STRATEGIC MANAGEMENT

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STRUGGLE FOR EXISTENCE AND GROWTH

RULES OF COMPETITION CHANGE INDUSTRY BOUNDRIES ARE REDRAWN NEW INDUSTRIES AND PRODUCTS ARE CREATED ESTABLISHED INDUSTRIES ARE REINVENTED

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COMPANIES MAY CHANGE THEIR

VISION OBJECTIVES STRUCTURE PORTFOLIO OF BUSINESS MARKETS AND COMPETITIVE STRATEGIES

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STRATEGIC MANAGEMENT IS A BROADER TERM THAN CORPORATE STRATEGY

STRATEGIC MANAGEMENT CONSISTS OF CORPORATE STRATEGY AND BUSINESS STRATEGY

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STRATEGIC MANAGEMENT INVOLVES

DECISION - MAKING AND THE ACTIVITIES WHICH
HAVE WIDER RAMIFICATIONS HAVE A LONG TIME PERSPECTIVE USE CRITICAL RESOURCES TOWARDS PAINE AND NAUMES PERCEIVED OPPORTUNITIES AND THREATS

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ESSENCE OF STRATEGY
DISTINCTIVELY DIFFERENT FROM THE COMPETITORS

PORTER, HAMEL, PRAHLAD

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A COMPANY CAN CONTROL ITS OWN DESTINY IF IT UNDERSTANDS HOW TO CONTROL THE DESTINY OF ITS INDUSTRY
HAMEL, PRAHLAD

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TO CREATE THE FUTURE A COMPANY MUST

CHANGE IN SOME FUNDAMENTAL WAY THE RULES OF ENGAGEMENT IN A LONG STANDING INDUSTRY REDRAW THE BOUNDARIES BETWEEN INDUSTRIES CREATE ENTIRELY NEW INDUSTRIES

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STRATEGIC PLANNING
TOP MANAGEMENT DETERMINES ORGANISATIONAL OBJECTIVES,STRATEGIES NEEDED TO REACH THESE OBJECTIVES TOP LEVEL ACTIONS NECESSARY TO IMPLEMENT THE STRATEGY PROPERLY

TACTICAL PLANNING
SHORT RANGE PLANNING THAT IS ORIENTED TOWARDS OPERATIONS AND IS CONCERNED WITH SPECIFIC AND SHORT RANGE DETAILS

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STRATEGIC BUSINESS UNIT ( SBU )

( OPERATING DIVISION OF A FIRM )

AND

SERVES A DISTINCT PRODUCT SERVES A DISTINCT MARKET SEGMENT SERVES A DISTINCT GEOGRAPHICAL AREA

FORMULATES OWN STRATEGIC DECISIONS WITHIN CORPORATE GUIDELINES

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CLASSES OF DECISIONS 1. OPERATING DECISIONS

TO MAXIMISE THE EFFICIENCY OF THE FIRMS RESOURCES CONVERSION PROCESS

2.

STRATEGIC DECISIONS
PERTAIN TO FUNDAMENTAL QUESTIONS IN WHAT BUSINESS THE FIRM SHOULD BE IN AND HOW IT SHOULD BE IN ?

3.

ADMINISTRATIVE DECISIONS
ORGANISE AND MOBILISE FOR THE IMPLEMENTATION OF THE CORPORATE STRATEGY

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STRATEGIC DECISIONS
KEY CHARACTERISTICS 1. 2. 3. 4. DECISIONS CENTRALISED PARTIAL IGNORANCE DECISIONS NON REPETITIVE DECISIONS NOT SELF REGENERATIVE

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OPERATING DECISIONS

KEY CHARACTERISTICS
DECENTRALISED DECISIONS RISK AND UNCERTAINTY REPETITIVE DECISIONS LARGE VOLUME DECISIONS

DECISIONS SELF REGENERATIVE

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ADMINISTRATIVE
KEY CHARACTERISTICS

CONFLICT BETWEEN STRATEGY AND OPERATIONS

CONFLICT BETWEEN INDIVIDUAL AND INSTITUTIONAL OBJECTIVES STRONG COUPLING BETWEEN ECONOMIC AND SOCIAL VARIABLES DECISIONS TRIGGERED BY STRATEGIC AND / OR OPERATING PROBLEMS

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STRATEGIC DECISIONS
KEY DECISIONS

OBJECTIVES AND GOALS DIVERSIFICATION STRATEGY EXPANSION STRATEGY ADMINISTRATIVE STRATEGY FINANCE STRATEGY GROWTH METHOD TIMING OF GROWTH

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ADMINISTRATIVE DECISIONS
KEY DECISIONS
ORGANISATION
STRUCTURE OF INFORMATION AUTHORITY AND RESPONSIBILITY FLOWS STRUCTURE OF RESOURCES
CONVERSION, WORK FLOWS, DISTRIBUTION SYSTEMS , FACILITIES, LOCATION

RESOURCE ACQUISITION AND DEVELOPMENT

FINANCING, FACILITIES AND EQUIPMENT, PERSONNEL, RAW MATERIALS

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OPERATING DECISIONS
KEY DECISIONS

OPERATING OBJECTIVES AND GOALS PRICING AND OUTPUT LEVELS OPERATING LEVELS
PRODUCTION SCHEDULES INVENTORY LEVELS WAREHOUSING ETC.

MARKETING POLICIES AND STRATEGIES R & D POLICIES AND STRATEGY CONTROL

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LEVELS OF STRATEGY HAVING SEVERAL SBUs 1. CORPORATE STRATEGY

DECIDES BUSINESS PORTFOLIO

2.

SBU STRATEGY / BUSINESS STRATEGY / COMPETITIVE STRATEGY

DECISION PERTAINING TO PRODUCT MIX

3.

FUNCTIONAL STRATEGY
PRODUCTION, FINANCE, PERSONNEL, MARKETING, ETC

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LEVELS OF STRATEGY
ENTERPRISES WHICH DO NOT HAVE SBUs

1.
2.

CORPORATE STRATEGY
FUNCTIONAL STRATEGY

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TESTS APPLIED TO IDENTIFY CORE COMPETENCIES

A CORE COMPETENCE SHOULD

1.

PROVIDE POTENTIAL ACCESS TO A WIDE VARIETY OF MARKETS

MAKE SIGNIFICANT CONTRIBUTION TO THE PERCEIVED CUSTOMER BENEFIT OF THE END PRODUCT BE DIFFICULT FOR COMPETITORS TO IMITATE

2.

3.

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CHARACTERISTICS OF GLOBAL LEADERS IN THEIR ENVISIONING OF THE FUTURE

o o STRATEGY INTENT AN OBSESSION WITH WINNING

UNFETTERED BY THEIR RESOURCE CONSTRAINTS

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STRATEGIC INTENT IS MORE THAN SIMPLY UNFETTERED AMBITION ACTIVE MANAGEMENT : FOCUSES THE ORGANISATIONS ATTENTION ON THE ESSENCE OF WINNING MOTIVATES PEOPLE BY COMMUNICATING THE VALUE OF THE TARGET LEAVES ROOM FOR INDIVIDUAL AND TEAM CONTRIBUTION SUSTAINS ENTHUSIASM BY PROVIDING NEW OPERATIONAL DEFINITIONS AS CIRCUMSTANCES CHANGE USES INTENT CONSISTENTLY TO GUIDE RESOURCES ALLOCATIONS

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JAPENESE COMPANIES WHICH HAD FAR LIMITED RESOURCES THAN THE EASTERN COMPANIES HAVE BECOME GLOBAL LEADERS BECAUSE OF THEIR STRATEGIC INTENT THAT STRETCHED THEIR ORGANISATION

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APPROACHES TO STRATEGY MAKING

ON THE BASIS OF THE STRATEGIC MANAGEMENT PROCESS AND NATURE OF RELATIONSHIP BETWEEN THE CORE COMPONENTS OF THE STRATEGIC MANAGEMENT 1. 2. PRESCRIPTIVE APPROACH EMERGENT APPROACH

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PRESCRIPTIVE AND EMERGENT APPROACHES

BOTH THE APPROACHES RECOGNISE THE CORE COMPONENTS 1. STRATEGIC ANALYSIS
( CONSISTING OF SWOT ANALYSIS AND DETERMINATION OF MISSION AND OBJECTIVES )

2.

STRATEGY DEVELOPMENT
( EVALUATION OF STRATEGIC ALTERNATIVES AND CHOICE OF STRATEGY )

3.

IMPLEMENTATION

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APPROACHES TO STRATEGY MAKING

MINTZBERG HAS IDENTIFIED 3 MODES OR APPROACHES

1.
2. 3.

ENTREPRENEURIAL MODE
ADAPTIVE MODE PLANNING MODE

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IN LARGE ORGANIZATIONS
BOARD OF DIRECTORS GENERAL MANAGERS CORPORATE PLANNING STAFF EXTERNAL CONSULTANTS

MAY PLAY A ROLE IN STRATEGIC PLANNNING

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BOARD OF DIRECTORS
THE ULTIMATE LEGAL AUTHORITY IN THE BUSINESS THEY ARE RESPONSIBLE TO THE STOCKHOLDERS MANAGERS TAKE PRUDENT ACTIONS REGARDING CORPORATE OBJECTIVES APPROVING MAJOR FINANCIAL AND OPERATIONAL DECISIONS

REPRESENTING THE COMPANY WITH OTHER ORGANISATIONS

MAINTAINING , REVISING AND ENFORCING THE CORPORATE CHARTER AND BYLAWS

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THE BOARD AS A WHOLE

RESPONSIBLE TO INITIATE DISCUSSION , AGREE AND UNDERWRITE THE CORPORATIONS STRATEGIC PLANS ENSURE ITS IMPLEMENTATION THROUGH AGREED OPERATIONAL PLANS INDIVIDUAL EXECUTIVE DIRECTORS ARE RESPONSIBLE AND ACCOUNTABLE TO MEET THE TARGETS FOR SPECIFIC BUSINESSES UNDER THEIR CONTROL
Dr. A.S GANGULY CHAIRMAN ICI INDIA LTD.

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ON ANY COMPANYS BOARD THERE SHOULD BE

SOME INDEPENDENT , PROFESSIONALLY QUALIFIED NON EXECUTIVE DIRECTORS

REGULAR RETIREMENT POLICY FOR NON - EXECUTIVE DIRECTORS

( THIS IS AN ESSENTIAL PART OF CORPORATE GOVERNANCE )

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STRATEGIC MANAGEMENT IS A GENERAL MANAGEMENT FUNCTION

GENERAL MANAGERS ARE THE TOP EXECUTIVES OF THE ENTERPRISE & SBUS RESPONSIBLE FOR THE SURVIVAL AND SUCCESS OF THE ENTERPRISE

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GENERAL MANAGER

ENTREPRENEUR . . ( SETS GOALS )

STRATEGIST .. ( PLANS )

ORGANISATION BUILDER ..
LEADER

( ORGANISES )
( DIRECTS )

CHIEF IMPLEMENTER .

( ONTROLS )

THE TASK IS TO LEAD THE FIRM OR SBU

JAUCH AND GULECK

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THERE CAN AND WILL BE NO EFFECTIVE FORMAL STRATEGIC PLANNING IN AN ORGANISATION IN WHICH THE CHIEF EXECUTIVE DOES NOT GIVE IT FIRM SUPPORT AND MAKE SURE THAT OTHERS IN THE ORGANISATION UNDERSTAND HIS DEPTH OF COMMITMENT

GEORGE STEINER

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STRATEGIC MANAGEMENT PROCESS HAS THREE PHASES INVOLVING A NUMBER OF SYSTEMATIC STEPS 1. STRATEGY FORMULATION 2. IMPLEMENTATION 3. EVALUATION AND CONTROL

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FORMULATION OF MISSION & OBJECTIVES

SWOT ANALYSIS

CONSIDERATION OF STRATEGIC ALTERNATIVES

EVALUATION AND CONTROL

IMPLEMENTATION

CHOICE OF STRATEGY

STRATEGIC MANAGEMENT PROCESS

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THE ART AND SCIENCE OF FORMULATING , IMPLEMENTING AND EVALUATING CROSS FUNCTIONAL DECISIONS THAT ENABLE AN ORGANISATION TO ACHIEVE ITS OBJECTIVES.

STRATEGIC MANAGEMENT

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TERM STRATEGIC ( IN STRATEGIC MANAGEMENT ) MEANS PERTAINING TO THE RELATION BETWEEN THE FIRM AND ITS ENVIRONMENT

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ASSESSING THE SUITABILITY OF THE STRATEGY

1. DOES IT -- CONFORM WITH CORPORATE PHILOSOPHY ? 2. DOES IT -- ACCOMPLISH THE MISSION AND OBJECTIVES ? 3. DOES IT -- EXPLOIT ORGANIZATIONAL STRENGTHS AND ENVIRONMENTAL OPPORTUNITIES ? 4. DOES IT -- COMBAT ENVIRONMETAL THREATS AND OVERCOME INTERNAL WEAKNESSES ? 5. IS THE STRATEGY CONSISTENT ?

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STRATEGIC MANAGEMENT FACILITATES

BETTER DELEGATION COORDINATION MONITORING PERFORMANCE EVALUATION AND CONTROL

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CRITICISM AGAINST STRATEGIC MANAGEMENT

1. SOMETIME MAKES THE ORGANIZATOIN OVER AMBITIOUS AND THE RESULTANT FAILURE --- CAUSE FRUSTRATION

2. MAKES THE FUTURE VISION TUNNELED THAT SEVERAL OPPORTUNITIES MAY BE OVERLOOKED

3. IT MAKES THE WHOLE APPROACH VERY RIGID

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EFFECTIVE IMPLEMENTATION OF STRATEGY DEMANDS

1. RESOURCE ALLOCATION

2. LEADERSHIP IMPLEMENTATION
3. RIGHT STRUCTURE

4. EFFECTIVE EVALUATION AND CONTROL

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ACCORDING TO PETER DRUCKER STRATEGIC PLANNING

IT IS NEITHER A BOX OF TRICKS NOR A BUNDLE OF TECHNIQUES IT IS NEITHER FORECASTING NOR MASTERMINDING THE FUTURE IT DOES NOT DEAL WITH THE FUTURE DECISIONS IT NEITHER ELIMINATES RISK NOR MAKES AN ATTEMPT TO MINIMISE RISK

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PRINCIPLES OF GOOD STRATEGY

A GOOD STRATEGY IS CONCERNED WITH THE STRUCTURAL EVOLUTION OF THE INDUSTRY, AND FIRMS OWN UNIQUE POSITION WITHIN THAT INDUSTRY. A GOOD STRATEGY MAKES THE COMPANY DIFFERENT INVOLVING THE DELIVERY OF A PARTICULAR MIX OF VALUE. ACOMPANY HAS GOT TO BE DIFFERENT IN WAYS THAT INVOLVE TRADE-OFFS.AND MUST BE INCONSISTENT WITH DELIVERING OTHER TYPES OF VALUES.

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ENVIRONMENTAL CHANGES THAT HAVE INCREASED THE RELEVANCE OF STRATEGIC MANAGEMENT

ABOLITION OF PUBLIC SECTOR MONOPOLY

DELICENSING HAS REMOVED BARRIER ON ENTRY AND GROWTH. SCRAPPING OF MOST OF THE MRTPA RESTRICTIONS ON ENTRY, GROWTH AND M & A s LIBERALISATION IN OTHER COUNTRIES, THE EXPANDING FOREIGN MARKETS GRANT OF MORE AUTONOMY TO THE PUBLIC SECTOR ENTERPRISE

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LIBERALIZATION ON

INDUSTRIAL POLICY IMPORTS MRTPA

POSING SURGING THREATS TO MANY EXISTING BUSINESSES

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THE ESSENTIAL CHARACTERISTICS OF TQM ARE

A CUSTOMER DRIVEN DEFINITION OF QUALITY STRONG QUALITY LEADERSHIP EMPHASIS ON CONTINUOUS IMPROVEMENT RELIANCE ON FACTS, DATA , AND ANALYSIS ENCOURAGEMENT OF EMPLOYEES PARTICIPATION

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SUCCESSFUL IMPLEMENTATION OF TQM LEADS TO

CUSTOMERS LOYALTY ORGANIZATION RESPONDING TO PROBLEMS , NEEDS AND OPPORTUNITIES ENCOURAGES TEAM WORK AND MAKES WORK MORE SATISFYING

DEVELOPMENT OF GENERAL ETHIC OF CONTINUOUS IMPROVEMENT

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TQM FORCES TO INCLUDE INTO THE PROCESS OF FORMULATING STRATEGY

CUSTOMERS PERSPECTIVE

COMPETITORS PERSPECTIVE

SUPPLIERS PERSPECTIVE

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CARDINAL PRINCIPLE OF TQM

CUSTOMER NEEDS

CUSTOMER PREFERENCES

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A TOTAL QUALITY MANAGEMENT INITIATIVE AFFECTS EVERY STEP IN THE STRATEGIC MANAGEMENT PROCESS IT FOCUSSES
1 2. 3. FIRMS ENVIRONMENTAL ANALYSIS ORGANISATIONS VISION AND MISSION KEEPING OBJECTIVES TIED SECURELY TO CUSTOMERS NEEDS