Introduction to Strategic Management - Module 1 – MG University - Manu Melwin Joy

Introduction to Strategic ManagementModule 1 – MG University

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – [email protected]

Contents

• Introduction to Strategic Management.• Concept of Strategy.• Process of Strategy.• Strategic Framework.• Vision, Mission, Objectives and Goals. • Strategic Analysis. • Environmental Analysis.• Competitive forces.• Internal analysis.• SWOT Analysis.

Definition of strategy

• According to Norman (1993), “Strategy is the art of creating value”.

• According to Porter (1996), “Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value”.

Characteristics of strategy• The decision is concerned with

or effects the long term direction of an organization.

• Strategic decisions are normally about trying to achieve some advantage for the organization.

• Decision is likely to be concerned about the scope of an organization’s activities.

• Decisions can be seen as matching of the activities of an organization to the environment in which it operates.

Characteristics of strategy• Decisions have major

financial or other resource implications.

• Decision will have a major impact outside the organization.

• Strategic decisions are likely to affect operations decisions.

• Decisions entail significant risks to the business.

5 Ps of strategy

• Professor Henry Mintzberg of McGill University in Montreal, Canada, articulated what he labeled as “the 5 Ps of strategy.”

• According to Mintzberg, understanding how strategy can be viewed as a plan, as a ploy, as a position, as a pattern, and as a perspective is important.

Process of strategy

• Strategic management is a process that involves building a careful understanding of how the world is changing, as well as knowledge of how those changes might affect a particular firm.

Strategic FrameworkVision, mission, objectives and goals

Vision - Definition

• Vision statement answers

the question “What will

success look like?”.

Characteristics of vision

• A basis of performance.

• Reflects core values.

• Way to communicate.

Examples of vision statement

• Hindustan Lever Ltd –

Our vision is to meet the

everyday needs of people

everywhere.

Mission - Definition

• Mission statement is a statement of purpose and function.

• It answers the following questions.– Why the organization does exist?– What is its value addition?– What is its function?– How does it want to be

positioned in the market and minds of customer?

– What business is it in?

Characteristics of mission

• It draws on the belief systems.

• It must be future oriented and portray your organization as it will be, as if it already exists

• It must focus on one common purpose.

• It must be specific to the organization, not generic.

Example of Mission Statement

• Ranbaxy Laboratories

Ltd – Our mission is to

become a research

based international

pharmaceutical

company.

Strategic Goals

• Strategic goals address

the key question “

Where do we wish to

arrive and when?”.

SMART Goals

Nike’s strategic goals

• Protect Nike’s position as the number one athletic brand in America.

• Build a strong momentum in the growing fitness market.

• Intensify the company’s efforts to develop products that women need and want.

Environmental analysis• Why Does the Environment

Matter?– First, the environment

provides resources that an organization needs in order to create goods and services.

– Second, the environment is a source of opportunities and threats for an organization.

– Third, the environment shapes the various strategic decisions that executives make as they attempt to lead their organizations to success.

PESTEL Analysis

• P Is for “Political.

• E Is for “Economic”.

• S Is for “Social”.

• T Is for “Technological”.

• E Is for “Environmental”.

• L Is for “Legal”.

Competitive Analysis Porter’s five force model

SWOT Analysis

The SWOT Matrix