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Strategic Management

Lecture - 1

Learning Objectives
Understanding the strategic management process Appreciating the need for integrating intuition and analysis in strategic management Understanding the importance of adapting to changing scenarios

Strategic Management: Its Nature


Globalization: Survival for businesses E-commerce: Now an essential business tool Earths environment has become a major strategic issue

Strategic Management: Route to Success


It integrates:
Marketing

Management
Finance Research & Development
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Strategic Management: Route to Success


It integrates:
Productions/Operations
Information Systems Other functional areas
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Terminology
Strategic Management Strategic Planning Strategic management
Used more often in academic circles Used more often in the business world
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Same as

Strategic planning

Terminology
Strategic management Refers to:
Strategy formulation Strategy implementation Strategy evaluation

Strategic planning Refers to:

Strategy formulation
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Brief History
1950s
Term strategic planning originates

1960s 1970s

Strategic planning very popular

Widely viewed as panacea for problems


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Brief History
1980s
Strategic planning cast aside
Planning models did not yield higher returns

1990s2000

Revival of strategic planning

Widely practiced in business world


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Strategic Management:
Its three phases
1. Strategy Formulation 2. Strategy Implementation 3. Strategy Evaluation
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Strategy Formulation
Vision & Mission Strengths & Weaknesses Opportunities & Threats

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Strategy Formulation
Setting Long-term Goals

Generating Possible Strategies


Selecting a strategy

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Strategy Formulation
Considerations:
Allocation of resources Businesses to enter/retain Businesses to divest/liquidate

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Strategy Formulation
Considerations:
Joint ventures/mergers

Whether to expand/diversify
Opening foreign markets

Avoiding takeovers
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Strategy Implementation
Policies Annual Objectives Resource Allocation

Employee Motivation
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Strategy Implementation
This is the action phase:
Requires consensus to pursue the goals Includes developing a supportive culture Interpersonal & managerial skills are critical Requires high overall motivation

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Strategy Implementation
Toughest of all phases, it needs:
- Personal discipline - Commitment - Sacrifice

Challenge: Inspiring everyone to work with pride and enthusiasm

Creating effective organizational structure


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Strategy Evaluation
Fundamental Activities:
Internal assessment External assessment Measuring performance Remedial measurers/Fine tuning
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Strategy Evaluation
Last phase of strategic management:
Todays success does not assure success tomorrow Continuous Modification of strategies Success itself leads to new problems Smugness can bring organizational disaster

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Prime Task
Peter Drucker says:

The prime task is to think through the overall mission of a


business.
Ask the question:

What is our Business?


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Intuition & Analysis


Strategic management tries to bring together qualitative and qualitative information

Intuition rests on:


- Past experiences
- Judgment - Feelings

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Intuition & Analysis


Helps in decision making where:
Uncertainty prevails Little or no precedence exists Highly interrelated variables exist A choice from various possible needed

alternatives is

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Intuition & Analysis


Intuition and analytical judgment requires inputs from all managerial levels Analytical thinking and intuitive thinking complement one another

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Intuition & Analysis


Imagination is more important than knowledge, because knowledge is limited, whereas imagination embraces the entire world. . . . . Albert Einstein

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