1. MBA SEM- III Strategy – An Introduction
SUBJECT: Strategic Management
Strategy – An Introduction
K K Parekh Institute Of Management Studied-Amreli
Prepared by- Dr. Vishal Patidar

2. Strategic Management

3. Joel Ross and Michael Kami
“Without a strategy the organization is like a ship without a rudder.”
Joel Ross and Michael Kami

4. Chapter Roadmap What Is Strategy?
Identifying a Company’s Strategy
Strategy and the Quest for Competitive Advantage
Strategy Is Partly Proactive and Partly Reactive
Strategy and Ethics: Passing the Test of Moral Scrutiny
The Relationship Between a Company’s Strategy and Its Business Model
What Makes a Strategy a Winner?
Why Are Crafting and Executing Strategy Important?

5. Thinking Strategically: The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
Business(es) to be in and market positions to stake out
Buyer needs and groups to serve
Outcomes to achieve
3. How will we get there?
A company’s answer to “how will we get there?” is its strategy

6. What Is Strategy?
Consists of the combination of competitive moves and business approaches used by managers to run the company
Management’s “game plan” to
Attract and please customers
Stake out a market position
Compete successfully
Grow the business
Achieve targeted objectives

7. Large-scale, future-oriented plan
Used to interact within competitive environment to achieve company goals
Provides a framework for managerial decisions
Reflects a company’s awareness of the main elements of competition

8. Strategy is about affecting the overall activities of an organization in ways to make the organization a winner.
Strategy is about survival in fierce (severe) competition.

9. Strategy – A Seminal (determining) Definition
In his book, Russel L Ackoff (1970) discuss the characteristics of strategy. He describe three characteristics that define the concept of strategy.
Strategy deals with concerns that are central to the livelihood and survival of the entire corporation and usually involve a large portion of the organizations resources.

10. Strategy represents new activities or areas of concern and typically addresses issues that are unusual for the organization rather than issues that lend themselves to routine decision making.
Strategy has repercussive (consequence) for the way other, lower lend decisions in the organization are made

11. The Hows That Define a Firm's Strategy
How to please customers
How to respond to changing market conditions
How to outcompete rivals
How to grow the business
How to manage each functional piece of the business and develop needed organizational capabilities
How to achieve strategic and financial objectives
Strategy is HOW to . . .

12. Strategic choices are based on . . .
What Are a Company’s Strategic Choices?
Trial-and-error organizational learning about
What has worked and
What has not worked
Management’s appetite for taking risks
Managerial analysis and strategic thinking about how best to proceed, given prevailing circumstances
Strategic choices are based on . . .

13. Strategy Strategic Management
A series of goal directed decisions and actions matching an organizations skills and resources with the opportunities and threats in its
environment
Analyze current situation
Develop appropriate
strategies
Put strategies into action
Evaluate, modify, or
change strategy

14. Strategy Involves
Strategic Management
Organization’s goals
Goal-oriented action
Related decisions and
actions
Internal Strengths
External opportunities
and threats
Planning
Organizing
Implementing
Controlling

15. Dimensions of Strategic Decisions
Strategic issues require top-management decisions
Strategic decisions overarch several areas of a firm’s operations
Usually only top management has the perspective needed to understand their broad implications
Usually only top managers have the power to authorize necessary resource allocations

16. Dimensions of Strategic Decisions
Strategic issues require large amounts of the firm’s resources
They involve substantial allocations of people, physical assets, and money
Strategic decisions commit the firm to actions over an extended period
In highly competitive firms, achieving and maintaining customer satisfaction frequently involves commitment from every facet of the firm

17. Dimensions of Strategic Decisions
Strategic issues often affect the firm’s long-term prosperity
Strategic decisions commit the firm for a long time, typically 5 years; however the impact lasts much longer
Once a firm has committed itself to a strategy, its image and competitive advantages are usually tied to that strategy
Firms become known for what they do and where they compete. Shifting away from that can jeopardize their previous gains.

18. Dimensions of Strategic Decisions
Strategic issues are future-oriented
They are based on what managers forecast, rather than what they know
Emphasis is on the development of solid projections that will enable a firm to seek the most promising strategic options
A firm will succeed only if it takes a proactive (anticipatory) stance toward change

19. Dimensions of Strategic Decisions
Strategic issues usually have multifunctional or multi-business consequences.
Strategic decisions have complex implications for most areas of the firm
Decisions about customer mix, competitive emphasis, or organizational structure involve a number of the firm’s SBUs, divisions, or program units

20. Dimensions of Strategic Decisions
Strategic issues require considering the firm’s external environment
All businesses exist in an open system. They affect and are affected by external conditions that are largely beyond their control
Successful positioning requires that strategic managers look beyond operations and consider what relevant others are likely to do

21. Three Levels of Strategy
Corporate level: board of directors, CEO & administration [Highest]
Business level: business and corporate managers [Middle]
Functional level: Product, geographic, and functional area managers [Lowest]

22. The Nature and Value of Strategic Management
The set of decisions and actions that result in formulation and implementation of plans designed to achieve a company’s objectives

23. Nine Critical Tasks of Strategic Management
Formulate the company’s mission
Conduct an internal analysis
Assess the external environment – competitive and general contexts
Analyze the company’s options by matching its resources with the external environment
Identify the most desirable options in light of the mission

24. Select a set of long-term objectives and grand strategies that will achieve the most desirable options
Develop annual objectives and short-term strategies that are compatible with long-term objectives and grand strategies
Implement the strategic choices
Evaluate the success of the strategic process for future decision making

25. Alternative Strategic Management Structures

26. Characteristics of Strategic Management Decisions: Corporate
Often carry greater risk, cost, and profit potential
Greater need for flexibility
Longer time horizons
Choice of businesses, dividend policies, sources of long-term financing, and priorities for growth

27. Characteristics of Strategic Management Decisions: Functional
Implement the overall strategy formulated at the corporate and business levels
Involve action-oriented and operational issues
Relatively short range and low risk
Modest costs: depend upon available resources
Relatively concrete and quantifiable

28. Characteristics of Strategic Management Decisions: Business
Help bridge decisions at the corporate and functional levels
Less costly, risky, and potentially profitable than corporate-level decisions
More costly, risky, and potentially profitable than functional-level decisions
Include decisions on plant location, marketing segmentation, and distribution

29. Formality in Strategic Management
Formality is the degree to which participation, responsibility, authority, and discretion in decision-making are specified in strategic management

30. Forces Determining Formality
Organizational Size
Predominant Management Styles
Complexity of Environment
Production Process
Problems in the Firm
Purpose of the Planning System
Stage of Firm’s Development

31. Benefits of Strategic Management
Managers at all levels interact in planning and implementing strategy
Similar to participative decision making
Assessing strategy formulation requires looking at nonfinancial evaluations as well as financial ones
Promoting positive behavioral consequences enables achievement of financial goals

32. Risks of Strategic Management
Managers’ time away from other responsibilities
Unrealistic expectations promised by strategy formulators
Possible disappointment of participating subordinates if goal is not reached

33. Why Do Strategies Evolve? (Develop)
A company’s strategy is a work in progress
Changes may be necessary to react to
Fresh moves of competitors
Evolving customer preferences
Technological breakthroughs
Shifting market conditions
Crisis situations

34. Crafting Strategy Is an Exercise in Entrepreneurship
Strategy-making is a market-driven activity that involves
Studying market trends and competitors’ actions
Keen observation of customer needs
Scrutinizing business possibilities based on new technologies
Building firm’s market position via acquisitions or new product introductions
Pursuing ways to strengthen firm’s competitive capabilities
Proactively searching out opportunities to
Do new things or
Do existing things in new or better ways