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Faculty :

Module :

S.Duttagupta
Business Policy & Strategic Management

Session 1

Topics to be covered in this session:

Strategic Management Concepts

Session Learning Objectives


At the end of this session you should be able to understand:
1. Strategy, Strategic Management Process, Strategic
Competitiveness, Competitive Advantage, Above Average
Returns,
2. The 21st century competitive landscape, Globalization and
Technological Changes
3. The Input Output model
4. Strategic Intent: Vision, Mission and Value
5. Stakeholders and their ability to influence organizations

Few definitions
A strategy is a long-term view of an organizations
commitments and actions to gain competitive
advantage using core competencies
The Strategic Management Process involves decisions
to achieve strategic competitiveness
Strategic competitiveness depends on a firms ability
to formulate and implement a value creating strategy
to earn above-average returns.
Competitive advantage is the ability of a firm to
outperform in cost or quality or productivity over its
competitors
Above average returns are returns more than
comparable investment at similar risks

What does Strategy Involve?


It involves knowing where we were, where
we are and where we want to go & how?
IT should be different from competition
Should be responsive to true market needs &
have significant impact in the marketplace
Should be visionary & yet focused so as to
capture the imagination & commitment of the
workforce and the other stakeholders
It is not tactical steps like TQM, BPR or
Benchmarking

Evolution Of Strategy

The word strategy has been derived from the


Greek word STRATOS (army) and AGEIN to
(lead )
Chinese military theorist Sun Tzu( Circa
500BC) stated that the supreme art of war is
to subdue the army without fighting
In recent times, F.W. Taylor (1900s) separated
planning from doing while Henry Fayol
talked about administration in 1920s.

The Strategic management process involves:

1. Strategic Inputs- Understanding external and


internal environment and deciding the vision
and mission.
2. Strategic Actions- Strategy formulation,
business level strategy, competitive dynamics,
corporate level strategy, acquisition and
restructuring strategies, international strategy,
strategy
implementation,
organizational
structure and control, strategic leadership,
strategic entrepreneurship
3. Strategic outcomes- strategic competitiveness,
above average returns

The 21st century competitive landscape


Global EconomyAsian Tigers- Singapore, Hong Kong, South Korea, Taiwan
Chindia
BRIC- Brazil, Russia, India, China
The European Union
Tripod- USA, Japan, Europe
Toyota, Wal-Mart, McDonalds', GE

The Input-Output (I/O)


model for above-average returns

Inputs

Process

Output

Goods

Services
Man,
Money,
Material

Internal Climate

Cost + Profit

Feedback

External Environment
(PESTEL)

Illustrations of I-O model


Study the external environment of the industry using
PESTEL
Study the Internal Climate- Strengths and Weaknesses
Identify the inputs and their sources Develop and
acquire skills and assets needed to implement the
chosen strategy
The Process : Strategy Implementation and controlSelect strategic action and control
After the delivery of goods/ services ; collect and
review feedback from stakeholders to generate better
inputs in next cycle
Plan-Do-Control-Re-plan PDCRsuperior returns

Steps to achieve Above- average returns

Resources
Capability
Competitive Advantage
An Attractive Industry
Strategy Implementation
Above Average Returns

Resources and capabilities:


Physical- Factors of production (land, raw

materials, machines, finance)


Human- Employee skills, talented managers
Organizational- Goodwill, patents, processes,
Intellectual property

Strategic Intent
Strategic Intent is the leveraging of a firms internal
resources, capabilities and core competencies to
accomplish the firms goals in a competitive
environment.
Vision- The passion and big picture of the
organization
ExamplesInfosys- "To be a globally respected corporation that provides bestof-breed business solutions, leveraging technology, delivered by
best-in-class people."
Tata Steel - We aspire to be the global steel industry benchmark
for Value Creation and Corporate Citizenship.

Definitions, Contd.
Mission: Statement of the firms reason for existence; its
unique purpose and the scope of its operations.
ExamplesInfosys - "To achieve our objectives in an environment of fairness,
honesty, and courtesy towards our clients, employees, vendors and
society at large."

Tata Steel strives to strengthen India's industrial base through the


effective utilization of staff and materials. The means envisaged to
achieve this are high technology and productivity, consistent with
modern management practices.
It recognizes that while honesty and integrity are the essential
ingredients of a strong and stable enterprise, profitability provides the
main spark for economic activity.
The Company seeks to scale the heights of excellence in all that it does
in an atmosphere free from fear, and thereby reaffirms its faith in
democratic values.

Definitions, Contd.
Value-

statements about how the organization will value


customers, suppliers, and the internal community. Value statements
describe actions which are the living enactment of the fundamental
values held by most individuals within the organization. They
represent an organizations highest priorities and deeply held
driving forces.

Infosys -

We believe that the softest pillow is a clear conscience. The


values that drive us underscore our commitment to:
Customer Delight: To surpass customer expectations consistently
Leadership by Example: To set standards in our business and transactions
and be an exemplar for the industry and ourselves
Integrity and Transparency: To be ethical, sincere and open in all our
transactions
Fairness: To be objective and transaction-oriented, and thereby earn trust
and respect
Pursuit of Excellence: To strive relentlessly, constantly improve ourselves,
our teams, our services and products to become the best

Definitions, Contd.
ValueTata Steel
Our PEOPLE, by fostering team work, nurturing talent, enhancing
leadership capability and acting with pace, pride and passion.
Our OFFER, by becoming the supplier of choice, delivering
premium products and services and creating value with our
customers.
Our INNOVATIVE APPROACH, by developing leading edge
solution in technology, process and products.
Our CONDUCT, by providing a safe working place respecting the
environment, caring for our communities and demonstrating high
ethical standards.

Stakeholders:
Stakeholders are individuals and groups who can
affect and get affected by the strategic outcomes
achieved by the firm; and who have an enforceable
claim on firms performance.
Capital market stakeholdersSuppliers of capital goods
Product Market stakeholdersSuppliers of revenue goods
Organizational stakeholdersemployees, managers, non-managers

Strategy Vs Tactics

Strategy focuses essentially on deciding on what the


organization is trying to do, what it is trying to
become within its business environment. Changing
strategy is difficult and often causes problems.
Tactic is the implementation of the strategy. It is the
set of management decisions focused on how to
achieve the strategic objectives.
Example: once the organization decides that it wants
to be a car manufacturer, there are many decisions
that must be made about how to profitably
manufacture cars.

Nature of Business Policy


They tend to serve as precedents and thus reduce the
repetitive rethinking of all the factors of individual
decisions which save time
Policies aid in coordination, if a member of
individuals are guided by the same policies they can
predict more accurately the actions and decisions of
others
Policy provides the stability in the organization and
reduces frustration of members
Policies clearly specify routes towards the related
goals of the organization

THANK YOU