Customers:Whoaretheorganisationscustomers?

Productsorservices:Whataretheorganisationsmajorproductsor
services?

Markets:Wheredoestheorganisationcompetegeographically?

Technology:Howtechnologicallycurrentistheorganisation?

Concernforsurvivalgrowth,andprofitability:Istheorganisation
committedtogrowthandfinancialstability?

Philosophy:Whataretheorganisationsbasicbeliefs,values,aspirations,
andethicalpriorities?

Selfconcept:Whatistheorganisationsmajorcompetitiveadvantageand
corecompetencies?

Concernforpublicimage:Howresponsiveistheorganisationtosocietal
andenvironmentalconcerns?

Concernforemployees:Doestheorganisationconsideremployeesa
valuableasset?
Source:
BasedonF.David,
StrategicManagement
,8thed.(Upper

Step3:Conductinganinternalanalysis

Assessingorganisationalresources,capabilities,activities,
andculture:

Strengths(
corecompetencies
)createvalueforthecustomer
andstrengthenthecompetitivepositionofthefirm.

Weaknesses(thingsdonepoorlyornotatall)canplacethe
firmatacompetitivedisadvantage
.

Steps2and3combinedarecalledaSWOT

analysis.(Strengths,Weaknesses,Opportunities,
andThreats)

Step4:Formulatingstrategies

Developandevaluatestrategicalternatives

Selectappropriatestrategiesforalllevelsinthe
organisationthatproviderelativeadvantageover
competitors

Matchorganisationalstrengthstoenvironmental
opportunities

Correctweaknessesandguardagainstthreats

Step5:Implementingstrategies

Implementation:
effectivelyfittingorganisational
structureandactivitiestotheenvironment

Theenvironmentdictatesthechosenstrategyeffective
strategyimplementationrequiresanorganisational
structurematchedtoitsrequirements.

Step6:Evaluatingresults

Howeffectivehavestrategiesbeen?

Whatadjustments,ifany,arenecessary

VISION,MISSIONANDOBJECTIVES

Sinceorganizationsaredeliberateandpurposivecreations,theyhavesomeobjectivestheendresults
forwhichtheystrive.Theseendresultsarereferredtoasmission,purpose,objective,goal,target,

Thiscontextualdifferenceamongvarioustermsisimportantinunderstandingtheirnaturerelevantfor
managerialactions.Fromplanningpointofview,anorganizationmustdefinewhyitexists,how.itjustifies
thatexistence,andwhenitjustifiesthereasonsforthatexistence.Theanswersofthesequestionslieinthe
organizations:

1.Missionandpurpose,
2.Longtermobjectives,a

A
Strategicvision
isaroadmapofacompanysfutureprovidingspecificsabouttechnologyandcustomer
focus,thegeographicandproductmarketstobepursued,thecapabilitiesitplanstodevelop,andthekindof
companythatmanagementistryingtocreate

Thethreeelementsofastrategicvision:

1. Coming up with a mission statement that defines what business the company is presently in and
conveystheessenceofWhoweareandwherewearenow?

2. Using the mission statement as basis for deciding on alongtermcoursemakingchoicesaboutWhere

wearegoing?

3.Communicatingthestrategicvisioninclear,excitingtermsthatarouseorganizationwidecommitment.

Howtodevelopastrategicvision

The entrepreneurial challenge in developing a strategic vision is to think creatively about how topreparea
companyforthefuture.

Formingastrategicvisionisanexerciseinintelligententrepreneurship.

Many successful organizationsneedtochangedirectionnotinordertosurvivebutinordertomaintaintheir

success.

A wellarticulated strategic vision creates enthusiasm for the course management has charted and engages
membersoftheorganization.

Thebestwordedvisionstatementclearlyandcrisplyilluminatethedirectioninwhichorganizationishead

Mission


AccordingtoGlueck&Jauchmissionisanswertothequestionwhatbusinessareweinthatisfacedby
corporatelevelstrategist

A companys
Missionstatement
istypicallyfocusedonitspresent businessscopewhowe areandwhatwe
do mission statements broadly describe an organizations present capabilities, customer focus, activities,
andbusinessmakeup.

Whyorganizationshouldhavemission?

Toensureunanimityofpurposewithintheorganization.

Toprovideabasisformotivatingtheuseoftheorganizationsresources.

Todevelopabasis,orstandard,forallocatingorganizationalresources.

Toestablishageneraltoneororganizationalclimate,forexample,tosuggestabusinesslikeoperation.

To serve as a focal point for those who can identify with the organizations purpose and direction, and to
deterthosewhocannotformparticipatingfurtherintheorganizationsactivities.

To facilitate the translation of objectiveandgoalsintoaworkstructureinvolvingtheassignmentoftasksto

responsibleelementswithintheorganization.

To specify organizational purposes and the translation of these purposes into goals in suchawaythatcost,
time,andperformanceparameterscanbeassessedandcontrolled.

Examplesofmissionstatement

MissionofUnilever:
Themissionofourcompany,asWilliamHaskethLeversawit,istomakecleanliness
commonplace,tolessenworkforwomen,tofosterhealth,andtocontributetopersonalattractivenessthatlife
maybemoreenjoyableforthepeoplewhouseourproducts.

MissionofMckinsey&Co:
Tohelpbusinesscorporationandgovernmentstobemoresuccessful.
MissionofCadburyIndia:
Toattainleadershippositionintheconfectionarymarketandachieveastrong
presenceinthefooddrinkssector.

Mission of Reliance Industries:

To become a major player in the global chemicals business and
simultaneouslygrowinothergrowthindustrieslikeinfrastructure.

MissionofRanbaxy:
Tobecomea$1billionresearchbasedglobalpharmaceuticalscompany.

ObjectivesandGoals

Objectives
areorganizationsperformancetargetstheresultsandoutcomesitwantstoachieve.They
functionasyardstickfortrackinganorganizationsperformanceandprogress.

Objectivesareopenendedattributesthatdenotethefuturestatesoroutcomes.Goalsarecloseended
attributeswhicharepreciseandexpressedinspecificterms.

Objectives with strategic focus relate to outcomes that strengthen an organizations overall business position
and competitive vitality. Objective to be meaningful to serve the intended role must possess following
characteristics:

Objectivesshoulddefinetheorganizationsrelationshipwithitsenvironment.

Theyshouldbefacilitativetowardsachievementofmissionandpurpose.

Theyshouldprovidethebasisforstrategicdecisionmaking

Theyshouldprovidestandardsforperformanceappraisal.

Objectivesshouldbeunderstandable.

Objectivesshouldbeconcreteandspecific

Objectivesshouldberelatedtoatimeframe

Objectivesshouldbemeasurableandcontrollable

Objectivesshouldbechallenging

Differentobjectivesshouldcorrelatewitheachother

Objectivesshouldbesetwithinconstraints

10.STRATEGICLEVELSINORGANISATIONS

Socialresponsibility

SocialResponsibilitytowardsdifferentInterestgroups:1.Responsibilitytowardsowners:
Ownersarethe
personswhoownthebusiness.Theycontributecapitalandbearthebusiness.

Runthebusinessefficiently

Properutilizationofcapitalandotherresources.

Regularandfairreturnoncapitalinvested.

Responsibility towards Investors:

Investorsarethosewhoprovidefinancebywayofinvestmentinshares,bonds,etc.Banks,
financialinstitutionsandinvestingpublicareallincludedinthiscategory
EnsuringsafetyoftheirinvestmentRegular
paymentofinterest.
Responsibilitytowardsemployees:
Businessneedsemployeesorworkerstoworkforit.Ifthe
employeesaresatisfiedandefficient,thenthebusinesscanbesuccessful.

Timelyandregularpaymentofwagesandsalaries.

Opportunityforbettercareerprospects.

Properworkingconditions

Timelytraininganddevelopment

Betterlivingconditionslikehousing,transport,canteenandcrches.

Responsibilitytowardscustomers:
Nobusinesscansurvivewithoutthesupportofcustomers.

Productsandservicesmustbeabletotakecareoftheneedsofthecustomers.

Theremustberegularityinsupplyofgoodsandservices.

Priceofthegoodsandservicesshouldbereasonableandaffordable

Theremustbeproperaftersalesservice

Grievancesoftheconsumersifanymustbesettledquickly.

Responsibilitytowardscompetitors:
Competitorsaretheotherbusinessmenororganizationinvolvedinasimilar
typeofbusiness.

Nottooffertocustomersheavy/discountsandorfreeproductsineverysale.


Nottodefamecompetitorsthroughfalseadvertisements.

Responsibilitytowardssuppliers:
Suppliersarebusinessmenwhosupplyrawmaterialsandotheritemsrequiredby
manufacturersandtraders.

Givingregularordersforpurchaseofgoods

Availingreasonablecreditperiod

Timelypaymentofdues.

8.ResponsibilitytowardsGovernment:
Businessactivitiesaregovernedbytherulesandregulationsframedbythe
government.Paymentoffees,dutiesandtaxesregularlyaswellashonestlyConformingtopollutioncontrolnorms
setupbygovernmentNottoindulgeinrestrictivetradepractices.
9.Responsibilitytowardssociety:
Asociety
consistsofindividuals,groups,organizations,familiesetc.Theyallarethemembersofthesociety.

Tohelptheweakerandbackwardsectionsofthesociety.

Togenerateemployment.

Toprotecttheenvironment

.Toprovideassistanceinthefieldofresearchoneducation,medicalscience,technologyetc.

9.Responsibilitytowardssociety:
Asocietyconsistsofindividuals,groups,organizations,familiesetc.Theyallare
themembersofthesociety.

Tohelptheweakerandbackwardsectionsofthesociety.

Togenerateemployment.

Toprotecttheenvironment

.Toprovideassistanceinthefieldofresearchoneducation,medicalscience,technologyetc

Stepsinstrategyformationprocess:Strategyformulation: