Professional Documents
Culture Documents
Strategic Management
By
Threat
Opportunity
RESOURCES
Strategy needed
to direct
Environment Environment
activities of its
people, finance,
factories etc.
Opportunity Threat
Economy at large
Suppliers Substitutes
Legislation &
Technology Regulation
Firm
Rivals Buyers
New Entrants
Population
Societal Values & Lifestyle Demographics
Business Policy & Strategic Management
Environmental Threat & Opportunities Profile (ETOP)
ETOP analysis is a management tool that analyses environmental
information and determines the relative impact of threats and
opportunities for the systematic evaluation of the environment.
ETOP gives a clear picture to the strategies about each aspect of the
business environment, the various individual factors within each
sector which affect the business favourably or otherwise.
Business Policy & Strategic Management
Environmental Threat & Opportunities Profile (ETOP)
ENVIRONMENTAL
NATURE OF IMPACT IMPACT OF THE SECTOR
SECTOR
Cheaper technology
TECHNOLOGY development, skilled and
trained indigenous talent.
Mintzbergs 5 Ps of Strategy
Mintzbergs 5 Ps of Strategy
Mintzberg presented 5 different approaches or concepts of
strategy. These are known as 5 Ps of strategy.
1. Plan
2. Ploy
3. Pattern
4. Position
5. Perspective
Business Policy & Strategic Management
Mintzbergs 5 Ps of Strategy
Strategy as a Plan :
Planning is something that comes naturally to us. As such, this is
the default, automatic approach that is adopted. This involves
brainstorming options and planning how to exploit the
opportunity.
By this definition, strategy has two essential characteristics :
a) They are made in advance of the actions to which they apply.
b) They are developed consciously and purposefully.
Mintzbergs 5 Ps of Strategy
Strategy as a Ploy :
Mintzbergs 5 Ps of Strategy
Strategy as a Pattern :
Strategic plans and ploys are both deliberate exercises.
Sometimes, however, strategy emerges from past
organizational behavior. Rather than being an intentional
choice, a consistent and successful way of doing business can
develop into a strategy.
Thus, defining strategy as a plan is not sufficient. We also need
a definition which takes into account the resulting behaviour.
Thus the definition of strategy as a pattern emerges.
By this definition strategy is consistency in behaviour, whether
or not intended.
Business Policy & Strategic Management
Mintzbergs 5 Ps of Strategy
Strategy as a Position :
In this way, strategy helps you explore the fit between your
organization and your environment, and it helps you
develop a sustainable competitive advantage.
Mintzbergs 5 Ps of Strategy
Strategy as a Perspective :
Mintzbergs 5 Ps of Strategy
Mintzbergs 5 Ps of Strategy
As such, there are three points in the strategic planning process
where it's particularly helpful to use the 5 Ps:
LEVELS OF
STRATEGY
LEVELS OF
STRATEGY
Operational strategy
Also called the Go-to-Market Strategy or Functional Strategy,
it decides the operational methods to implement the tactics.
Are concerned with how the component parts of an
organisation deliver effectively the corporate and business-level
strategies in terms of resources, processes and people.
Business Policy & Strategic Management
Strategic
Development
Strategic
Implementatio
n
Simultaneous Approach
Business Policy & Strategic Management
A Comprehensive Strategic Management Model
External
Audit
Internal
Audit
Walmart
To become the worldwide leader in retailing.
Vision
Samsung
"Leading the Digital Convergence Revolution"
Vision
Samsung
"Digital- Company"
Mission
There are two requirements for being "Digital-
Company", and the first is clearly about being
"Digital" producing not just digital products, but
products that inspire digital integration across our
entire company.
COMMON OBJECTIVES :
SURVIVAL
STABILITY
GROWTH
EFFICIENCY
PROFITABILITY
Business Policy & Strategic Management
Characteristics of Objectives :
Objectives help an organization in pursuit of its vision
and mission.
Objectives provide the basis for strategic decision-making
Objectives should define an organization's relationship
with its environment.
Objectives should provide the standards for performance
appraisal.
Objectives should be concrete and specific.
Objectives should be measurable, controllable and challenging.
Objectives should be set within constraints.
Business Policy & Strategic Management
ENVIRONMENTAL APPRAISAL
Environment is the sum of various external and some
internal forces that affect the functioning of business.
"The environment includes factors outside the firm which can lead
to opportunities for, or threats to the firm. Although there are
many factors, the most important of the sectors are socio-
economic, technological, supplier, competitors, and government.
- Glueck & Jauch
"Environment factors or constraint are largely if not totally, external
and beyond the control of individual industrial enterprises and their
managements. These are essentially the 'givers' within which firms
and their managements must operate in a specific country and they
vary, often greatly, from country to country.
- Barry M. Richman & Melvyn Copen
Business Policy & Strategic Management
ENVIRONMENTAL APPRAISAL
Micro Environment
Micro-environment is related to small area or immediate
periphery of the organisation. It influences the organisation
regularly and directly.
DEMOGRAPHIC
ECONOMIC
LEGAL / REGULATORY
GOVERNMENT
MACRO
ENVIRONMENT POLITICAL
CULTURAL
TECHNOLOGICAL
GLOBAL
Business Policy & Strategic Management
Types of strategies
Integration
Forward Integration : Gaining ownership/ increased control
over channel partners
Backward Integration : Ownership/ control over suppliers
Intensive
Market Penetration : Seeking increased market share in
existing markets through extra efforts.
Market Development : Introducing existing product (s) into new
geographic areas or consumer segments
Product Development : Improving existing products or developing
new products
Business Policy & Strategic Management
Types of strategies
Diversification
Related Diversification : Adding new but related products
or services
Unrelated
Diversification : Adding new, unrelated products
or services
Defensive
Retrenchment : Regrouping through cost and asset reduction
to reverse declining sales/ profits
Divestiture : Selling/ hiving off a division or part of the
organisation
Liquidation : Selling all the assets, in parts, for their
tangible worth
Business Policy & Strategic Management
Suppliers Buyers
(Bargaining Power)
Industry Rivalry (Bargaining Power)
Product
Substitutes
Business Policy & Strategic Management
Ethical : Driven not just by profits but also doing what is right,
just and fair.
Setting Objectives
Generating Alternatives
Choosing one or more alternative (s)
Implementing the chosen alternative(s)
Strategy Alternatives
Intensification Diversification
Forward Backward
Business Policy & Strategic Management
Strategy Implementation
Strategic-management process does not end when the firm
decides what strategies to pursue. There must be a transition of
strategic thought into strategic action. Implementing strategy
affects an organisation from top to bottom; it affects all the
functional and divisional areas of a business.
A technically imperfect plan that is implemented well, will
achieve more than the perfect plan that never gets off the
paper on which it is typed. Change comes through
implementation and evaluation and not through the plan.
Strategy execution deals with the managerial exercise of
supervising the ongoing pursuit of strategy, making it work,
improving the competence with which it is executed and
showing measurable progress in achieving the targeted results.
Business Policy & Strategic Management
Strategy formulation is fundamentally different from
strategy implementation :
Strategy Formulation Strategy Implementation
Positioning forces before the Guiding forces during the action
action
Focuses on effectiveness Focuses on efficiency
Strategy formulation concepts and tools do not differ greatly for small, large,
for-profit or non-profit organisations. However, strategy implementation
varies substantially among different types.
Business Policy & Strategic Management
Team-
work
Commu-
Hierarchy
nication
Social
Values Connecti
-vity
Control
Beliefs
Systems
Business Policy & Strategic Management
McKinseys 7 S Framework
Developed in the early 1980s by Tom Peters and Robert Waterman,
two consultants working at the McKinsey & Company.
The basic premise of the model is that there are seven internal
aspects of an organization that need to be aligned if it is to be
successful.
Organisational
New Strategy is New administrative
performance
formulated problems
declines
Improved New
Organisational Organisational
Performance Structure
2. Measurement of performance
3. Analysing variance
4. Corrective action
Business Policy & Strategic Managementc
Difficulties in Strategy Evaluation : Strategy evaluation in modern
business environment has become a difficult and complicated
process because of certain factors :
Increase in environment complexity
Difficulty in predicting the future accurately
Increasing number of variables
High rate of obsolescence of even the best laid plans
Increase in domestic world events
Decreasing time span for planning certainty
Change in assets
Change in profitability
Change in sales
Change in productivity
Change in profit margins
Business Policy & Strategic Managementc
Balanced Sorecard is a strategy performance management tool
that can be used by managers to keep a track of the execution
of activities by the staff within their control, and to monitor the
consequences arising from these actions.
Contd..
Business Policy & Strategic Managementc
BALANCED FINANCIAL
SCORECARD How do we appear to the
FRAMEWORK shareholders?
CUSTOMER INTERNAL
How should our customers VISION & At which processes should
perceive us? STRATEGY we excel?
MISSION
Why we STRATEGY STRATEGIC
exist MAP : OUTCOMES
Translate the SATISFIED
strategy SHAREHOLDERS
VISION STRATEGY DELIGHTED
What we Our game CUSTOMERS
want to be plan
EXCELLENT
BALANCED
PROCESSES
SCORECARD :
VALUES Measure & MOTIVATED
What is Focus WORKFORCE
important to
us
Thank You !
Prof. Shashank Divekar