STRTAEGIC

MANAGEMENT
Sem.III
Section A
Class of 2017
Objective

The objective of this course is to introduce the student with basic

knowledge on the dynamics of Strategic Management - Formulation &
Implementation and its complexities in a global environment and
enable understanding of the underlying factors that explains business
success and failure. Students will also acquire working knowledge of
corporate restructuring, mergers and acquisitions, alliances and
familiarize them with emerging thoughts and practices in the field of
strategic management.
Lecture 1 10th June, 2017

Introduction to Strategic Management:

Introduction to Strategic Management

Evolution of Strategic Thinking - Views of Eminent Thinkers

Strategic vs. Operational Management

Strategic Management Process

Levels of Strategy (Corporate, Business, Functional).

Evolution of Strategic Thinking and Views of
Eminent Thinkers

Strategic thinking is defined as a mental or thinking process

applied by an individual in the context of achieving success in agame
or other endeavor.
cognitive activity, it produces thought.
Instrategic managementprocess, strategic thinking involves the
generation and application of unique business insights and
opportunities intended to create competitive advantage for a firm
or organisation.
Henry Mintzberg, (Crafting Strategy, 1995), Ingrid Bonn
(Developing Strategic Thinking as a Core Competence, 2001), Jeanne
Liedtka (Linking Strategic Thonking with strategic Planning, 1998)
draw a clear distinction between strategic thinking andstrategic
planning.
 Management Perspective
Vision of the Future
Strategic Formulation and Implementation
Managerial Role in Strategy Making
Control
Managerial Role in Implementation
Strategy Making
Process and Outcome
Strategic Thinking
Only the shape of the future can be predicted.
Formulation and implementation are interactive
rather than sequential and discrete.
Lower-level managers have a voice in strategy-
making, as well as greater latitude to respond
opportunistically to developing conditions.
Relies on self-reference a sense of strategic
intent and purpose embedded in the minds of
managers throughout the organisation that guides
their choices on a daily basis in a process that is
often difficult to measure and monitor from above.
All managers understand the larger system, the
connection between their roles and the
functioning of that system, as well as the
interdependence between the various roles that
comprise the system.
Sees strategy and change as inescapably linked
and assumes that finding new strategic options
and implementing them successfully is harder
and more important than evaluating them.
Sees the planning process itself as a critical
value-adding element.
Strategic Planning
A future that is predictable and specifiable in
detail.
The roles of formulation and implementation can
be neatly divided.
Senior executives obtain the needed information
from lower-level managers, and then use it to
create a plan which is, in turn, disseminated to
managers for implementation.
Asserts control through measurement systems,
assuming that organisations can measure and
monitor important variables both accurately and
quickly.
Lower-level managers need only know his or her
own role well and can be expected to defend only
his or her own turf.
The challenge of setting strategic direction is
primarily analytic.
Focus is on the creation of the plan as the
ultimate objective.
5 stages of strategic management process
Goal Setting: Define Short and Long Term
Objective
Identify process to accomplish
objective
Analysis: Data gathering
Customize towards
the process for
accomplishment
operation of vision
Analysis of data as a sustainable entity
PESTEL / SWOT Analysis
Strategy Formulation: Critical analysis of data
Determination of resource gap to reach goals and
objective
Prioritize the issues to the importance of your
Strategy
objective Implementation: Critical assessment of organization structure
and strengths
Allocation of Role, Responsibility and
Accountability
Evaluation and Control: Secure resource
Casting and funding
performance plantoaligned
fulfil goals and and
to goals
objectives
objective
Performance measurement
Consistent review of internal and external issues and
Strategic Management vs. Operations
Management
Blue Ocean Current
Long Term Plan
Holistic View
Focus on Effectiveness and Agility
Where the Organization Competes
(product, customer, geographic market)
How it Chooses to Compete
Capture Value in the Market
Red Ocean Current
Short Term Plan aggregating to Long Term
Internal View
Focus on Efficiency
Hoe do we run our business; determining
the role of the corporate centre, individual
business unit, division, and staffing
Establishing standards, procedures
Defining and developing employee
capability
Establishing and monitoring KPI to
manage business and individual
performance
Levels of Strategy

Corporate Business Functional

Strategic decision Applicable for Relates to single
making, deals with organizations having functional organization
objectives of the firm different businesses, and Decisions are often
Acquisition and each business is treated considered as tactical
allocation of resources as a Strategic Business Relatively restricted
Coordination of Unit (SBU); e.g. RIL objective for specific
strategies of various operates in textile function
SBUs for optimal fabrics, fiber, yarn and a Resource allocation
performance variety of petrochemical among different
Decisions tend to be product. Customer, operation
value oriented, competition and market
Coordination for optimal
conceptual, and less channel differs for each
product performance of
concrete than business operations
or functional Requires different
Achieve SBU and
management strategies for different
product groups. corporate level
Relates to what objectives
Such strategies operate
within overall strategy of
the organization
Relates to How
Discussion
Current News Analysis pertaining to Strategic Management:

1. General Motors withdrawal of Indian Operations: what are the

strategic intent?

2. HUL adopts to Country Category Business Teams or CCBTs to

have representative from all functions including R&D, Sales and
Marketing, SCM and Finance and run as independent group with
an entrepreneurial mindset

-------------------------------------------
Class Contribution for Current News Analysis pertaining to Strategic
Management:
 Lecture 2 17/06/17

The Strategic Position

The Environment (Porters Five Forces Framework,
PESTEL,
Strategic Gaps,
SWOT;
Challenges in International Business Environment;
Hofstede Cultural Dimensions, Internationalization)
The Strategic Lense Model (Exploring Corporate Strategy by Johnson;
Pages 29 to 45 - Discussion
Hofstede Cultural Dimensions
Strategy
Gerard Hendrik (Geert) Hofstede (born 2 October 1928) is
a Dutch social psychologist, former IBM employee, and
Professor Emeritus of Organizational Anthropology and
International Management at Maastricht University in the
Netherlands, well known for his pioneering research on
cross-cultural groups and organizations.
Hofstede Cultural Dimensions
Strategy
His most notable work has been in developing cultural
dimensions theory. Here he describes national cultures along
six dimensions:

Power Distance,
Individualism,
Uncertainty avoidance,
Masculinity,
Long Term Orientation, and
Indulgence vs. restraint

He is known for his books Culture's Consequences and Cultures and

Organizations: Software of the Mind, co-authored with his son Gert Jan
Hofstede.
Lecture 3 26/06/17

The Strategic Position

Expectations and Purposes:

1. Organizational Purposes,
2. Stakeholder Mapping,
3. Communicating Organizational Purposes (Core Values
4. & Ideology, Vision, Mission, Objectives).
 The Organization Purpose

The Purpose of an organization is the fundamental reason why the

organization exists.
1. What do we do?
2. Why is the work you important?

The Six Criteria of a Purpose Statement:

Is it a contribution to society - not just a product or service
Does this answer the question - why is this work important?
Is it inspirational and motivational?
Does it use a powerful word?
Is it brief in length so employees will remember it?
It is broad in scope to allow for future opportunities and change?
Stakeholder Mapping

Stakeholder Category

Interest

Role

CSR
Communicating Organizational Purpose

Objective
Vision
Mission
Value
Code of Business Ethics

Minimize Harm (Honesty)

Proper Conduct (Patience)
Enhancing Professional Relationship (Kindness)
Show Loyalty (Faithfulness)
Act Fairly (Fairness)
Act Independently (Courage)
Lecture 4
01/07/2017
Strategic Capability

Strategy Deployment
Strategic Capability and Strategy
Development

Strategic Capability:

Critical Success Factor - Experience Curve - Strategic Capability Resources

Core Competence
Competition View of Strategy vs. RBV,
Value Chain Analysis.
Strategy Development:

Multiple approaches - Strategic Planning System, Logical Incrementalism, Learning

Organization, Strategic Leadership.
Implications - Intended, Realized,
Emergent Strategy - Strategic Drift.
Strategic Capability
Critical Success Factor

Limited number (usually between 3 to 8) of characteristics, conditions, or

variables that have a direct and serious impact on the effectiveness, efficiency,
and viability of an organization, to achieve the intended business objective is
called the CSF (also KRA / KPI).

Growing Top Line

Market Penetration
Customer Complain Resolution
Technology / Innovation - New Product Velocity

Experience Curve
Strategic Capability
Core Competence
Competition View of Strategy Vs. Resource Based View (RBV)
Value Chain Analysis
Strategy Development

Multiple approaches

Strategic Planning System,

1.People 2.Information 3.Finance 4.Technology
Logical Incrementalism,
Learning Organization,
Strategic Leadership.

Implications
Intended,
Realized,

Emergent Strategy
Strategic Drift.
Lecture 5 Strategic Choices
Corporate-level Strategy:
Value Creation and the Corporate Parent-Portfolio Manager (Eg. BCG, GE Matrices),
Synergy Manager, Resource Allocator, Restructurer, Parental Developer.
Managing the Corporate portfolio BCG, GE Matrices.
Product/Market Diversity Related/Unrelated Diversity.
International StrategyMarket Selection and Entry.

Business-level Strategy: Generic Strategies; Cost Leadership, Product Differentiation,

Focus; The Hybrid Strategy.
Directions for Strategy Development: Product Development, Market Development, The
TOWS matrix.
Strategic Choices
Basis of Competitive Strategy
The choices as to how an organization positions itself in relation to
competitor

Strategy Direction
The choices of products and markets available to an organization

Methods for pursuing strategies

The choices about how strategies are to be pursued
TOWS Strategic Alternative Matrix
External Opportunities External Threats

Internal Strengths SO - Maxi - Maxi Strategy ST - Maxi - Mini Strategies

Strategies that use strength to Strategies that use strength to
maximise opportunities minimize threat

Internal Weaknesses WO - Mini Maxi Strategy WT - Mini Mini Strategies

Strategies that minimize Strategies that minimize
weaknesses by taking weaknesses and avoid threats
advanrage of opportunities
Corporate Level Issues - Value Creation or
Destruction
Scope Decisions

Product International
Diversity Diversity

Corporate Managing the

Parenting Portfolio
Roles

Value Creation
The Case of IKEA india business foray
 Portfolio Managers, Synergy Managers and Parental
Developers Portfolio Managers Synergy Managers Parental Developers
Logic
Strategic Requirements
Organizational Requirements
Agent for financial markets
Value creation at SBU level
Limited
Identifying and aquiring
undervalued assets
Divesting low performing
SBUs quickly and good
performers at a premium
Low level strategic role at
SBU level
Autonomous SBUs
Small, low cost corporate
staff
Incentives based on SBU
results
The achievement of
synergistic benefits
Sharing activities /
resources or transfering
skills / competencies to
enhance competitive
advantage of SBUs
Identification of appropriate
bases for sharing or
transfering
Identification of benefits
which outweigh costs
Collaborative SBUs
Corporate staff as
integrators
Overcoming SBU resistance
to sharing or transfering
Incentives affected by
corporate results
Central competencies can
be used to create value in
SBUs
SBUs not fulfilling their
potential(a parenting
opportunity)
The parent has clear and
relevant resources or
capabilities to enhance SBU
potential
The portfolio is suited to
parents expertise
Corporate Managers
understand SBUs
Effective structural and
control linkages from parent
to SBUs
SBUs may be autonomus
unless collaboration is
required
Incentives based on SBU
performance
BCG Matrix
GE Business Portfolio Matrix
BCG Vs. GE Matrix
BCG Matrix
1. BCG matrix consists of four cells
2. The business unit is rated against relative
market share and industry growth rate
3. The matrix uses single measure to assess
growth and market share
4. The matrix uses two types of classification
i.e high and low
5. Has many limitations
GE Matrix
1. GE matrix consists of nine cells
2. The business unit is rated against business
strength and industry attractiveness
3. The matrix used multiple measures to
assess business strength and industry
attractiveness
4. The matrix uses three types of classification
i.e high/medium/low and strong/average/weak
5. Overcomes many limitations of BCG and is
an improvement over it
Lecture 6 Strategic Choices
Corporate-level Strategy:
Value Creation and the Corporate Parent-Portfolio Manager (Eg. BCG, GE Matrices),
Synergy Manager, Resource Allocator, Restructurer, Parental Developer.
Managing the Corporate portfolio BCG, GE Matrices.
Product/Market Diversity Related/Unrelated Diversity.
International StrategyMarket Selection and Entry.

Business-level Strategy: Generic Strategies; Cost Leadership, Product Differentiation,

Focus; The Hybrid Strategy.
Directions for Strategy Development: Product Development, Market Development, The
TOWS matrix.
Product/Market Diversity : Related/Unrelated Diversity

Scope Decisions

Product International
Diversity Diversity

Corporate Managing the

Parenting Portfolio
Roles

Value Creation
Product/Market Diversity : Related/Unrelated Diversity

Diversification is a strategy that takes and

organization into both new markets and services

Synergy refers to the benefits that might be

gained where activities or processes
complement each other such that their
combined effect is greater than the sum of the
parts
International Strategy - Market Selection and
Entry
Reasons for international diversity
Globalization of market and competition
Firms acting as suppliers may follow the trail of the
customers when the globalize
to bypass limitations in its; home market
opportunities to exploit opportunities between
countries and geographical regions,eg.
exploitation of difference of culture such as US fast
food giants like McD, KF
administrative difference, take advantage of tax
laws like Apple
exploitation of geography specific difference; Airtel
expansion in Africa
exploitation of specific economic factor eg. labour
and cost of capital, China Sourcing Strategy by all the
electronic majors
International Strategy

Globalization may also be pursued to build on and take

advantage of strategic capabilities
Gives the enterprise ability to broaden the size of
the market to exploit strategic capabilities eg. Amazon,
Starbucks
Internationalization of value adding activities which
allows an organization to develop resources and
capbilities in ways not possible in its HOME country eg.
oil field ownership by ONGC; iron and coal mines by steel
giants
enhancement of knowledge base by entering
markets that are strategically important as a source of
industry innovation eg. IKEA

Other economic benefits in strategies of internationalization

Reaping economy of scale by expanding the size of
Market Selection and Entry
Macro economic conditions
Reflected in Indicators such as GDP, disposable
income, country stability etc.

Political environment may create significant opportunities for

organizations eg. UK provides for investmennt incentives for foreign
manufacturers as un the case of Apple production facility in Ireland
Infrastructure creates attractiveness of national markets for entry
existing transportation and communications infrastructure
eg. electronic component manufacturing in Vietnam
local availability of appropriately skilled labour eg.
garment industry in SriLanka and Bangladesh
tariff and non tariff barriers to trade eg. auto component,
white goods manufacturing in Thailand
Cultural norms and social structure
Political and legal risks
Soverign risk arising from government policies and
decisions
Protection of Intellectual property rights (IPR)
Lecture 7 Strategic Choices
Corporate-level Strategy:
Value Creation and the Corporate Parent-Portfolio Manager (Eg. BCG, GE Matrices),
Synergy Manager, Resource Allocator, Restructurer, Parental Developer.
Managing the Corporate portfolio BCG, GE Matrices.
Product/Market Diversity Related/Unrelated Diversity.
International StrategyMarket Selection and Entry.

Business-level Strategy: Generic Strategies; Cost Leadership, Product Differentiation,

Focus; The Hybrid Strategy.
Directions for Strategy Development: Product Development, Market Development, The
TOWS matrix.
Business-level Strategy

Sustaining Competitive Advantage

Price Based Advantage
pursuing low price strategies
sustain and win a price war
low cost capabilities throughout value chain
Product Differentiation Based Advantage
create imitation difficulty
imperfect mobility e.g. CR7 in Barcelona
the power of intangible brand asset
switcing cost
co-specialization as imperfect mobility e.g. Airtel - IBM
The Delta Model and Lock In
size of market dominance by becoming the industry standard e.g. Dolby, Visa
first mover advantage in early life cycle of product e.g. Intel, Microsoft
self reinforcing and escalating by creating an eco system, e.g. Linux
rigotous insistence on the preservation of lock in e.g. Microsoft and US Courts
Directions for Strategy Development

Product Development
changing needs of customers
product lifecycle cost
developing core competency
development of new capabilities
change of emphasis amonmg customers
critical success factor

Strategy Development
Intended Strategy
Unrealised Strategy
Realised Strategy
Emergent Strategy
Intended Strategy Development

Strategic Planning System

Strategy Workshops and Project Groups

Strategy Consultants

Externally Imposed Strategy