bsm 1 overview

8/2/2019 BSM 1 Overview

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Strategic Management

An Overview


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StrategicManagement

Most of the time themanagement is concerned withmanaging current operations.

There is a need for looking

beyond the current operationsand think about future course ofdirections in which enterprisewill move.

Strategic Managementaddresses this need.


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Need for StrategicManagement

Business environment-economic, technological,political etc go on changing.

Changes in environment can

throw opportunities and threats.

Business has to meet thesechanges effectively.

The pace of change isaccelerating.


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Increasing Relevance

Acceleration of technologicalchange

Intensification of intra-industryand inter-industry competition

Globalisation

Increasing share ofdiscretionary spending by

consumers Multiple demands on industry


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Essence?


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Essence

Essence of Strategic

Management exercise is to

secure and maintaincompetitive edge over the

close competitor/s.


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Three Basic Questions

Where are we now?

Where do we want to

go?

How will we get there?


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Six tasks of strategic

management

Describing business, stating missionand developing vision statement

Scouting for opportunities and

threats

Setting measurable objectives

Crafting strategy

Implementing and executing

strategy Evaluating performance,

assessing new developments and

initiating required changes.


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Importance

Empirical evidence confirmsof a positive correlationbetween corporateperformance and quality of

its strategic management. Choice not between having

or not having strategicmanagement, but betweengood explicit and badexplicit/implicit strategicmanagement.


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SM Concept

Strategic management/planning is essentially a blue

print of whole gamut of broad

actions to get from here tothere.

The focus is to get as efficiently

as possible and gain a

sustainable edge overcompetitors.


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An illustration

A single unit,leading hotelstrong in operating skills butweak on funds.

Perceived need/opportunity for

growing into a chain of hotels.

Strategyacquire, merge, buildalliances, with people who

have properties/funds. Decided on alliances.

Identified possible partners

Entered into alliances


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Illustration Contd..

Built up people resources inadvance taking hit on profits

Developed pool of people,architects, contractors, interior

decorators, who understoodhotel needs and were adept atmodifying existing properties.

Put in place technology ofmanaging chain.

Blossomed into a largecountrywide chain in 5 years.


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The Broad Frame

Vision and Mission provide thebroad frame.

Vision is what we would like tobecome- a dream an ambition.

Mission is what we would bedoing.

Many times these are implicit.

They need to be articulated andcommunicated.

Objective , target are moreproximate in time.


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Process

Understanding the current status(Where are we?)

Analysing environment foridentifying opportunities and threats

(what is going out there?) Deciding objectives (Where Do we

want to go?)

Analysis of internal Organisation

(What do we have?) Formulation of possible strategies

(What can be done?)

Selection (what shall we do?)

Implement (what? when? Who?how?)


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SM Process contd..

Selection of strategies (Whatwill we do?)

Implementation of strategies

(What actions, who will dowhat, when, how and with what

resources?)

Monitoring (What is

happening?

Making midcourse changes

(What will be done,by whom

when how?)


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Revisiting Illustration

The story was of Taj group

of hotels.

Their vision was to establisha world class hotel.

Their mission was to render

unmatched level of service.


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SM process contd..

Strategic management

process is broadly but

necessarily not strictlysequential.

It is interactive

It is collaborative

A group process


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Environmental Analysis

Environment is the sum total factorsimpacting enterprise.

Some of these are-

Technology

Demography Economy

Government policy

Essentially understanding what isgoing on out there

Relating them to the business

Working out implications-opportunities (O)/threats(T).


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Teasers

What do increasinglongevity,and greatersocial security mean to

pharma industry?What opportunities are

created by increasing

number of workingcouples and greatercommuting?


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EA - Illustrations

Demographics

Increased longevity

Extension of social security

Technology

Stem-cell research

Bt drugs

Economic

Improvement in living

conditions

Drug Price control


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Enterprise Analysis

Understanding what is thebusiness and what are the

critical factors for that business.

Comparing the enterprise withcompetitors to understand the

strengths (S) and weaknesses

(W) of the enterprise

These may relate to the areas of

marketing, finance, production,

human skills etc.


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Strategy Formulation

Strategic planning is a blue printof broad actions of how(strategy)to get there (mission/objectives)

from here (current state).

Answers the question how dowe go from where we are to

where we want to?


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Some strategies

Expansion

Contraction/exit

Vertical integration

Forward

Backward

Diversification

Related

Unrelated.


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Monitoring

Monitoring meansoverseeing the direction andthe progress of the events to

check whether they arebroadly in line with what wasplanned.

If not, the significant

deviations be analysed andcorrective actions may betaken.


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Implementation

Having decided objectives, andstrategy the management has todevelop specific structure,systems, programmes andpolicies.

It is useful to spell out majorassumptions.

Working out details in advancesaves from many futureproblems/ hiccups.


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An illustration

A leading hotel perceived opportunityfor growing into a chain of hotel.

Strong in operating skills but weak onfunds.

Strategy -build alliances with people

who have properties. Developed pool of people, architects,

contractors, interior decorators, whounderstood hotel needs.

Blossomed into a large countrywidechain in 5 years.


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SM ? Not For Me

Corporate strategy Understanding

communicating

Implementing

Providing feedback Scanning competitive environment

Personal Making self swot/ client swot

Developing personal strategy


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An Overview


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Need for StrategicManagement

Business environment-economic, technological,political,etc go on changing.

The pace of change is

accelerating. Changes in environment can

throw opportunities and threats.

Business has to meet these

changes effectively.


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Most of the time themanagement is concerned withmanaging current operations.

There is a need for looking

beyond the current operationsand think about future course of

directions in which enterprise will

move.this is what strategic

management does.


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Increasing Relevance

Acceleration of technologicalchange

Intensification of intra-industryand inter-industry competition

Globalisation Increasing share of discretionary

spending by consumers

Multiple demands on industry


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Importance

Empirical evidence suggestspositive correlation betweencorporate performance andquality of strategic management.

Choice not between having ornot having strategicmanagement, but between goodexplicit and bad implicit strategicmanagement.


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SM Concept

Strategic management/ planning isessentially a blue print of whole gamut

of broad actions to get from here to

there.

Answers the question how do we getfrom where we are to where we wantto go.

The focus is to get as efficiently aspossible a sustainable edge over

competitors


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Process

Deciding objectives (Where Dowe want to go?)

Analysis of environment (What isgoing out there?)

Analysis of internal Organisation(What do we have?)

Formulation of possiblestrategies (What can be done?)


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SM Process contd..

Selection of strategies (What will wedo?)

Implementation of strategies (Whatactions, who will do what, when, howand with what resources?)

Monitoring (What is happening?)

Making midcourse changes (What willbe done, by whom, when, how?)


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Environmental Analysis

Environment is the sum total factorsimpacting enterprise.

Some of these are- Technology

Demography

Economy Government policy

Essentially understanding what isgoing on out there

Relating them to the business

Working out implications- opportunities(O)/threats(T).


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Teasers

What do increasinglongevity,and greater socialsecurity mean to pharma

industry?

What opportunities are createdby increasing number of working

couples and greater commuting?


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Enterprise Analysis

Understanding what is the businessand what are the critical factors for

that business.

Comparing the enterprise withcompetitors to understand thestrengths (S) and weaknesses (W) ofthe enterprise

These may relate to the areas ofmarketing, finance, production, human

skills etc.


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Strategy Formulation

Strategic planning is a blue printof broad actions of how(strategy)to get there (mission/objectives)

from here (current state).

Answers the question how dowe go from where we are to

where we want to?


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Some strategies

Expansion Contraction/exit

Vertical integration

Forward

Backward

Diversification

Related

Unrelated.


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Monitoring

Monitoring means overseeingthe direction and the progress ofthe events to check whether they

are broadly in line with what was

planned. If not, the significant deviations

be analysed and corrective

actions may be taken.


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Implementation

Having decided objectives, andstrategy the management has todevelop specific structure,systems, programmes andpolicies.

It is useful to spell out majorassumptions.

Working out details in advancesaves from many futureproblems/ hiccups.

bsm 1 overview

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