Strategic Management

Key Concepts

Mintzerbgs 5Ps of strategy

Henry Mintzberg, in his 1994 book, The Rise and

Fall of Strategic Planning, points out that people
use "Strategy" in several different ways, the most
common being these five:

1. Strategy is a Plan, a "how," a means of getting

from here to there.
2. A strategy can be a Ploy too; really just a specific
manoeuvre intended to outwit an opponent or
competitor.
3. Strategy is a Pattern in actions over time; for
example, a company that regularly markets very
expensive products is using a "high end" strategy.
4. Strategy is Position; that is, it reflects decisions
2
to offer particular products or services in particular
markets.

 Mintzberg argues that strategy emerges over time

as intentions collide with and accommodate a
changing reality.
Thus, one might start with a perspective and
conclude that it calls for a certain position, which
is to be achieved by way of a carefully crafted
plan, with the eventual outcome and strategy
reflected in a pattern evident in decisions and
actions over time.
This pattern in decisions and actions defines what
Mintzberg called "realized" or emergent strategy.

Identifying a Companys Strategy What to look For:

Actions to
diversify the
Companys
revenue &
earnings by
entering into new
business

Actions to gain sales & Market share

via lower prices, more performance
features, more appealing design,
better quality or customer service,
wider production selection etc.

Actions to strengthen
competitive capabilities &
correct competitive
weaknesses

Actions &
approaches that
define how the
company manages,
research &
development,
production, sales &
marketing, finance &
other key activities

The Pattern of
Actions &
Business
Approaches that
define a
Companys
Strategy

Efforts to
pursue new
market
opportunities
& defend
against
threats to the
Companys

Actions to respond
changing market
conditions and
other external
circumstances

Actions to enter new

geographic or product
markets or exit existing
market

Actions to
form
Strategic
alliances &
collaborative
partnerships

Actions to
merge with or
acquire rival
companies.

The Strategy Hierarchy

In most (large) corporations there are several levels of strategy. Strategic
management is the highest in the sense that it is the broadest, applying to all
parts of the firm. It gives direction to corporate values, corporate culture,
corporate goals, and corporate missions. Under this broad corporate strategy
there are often functional or business unit strategies
Different Levels of Strategy
Levels

Structure

Corporate

SBU

Strategy
Corporate Level

Corporate Office

SBU - A

SBU - B

SBU - C

Functional
Finance

Personnel

Marketing

Operations

Information

Business level

Functional Level

Corporate Strategy: The companywide game plan for managing a set of businesses.
The levels involved are CEO and other Senior Executives.
Business & Corporate Strategy
Business strategy, which refers to the aggregated operational strategies of single
business firm or that of an SBU in a diversified corporation, refers to the way in which a
firm competes in its chosen arenas.
Corporate strategy, then, refers to the overarching strategy of the diversified firm.
Such corporate strategy answers the questions of "in which businesses should we
compete?" and "how does being in one business add to the competitive advantage of
another portfolio firm, as well as the competitive advantage of the corporation as a
whole
Business Strategy for Strategic Business Units: One for each business, the
company has diversified into. Actions to build competitive capabilities and strengthen
market position. Executed by General Mangers, Plant Heads, Division heads of each
business with inputs from Corporate and Functional levels.
Many companies feel that a functional organizational structure is not an efficient way to
organize activities so they have re engineered according to processes or strategic
business units (called SBUs). A Strategic Business Unit is a semi-autonomous unit
within an organization. It is usually responsible for its own budgeting, new product
decisions, hiring decisions, and price setting. An SBU is treated as an internal profit
centre by corporate headquarters. Each SBU is responsible for developing its business
6
strategies, strategies that must be in tune with broader corporate strategies

Functional Strategies
Functional strategies include Marketing Strategies, new product
development strategies, human resource strategies, financial strategies,
legal strategies, supply-chain strategies, and information technology
management strategies. The emphasis is on short and medium term plans
and is limited to the domain of each departments functional responsibility
and is executed by Functional heads. Each functional department attempts
to do its part in meeting overall corporate objectives, and hence to some
extent their strategies are derived from broader Corporate & Business
strategies.
Operational Strategy
The lowest level of strategy is operational strategy. At this level, detailing
is done to add completeness to Business & Functional Strategies. It is very
narrow in focus and deals with day-to-day operational activities such as
scheduling criteria. It must operate within a budget but is not at liberty to
adjust or create that budget. Operational level strategy was encouraged by
Peter Drucker in his theory of Management By Objectives (MBO).
Operational level strategies are informed to business level strategies which,
in turn, are informed to corporate level strategies. These strategies are
executed by Brand Managers, Operating Managers, Plant managers.
Important activities like Advertising, Web site operations, distributions are
7
involved at this level.

Strategists - Their Roles & Levels:

Strategists are individuals or groups who are primarily involved in the
formulation, implementation, and evaluation of Strategy.
In a limited sense, all managers are Strategists. But we may have outside
agencies involved in various aspects of Strategic Management, who are
also Strategists.

Kinds of Corporate Strategy -1

There are four Grand Strategic alternatives:

a) Stability Strategy: Main aim here is Stabilising and

improving Functional Performance.
a.1) No Change Strategy.
a.2) Profit Strategy.
a.3) Pause / Proceed with caution Strategy.
b) Expansion Strategy: Main aim is here High Growth.
b.1) Concentration.
b.2) Integration.
b.3) Diversification.
b.4) Cooperation.
b.5) Internationalisation.
Mergers, Takeovers, Joint Ventures, Strategic Alliances, Global
Strategy, Trans-national Strategy, International Strategy,
Multi-domestic Strategy.

Kinds of Corporate Strategy - 2

c) Retrenchment Strategy: Main aim here is
contraction of its activities. It is done through
Turnaround, divestment and liquidation in modes
like
c.1) Compulsory winding up.
c.2) Voluntary winding up.
c.3) Winding up under supervision of Court.
d) Combination Strategies: It is combination of all
above three
policies simultaneously in different businesses or at
different
times.
10

Strategic Management Process - an Overview

Definition of Strategic Management: Strategic management
is defined as the dynamic process of formulation,
implementation, evaluation and control of strategies to realise
the Organisations Strategic intent.
Strategic Management is a continual, evolving, iterative
process. It is not rigid, stepwise activities arranged in a
sequential order. It is repeated over time as situation
demands.
Establish
Strategic
Intent

Formulation
of
Strategies

Implementation
of
Strategies

Strategic Control

Strategic
Evaluation

11

11

Strategic Management Process-1

Strategic Intent:

Creating & Communicating the Vision.

Defining the Business.

Designing a Mission Statement.

Adopting the Business Model.

Clarifying the business mission, purpose & setting broad

Objectives and Goals.

Formulation of Strategies:
External Environment Survey. SWOT Analysis.
Internal Appraisal of the firm.
Setting Corporate Objectives.
Formulating the Corporate objectives.
Formulating the Corporate strategies.
Exercising Strategic Choice.
Preparing a Strategic Plan.

12