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Amity Business School
1
Amity Business SchoolMBA(M&S) Class of 2011, Semester III
Strategic Management
Dr. Himani Sharma
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What is Strategic
ManagementStrategic Management entails three ongoing processes:
1.Analysis:
- Analysis of strategic goals and the external
and internal environments
2.Decisions:
- What industries to compete?
- How should we compete?
3.Actions:
- Actions to implement decisions
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Strategic Management
Strategic management consists of the
analyses, decisions, and actions anorganization undertakes in order to
create and sustain competitive
advantages.
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Four Key Attributes of StrategicManagement
Directs the organization toward overall goals
and objectives Includes multiple stakeholders in decision
making
Needs to incorporate short-term and long-term
perspectivesRecognize trade-offs between efficiency and
effectiveness
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Strategy consists of competitive moves and business
approaches used by managers to run the company
Strategy involves making analysis and choices
The hows that define a firm's strategy ± How to grow the business
± How to please customers
± How to outcompete rivals
± How to manage each functional piece of the business (R&D,production, marketing, HR, finance, and so on)
± How to respond to changing market conditions
± How to achieve targeted levels of performance
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Amity Business SchoolThinking Strategically
Three Big Central
Questions
1. What¶s the company¶s present situation?
- industry conditions and competitive pressure
- current performance and market standing
- resource strength and capabilities and competitive weaknesses
2. Where does the company need to go from here?
± Business(es) to be in and market positions to stake out
± Buyer needs and groups to serve
± Direction to head
3. How should it get there?
± A company¶s answer to ³howwill we get there? ´ is its strategy
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Strategy as an Emergent Process Strategy making in an unpredictable world
± Creates the necessity for flexible strategic approaches.
Strategy making by lower-level managers ± Strategy evolves through autonomous action.
Serendipity and strategy
± Accidental discoveries and happenstances can have
dramatic effects on strategic direction. Intended and emergent strategies
± Realized strategies are combinations of intended and
emergent strategies.
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Intended and Emergent Strategies
S ource: Reprinted from ³Strategy Formation in an Adhocracy,´by Henry Mintzberg and Alexandra McGugh, published in
AdministrativeS cience Quarterly , Vol. 30, No. 2, June 1985, bypermission of Administrative S cience Quarterly .
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The Strategic Management Process for Intended and Emergent Strategies
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Strategy Making : Design or Process?Strategy as Design
Planning and
rational choice
INTENDED
STRATEGY
Many decision makers
responding to multitude of
external and internal forces
REALIZED STRATEGY
EMERGENT
STRATEGY
Strategy as Process
Mintzberg¶s Critique of Formal Strategic Planning:
The fallacy of predicti on ± the future is unknown
The fallacy of detachment -- impossible to divorce formulation from
implementation
The fallacy of f ormalizati on --inhibits flexibility, spontaneity,
intuition and learning.
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Strategy Making Processes within theCompany: Multiple Roles of Strategy
Strategy as Decision
Support
Strategy as Coordination
and Communication
Strategy as Target
Improves the quality
of decision making
Creates consistency
and unity
Improves perform-
ance by setting
high aspirations
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Strategic Problem-Solving Model
Data
Intuition
ManagingTeam
Client
Self
LeadershipVision
Inspiration
Delegation
Problem Solution
ImplementationDedication
Reaction
Completion
Iteration
Business NeedCompetitive
Organizational
Financial
Operational
AnalyzingFraming
Designing
Gathering
Interpreting
PresentingStructure
Buy-in
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Strategic Planning in Practice Planning under uncertainty
± Scenario planning for dynamic environmental change
Ivory tower planning
± Lack of contact with operational realities ± The importance of involving operating managers
± Procedural justice in the decision-making process Engagement, explanation, and expectations
Strategic Intent: Planning for the present ± Recognition of the static nature of the strategic fit
model
± Strategic intent in focusing the organization on winningby achieving stretch goals
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The Evolution of Strategic Management
DOMINANT
THEME
1950s 1960s- early 7 0s M id - 7 0s- mid -80s Late 80s ±1990s 2000s
Budgetary Corporate Positioning Competitive Strategic
planning & planning advantage innovation
control
Financial Planning Selecting Focusing on Reconciling
control growth &- sectors/markets. sources of size with
diversification Positioning for competitive flexibility &
leadership advantage agility
Capital Forecasting. Industry analysis Resources & Cooperative
budgeting. Corporate Segmentation capabilities. strategy.
Financial planning. Experience curve Shareholder Complexity.planning Synergy Portfolio analysis value. Owning
E-commerce. standards.
² Knowledge Management²
Coordination Corporate Diversification. Restructuring. Alliances &
& control by planning depts. Global strategies. Reengineering. networks
Budgeting created. Rise of Matrix structures Refocusing. Self -organiz
systems corporate Outsourcing. ation & virtualplanning organization
MAIN
ISSUES
KEY
CONCEPTS
&TOOLS
MANAGE-
MENT
IMPLIC-
ATIONS
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Strategic management
process
Identifying
and analyse
current: Mission
Objective
Strategies
Analyse external
and internal
environments: Industry and
external
environment
(opportunities and
threats)
Organisationalresources and
capabilities
(strengths and
weaknesses)
Revise
mission and
objectives& select
new
strategies:
Corporate
Business
Functional
Implement
strategies:
Corporategovernance
Manage-
ment
systems and
practices
Strategicleadership
Evaluate
results:
Strategiccontrol
Renew
strategic
management
process
Strategy formulation ±
creating strategies
Strategy implementation ±
putting strategies into action
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External Audit
Internal Audit
Long-TermObjectives
Generate,
Evaluate,Select
Strategies
Implement
Strategies:Mgmt Issues
ImplementStrategies:Marketing,Fin/Acct,R&D, CIS
Measure &Evaluate
Performance
Vision&
Mission
Strategic management model
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The Basic Framework
Strategy: the Link between the
Firm and its Environment
THE FIRM
Goals &
Values
Resources &
Capabilities
Structure &
Systems
THE
INDUSTRY
ENVIRONMENT
Competitors
Customers
Suppliers
STRATEGY
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Amity Business SchoolA Framework for Analyzing
Organizations
Figure 16.1
People Structure
Systems Culture
External Analysis
Strategy
Internal Analysis
PerformancePerformance