BS1

BSA BSB

STRATEGY
TO LAY A FOUNDATION FOR TOMORROWS SUCCESS WHILE COMPETING TO WIN IN TODAYS MARKET

COMPETITIVE STRATEGY
CONCEPT AND DEFINITION THE FIVE TASKS OF STRATEGIC MANAGEMENT BENEFITS OF STRATEGIC APPROACH TO MANAGING

WHAT DO WE MEAN BY STRATEGY

A COMPANYS STRATEGY CONSISTS OF THE COMPETITIVE MOVES AND BUSINESS APPROACHES DEVISED BY MANAGEMENT TO PRODUCE SUCCESSFUL PERFORMANCE STRATEGY IS MANAGEMENTS GAME PLAN FOR RUNNING THE BUSINESS

WITHOUT A STRATEGY, MANAGERS HAVE

NO WELL-DEFINED PATH TO FOLLOW NO ROAD MAP TO MANAGE BY NO COHESIVE, REASONED ACTION PLAN TO PRODUCE SUCCESSFUL RESULTS

Strategic Management Definition and Evolution

Strategic Management Set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objectives of and organization Decisions about products, location and org structure; survival of the organization Evolution of the concept of Strategic Management Greek word strategia : General/Military commander War and strategy are inseparable

Igor Ansoff
Conducted research on acquisitions by American companies Found acquisitions based on rational strategy fared better than opportunistic decisions Key elements of success paradigm No universal success formula Turbulence level determines the required strategy Strategy aggressiveness to be aligned with the turbulence level Management capabilities and internal capability of firm Cascade of decisions and Gap analysis

Mintzberg Strategy as Craft

Simple Structure Machine bureaucracy Professional bureaucracy Divisionalized form ad hoc racy

Peter Drucker
Management is not just passive, adaptive behavior; it means taking action to make desired results come to pass Managing responsibility for attempting to shape the economic environment, for constantly pushing back the limitations of economic environment Using formal planning, a company could exert some positive control over market forces MBO philosophy of managing exercising control to self control

Michael Porter
Five forces model: threat of new entrants, bargaining power of suppliers, bargaining power of customers, threat of substitute products and rivalry between existing players determine strategic plan Value chain analysis : determine how and where value could be added in the interactions between different functions Generic strategies: cost, differentiation and focus determine the basis of competition Firms that engage in intense competition tend to survive and prosper

Steps in Strategic Planning process

Determine the organisations current situation within its internal and external environments Identify the gaps between the current situation and strategic intent Developing the appropriate strategies or game plan to achieve the strategic intent

EXERCISE
Focus on the SIP organisation. In your opinion, how effectively does the organisation utilise the strategic planning process described.

Components of Strategic Management

Vision Description of what the organization is trying to do and to become View of organizations direction and course of business activity Communicated through mission statement Powerful motivator Corporate Mission Identifies scope of the companys operations, describes the companys product, market and technological areas of thrust Reflects the values and priorities of its strategic decision makers Looks to perpetuity

Company Profile Depicts the quantity and quality of the companys financial, human and physical resources Assesses strengths and weaknesses of management and organizational structure Analyses past successes and traditional concerns in context of current capabilities External Environment Consists of all the conditions and forces that affect an organizations strategic options and define its competitive situation 3 interactive segments operating environment, industry environment, remote environment

Strategic analysis and choice Identify range of possible attractive investment opportunities Combine long-term objectives and generic and grand strategies in order to place the firm in and optimal position Identify strategies that are most effective in building a sustainable competitive advantage Annual objectives More specific than long-term objectives firm seeks to achieve in one year Crucial to attaining long-term objectives

Grand Strategy Statement of means that indicated the methods to be used to achieve the companys objectives Framework for entire business of the firm Focus of concentration, market development, product development, innovation, horizontal integration, vertical integration, joint ventures etc Operational Strategies Grand strategy split for each biz division Specific to needs of each functional area Means for achieving annual objectives

Policies Directives given to managers and subordinates as framework Referred to as standard operating procedures Increase managerial effectiveness by standardizing routine decision making and limiting discretionary powers Institutionalizing the strategy For effective implementation, strategy must become part of day to day activities of the company institutionalize Structure, leadership and culture help institutionalize Control and Evaluation Monitored to determine extent of success Employ early monitoring and control methods to ensure implementation

THINKING STRAGTEGICALLY: THE THREE BIG QUESTIONS

WHERE ARE WE NOW? THINKING STRATEGICALLY ON EXTERNAL MARKET ENVIRONMENT AND INTERNAL RESOURCES AND CAPABILITIES WHERE DO WE WANT TO GO? WHAT FINANCIAL AND STRATEGIC OUTCOMES TO ACHIEVE IN WHAT TIME FRAME

THINKING STRAGTEGICALLY: THE THREE BIG QUESTIONS

HOW WILL WE GET THERE? WHAT STRATEGY THE COMPANY SHOULD ADOPT TO ACHIEVE ITS STRATEGIC INTENT

Strategic Decisions are about:

The long term direction of the organisation The scope of an organisations activities Gaining advantage over competitors Addressing changes in the business environment Building on resources and competency(Capability) Values and expectations of stake holder

Therefore
Complex decisions Be made in situations of uncertainty Affect operational decisions Require an inside and outside integrated approach Involve considerable change

THE FIVE TASKS OF STRATEGIC MANAGEMENT

DEFINING THE BUSINESS, STATING A MISSION AND FORMING A STRATEGIC VISION SETTING MEASURABLE OBJECTIVES AND PERFORMANCE TARGETS CRAFTING A STRATEGY TO ACHIEVE THE OBJECTIVE IMPLEMENTING AND EXECUTING THE STRATEGY EVALUATING, REVIEWING AND INITIATING CORRECTIONS

FIRST TASK

DEVELOPING VISION AND MISSION Vision an inspired dream Mission concrete form of vision including values Beliefs, guiding principles),

SECOND TASK
SETTING OBJECTIVES
CONVERT MISSION INTO SPECIFIC PERFORMANCE TARGETS CREATE YARDSTICK FOR TRACKING ORGANISATIONAL PERFORMANCE ESTABLISH TARGETS WHICH REQUIRE STRETCH AND EFFORT PUSH AN ORGANISATION TO BE INVENTIVE INTENTIONAL AND FOCUSSED BOTH FINANCIAL AND STRATEGIC OBJECTIVES ARE REQUIRED

CRAFTING A STRATEGY TO MEET THE OBJECTIVES

(THIRD TASK)

IMPLEMENTING AND EXECUTING THE STRATEGY

(FOURTH TASK)

EVALUATING PERFORMANCE,REVIEWING NEW DEVELOPMENTS, AND INITIATING CORRECTIVE ADJUSTMENTS IN LONG TERM DIRECTION, OBJECTIVES, STRATEGY, OR IMPLEMENTATION APPROACHES
(FIFTH TASK)
Mintzberg: intended, unrealised, deliberate, emergent, realised

Means
Plan Policies
Strategic Intent, Vision, Mission, Goals, Objectives

Ends

Intended Strategy Realized Strategy

Action taken

Results Observed

Strategic Management Model

Company Mission f e e d b a c k Company Profile Ext. Envt. Analysis

Strategic Analysis & Choice f e e d b a c k

Long-term Objectives

Grand Strategy

Annual Objectives

Operating Strategies

Policies

Institutionalization of Strategy

Control And Evaluation

BENEFITS OF A STRATEGIC APPROACH TO MANAGING

CREATES SUSTAINABLE COMPETITIVE ADVANTAGE IS PROACTIVE RATHER THAN REACTIVE GUIDES THE ENTIRE ORGANISATION AS TO WHERE WE ARE AND WANT TO GO

9 critical tasks of strategic management

Formulating the companys mission Developing company profile Assessing external environment Analyzing options by matching its resources with the external environment Identifying most desirable options Selecting set of long-term objectives and grand strategies Developing short-term/annual objectives Implementing strategic choices Evaluating success of the process

Characteristics of strategic decisions

Integrates various functions central to capitalizing on functional expertise and integrating all functions Considers broad range of stakeholders optimum results can be obtained only when all resources of the different functions are integrated and utilized Entails multiple time horizons conscious of short-run, and long-run ramifications of different org activities Concerned with both efficiency and effectiveness doing things right and doing the right things, encourages balanced emphasis on both these dimensions of managerial work

THE THREE LEVELS OF STRATEGY PLANNING

CORPORATE LEVEL BUSINESS LEVEL FUNCTIONAL LEVEL

CORPORATE/BUSINESS LEVEL

STRATEGIES DEVISED TO EXPLOIT A FIRMS DISTINCTIVE COMPETENCIES SELECTION OF AREAS OF BUSINESS

CORPORATE/BUSINESS LEVEL
MAKING DECISIONS ABOUT THE COMPETITIVE POSITION OF A SINGLE BUSINESS UNIT EVOLVE EXACT, CONCRETE OBJECTIVES AND STRATEGIES FOR THE INDIVIDUAL BUSINESS DIVISION

FUCTIONAL LEVEL
FIX SHORT TERM AND OPERATIONAL OBJECTIVES FOR DIFFERENT AREAS

STRATEGIC MANAGEMENT
STRATEGIC POSITION STRATEGIC CHOICES TRANSLATING STRATEGY INTO ACTION

STRATEGIC POSITION
THE ENVIRONMENT THE STRATEGIC CAPABILITY - S W CC CORPORATE GOVERNANCE + EXPECTATIONS OF STAKE HOLDERS

STRATEGIC CHOICES
BASIS OF COMPETITIVE ADVANTAGE AT CORPORATE LEVEL PRODUCT / MARKET

TRANSLATING STRATEGY INTO ACTION

STRUCTURING ENABING SUCCES ( THRU IT) CHANGE MANAGEMENT

3 levels of Strategic Planning

Corporate level
Strategies are devised to exploit the distinctive competencies of the firm Give direction to the org Deals with selection of business areas

Business Level
Making decisions about the competitive position of a business unit Managers translate the general statement of corporate strategic planers into exact, concrete, functional objectives and strategies for individual business divisions Concerned with using generic strategies to create competitive advantage

Functional level
Managers from geographic, product and functional areas design short-term strategies and fix annual objectives in research, finance, marketing, production, HR etc Address problems related to efficiency Objectives are quantifiable and objectives in nature; can be modified depending on objectives

Vocabulary

Mission

Overriding purpose in line with the values and expectations of stakeholders Desired future state General statement of aim or purpose Quantified goal Long term direction

Make parents happy

Vision Goal Objective Strategy

To be a CEO Improve effectiveness and confidence Be a VP in 7 years Participate, Learn and build confidence

Business Model

Flow of info/product etc

Associate with like minded people

Monitor class perf, Extracurricular activity etc

Control

Monitor and modify strategy

EXPECTATIONS AND GOVERNANCE

ORGANISATIONAL PURPOSE
CORPORATE GOVERNANCE BUSINESS ETHICS STAKE HOLDERS CULTURAL CONTEXT

ORGANISATIONAL PURPOSES
CORPORATE VALUES MISSION OBJECTIVES

CORPORATE GOVERNANCE
WHOM SHOULD THE ORGANISATION SERVE? HOW SHOULD PURPOSES BE DETERMINED?

BUSINESS ETHICS
WHICH PURPOSES SHOULD BE PRIORITISED? Why?

Stake holders
Whom does the organisation serve?

Cultural context
Which purposes are prioritized? Why?

STRATEGY LENSES
DESIGN LENS EXPERIENCE LENS IDEAS LENS

STRATEGIC DRIFT

APPROACHES FOR CORPORATE/BUSINESS LEVEL STRATEGY FORMULATION PORTERS(1990) DIAMOND PRODUCT AND INDUSTRY LIFE CYCLE PORTERS FIVE FORCES MODEL SWOT ANALYSIS PORTER GENERIC STRATEGIES BCG MATRIX