Introductiontostrategicmanagement 110816041549 Phpapp02

STRATEGIC MANAGEMENT
LECTURE 1 : Introduction to Strategic Management Dr.K.Prabhakar
Strategic Management
8/10/2011
1-1
8/10/2011
1-2
Why do some firms succeed while others fail? What is strategy?
A central objective of strategic management is to learn why this happens. An action a company takes to attain superior performance. In this context it means allocations of resources. Resources may be same but if they are combined in different ways some get superior performance; some get ordinary performance. Strategic Management studies the ways to make superior performance. The process by which managers choose a set of strategies for the enterprise to pursue its vision.
What is the strategic management process?
8/10/2011
1-3
What's the use of running if you are not on the right road- German proverb If you do not know where you come from, you do not know where you stand, if you do not know where you stand, you do not know where you go- Chinese Proverb To run in a right road to reach your destination is strategy.
8/10/2011
1-4
However beautiful the strategy, you should occasionally look at the results -Sir Winston Churchill 1874-1965, English statesman Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances -Sun Tzu c. 490 BC, Chinese
military strategist
8/10/2011
1-5
8/10/2011
1-6
Sam Walton started it in the year 1962. For the fiscal year ending January 31, 2011, WalMart reported a net income of $15.4 billion on $422 billion of revenue with a 24.7% gross profit margin) Net profit margin3.78% Operating margin6.05% EBITD margin-7.87% Return on average assets-9.09%R Return on average Equity22.09% Employees2,100,000
8/10/2011
1-7
Location Information systems Logistics Human Resources Practices; Empolyee stock options at a discounted price to that of market price Bar code technology and checkout scanners Shifting unsold stock EDLP Low Prices from Suppliers- Information to Suppliers
8/10/2011
1-8
8/10/2011
1-9
Walmart (WMT)
Target (TGT)
Costco (COST)
Family Dollar (FDO)
Revenue Growth Avg. Gross Margin Operating Margins Net Margin Dividend Growth EPS Growth FCF Growth Payout Ratio Cash Payout Ratio Share BuyBacks Current Ratio Book Value Total Debt / Equity Avg. Return on Equity Avg. Cash Return on Capital 5 Year Avg. Low p/e Current p/e (ttm) Current p/e (forward)
8.57% 23.83% 5.83% 3.4% 18.11% 11.28% 29.4% 29% 30.05% -3.57% 0.87 $18.81 0.52 20.77% 6.25% 14.01 14.8 13.29
6.51% 32.58% 7.51% 4.27% 13.03% 10.07% N/A 20% 12.18% -4.65% 1.63 $20.33 0.75 18.89% 1.36% 12.39 16.68 14.04
9.28% 12.44% 2.72% 1.75% N/A 9.4% N/A 26% 19.86% -1.67% 1.16 $24.56 0.20 12.51% 6.31% 17.05 24.20 Strategic Management 21.22 8/10/2011
8.76% 33.87% 6.74% 4.25% 10.6% 10.02% 69.90% 23% 21.62% -5.7% 1.57 $10.41 0.18 19.62% 14.86% 11.79 16.38 13.76 110
http://www.youtube.com/watch?v=dp0O9jxLS64
You can see here the movie that projects the negative image about Wal Mart.
8/10/2011
111
Rated as the 50 fastest growing business to be observed in the world Started by IIT IIM graduate and Professionally managed. Ajim Premji Invested in the organization rama bijapurkar was in the board Ultimately left with lost of court cases and operations are closed across India.
8/10/2011
112
Do you know the from where the CEO of Big Bazar got his idea? It is from Saravan Stores in Chennai; Saravana Stores operates on EDLP Mode and everyone goes there for low prices with high quality. It has on thousand shops across India in 70 cities. Its formats are Its formats include; 1.Pantaloons 2.Big Bazaar-Indian hypermarket chain 3. Food Bazaar- which is a supermarket chain 4.Central, which is a chain of destination malls. 5.Brand Factory 6. Blue Sky 7. aLL 8.Star 9.Sitara. Read his book It happened in India.
8/10/2011
113
8/10/2011
114
8/10/2011
115
8/10/2011
116
Dr.Devdutt Patnaik is an Atheist turned mythologist. He is the Chief Belief Officer at Future Group. He uses mythology to bring to life different aspects of corporate life. Future group looks for Duryodhanas in organization Definition of Duryodhana- Duryodhanas are employees who play by the rules but whose intentions and integrity are questionable.
Strategic Management 8/10/2011 117
You need to be familiar with Geetha. Its focus is Do you work or Dharma and do not expect results! It is something quiet opposite to the market economics. How does it work in India with Globalization? It works! It worked wonders for Future group. The Concept of Dharma does have its roots in caste system; for time being we should suspend its painful impact on Indian society. However, the concept of Dharma has many good aspects and it has been accepted in Future group.
118
8/10/2011
8/10/2011
119
Some of them are internalized in the Indian psyche. Athidi Devobhava- Guest is the God. Anna data sukibhava The person who gives food should always be great. (Comments are by me) Think on these lines and give your ideas.
8/10/2011
120
Retail is our religion. Customers are our gods. The stores are our temples. In every temple, there are rituals, there are customs. We have to enshrine customers as our gods in our minds. Devdutt will dip into Indian mythology and help us create these rituals, symbols and vocabulary, says Biyani, who, in his own words, is a borderline atheist who has neither prayed since his early teens nor visited a temple. But that does not stop him from understanding or harvesting the power of mythology in a country where there is an auspicious time, method and place for doing everythingwaking up, bathing, marrying and even dying.
121
8/10/2011
Take the Kartha ceremony the group has put in place. Kartha in Sanskrit means creator or the head of a family. Every time somebody is hired to head a Future Group store, he or she is anointed as a Kartha. That does not just translate to a fancy designation on a rectangular visiting card. Its much more. We seat the Kartha on a chair and all the employees stand around him. His family memberswife, siblings and parentsare invited to the ceremony. His boss reads him out his duties as a Kartha, which is to ensure the welfare and happiness of employees and customers, - Sanjoy Jog, Chief People Officer, Future Group.
It just aligns the mind of the person who has all these aspects ingrained in him. Question: Do we have neurological basis for this? Read the book Habit: the 95% of Behavior Marketers Ignore
8/10/2011
122
They demacdonandized the retailing in India. Example: No women in north India likes a person to put saree on her shoulder to see herself in the mirror. However, it will be a cutomer delight in Tamilnadu for a women to see the saree being put on her shoulder. Same country two strategies to meet customer needs. Can you imagine single largest retails stores in the world to have highest trunover? It is Nalli Silks. ( We will study Nalli case study soon)
Biyani has great intuition about the intuitive sense of India. What I have is a vocabulary. We clicked because our understanding of Indian-ness matched, says Pattanaik, who believes that Indian businesses are aping the west by putting too much emphasis on processes over intuition and culture. You cannot standardise a smile. We cannot and should not have standard operating proceedures for something which should be natural.
124
8/10/2011
Subhisha had the same access towards resources as future group. However, Future Group used it differently. It brings out the difference between resources and resourcefulness. Coke formula was sold by Pemberton for 2300$ and died as a papuer in Atlanta; Presently its brand value is 150 billions!
( Please read http://www.slideshare.net/kprabhakar975/differencebetween-2300116billion-entrepreneurship )
8/10/2011
125
655 VS552 VS 347 Air Craft South West Airline Model (Low cost Model) Revenue Management Model ( British Airways later poineered by American Airlines ) Indian Airlines
8/10/2011
126
Strategy is a set of related actions that managers take to increase organizations performance. If it results in superior performance to that of its rivals it is said to have competitive advantage. Example: Wal Mart, American Airlines, Airtel
8/10/2011
127
What is a strategy? How to create strategies that lead to superior performance? How to implement? How you have to relate to the environment? Why strategy?
8/10/2011
128
How to most effectively manage a
organizational strategy making process to create competitive advantage.
8/10/2011
129
Unless a variety of opinions are laid before us, we have no opportunity of selection, but are bound of necessity to adopt the particular view which may have been brought forward
Herodotus, 5th century BC, Greek historian
8/10/2011
130
SMP is the process by which managers select and then implement a set of strategies that aim to achieve a cometitive advantage. Strategy formulation is selection of strategies Strategy implementation is the task of putting strategies in to action; it includes designing; delivering; and supporting products; improving efficienty and effectiveness of organiztions; desinging organizational structure; Control systems and culture.
131
8/10/2011
Strategy
formulation is is 10% implementation is 90%.
8/10/2011
132
Rational planning by top management?
Basic Strategic Planning Model

Defining the Mission and Setting Top-Level Goals External Analysis of Opportunities and Threats Internal Analysis of Strengths and Weaknesses Selection of Appropriate Strategies Implementation of Chosen Strategies
8/10/2011
134
8/10/2011
135
Mission
Sets out why the organization exists and what it should be doing from point of view of customer.
Major goals
Specify what the organization hopes to fulfill in the medium to long term.
Objectives
Are objectives to be attained that lead to superior performance.
8/10/2011
136
Perception is strong and sight is weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.Miyamoto Musashi 1584-
1645, legendary Japanese swordsman
8/10/2011
137
Identify strategic opportunities and threats in the operating environment.
8/10/2011
138
Identify strengths
Quality and quantity of resources available Distinctive competencies
Identify weaknesses
Inadequate resources Managerial and organizational deficiencies
8/10/2011
139
Cost leadership
Attaining, then using the lowest total cost basis as a competitive advantage; Example of Intel
Differentiation
Using product features or services to distinguish the firms offerings from its competitors;Apple Computers
Market niche focus

Concentrating competitively on a specific market segment; Nala Appakadai
8/10/2011
140
Focus is on improving the effectiveness of operations within a company.

Manufacturing Marketing Materials management Research and development Human resources
8/10/2011
141
Multidomestic International Global Transnational
8/10/2011
142
Vertical integration Diversification Strategic alliances Acquisitions New ventures Business portfolio restructuring
8/10/2011
143
In real life, strategy is actually very straightforward. You pick a general direction and implement like hell-Jack Welch in Winning, 2005
8/10/2011
144
Designing organizational structure Designing control systems

Market and output controls Bureaucratic controls Control through organizational culture Rewards and incentives
Matching strategy, structure, and controls

Congruence (fit) among strategy, structure, and controls
8/10/2011
145
The only constant is change. Success requires adapting strategy and structure to a changing world.
8/10/2011
146
General managers
Responsible for the overall (strategic) performance and health of the total organization.
Operations managers
Responsible for specific business functions or operations.
8/10/2011
147
8/10/2011
148
Vision, eloquence, and consistency Commitment to the vision Being well informed Willingness to delegate and empower Astute use of power Emotional intelligence
8/10/2011
149
Strategy making in an unpredictable world Strategy making by lower-level managers

Creates the necessity for flexible strategic approaches.
Serendipity and strategy
Strategy evolves through autonomous action.
Intended and emergent strategies
Accidental discoveries and happenstances can have dramatic effects on strategic direction.
Realized strategies are combinations of intended and emergent strategies.
8/10/2011
150
FIGUR 1.3
Five Ps of Strategy 1. Plan 2. Ploy 3. Pattern 4. Position 5. Prespective
8/10/2011
152
FIGURE 1.4
Please read case study by me on 3M
8/10/2011
154
Planning under uncertainty Ivory tower planning
Scenario planning for dynamic environmental change

Lack of contact with operational realities The importance of involving operating managers Procedural justice in the decision-making process
Engagement, explanation, and expectations
Planning for the present: Strategic Intent
Recognition of the static nature of the strategic fit model Strategic intent in focusing the organization on winning by achieving stretch goals
155
8/10/2011
Cognitive biases systematically influence the rationality of decision makers;Psychologists have articulted more than fifty cognitive biases.
FIGURE 1.5 ( Adopted from Strategic Mangement by Hill and Jones, 2009 e )
I claim not to have controlled events, but confess plainly that events have controlled me- Abraham Lincoln 1809-1865, sixteenth
American president
8/10/2011
157
Pitfalls of groupthink
Failing to question underlying assumptions. Coalescing around a single person or policy. Filtering out conflicting information. Developing after-the-fact rationalizations. Having an emotional (nonobjective) commitment to an action.
8/10/2011
158
Two decisionmaking processes that counteract cognitive biases and groupthink.
FIGURE 1.6
How to create strategic alternatives How to select alternative that is most suitable for organization Implement the strategies that will help the stakeholders to maximise their wealth.
8/10/2011
160

Introductiontostrategicmanagement 110816041549 Phpapp02

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Introductiontostrategicmanagement 110816041549 Phpapp02

Diunggah oleh

Hak Cipta:

Format Tersedia

STRATEGIC MANAGEMENT

LECTURE 1 : Introduction to Strategic Management Dr.K.Prabhakar

Why do some firms succeed while others fail? What is strategy?

What is the strategic management process?

Family Dollar (FDO)

How to most effectively manage a

organizational strategy making process to create competitive advantage.

Herodotus, 5th century BC, Greek historian

formulation is is 10% implementation is 90%.

Rational planning by top management?

Basic Strategic Planning Model

1645, legendary Japanese swordsman

Identify strategic opportunities and threats in the operating environment.

Market niche focus

Focus is on improving the effectiveness of operations within a company.

Multidomestic International Global Transnational

Designing organizational structure Designing control systems

Matching strategy, structure, and controls

Strategy making in an unpredictable world Strategy making by lower-level managers

Serendipity and strategy

Strategy evolves through autonomous action.

Intended and emergent strategies

Realized strategies are combinations of intended and emergent strategies.

Five Ps of Strategy 1. Plan 2. Ploy 3. Pattern 4. Position 5. Prespective

Please read case study by me on 3M

Planning under uncertainty Ivory tower planning

Scenario planning for dynamic environmental change

Planning for the present: Strategic Intent

Two decisionmaking processes that counteract cognitive biases and groupthink.

Anda mungkin juga menyukai