Strategic Management

Strategic Management MBA: SEM: - IVIntroduction to Strategic ManagementConcept and Process of Strategy Strategic FrameworksVision, Mission, Objectives and GoalsStrategic Analysis- Environmental AnalysisCompetitive Forces-Five forces analysisInternal analysis SWOT Analysis Module 1A comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage. Strategy - DefinitionThe process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage.Strategic ManagementCompetitive advantage operating with an attribute or set of attributes that allows an organization to outperform its rivals.

Competitive AdvantageSustainable competitive advantage one that is difficult for competitors to imitate.

Sustainable competitive advantageStrategy Analysis

Strategy Formulation

Strategy Implementation

Strategic Management Process Developing a vision and mission statement, identifying an organizations external opportunities and threats (PESTLE), determining internal strengths and weaknesses, (SWOT) establishing long-term objectives, generating alternative strategies, and choosing strategies to pursue.

Strategy Analysis The process of creating strategy.Involves assessing existing strategies, organization, and environment to develop new strategies and strategic plans capable of delivering future competitive advantage.establish annual objectives, devise policies, motivate employees, and allocate resources so formulated strategies can be executed.

Strategy formulationStrategy formulation and implementation in the strategic management process

The process of allocating resources and putting strategies into action.All organizational and management systems must be mobilized to support and reinforce the accomplishment of strategies.

Strategy implementationIdentify organizational mission and objectives.Assess current performance vis--vis mission and objectives.Create strategic plans to accomplish purpose and objectives.Implement the strategic plansEvaluate results; change strategic plans and/or implementation processes as necessaryEssential tasks for strategy implementation:

Vision Mission Objectives and GoalsA vision is a clear, comprehensive statement of aspiration of an organization at some point in the future. It provides direction because it describes what the organization needs to be like, to be successful within the future.VisionTo be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares.Vision AirasiaExample of a Strategic Vision

Provide a global trading platform where practically anyone can trade practically anything.Mission is a clear and succinct statement of the reason the organisation or project exists. It brings clarity of purpose to members of the organisation, and broad direction as to what members of the organisation should be aiming for. It includes: The purpose The core function(s) The main methods used to reach those purposes

MissionAnalysis of mission:The reason for an organizations existence.Good mission statements identify:CustomersProducts and/or servicesLocationUnderlying philosophyAn important test of the mission is how well it serves the organizations stakeholders.

MissionHow external stakeholders can be valued as strategic constituencies of organizations.

To be the best company to work for whereby employees are treated as part of a big familyCreate a globally recognized ASEAN brandTo attain the lowest cost so that everyone can fly with AirAsiaMaintain the highest quality product, embracing technology to reduce cost and enhance service levels\

Mission Airasia Vision V/S Mission A strategic vision concerns a firms future business path - wherewe are going Markets to be pursuedFuture product/market/customer/technology focusThe mission statement of a firm focuses on its present business purpose - who we are and what we doCurrent product and service offeringsCustomer needs being servedGoals are an expected or desired outcome of a planning process. Goals are usually broad, general expressions of the guiding principles and aspirations of a community.

GoalsObjectives are precise targets that are necessary to achieve goals. Objectives are detailed statements of quantitatively or qualitatively measurable results the plan hopes to accomplish.

ObjectivesSetting ObjectivesPurpose of setting objectivesConverts vision into specific performance targetsCreates yardsticks to track performanceWell-stated objectives areQuantifiableMeasurableContain a deadline for achievement

PESTLE Analysis - Macro Environment AnalysisFive Forces Analysis: Michael Porter Micron Environment AnalysisEnvironmental Analysis A PESTEL analysis is a framework or tool used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation. The result of which is used to identify threats and weaknesses which is used in aSWOT analysis.

PESTEL stands for:P PoliticalE EconomicS SocialT TechnologicalE EnvironmentalL Legal

PESTLE AnalysisPESTLE Factors

PEST Analysis How Airasia capitalized on the variables in macro environment.

Political Factors* Political Stability (World Bank Report)* Government Support, as a part of privatization drive (SE Ismail, 2010) * National Development Policy - Malaysia (effective from 1991) made legislation less cumbersome and encouraged private sector entrepreneurs.

* Open Skies agreement between ASEAN member states (Forsyth et al, 2004)

29Economic FactorsGDP growth rate in Malaysia (8.9% - 2000; 6.1-1991) Increase in Per Capita Income ($4783-2001. The 5 year prior averaged $4573)Low interest rate (4.treasury.gov.my)30Social Factors* Change in life style* Attitude towards leisureMalaysia's multiracial population composition (Malays 50%, Chinese 23%, Indians 7%-Total population 3Cr ) (B Mohamed, 2001)(CIA, World Fact Book, 2014)

31 Technological factors Internet Penetration and Resultant Disintermediation (20% penetration by 2001) 32Five Forces AnalysisNamed after Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths. The analysis reveals the attractiveness of the industry. 1. Competition in the industry2. Potential of new entrants into industry3. Power of suppliers4. Power of customers5. Threat of substitute products

Five Forces Analysis

Elaborating Five ForcesCorporate StrategyBusiness StrategiesFunctional StrategiesTwo-Way InfluenceCorporate-Level ManagersBusiness-Level ManagersFunctional ManagersLevels of StrategyTwo-Way Influence36Three levels of strategy in organizationscorporate, business, and functional strategies.

SWOT Analysisis a useful technique for understanding the Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, it helps you carve a sustainable niche in your market.

SWOT AnalysisSWOT analysis

StrengthWeaknessWell k known and reputed brandCash richBacked by Govt of Singapore Youngest fleet

ExpensiveOpportunitiesThreatsOpportunities in emerging market and ASEAN countries (Increasing disposable income, changing lifestyle-tourism)Competition from low cost carriers in emerging markets.SWOT Analysis - Sigapore AirlinesStrategy: Singapore Airlines started a low cost carrier named Tiger Airways, relying on the strength, by selling airtickets at a lower price (overcoming the weakness) to capitalize on the opportunities (emerging markets) and there by minimizing the threats from low cost carriers.