BA9110

STRATEGICMANAGEMENT

UNITI

STRATEGYANDPROCESS

LTPC

3003
9

Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
GoalsCorporateGovernanceandSocialresponsibilitycasestudy.
UNITII

COMPETITIVEADVANTAGE

External Environment Porters Five Forces ModelStrategic Groups Competitive Changes during Industry
EvolutionGlobalisation and Industry Structure National Context and Competitive advantage Resources
Capabilities and competenciescore competenciesLow cost and differentiation Generic Building Blocks of
Competitive Advantage Distinctive CompetenciesResources and Capabilities durability of competitive
AdvantageAvoidingfailuresandsustainingcompetitiveadvantageCasestudy.
UNITIII

STRATEGIES

10

The generic strategic alternatives Stability, Expansion, Retrenchment and Combination strategies
Business level strategy Strategy in the Global EnvironmentCorporate StrategyVertical Integration
Diversification and Strategic Alliances Building and Restructuring the corporation Strategic analysis and
choiceEnvironmentalThreatandOpportunityProfile(ETOP)OrganizationalCapabilityProfileStrategic
Advantage Profile Corporate Portfolio Analysis SWOT Analysis GAP Analysis Mc Kinsey's 7s
FrameworkGE9CellModelDistinctivecompetitivenessSelectionofmatrixBalanceScoreCardcase
study.
UNITIV

STRATEGYIMPLEMENTATION&EVALUATION

The implementation process, Resource allocation, Designing organisational structureDesigning Strategic

Control Systems Matching structure and control to strategyImplementing Strategic changePoliticsPower
andConflictTechniquesofstrategicevaluation&controlcasestudy.
UNITV

OTHERSTRATEGICISSUES

ManagingTechnologyandInnovationStrategicissuesforNonProfitorganisations.NewBusinessModels
andstrategiesforInternetEconomycasestudy

Total: 45
TEXTBOOKS
ThomasL.Wheelen,J.DavidHungerandKrishRangarajan,StrategicManagementandBusinesspolicy,
PearsonEducation.,2006
Charles W.L.Hill & Gareth R.Jones, Strategic Management Theory, An Integrated approach, Biztantra,
WileyIndia,2007.

AzharKazmi,StrategicManagement&BusinessPolicy,TataMcGrawHill,ThirdEdition,2008.

REFERENCES
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Fred.R.David,StrategicManagementandcases,PHILearning,2008.
UpendraHachru,StrategicManagementconcepts&cases,ExcelBooks,2006.
AdriauHAberbergandAlisonRieple,DtrategicManagementTheory&Application,OxfordUniversity
Press,2008.
ArnoldoC.HaxandNicholasS.Majluf,TheStrategyConceptandProcessAPragmaticApproach,
PearsonEducation,SecondEdition,2005.
HarvardBusinessReview,BusinessPolicypartI&II,HarvardBusinessSchool.
SalonerandShepard,Podolny,StrategicManagement,JohnWiley,2001.
LawerenceG.Hrebiniak,Makingstrategywork,Pearson,2005.
Gupta, Gollakota and Srinivasan, Business Policy and Strategic Management Concepts and
Application,PrenticeHallofIndia,2005.

UNITI

STRATEGYANDPROCESS

Conceptual framework for strategic management, the Concept of Strategy and the Strategy Formation
Process Stakeholders in business Vision, Mission and Purpose Business definition, Objectives and
GoalsCorporateGovernanceandSocialresponsibilitycasestudy.

Strategic management is not a box of tricks or a bundle of techniques. It is analytical thinking and commitment of
resources to action.
PeterDrucker

Definition:
Theongoingprocessofformulating,implementingandcontrollingbroadplansguidethe
organizationalinachievingthestrategicgoodsgivenitsinternalandexternalenvironment.
AlfredDChandler(1962)
,Chandlerdefinedstrategyas:Thedeterminationofthebasiclongtermgoalsandobjectivesofanenterprise
andtheadoptionofthecoursesofactionandtheallocationofresourcesnecessaryforcarryingoutthese
goals.NotethatChandlerreferstothreeaspects
FeaturesofstrategicManagement
1.Ongoingprocess:
Strategicmanagementisaongoingprocesswhichisinexistencethroughoutthelifeoforganization.
2.Shapingbroadplans:
First,itisanongoingprocessinwhichbroadplansarefirstlyformulatedthanimplementingandfinally
controlled.
3.Strategicgoals:
Strategicgoalsarethosewhicharesetbytopmanagement.Thebroadplansaremadeinachievingthegoals.
Evolutionofstrategicmanagement
From his extensive work in the field, Bruce Henderson of the Boston Consulting Group concluded that
intuitivestrategiescannotbecontinuedsuccessfullyif
(1)thecorporationbecomeslarge,
(2)thelayersofmanagementincrease,or
(3)theenvironmentchangessubstantially.
Phase1Basicfinancialplanning:Seekbetteroperationalcontrolbytryingtomeetbudgets.


Phase2Forecastbasedplanning:Seekingmoreeffectiveplanningforgrowthbytryingtopredictthefuture
beyondnextyear.
Phase3.Externallyorientedplanning(strategicplanning):Seekingincreasingresponsivenesstomarketsand
competitionbytryingtothinkstrategically.
Phase 4. Strategic management: Seeking a competitive advantage and a successful future by managing all
resources.
Phase4intheevolutionofthestrategicmanagementincludesaconsiderationofstrategyimplementationand
evaluationandcontrol,inadditiontotheemphasisonthestrategicplanninginPhase3.
GeneralElectric,oneofthepioneersofthestrategicplanning,ledthetransitionfromthestrategicplanningto
strategicmanagementduringthe1980s.Bythe1990s,mostcorporationsaroundtheworldhadalsobegunthe
conversiontostrategicmanagement.
Ingeneral,acorporatestrategyhasthefollowingcharacteristics:
It is generally longrange in nature, though it is valid for shortrange situations also and has shortrange
implications.
Itisactionorientedandismorespecificthanobjectives.
Itismultiprongedandintegrated
Itisflexibleanddynamic.
Itisformulatedatthetopmanagementlevel,thoughmiddleandlowerlevelmanagersareassociatedintheir
formulationandindesigningsubstrategies.
Itisgenerallymeanttocopewithacompetitiveandcomplexsetting.
Itflowsoutofthegoalsandobjectivesoftheenterpriseandismeanttotranslatethemintorealities.
Itisconcernedwithperceivingopportunitiesandthreatsandseizinginitiativestocopewiththem.Itisalso
concernedwithdeploymentoflimitedorganizationalresourcesinthebestpossiblemanner.
It gives importance to combination, sequence, timing, direction and depth of various moves and action
initiativestakenbymanagerstohandleenvironmentaluncertaintiesandcomplexities.
Itprovidesunifiedcriteriaformanagersinfunctionofdecisionmaking.

Framework
Thebasicframeworkofstrategicprocesscanbedescribedinasequenceoffivestagesasshowninthefigure
Frameworkofstrategicmanagement:
Thefivestagesareasfollows:
Stageone:Thisisthestartingpointofstrategicplanningandconsistsofdoingasituationalanalysisofthe
firmintheenvironmentalcontext.Herethefirmmustfindoutitsrelativemarketposition,corporateimage,
its strength and weakness and also environmental threats and opportunities. This is also known as SWOT
(Strength,Weakness,Opportunity,Threat)analysis.Youmayreferthirdchapterforadetaileddiscussionon
SWOTanalysis.
Stagetwo:Thisisaprocessofgoalsettingfortheorganizationafterithasfinaliseditsvisionandmission.A
strategic vision is a roadmap of the companys future providing specifics about technology and customer
focus,thegeographicandproductmarketstobepursued,thecapabilitiesitplanstodevelop,andthekindof
companythatmanagementistryingtocreate.AnorganizationsMissionstateswhatcustomersitserves,what
needitsatisfies,andwhattypeofproductitoffers.
Stagethree:Heretheorganizationdealswiththevariousstrategicalternativesithas.
Stagefour:Outofallthealternativesgeneratedintheearlierstagetheorganizationselectsthebestsuitable
alternativeinlinewithitsSWOTanalysis.
Stagefive:Thisisaimplementationandcontrolstageofasuitablestrategy.Hereagaintheorganization
continuouslydoessituationalanalysisandrepeatsthestagesagain.

6.2ImportanceofStrategicManagement
Strategic management provides the framework for all the major business decisions of an enterprise such as
decisions on businesses, products and markets, manufacturing facilities, investments and organizational
structure.
In a successful corporation, strategic planning works as the pathfinder to various business opportunities
simultaneously, it also serves as a corporate defence mechanism, helping the firm avoid costly mistakes in
productmarketchoicesorinvestments.S
trategic management has the ultimate burden of providing a business organization with certain core
competenciesandcompetitiveadvantagesinitsfightforsurvivalandgrowth.


It seeks to prepare the corporation to face the future and even shape the future in its favour. Its ultimate
burdenisinfluencingtheenvironmentalforcesinitsfavour,workingintotheenvironsandshapingit,instead
ofgettingcarriedawaybyitsturbulenceoruncertainties.
THETASKOFSTRATEGICMANAGEMENT
Thestrategymaking/strategyimplementingprocessconsistsoffiveinterrelatedmanagerialtasks.Theseare
Settingvisionandmission:Formingastrategicvisionofwheretheorganizationisheaded,soastoprovide
longterm direction, delineate what kind of enterprise the company is trying to become and infuse the
organizationwithasenseofpurposefulaction.
Settingobjectives:Convertingthestrategicvisionintospecificperformanceoutcomesforthecompanyto
achieve.
Craftingastrategytoachievethedesiredoutcomes.
Implementingandexecutingthechosenstrategyefficientlyandeffectively.
Evaluating performance and initiating corrective adjustments in vision, longterm direction, objectives,
strategy,orexecutioninlightofactualexperience,changingconditions,newideas,andnewopportunities.
StrategyFormationProcess
Simplemodel
Workingmodelofstrategicplanningprocess

Step1:Identifyingtheorganisations
currentmission,objectives,and
strategies

Mission:thefirmsreasonforbeing
Thescopeofitsproductsandservices
Goals:thefoundationforfurtherplanning
Measurableperformancetargets

Step2:Conductinganexternalanalysis

Theenvironmentalscanningofspecificandgeneral
environments
Focusesonidentifyingopportunitiesandthreats
Customers:Whoaretheorganisationscustomers?
Productsorservices:Whataretheorganisationsmajorproductsor
services?
Markets:Wheredoestheorganisationcompetegeographically?
Technology:Howtechnologicallycurrentistheorganisation?
Concernforsurvivalgrowth,andprofitability:Istheorganisation
committedtogrowthandfinancialstability?
Philosophy:Whataretheorganisationsbasicbeliefs,values,aspirations,
andethicalpriorities?
Selfconcept:Whatistheorganisationsmajorcompetitiveadvantageand
corecompetencies?
Concernforpublicimage:Howresponsiveistheorganisationtosocietal
andenvironmentalconcerns?
Concernforemployees:Doestheorganisationconsideremployeesa
valuableasset?
Source:BasedonF.David,StrategicManagement,8thed.(Upper
Step3:Conductinganinternalanalysis

Assessingorganisationalresources,capabilities,activities,
andculture:
Strengths(corecompetencies)createvalueforthecustomer
andstrengthenthecompetitivepositionofthefirm.
Weaknesses(thingsdonepoorlyornotatall)canplacethe
firmatacompetitivedisadvantage.
Steps2and3combinedarecalledaSWOT
analysis.(Strengths,Weaknesses,Opportunities,
andThreats)

Step4:Formulatingstrategies

Developandevaluatestrategicalternatives
Selectappropriatestrategiesforalllevelsinthe
organisationthatproviderelativeadvantageover
competitors
Matchorganisationalstrengthstoenvironmental
opportunities
Correctweaknessesandguardagainstthreats

Step5:Implementingstrategies

Implementation:effectivelyfittingorganisational
structureandactivitiestotheenvironment
Theenvironmentdictatesthechosenstrategyeffective
strategyimplementationrequiresanorganisational
structurematchedtoitsrequirements.
Step6:Evaluatingresults

Howeffectivehavestrategiesbeen?
Whatadjustments,ifany,arenecessary

VISION,MISSIONANDOBJECTIVES

Sinceorganizationsaredeliberateandpurposivecreations,theyhavesomeobjectivestheendresults
forwhichtheystrive.Theseendresultsarereferredtoasmission,purpose,objective,goal,target,
Thiscontextualdifferenceamongvarioustermsisimportantinunderstandingtheirnaturerelevantfor
managerialactions.Fromplanningpointofview,anorganizationmustdefinewhyitexists,how.itjustifies
thatexistence,andwhenitjustifiesthereasonsforthatexistence.Theanswersofthesequestionslieinthe
organizations:
1.Missionandpurpose,
2.Longtermobjectives,a
AStrategicvisionisaroadmapofacompanysfutureprovidingspecificsabouttechnologyandcustomer
focus,thegeographicandproductmarketstobepursued,thecapabilitiesitplanstodevelop,andthekindof
companythatmanagementistryingtocreate
Thethreeelementsofastrategicvision:
1. Coming up with a mission statement that defines what business the company is presently in and
conveystheessenceofWhoweareandwherewearenow?
2.UsingthemissionstatementasbasisfordecidingonalongtermcoursemakingchoicesaboutWhere
wearegoing?
3.Communicatingthestrategicvisioninclear,excitingtermsthatarouseorganizationwidecommitment.
Howtodevelopastrategicvision
Theentrepreneurialchallengeindevelopingastrategicvisionistothinkcreativelyabouthowtopreparea
companyforthefuture.
Formingastrategicvisionisanexerciseinintelligententrepreneurship.
Manysuccessfulorganizationsneedtochangedirectionnotinordertosurvivebutinordertomaintaintheir
success.
Awellarticulatedstrategicvisioncreatesenthusiasmforthecoursemanagementhaschartedandengages
membersoftheorganization.
Thebestwordedvisionstatementclearlyandcrisplyilluminatethedirectioninwhichorganizationishead

Mission
AccordingtoGlueck&Jauchmissionisanswertothequestionwhatbusinessareweinthatisfacedby
corporatelevelstrategist
AcompanysMissionstatementistypicallyfocusedonitspresentbusinessscopewhoweareandwhatwe
do mission statements broadly describe an organizations present capabilities, customer focus, activities,
andbusinessmakeup.

Whyorganizationshouldhavemission?
Toensureunanimityofpurposewithintheorganization.
Toprovideabasisformotivatingtheuseoftheorganizationsresources.
Todevelopabasis,orstandard,forallocatingorganizationalresources.
Toestablishageneraltoneororganizationalclimate,forexample,tosuggestabusinesslikeoperation.
Toserveasafocalpointforthosewhocanidentifywiththeorganizationspurposeanddirection,andto
deterthosewhocannotformparticipatingfurtherintheorganizationsactivities.
Tofacilitatethetranslationofobjectiveandgoalsintoaworkstructureinvolvingtheassignmentoftasksto
responsibleelementswithintheorganization.
Tospecifyorganizationalpurposesandthetranslationofthesepurposesintogoalsinsuchawaythatcost,
time,andperformanceparameterscanbeassessedandcontrolled.

Examplesofmissionstatement
MissionofUnilever:Themissionofourcompany,asWilliamHaskethLeversawit,istomakecleanliness
commonplace,tolessenworkforwomen,tofosterhealth,andtocontributetopersonalattractivenessthatlife
maybemoreenjoyableforthepeoplewhouseourproducts.
MissionofMckinsey&Co:Tohelpbusinesscorporationandgovernmentstobemoresuccessful.
MissionofCadburyIndia:Toattainleadershippositionintheconfectionarymarketandachieveastrong
presenceinthefooddrinkssector.
Mission of Reliance Industries: To become a major player in the global chemicals business and

simultaneouslygrowinothergrowthindustrieslikeinfrastructure.
MissionofRanbaxy:Tobecomea$1billionresearchbasedglobalpharmaceuticalscompany.
ObjectivesandGoals
Objectivesareorganizationsperformancetargetstheresultsandoutcomesitwantstoachieve.They
functionasyardstickfortrackinganorganizationsperformanceandprogress.
Objectivesareopenendedattributesthatdenotethefuturestatesoroutcomes.Goalsarecloseended
attributeswhicharepreciseandexpressedinspecificterms.
Objectiveswithstrategicfocusrelatetooutcomesthatstrengthenanorganizationsoverallbusinessposition
and competitive vitality. Objective to be meaningful to serve the intended role must possess following
characteristics:
Objectivesshoulddefinetheorganizationsrelationshipwithitsenvironment.
Theyshouldbefacilitativetowardsachievementofmissionandpurpose.
Theyshouldprovidethebasisforstrategicdecisionmaking
Theyshouldprovidestandardsforperformanceappraisal.
Objectivesshouldbeunderstandable.
Objectivesshouldbeconcreteandspecific
Objectivesshouldberelatedtoatimeframe
Objectivesshouldbemeasurableandcontrollable
Objectivesshouldbechallenging
Differentobjectivesshouldcorrelatewitheachother
Objectivesshouldbesetwithinconstraints

10.STRATEGICLEVELSINORGANISATIONS

Socialresponsibility
SocialResponsibilitytowardsdifferentInterestgroups:1.Responsibilitytowardsowners:Ownersarethepersons
whoownthebusiness.Theycontributecapitalandbearthebusiness.
Runthebusinessefficiently
Properutilizationofcapitalandotherresources.
Regularandfairreturnoncapitalinvested.
Responsibility towards Investors: Investors are those who provide finance by way of investment in shares, bonds, etc. Banks,
financial institutions and investing public are all included in this category EnsuringsafetyoftheirinvestmentRegularpayment
ofinterest.Responsibilitytowardsemployees:Businessneedsemployeesorworkerstoworkforit.Iftheemployees
aresatisfiedandefficient,thenthebusinesscanbesuccessful.
Timelyandregularpaymentofwagesandsalaries.
Opportunityforbettercareerprospects.
Properworkingconditions
Timelytraininganddevelopment
Betterlivingconditionslikehousing,transport,canteenandcrches.
Responsibilitytowardscustomers:Nobusinesscansurvivewithoutthesupportofcustomers.
Productsandservicesmustbeabletotakecareoftheneedsofthecustomers.
Theremustberegularityinsupplyofgoodsandservices.
Priceofthegoodsandservicesshouldbereasonableandaffordable
Theremustbeproperaftersalesservice
Grievancesoftheconsumersifanymustbesettledquickly.
Responsibilitytowardscompetitors:Competitorsaretheotherbusinessmenororganizationinvolvedinasimilartype

ofbusiness.
Nottooffertocustomersheavy/discountsandorfreeproductsineverysale.
Nottodefamecompetitorsthroughfalseadvertisements.
Responsibilitytowardssuppliers:Suppliersarebusinessmenwhosupplyrawmaterialsandotheritemsrequiredby
manufacturersandtraders.
Givingregularordersforpurchaseofgoods
Availingreasonablecreditperiod
Timelypaymentofdues.
8.ResponsibilitytowardsGovernment:Businessactivitiesaregovernedbytherulesandregulationsframedbythe
government.Paymentoffees,dutiesandtaxesregularlyaswellashonestlyConformingtopollutioncontrolnormsset
upbygovernmentNottoindulgeinrestrictivetradepractices.9.Responsibilitytowardssociety:Asocietyconsistsof
individuals,groups,organizations,familiesetc.Theyallarethemembersofthesociety.
Tohelptheweakerandbackwardsectionsofthesociety.
Togenerateemployment.
Toprotecttheenvironment
.Toprovideassistanceinthefieldofresearchoneducation,medicalscience,technologyetc.
9.Responsibilitytowardssociety:Asocietyconsistsofindividuals,groups,organizations,familiesetc.Theyallare
themembersofthesociety.
Tohelptheweakerandbackwardsectionsofthesociety.
Togenerateemployment.
Toprotecttheenvironment
.Toprovideassistanceinthefieldofresearchoneducation,medicalscience,technologyetc

Stepsinstrategyformationprocess:Strategyformulation: