The illiterate of the 21st century will not be those who cannot read and write, but those

who cannot learn, unlearn, and relearn. Alvin Toffler,

daily Dawn 3 Feb 12

Welcome and introduction to Strategic Management (StM)

COURSE PROFILE SEMESTER SPRING -2013 MBASTRATEGIC MANAGEMENT MGT - 625

COURSE DESCRIPTION
Todays Business World is extremely competitive. It relies heavily on the decisions made by its (Strategic) Managers / Strategic Management. The strategic managers must develop panoramic view of business environment, i.e., both internal and external. The managers of modern businesses should be adequately skilled to pre-empt the situation rather than resorting to reactive mode. Recent economic slowdown and currency war raging between the USA, Europe (Euro Zone) and China are cases in example. Therefore, the strategic management course has been designed to enable you to learn not only the fundamentals, but also the intricacies of higher levels of management. A careful look at the schedule would let you know the progression 3 of the course.

COURSE OBJECTIVES
Develop an understanding of Strategy and Strategic Management and its application to complex relationships that exist in todays environment. Develop an awareness of the various environmental contexts under which strategic formulation and implementation occur. Develop an ability to thoroughly analyze business problems. Develop an ability to function effectively as a member or a chairperson of a strategic team and, Develop an ability to effectively communicate strategic thinking, both orally and in writing.
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Recommended Books
Dess, Gregory G; Lumpkin, G.T.; Eisner, Alan B. Strategic Management Text and Cases. 2006. The McGraw-Hill Companies, Inc., NewYork. Strategic Management: Concepts and Cases By Fred R. David5

RECOMMENDED BOOKS
The McGraw-Hill Companies, Inc., New York. Strategic Management: Concepts and Cases By Fred R. David Rao, VSP; Strategic Management Strategic Management, by Miller & Dess, McGraw Hill - International Edition, 1996. Business Policy and Strategy - Concepts and Readings, by McCarthy, Minichiello & Curran, Irwin, 1996. Strategic Management by J A Pearce 11 and Robinson, Jr., All India Traveler Book Seller.
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Wk

General Contents

Class Activities

Lecture Delivery Plan

Quizzes / Assignment s

Part - 1 --- Strategic Analysis

1 2 3 4
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Ch-1 Introduction to STM Ch-2 Analyzing External Environment Ch-3 Analyzing Internal Environment Ch-4 Assessing Intellectual Capital
Part - 2 --- Strategic Formulation

A-1 Q -1

Ch-5 Formulating Business Level Strategies Ch-6 Formulating Corporate Level Strategies Ch-7 Formulating International Strategies Ch-8 Digital Business Strategies
Mid Term Exam Part 3 --- Strategic Implementation

A-2 Q-2

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Ch-9 Strategic Control and Corporate Governance

Nominations for Group Presentations

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13 14

Ch-10 Creating Effective Organizational Designs Ch-11 Strategic Leadership, Excellence, Ethics, and Change Ch-12 Fostering Corporate Entrepreneurship

A-3
Q-3

15 16 17 18

Ch-13 Strategic Leadership: Creating new Ventures Part 4 Miscellaneous Comprehensive Case Analysis Presentations Final Course / Group Revision
Final Exam

A-4

Q-4 7

Shahid Nawaz Assist. Professor 0345-5139748

Email: csn724@gmail.com OR Qaisera5210@yahoo.com
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Bring a change in your attitude and make it a habit to visit library at least once a week.

LP-1 dt 6 Feb 13
Ch-1 Strat. Mgmt Creating Competitive Advantages Learning Objectives
Definition and 4 key attributes of Strat. Mgmt The Strat. Mgmt Process and its 3 related principal activities Corporate Governance Environmental Forces Vision, Mission and Objectives Awareness of
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STRATEGIC MANAGEMENT MODEL

Planning 1.Establish vision, Purpose, values, and 3-5 yrs scorecard Development
7. Identify drivers with Targets for annual Objectives 6. Develop project action plans For drivers

Implementation
8. Execute Project Action Plans Do Proj Mgmt

Improve strategic management process

2. determine annual Obj & Goals

5. Charter improvement teams And Create infrastructure

9. Review Project plan Study Perfor In a database mance And systematic Evaluat process ion

3. Address implementation Barriers

4. Design and execute communication plan

10. Sustain the Improvements (Trg & Doc)

Act Instituti onalize

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Annual strategic planning

STRAT MGMT & CEO

All Org are run by the CEOs Explain role of CEO vis-vis Strat Mgmt and challenges they face CEOs are synonymous with the success and failure of the org Strat Mgmt is based on participatory decision making techniques with the CEO taking full responsibility for the outcome Leadership roles: Romantic ---- Leader is the key to success or failure External Factor ---- Focus is on the external factors for success or failure of the Org Explain recent examples: BP Oil Rig disaster and its fallout OGDC Downfall of BCCI Recent economic downturn in USA / Euro Zone / DPW etc
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STRAT MGMT
The Essence of STRAT MGMT is to focus on 2 fundamental
questions: How should we compete in order to create competitive advantages (CA) in the market place How can we create competitive advantage in the market place that are not only unique, sustainable and valuable but also difficult for competitors to copy or substitute. Important to note is:
Sustainable

CA cannot be achieved without operational effectiveness which means performing similar activities better than rivals.

Operational Effectiveness includes concepts of TQM, just-in-time, benchmarking, business process reengineering, and outsourcing etc Strategy is all about being different from everyone else.
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SUCCESSFUL STRAT MGMT An industry is composed of a set of firms that produce similar products or services, sell to similar customers, and use the similar methods of production. Gathering industry information and understanding competitive dynamics among the different companies in an industry is key to successful strategic management.
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STRAT MGMT DEFINITION

What is Strat Mgmt? Step further than incremental management Taking minor decisions in a stable, simple and unchanging industry. Does it happen always? No, therefore, need for Strat Mgmt which is defined as: Analyzing, taking decisions, and initiating actions in order to create and sustain competitive advantage. Biggest Question How (and when) and why do some firms outperform others? Critical Answer
The challenge to managers is to decide on strategies that provide advantages that can be sustained over time 15

STRAT MGMT AND 4 KEY ATTRIBUTES Directed at overall organizational goals

Looking at the strategic issues rather than functional areas What to produce and at what cost

Involving multiple stakeholders

Involve owners, employees, customers, suppliers, and the community at large

Incorporating perspectives

short

term

and

long

term

Keep an eye on the current production needs as well as vision for the future ---- Creative Tension

Recognizing need for trade-offs efficiency and effectiveness

between

Using organizational resources wisely and optimally

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THE STRAT. MGMT PROCESS

It involves 3 related principal activities:

Analysis
Of strategic goals (V + M + Strat Obj) Internal and External Environment of the Org Based on Orgs domestic and international operations, the Org should address 2 basic questions, i.e.,
1. 2. What industries should we compete in? How should we compete in those industries?

Decisions (Strategic)

Actions
In order to achieve success as a result of decisions, the necessary resources must be made available for a desirable outcome. It is a continuing process and seeks intimate involvement of CEO

Be able to differentiate between Intended Strategy and Realized Strategy

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Environmental Forces

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CORPORATE GOVERNANCE AND STAKEHOLDERS MANAGEMENT

Management (CEO)
To run the Org to satisfy the interests and needs of the shareholders under the guidelines prepared by BOD

Shareholders (Owners) BOD (Elected by the shareholders to represent their interests)

To align the interests and motives of the management with those of the owners
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ROLE OF CEO--- Electronic Data System since 1962

In 1998 --- EDS earned $22Bn (Total market $140Bn) as Revenue with shares trading at $35. In March 2003 --- Shares shrunk to $16. Additionally, EDSs reputation was tarnished due investigations by S&EC resulting in loss of competitive position. EDS CA -- technical competence, steady growth, old CEOs conservative culture --- crisp white shirt and military cut hair style v/s new CEOs culture --- gung-ho style to get rid of bureaucratic life style To spur growth the new CEO pushed for megadeals requiring outsourcing companies to make large investments. Resultantly, stocks were pushed up to $77. By 2001, CEO (Mr. Brown) received $52M in compensation.
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EDS- WHAT WENT WRONG

CEOs Attitude --- Over ruling the managers By 2002, Navy contract suffered loss of $1.9Bn due poor calculation of margins Megadeals / megarisks In the same time frame, a contract with Worldcom signed in 1998 incurred a loss of $118M due bankruptcy of Worldcom as a result of Internet Bubble Burst 2002 estimates were fudged and investors were assured of 13-14% growth despite recession Stocks plunged to $11.68 By 2003, EDS BOD lost patience and replaced CEO Closing statement: Pay for performance, differentiate performance- not organizational level.make difficult choices. Do as I say, not as I do.
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CORPORATE GOVERNANCE AND STAKEHOLDERS MANAGEMENT --CONTD

Creating Symbiosis or Zero Sum Two views

1. Zero Sum --- All the stakeholders are to be satisfied:
Employees want higher wages Shareholders want higher profits Zero sum concept gives rise to Unionism

2. Stakeholder symbiosis ---- Managers acknowledge interdependence between employees, suppliers, customers, shareholders and the community at large
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Corporate Governance and Social Responsibility

Social Responsibility is the expectation that businesses or individuals will strive to improve the overal welfare of the society. Companies have determined Triple Bottom Line which is:

Financial Measures / Capital

Ecological and material capital Renewable resources generated by living systems, such as wood or animal by-products Human and Social capital Human deals with peoples knowledge, skills, health, nutrition, safety, security, and fossil fuels

Social includes assets of civil society, social cohesion, trust, reciprocity, equity and other values that provide mutual benefits
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THE STRAT. MGMT Perspective --- An imperative It requires managers to take an integrative view of the Org and assess how all of the functions and activities fit together to help an Org achieve its goals and objectives. Some Key Driving Forces are: 1. Globalization
Global economy is NOT the flow of goods only but it is flow of capital, people, and information worldwide. Innovative technology is having impact on our lives, trade, services and products Creating and applying knowledge to deliver differentiated products and services of superior value for customers require the acquisition of superior talent, as well as ability to develop and retain that talent
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2. Technology

3. Intellectual Capital

EMPLOYEES AND STRAT MGMT

Role of Leaders Thinking and Working groups can not be different and separated Ideas must be encouraged, analyzed and implemented Trg and Dev must move hand in glove

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VISION, MISSION AND OBJECTIVES Vision tend to be quite broad, and can be inspiring, overarching and emotionally driven Org express priorities best through stated goals and objectives that form a hierarchy of goals Hierarchy of goals is the Companys Vision A vision may or may not succeed Give examples of vision:
GOP BU ICI AkzoNobel Unilever Telenor PTCL
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MISSION
It encompasses both the purpose of the company as well as the basis of competition and competitive advantage

More specific and depict rationale for existence of org

Effective mission statements incorporates the concept of

stakeholder management, suggesting that org must respond to

multiple constituencies if they are to survive and prosper.

They also have the greatest impact when they reflect an orgs enduring, overarching strategic priorities and competitive

positioning.

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STRATEGIC OBJECTIVES
Operationalization of Mission statement Outlining Strategy how to achieve higher goals Cover well defined time frame Resources are identified and allocated To be meaningful, Objectives must be: Measurable Specific - clear and concise Appropriate - Consistent with vision and mission Timely Have a time frame
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Thank you

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