Strategy Terms-Unit 1

8/6/2019 Strategy Terms-Unit 1

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Dr.S.SakthivelA.M.I.I.M.,P.G.D.B.A.,M.M.M.,M.Phil.,Ph.D

Sr. Professor / Hallmark Business School

Good Morning

Best Wishes for Bright Career


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Conceptual Framework for StrategicManagement,

the Concept of Strategy and

the Strategy Formation Process

Stakeholders in Business

Vision, Mission and Purpose

Business Definition, Objectives and Goals Case Study.


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Managers Old Concept :

To-days decisions for To-days Business

Latter Managers have to prepare to face thechallenges by introducing new methodology

for survival ,which turnout Strategic Planningand subsequently Strategic Management toexcel .


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Importantly, the realisedstrategy of the organisationwas not directly related to

the intended, deliberatestrategy, the precise andexplicit plan of theorganisation, but more anoutworking of the non

deliberate and hugelyvariable strategies of thework force; emergentstrategy.


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Its success mainly depends on

IndustryContest National Contest

Self Resources , Capabilities and Strategies.


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Strategic Planning is a critical, evolving, andongoing process for setting the futuredirection of the Department.

In addition to shaping its future, it directlysupports the effectiveness of the Department

in accomplishing its mission of providing andmaintaining the excellent transportationsystem Georgians have come to expect.


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Strategic Management is the effort totransform the high level directions of

Strategic Planning into well aligned actionsof the working units of the Department, usingperformance measurements and performancebased management as a business process.

Performance measurement supports thedecision making process to continuallyimprove transportation services for ourcustomers.


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1. BHEL is Planning to expand its range of supercriticalpower projects to cater the need of the country.

2. LG Electronics India Limited signed a MOU withMaharashtra Government to expand its manufacturingfacility at Pune for Rs. 900 Crores

3. Maruti Udyog slashed the price of Maruti-800 in smallcar segment (Rs. 160000)

4. Lenova a computer giant in china acquired IBM in

China.5. Tata Steel entered Joint Venture agreement with

Iranian Mines and Mining Industries

6. Developments and Renovation Organization.


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The prime task is to think through theoverall mission of a business.

Peter Drucker

Imagination is more important thanknowledge, because knowledge is limited,

whereas imagination embraces the entireworld.

. . . . Albert Einstein.


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What is strategic management?

Strategic Management can be defined as

the art and science of formulating,implementing and evaluating cross-functionaldecisions that enable an organization to

achieve its objective.


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The on-going process of formulating,implementing and controlling broad plans

guide the organizational in achieving thestrategic goods given its internal and externalenvironment.


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1. Globalization is the survival for business

2. E-Commerce becomes a business tool

3. Earth environment has become a majorstrategic issue


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1. Corporate Strategy

2. Business Strategy

3. Functional Strategy


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Corporate Strategy - is concerned with the overall purpose andscope of the business to meet stakeholder expectations.This is acrucial level since it is heavily influenced by investors in thebusiness and acts to guide strategic decision-making throughout

the business.C

orporate strategy is often stated explicitly in a"mission statement".

Corporate strategy refers to the overarching strategy of thediversified firm. Such a corporate strategy answers the questions

of "which businesses should we be in?" and "how does being inthese businesses create synergy and/or add to the competitiveadvantage of the corporation as a whole?


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Business Unit Strategy - is concerned morewith how a business competes successfully in

a particular market. It concerns strategicdecisions about choice of products, meetingneeds of customers, gaining advantage overcompetitors, exploiting or creating new

opportunities etc.


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The Greek Word Strategos

Strategy in English and Chinese

Strategy in Management, Administration, andNational Defense

Also named Business Policy, Corporate

Management,Corporate Strategy, BusinessStrategy, Strategic Management


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Top level, LongTerm Plan/Intent, regarding

OverallCorporate Direction

Defines Scope, and focus, of activities

Often about winning, out-performing

Competitors

Building on resources

Affected by values, expectations & power

Sustainable not casually changed.


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Basic Financial Planning

Forecasting-based Planning

Externally Oriented Planning

Strategic Management

- Meeting annual budgets

- Incorporating predictions beyond next year

- Thinking strategically, Strategic Planning

- Considering also the implementation & control

aspects when formulating strategies


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1960s Design School

1970s BCG Portfolio Management

1980s Porter Positioning School

Early 1990s Resource-based View

(Core Competence), & Learning Organization

Mid 1990s Stretching ambition, not justpositioning/Fit


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GettingThings Done Through People

Corporate level: Purpose and scope,

LongTerm Survival

Business Level: Competition

Operations Level: Action plans and implemen-

tation for human resources, financing, R&D,manufacturing, etc.


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Mission purpose, scope Vision/Intent, desired future state Goal Strategies - long term direction, plans Policies Clear guidelines for decisions and actions Objectives end results of planned activities, Should be compatible with Mission, probably

quantified: To achieve 10% annual growth in earnings per share

T

o achieve 20%

return on equity. To achieve 27% return on capital employed. To capture 45% market share within three years.

Programmes


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Identify Structural Drivers of Change

PEST Framework (PESTEL)

Political, Economic, Social, Technological,Environmental, Legal, .

Political-Legal

Economic-Global

Social-Cultural Technological

Legal Scenarios Planning


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PoliticalLegal (Governments Positions)

Possible trade protection / customs measures ?

Lobby-able consumer protection, environment ?

Usable Export Promotion ?

Economic Trend

Demographics: younger / older population

Peoples disposable income

Exchange rate stability

Those of e.g. neighbouring countries


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Social-Cultural

Lifestyle

Fascination

Attitudes towards foreign products, pollution,wastages, ..

Technological

Flexibility in product changes

Flexibility in packaging changes New food and drug laws, environmental laws, local

and overseas


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1. Threat of New Entrants vs. Barrier to Entry:

economies of scale; capital requirement; access todistribution channels; experience; expectedretaliation; government action; differentiation(customer preference)

2. Threat of Substitutes

Product-for-product substitution (letter-email)

Substitution of need (scissors-sharpening service) Generic substitution (competing for disposable

income)


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3. Power of Buyers

Concentrated Buyers

Large number of small vendors

Undifferentiated alternative sources of supply

Constitute significant portion of total cost

Low cost of switching

Threat of backward integration by the buyer

4. Power of Suppliers

Concentrated suppliers

High switching cost

Powerful brand of supplier

Threat of forward integration by supplier

Fragmented buyers

5. Competitive Rivalry

Balance of power, market growth rates, fixed costs,

increments of extra capacity, differentiation, exit barriers


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Strategic Groups and Organizational Fields

(Supply Chain, Distribution Chain, Clusters)

Markets, market segments, new markets

Consumer needs:

brand reputation,

after-sales service,

delivery reliability,

quality, .. Plus taken-for-granted factors

Any other S.W.O.T. ?


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Portfolio

Culture

Competence


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Strategy Terms-Unit 1

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