Download - Introduction to strategic management
STRATEGIC MANAGEMENT AND BUSINESS POLICY
STRAT 401
Introduction to strategic management and business policy
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Learning objectives
Historical development of strategic management and business policy in the world and in India
Concept of strategy and its limitations
Process of strategic decision making
Various schools of thought on strategy formation
Strategic management process
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Evolution of strategic management and business policy
The genesis of strategic management and business policy- 1911 Harvard Business School
Evolution based on management practices- MBO Capital Budgeting etc
Historical perspective- Acc. to hofer Adhoc policy making, 1930’s
Planned policy formulation 1940-50
Strategy paradigm 1960’s
Current- Strategic Management
Pointers to the future Development of strategic thinking
Alternative models like of Hambrick & fredrickson
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Vision and
Mission
Goals and
Objectives
Strategy:
Arenas
Vehicles
Differentiators
Staging
Economic logic
Implementation Levers
and Strategic
Leadership
Internal and External
Strategic Analysis
Hambrick and Fredrickson model of strategic management
D. C. Hambrick & J. W. Fredrickson: “Are you sure you have a strategy?” (2001). Academy of Management Executive Vol. 15, No. 4, pp. 48-59
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The Indian scenario
Role of IIMs and ASCI
Role of AICTE
Role of AIMS
Role of AIMA
India-focused international studies
Strategic Management Forum of India
Publications
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Business policy defined
Business policy, as defined by Christensen and others, is "the study of the function and responsibilities of senior management, the crucial problems that affect success in the total enterprise, and the decisions that determine the direction of the organisation and shape its future. The problems of policy in business, like those of policy in public affairs, have to do with the choice of purposes, the moulding of organisational identity and character, the continuous definition of what needs to be done, and the mobilisation of resources for the attainment of goals in the face of competition or adverse circumstance”.
Strategy
Term derived from Greek word strategos meaning generalship- the actual direction of military force as distinct from the policy governing its deployment.
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The concept of strategy
A strategy could be: plan or course of action or a set of decision rules making a
pattern or creating a common thread; the pattern or common thread related to the organisation's
activities which are derived from the policies, objectives and goals;
related to pursuing those activities which move an organisation from its current position to a desired future state;
concerned with the resources necessary for implementing a plan or following a course of action; and
connected to the strategic positioning of a firm, making trade-offs between its different activities, and creating a fit among these activities.
the planned or actual coordination of the firm's major goals and actions, in time and space that continuously co-align the firm with its environment.
A global economy is one which goods, services, people,
skills and ideas move freely across geographic borders.
Europe is now world’s largest market.
GDP 35% more than US.
China extremely competitive market. Source of low cost
goods
GE headquartered in US, will have 60% revenue from
developing countries 2015.
Globalization is the increasing economic interdependence
among countries and their organization as reflected in the
flow of goods and services, financial capital knowledge
across country border.
Wal-Mart- Boundary-less retailing, global pricing,
sourcing and logistics
Globalization- Design, production, distribution and
servicing of goods and services.
N=1
Serving one customer at a time.
R=G
Resource = Global
Radius of operation= Global
Characteristics
Node within a global web
Personalized experience
Co-creation
Celebration of individual
Thematic experience
Delivery Network
A strategy is an integrated and coordinated set
commitments and actions designed to exploit core
competencies and gain a competitive advantage.
Integrated
Two or more component merged together into a single system
Core Competencies
Specific factor that a business sees as being central to the way
it works.
Competitive advantage
A strategy competitors are unable to duplicate or find to costly
to try to imitate
“A unified, comprehensive, and integrated plan designed
to ensure that the basic objectives of the enterprise are
achieved.” (Glueck, 1980)
“The pattern or plan that integrates an organization’s
major goals, policies, and action sequences into a
cohesive whole.” (Quinn, 1980)
“A pattern of resource allocation that enables firms to
maintain or improve their performance.
Increasing rate of change and diffusion
Perpetual Innovation
Continuous and carry high priority
Shorter life cycle
Rapid diffusion of innovation
Replicated within short period
Speed to market may become a source of competitive advantage
The information age
Companies are wired
Customers
Employees
Vendors
Increasing Knowledge Intensity
Converting accumulated knowledge of employees into corporate asset
Shareholder value is increasingly influenced by the firm’s intangible
assets such as knowledge
From assessing information to exploiting information
Capturing intelligence
Transforming intelligence into usable knowledge
Embedding it as organizational learning
Diffusing it rapidly throughout the organization
1996 takeover of tandem computers
1998 took over digital
1999 CEO, Pfeiffer Sacked, Why?
By 1995 Compaq become leading seller of PC
Purchase of DEC also made it leading computer service firm competing with IBM.
Compaq lost focus of selling PC, went behind Dell in Internet selling.
Announced a bigger move in web sales
Reseller become anxious
Announced number of reseller to de downsized to 4 from 20.
1998, in charge of service business resigned.
Creating further uncertainty about their future
2002 taken over by HP
Valuable
Allow the firm to exploit opportunities or neutralize
threats in its external environment.
Rare
Possessed by few, if any, current and potential
competitors
Costly to imitate
When other firms cannot obtain them or must
obtain them at much higher cost
Organized to be exploited
The firm is organized appropriately to obtain the
full benefits of the resources in order to realize a
competitive advantage.
Core Competence
Costly
Valuable Rare
Organized
Levels at which strategy operates
Corporate
Office
SBU
A SBU
B
Finance Marketing Operations HRM Information
LEVELS OF MANAGEMENT LEVELS OF STRATEGY
CORPORATE CORPORATE-LEVEL
SBU BUSINESS-LEVEL
FUNCTIONAL
SBU
C
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Strategic decision-making
Objectives to be achieved are determined;
Alternative ways of achieving the objectives are identified;
Each alternative is evaluated in terms of its objective-achieving ability; and
The best alternative is chosen.
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Issues in strategic decision-making
Criteria for decision-making
Rationality in decision-making
Creativity in decision-making
Variability in decision-making
Person-related factors in decision-making
Individual versus group decision-making.
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Schools of thought on strategy formation
The prescriptive schools
The descriptive schools
The integrative school
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Strategic management defined
Strategic management is defined as the dynamic process of formulation, implementation, evaluation and control of strategies to realise the organization’s strategic intent.
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Four phases in strategic management
Formulation of
strategies
Implementation of
strategies
Strategic
evaluation
Strategic control
Establishment of
strategic
intent
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Comprehensive model of strategic management
Strategy Formulation
Environmental Organisational
Appraisal Appraisal
SWOT Analysis
Corporate-level Strategies
Business-level Strategies
Strategic analysis and choice
Strategic plan
Strategic Intent
Vision
Mission
Business definition
Business model
Objectives
Strategy
Implementation
Project
Procedural
Resource allocation
Structural
Behavioural
Functional &
Operational
Strategic control
Strategic
Evaluation