foundation of strategic management

Foundation of Strategic Management

© Copyright 2013 Anupam Kumar 1

Foundation of Strategic

Management

Presented By:

Anupam Kumar

Reader,

School of Management Sciences,

Varanasi


Evolution of Strategic Management

• As per Hofer, the evolution

of strategic management

can be seen as part of 4

distinct phases:

– Ad-hoc policy-making

– Planned policy formulation

– Strategic paradigm

– Strategic management

Ad hoc Policy-

making

Planned Policy

formulation

Strategic

Paradigm

Strategic

Management

1930 1940 1960 19802© Copyright 2013 Anupam Kumar

Strategy

• As per Johnson and Scholes

– "Strategy is the direction and scope of an

organization

– over the long-term:

– which achieves advantage for the organization

– through its configuration of resources

– within a challenging environment,

– to meet the needs of markets and

– to fulfill stakeholder expectations".

3© Copyright 2013 Anupam Kumar

What is Strategy?

• Where is the business trying to get to in the long-term?

(Direction)

• How can the business perform better than the competition in

those markets? (Advantage)

• What resources (skills, assets, finance, relationships, technical

competence, facilities) are required in order to be able to

compete? (Resources)

• What external, environmental factors affect the businesses'

ability to compete? (Environment)

• What are the values and expectations of those who have

power in and around the business? (Stakeholders)


Vision – Strategy – Plan Paradigm

• A vision is an input to

strategy.

• Strategy is an integrated

set of choices that

– appeals uniquely to

certain customers,

– creates sustainable

competitive advantage,

and

– delivers reliable value

creation.

• Strategy explains:

– what is winning,

– where to play,

– how to win,

– with what core

competencies,

– with what structures,

systems and measures .

• A plan or a budget is an

output of strategy.


Strategic Decisions: Characteristics

• Strategic decisions are concerned with the scope of an organization’s activities.

• Strategic decisions try to achieve some advantage for the organization over competition.

• Strategy is a search for fit with the business environment.

• Strategy can be seen as creating opportunities by building on an organization’s resources and competences.

• Strategy is affected by the values and expectations of those who have power in and around the organization.

Foundation of Strategic Management


Levels of Strategy

• Strategies exist at several levels in any

organization - ranging from the overall

business (or group of businesses) through to

individuals working in it.

– Corporate Strategy

– Business Unit Strategy

– Operational Strategy.


Corporate Strategy

• Corporate Strategy is concerned with the

overall purpose and scope of the business to

meet stakeholder expectations.

• This is a crucial level since it is heavily

influenced by investors in the business and

acts to guide strategic decision-making

throughout the business.

• Corporate strategy is often stated explicitly in

a "mission statement".


Business Unit Strategy

• Business Unit Strategy is concerned more with

how a business competes successfully in a

particular market.

• It concerns strategic decisions about

– choice of products,

– meeting needs of customers,

– gaining advantage over competitors,

– exploiting or creating new opportunities etc.


Levels of Strategy

CORPORATE LEVEL BUSINESS LEVEL


Operational Strategy

• Operational Strategy is concerned with how

each part of the business is organised to

deliver the corporate and business-unit level

strategic direction.

• Operational strategy therefore focuses on

– issues of resources,

– processes,

– people etc.


Levels of Strategy

• “At P&G, we tried to focus on three things:

– Precisely defining winning in each industry in which we

competed.

• This required us to focus externally on winning with customers

who mattered most and against the very best competitors.

– Positioning P&G brands and products

• where to play and how to win.

– Playing to P&G’s strengths

• those core competencies that gave P&G competitive advantage

(i.e., consumer understanding, branding, innovation, strategic

partnerships, and global scale).”
