MBCII Strategic Management SM MBA II SemIII A

MBCII: Strategic Management (SM) MBA - II: Sem-III A Theoretical & Practical Perspective By Prof. Rajkamal padmakars 21@gmail. com +91 -9765900862

Syllabus: Unit –I : Strategic Management 4 Introduction to strategic management, Strategic decision 4 4 making, Strategic management process; Difference between Policy, Strategy and Tactics. Vision, Mission & goals, Preparation of Vision & Mission Statement; Organisational objectives, Hierarchy of objectives & strategies, setting of Objectives; Internal Resource Analysis - SWOT analysis, Resource analysisa) Organisation capabilities & competitive advantage b) Value chain analysis; Concept of synergy – Core competency, Competitive analysis Interpreting the five forces model, Competitors analysis

Books Preference 4 Strategic Management – Upendra Kachru 4 Strategic Planning & Formulation of Corporate Strategy, V S Ramaswami, S 4 4 4 Namaumari, Publication- Macmillan, India. Strategic Management , 9 th Edition – John A Pearce II, Richard B Robinson, Jr Publication-Tata Mc. Graw- Hill Publishing Company Limited, New Delhi. Understanding Strategic Management, Henry, Oxford University Press Crafting & executive strategy -14 th edition, Arthur A. Thompson Jr, A. J. Strickland III, Publication-Tata Mc. Graw- Hill Publishing Company Limited, New Delhi. Management Policy & strategic Management – R. M. Srivastava Publication – Himalaya Publishing House. Global Strategic management – Kamel Mellahi, J. George Frynas, Paul Finlay Publication- Oxford University Press, New Delhi. Strategic Management, Chandrasekara, Anant Narayanan, Oxford University Press

Defining Strategic Management 4 Strategic management – the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives – Strategic management is used synonymously with the term strategic planning – Sometimes the term strategic management is used to refer to strategy formulation, implementation, and evaluation, with strategic planning referring only to strategy formulation 4 A strategic plan is a company’s game plan. 4 A strategic plan results from tough managerial choices among numerous good alternatives, and it signals commitment to specific markets, policies, procedures, and operations 1 -4

What are the foundations of strategic competitiveness? Ø Basic concepts of strategy: – Competitive advantage — operating with an attribute or set of attributes that allows an organization to outperform its rivals. – Sustainable competitive advantage — one that is difficult for competitors to imitate. – Strategy — a comprehensive action plan that identifies long-term direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage. – Strategic intent — focusing all organizational energies on a unifying and compelling goal. – Strategic management — the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage. 5

Stages of Strategic Management Strategy Formulation Strategy Implementation 1 -6 Strategy Evaluation

What is the Strategic Management Process? Ø Strategic question for strategy formulation: – What is our business mission? – Who are our customers? – What do our customers consider value? – What have been our results? – What is our plan? 7

Stages of Strategic Management 4 Strategy formulation v v v v – Includes developing a vision and mission, identifying an organization’s external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue Deciding what new businesses to enter, What businesses to abandon, How to allocate resources, Whether to expand operations or diversify, Whether to enter international markets, Whether to merge or form a joint venture, How to avoid a hostile takeover 1 -8

Stages of Strategic Management…. 4 Strategy Implementation – Requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed – Often called the action stage – 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. 1 -9

Strategy formulation and implementation in the strategic management process. 10

The Strategic Management Process (cont. ) Define vision and mission Perform situational analysis Establish objectives Strategy Formulation Formulate strategies Implement strategies Strategy Implementation Evaluate and correct Strategy Evaluation

Stages of Strategic Management…. 4 Strategy Evaluation – reviewing external and internal factors that are the bases for current strategies, measuring performance, and taking corrective actions 1 -12

What is the Strategic Management Process? Ø Essential tasks for strategy implementation: – Identify organizational mission and objectives. – Assess current performance vis-à-vis mission and objectives. – Create strategic plans to accomplish purpose and objectives. – Implement the strategic plans – Evaluate results; change strategic plans and/or implementation processes as necessary. Ø Analysis of mission: – The reason for an organization’s existence. – Good mission statements identify: • • Customers Products and/or services Location Underlying philosophy – An important test of the mission is how well it serves the organization’s stakeholders. 13

How External Stakeholders can be valued as strategic constituencies of organizations. 14

Key Terms in Strategic Management 4 Vision statement – Answers the question “What do we want to become? ” – Often considered the first step in strategic planning 4 Mission statements – Enduring statements of purpose that distinguish one business from other similar firms – Identifies the scope of a firm’s operations in product and market terms – Addresses the basic question that faces all strategists: “What is our business? ” 4 External opportunities and external threats – Refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future 1 -15

What is a Vision? “An articulation of what the company wishes to become or where it seeks to go” or, “the firm’s aspirations of what it really wants to be…designed to capture the imagination of the firm’s people and galvanize their efforts to achieve a higher purpose. ” • Visions often describe organizations in a lofty, even romantic or mystical tone – and “expression of hope”. • Four attributes of “good” visions: 1) Idealism A well-conceived strategic vision: 2) Uniqueness Ø Guides managerial decision-making 3) Future Orientation Ø Arouses employee buy-in and commitment 4) Imagery • Ø Prepares a company for the future

Mission Statements 4 Encompasses both the purpose of the company as well as the basis of competition and competitive advantage. Should answer, “What is unique about our organization? ” 4 More specific, focused, and concrete than the vision. 4 Employees are usually the most important audience for mission statements. 4 Components: 1) Should explicitly target customers and market. 2) Should indicate the principal products and/or services provided by the organization. 3) Should specify the geographical area of concentration. “Writing a mission statement is important; however, living it is more important. ”

What is a Mission? 4 “A mission statement is more a statement of corporate purpose, and often defines the area of business in which it competes. ” 4 “Captures the organization’s distinctive purpose or reason for being. ” 4 Or, “Describes the firm or organization in terms of its business. Mission statements answer the questions, ‘What business are we in? ’ and ‘What do we intend to do to succeed? ’ …[they] are more concrete than visions, but still do not specify the goals and objectives necessary to translate the mission into reality. ”

Value Statements Values are things organizations and people stand for or the fundamental principles that, along with the mission, make an organization unique. Usually associated with ethical behavior and social responsibility. Questions for discussion: 1) Why are value statements important (or not)? 2) Are value statements (or codes of ethics) simply impression management devices? 3) How do you get employees to exhibit behaviors that reflect the stated values of the organization? 4) Can creating organizational virtue (i. e. , integrity, courage, empathy, conscientiousness, warmth, and zeal) create a competitive advantage for your organization?

What is the Strategic Management Process? Ø Analysis of values: – Values are broad beliefs about what is or is not appropriate. – Strong core values for an organization helps build institutional identity, gives character to an organization, and it backs up the mission statement. – Organizational culture reflects the dominant value system of the organization as a whole. 20

Goals & Objectives • Follows Vision & Mission to more specifically give direction and goals for the organization. These also serve to determine if appropriate control is been set for strategic decisions: Represent commitment to achieve specific performance targets by a certain time. ü Must be stated in quantifiable terms and contain a deadline for achievement. ü Spell-out how much of what kind of performance by when. ü

What is the Strategic Management Process? Ø Organizational culture – Shapes the values of managers and other organization – – – members. Points people in common directions. Helps build institutional identity. Gives character to the organization in the eyes of employees and external stakeholders. Backs up the mission statement. Guides the behavior of organizational members in meaningful and consistent ways. 22

What is the Strategic Management Process? Ø Analysis of objectives: – Operating objectives direct activities toward key and specific performance results. – Typical operating objectives: • • Profitability Market share Human talent Financial health Cost efficiency Product quality Innovation Social responsibility 23

What is the Strategic Management Process? Ø What are our Strengths? – Manufacturing efficiency? – Skilled workforce? – Good market share? – Strong financing? – Superior reputation? Ø What are our Weaknesses? – Outdated facilities? – Inadequate research and development? – Obsolete technologies? – Weak management? – Past planning failures? 24

What is the Strategic Management Process? Ø Analysis of organizational resources and capabilities: – Important goal of assessing core competencies. – Potential core competencies: • Special knowledge or expertise. • Superior technology. • Efficient manufacturing approaches. • Unique product distribution systems. 25

What is Strategy? 4 4 Strategy is the overall plan for deploying resources to establish a favorable position. Tactic is a scheme for a specific maneuver The Strategic Management Model 4 Where are we now? 4 Where do we want to go? 4 How are we going to get there?

Basic Framework External Environment The firm Goals & Values Resources & Capabilities Structures & Systems Competitors Strategy Customers Suppliers etc

From Organizational Vision to Tactical Steps 4 Define the Organization: – Vision – Mission Statement 4 Understand the Operating Environment – External Environment (Threats and Opportunities) – Internal Conditions (Strengths and Weaknesses) 4 Determine Strategic Alternatives 4 Formulate Strategy (long term) 4 Implement Strategy through Tactics (short term)

From Organizational Vision to Tactical Steps SWOT Analysis External Analysis – EFAS Matrix (Chapter 3) Internal Analysis IFAS Matrix (Chapter 4) Strategy Formulation Alternative Strategies – TOWS Matrix (Chapter 5) Strategy Implementation Corporate Strategy (Chapter 6) Organizing (Chapter 8) Functional Strategy (Chapter 7) Staffing (Chapter 9) Evaluating (Chapter 10)

Levels of Strategy Functio nal Business Corp orate Global

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