EXECUTIVE GROUP

MOHAMMAD WAQAS KHAN HAIDER MUSARRAT SHAH

TUFAIL AHMAD
RASHID ALI DANYAL KHATTAK

CHAPTER 1

INTRODUCING STRATEGY

Learning outcomes

Describe the characteristics of stratigic decisions and define what is meant by strategy and strategic management.(haider) Explain how strategic priorities vary by level:corporate,business and operational;and understand what distinguishes strategic management from operational management.(danyal) Understand the basic vocabulary of strategy.(tufail) Explain the elements of the exploring corporate strategy strategic management model and understand how the relative importance of each element will vary with context and

Strategy

Is the direction and scope of an organization over the long term,which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations

Characteristics of strategic decisions

The Long term direction of an organization The scope of an organizations activity Gaining advantage over competitor Addressing changes in business environment Building on resources& competencies Values & expectations of shareholders

Strategic decisions are likely to:

Complex in nature Made in situation of uncertainty Affect operational decisions Demand an integrated approach Manager have to sustain relationship & networks Involve change in organizations which may prove difficult

Some Levels of Strategy

We can differentiate the levels of strategy into the following four types

Corporate Business Functional Operational

Corporate Level Strategy

What businesses are we in? What businesses should we be in? Four areas of focus
Diversification

management (acquisitions and

divestitures) Synergy between units Investment priorities Business level strategy approval (but not crafting)

Business Level Strategy

How do we support the corporate strategy? How do we compete in a specific business arena? Three types of business level strategies:

Low cost producer Differentiator Focus Generate sustainable competitive advantages Develop and nurture (potentially) valuable capabilities Respond to environmental changes Approval of functional level strategies

Four areas of focus

Functional / Operational Level Strategy

Functional: How do we support the business level strategy? Operational: How do we support the functional level strategy?

An example. Business L.S.: Become the low cost producer of widgets Functional L.S. (Mfg.): Reduce manufacturing costs by 10% Operational (Plant #1): Increase worker productivity by 15%

Functional / Operational Level Strategy

Functional: How do we support the business level strategy? Operational: How do we support the functional level strategy?

An example. Business L.S.: Become the low cost producer of widgets Functional L.S. (Mfg.): Reduce manufacturing costs by 10% Operational (Plant #1): Increase worker productivity by 15%

Business Level Strategy

How do we support the corporate strategy? How do we compete in a specific business arena? Three types of business level strategies:

Low cost producer Differentiator Focus Generate sustainable competitive advantages Develop and nurture (potentially) valuable capabilities Respond to environmental changes Approval of functional level strategies

Four areas of focus

A Simple Organization Chart (Single Product Business)

Business Level Strategy Business

Research and Manufacturing Development Functional Level Strategy

Marketing

Human Resources

Finance

A Simple Organization Chart (Dominant or Related Product Business)

Corporate Level Multibusiness Corporation

Business Level

Business 1 (Related)

Business 2 (Related)

Business 3 (Related)

Functional Level Research and Manufacturing Development Marketing Human Resources Finance

An example of an Unrelated Product Business (Note: By itself, an SBU can be considered a related product business) SBU: a single business or collection of related businesses that is independent and formulates its own strategy

A (Multi-business) Corporation

Ex.: G.E. (General Electric Corp.)

Strategic Business Unit 1

S.B.U. 2

Company 1

Co. 2

Co. 3

Division 1

Div. 2

Div. 3

What is strategic Management?

Strategic management includes understanding the strategic position of an organization, strategic choices for the future and turning strategy into action. There are three main elements of this definition: Strategic position of an organization. Strategic choices for future. Turning strategy in to action.

1. 2. 3.

What is strategic position?

1. 2. 3.

The strategic position is concerned with the impact on strategy of the external environment, an organization's strategic capability (resources and competences) and the expectations and influence of stakeholders. This strategic position is effected from the following area: Environment Strategic capability Expectation and purposes

What is strategic choices?

1. 2. 3.

Strategic choices involve understanding the underlying bases for future strategy at both the business unit and corporate levels and the options for developing strategy in terms of both the directions and methods of development It has three important elements: Business level strategies Corporate level strategy Development Direction and methods

Strategy into Action

Strategy into action is concerned with ensuring that strategies are working in practice This include the three main elements Structuring organization Enabling the resources Change

1. 2. 3.