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MFC
STRATEGIC MANAGEMENT
Semester – 3
Session - 1
Suraj Prakash
LECTURE 1 : Strategic Management
Course Contents:
Module I: Introduction
Concept of Planning, Evolution of Strategic Management,
Corporate Strategy, Patterns of Strategy
Development, Levels of Strategy, Competitive scope and
value chain
Module II: Strategic Analysis
Mission, Vision and Business Definition, Environmental
Threat and Opportunity Profile (ETOP), Industry
Analysis, Strategic Advantage Profile (SAP), Competitor
analysis, market analysis, environmental analysis and
dealing with uncertainty, scenario analysis and SWOT
Analysis.
Module III: Strategic Choice
Traditional Approach - Strategic Alternatives, Various models like
BCG, GE Nine Cell Matrix, Hofer’s Model,
Strickland’s Grand Strategy Selection Matrix, Basis of Choice; Michael
Porter’s Approach - Generic
competitive strategies, Cost advantage, differentiation, technology and
competitive advantage, substitution,
competitor, complementary products and competitive advantage,
strategic vision vs. strategic opportunism,
Coevolving and patching.
Text:
Azhar Kazmi, Business Policy and Strategic Management, Tata McGraw Hill.
Kaplan Robert & Norton David P, Strategic Focused Organization, Harvard
Business School Press.
References:
Pearce John A & Robinson R B, Strategic Management: Strategy Formulation
and Implementation, 3rd Ed.,
A.I.T.B.S. Publishers & Distributors.
Aaker David, Strategic Market Management, 8th Ed., John Wiley and Sons
Regular reading of all latest Business Journals: HBR, Strategist, Business World,
Business India, Business Today.
This presentation is dedicated to
all my students the only capital I
have
Overview
• Why do some firms succeed while others fail?
– A central objective of strategic management is to learn
why this happens.
• What is strategy?
– An action a company takes to attain superior
performance. In this context it means allocations of
resources. Resources may be same but if they are
combined in different ways some get superior
performance; some get ordinary performance. Strategic
Management studies the ways to make superior
performance.
• What is the strategic management process?
– The process by which managers choose a set of strategies
for the enterprise to pursue its vision.
Philosophy
“The category of intentions that are broad, all inclusive and forward thinking .
Mission Statement –
What is our business?
“Essential purpose of the organization , concerning particularly
why it is in existence the nature of the business and the customers
it seeks to serve & satisfies.”
Goals-
Goals denotes what an organizations hopes to accomplish
in a future period of time.
Objectives-
Objectives are the ends that states specifically how the
goals shall be achieved.
Strategy Formulation
Long-Term Objectives
Alternative Strategies
Strategy Selection
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
What is difference between
Walmart ,Subhiksha and Future
Group?
What are the results of Wal-Mart?
• What is a strategy?
• How to create strategies that lead to
superior performance?
• How to implement?
• How you have to relate to the
environment?
• Why strategy?
Strategic Leadership
• Strategy formulation is is
10% implementation is
90%.
Strategic Planning
• Rational planning by top management?
Basic Strategic Planning Model
• Mission
– Sets out why the organization exists and what it
should be doing from point of view of customer.
• Major goals
– Specify what the organization hopes
to fulfill in the medium to long term.
• Objectives
– Are objectives to be attained that lead to superior
performance.
Perspective Quote on Vision
• Identify strengths
– Quality and quantity of resources available
– Distinctive competencies
• Identify weaknesses
– Inadequate resources
– Managerial and
organizational deficiencies
Business-Level Strategies
• Cost leadership
– Attaining, then using the lowest total cost basis as
a competitive advantage; Example of Intel
• Differentiation
– Using product features or services to distinguish
the firm’s offerings from its competitors;Apple
Computers
• Market niche focus
– Concentrating competitively on a specific market
segment; Nala Appakadai
Functional-Level Strategies
• Focus is on improving the effectiveness of
operations within a company.
– Manufacturing
– Marketing
– Materials management
– Research and development
– Human resources
Global-Level Strategies
• Multidomestic
• International
• Global
• Transnational
Corporate-Level Strategies
• Vertical integration
• Diversification
• Strategic alliances
• Acquisitions
• New ventures
• Business portfolio restructuring
What is Competitive Advantage?
• Substantiality
– Is it substantial enough to make a difference?
• Sustainability
– Can it be neutralized by competitors quickly?
• Ability to be leveraged into visible
business attributes that will influence
customers
• General managers
– Responsible for the overall (strategic)
performance and health of the total
organization.
• Operations managers
– Responsible for specific business
functions or operations.
Strategic Managers for All Levels
Strategic Leadership
FIGUR 1.3
Mintzberg’s Intended Strategy
and Emergent Strategy
Five P’s of Strategy
1. Plan
2. Ploy
3. Pattern
4. Position
5. Prespective
The Strategic Management Process for Intended and
Emergent Strategies
FIGURE 1.4
http://papers.ssrn.com/sol3/paper
s.cfm?abstract_id=1857795
FIGURE 1.5 ( Adopted from Strategic Mangement by Hill and Jones, 2009 e )
Illusion of Control
• Pitfalls of groupthink
– Failing to question underlying assumptions.
– Coalescing around a single person or policy.
– Filtering out conflicting information.
– Developing after-the-fact rationalizations.
– Having an emotional (nonobjective)
commitment to an action.
Techniques for Improving Decision Making
Two decision-
making
processes
that counteract
cognitive biases
and groupthink.
FIGURE 1.6
At the end of the course You will
understand
• How to create strategic alternatives
• How to select alternative that is most
suitable for organization
• Implement the strategies that will help the
stakeholders to maximise their wealth.
MCQ’S
1.The generic types of competitive strategies include
A. Build market share, maintain market share and slowly
surrender market share
B. Offensive strategies and defensive strategies
C. Low-cost provider, broad differentiation, best-cost provider,
focused low-cost and focused differentiation
Answer:c
2.Which one of the following generic types of competitive
strategy is typically the best strategy for a company to
employ?
A. A low-cost leadership strategy
B. A broad differentiation strategy
C. A best-cost provider strategy
D. A focused low-cost provider strategy
E. There is no such thing as a "best" competitive strategy;
a company's "best" strategy is always one that is
customized to fit both industry and competitive conditions
and the company's own resources and competitive
capabilities
Answer:e
3.A low-cost leader's basis for competitive advantage is
A. Lower prices than rival firms
B. Using a low cost/low price approach to gain the biggest
market share
C. High buyer switching costs
D. Meaningfully lower overall costs than competitors
Answer:d
4.How valuable a low-cost leader's cost advantage is
depends on
A. Whether it is easy or inexpensive for rivals to copy the
low-cost leader's methods or otherwise match its low costs
B. How easy it is for the low-cost leader to gain the biggest
market share
C. The aggressiveness with which the low-cost leader
pursues converting the cost advantage into the absolute
lowest possible costs
Answer:a
6.A low-cost leader can translate its low-cost advantage
over rivals into superior profit performance by
A. Cutting its price to levels significantly below the prices
of rivals
B. Either using its low-cost edge to underprice
competitors and attract price sensitive buyers in large
enough numbers to increase total profits or refraining
from price-cutting and using the low-cost advantage to
earn a bigger profit margin on each unit sold
C. Going all out to use its cost advantage to capture a
dominant share of the market
Answer:b
7.The major avenues for achieving a cost advantage over
rivals include
A. Revamping the firm's value chain to eliminate or bypass
some cost-producing activities and/or out-managing rivals in
the efficiency with which value chain activities are
performed
B. Having a management team that is highly skilled in
cutting costs
C. Being a first-mover in adopting the latest state-of-the-art
technologies, especially those relating to low-cost
manufacture
Answer:a
8.A competitive strategy of striving to be the low-cost
provider is particularly attractive when
A. Buyers are not very brand-conscious
B. Most rivals are trying to be best-cost providers
C. There are many ways to achieve product differentiation
that have value to buyers
D. Buyers are large and have significant power to bargain
down prices; buyers use the product in much the same
ways; and buyers have low switching costs
Answer:d
Which of the following is not an action that a company can
take to do a better job than rivals of performing value chain
activities more cost-effectively?
A. Striving to capture all available economies of scale and
learning/experience curve effects
B. Trying to operate facilities at full capacity
C. Adopting labor-saving operating methods
D. Improving supply chain efficiency
E. Outsourcing all production-related activities
Answer:e
To succeed with a low-cost provider strategy, company
managers have to
Answer:d
Thank You
To: surajamity@yahoo.com