Role and aspects of strategic management

ROLE AND ASPECTS OF STRATEGIC MANAGEMENTPRESENTED BYSIMRAN KAURMBA2ND YEAR

STRATEGY SHAPING CHARACTERISTICS OF e-COMMERCE ENVIRONMENT

Impact on competitive rivalry Impact on barriers to entry Impact on bargaining power of buyers Impact on supplier bargaining power and supplier-

seller collaboration Lower variable costs Global competition and wider market

E-COMMERCE BUSINESS MODEL AND STRATEGIES

Pure dot-com strategies “Brick-and-click” strategies Merchant model Brokerage model Advertising model Mixed model Infomediary model Subscription model

INTRA-BUSINESS E-COMMERCE

Added value Differentiation Cost leadership Focus Market penetration Growth source

BUSINESS-TO-BUSINESS E-COMMERCE

Added value Differentiation Cost leadership Focus

BUSINESS-TO-CONSUMER E-COMMERCE

Added value Differentiation Focus Growth source

VALUE CHAIN E-COMMERCE

Value-added Differentiation Cost leadership Focus Growth source

ROLE OF STRATEGIC MANAGEMENT IN MARKETING

Key is the understanding of consumer’s needs, the inducement of new necessities, and triggering of purchasing behavior

Complete and unbeatable plan or instrument designed specifically for attaining the marketing objectives of the firm

Always designed for particular segment of customers Focal point at every stage so as to ensure that

products/services offered by the organization are in consonance with the customers’ demands

NATURE OF MARKETING STRATEGIES

Dynamic Futuristic Complex Direction Interpretative Top management blueprint

DECISIONS RELATED TO MARKETING STRATEGY

Marketing intelligence Product Pricing Promotion Integrative and systematic factor Organization and infrastructure Place New product development Segmentation

PROCESS OF DEVELOPING MARKETING STRATEGY

1. Segmenting the market2. Selecting the target market3. Positioning the offer4. Assembling the marketing mix

IMPORTANCE OF MARKETING STRATEGIES

Role of marketing strategy Streamlines product development Helps to determine optimal prices Establishes effective distribution Assists with marketing communication

ROLE OF STRATEGIC MANAGEMENT IN FINANCE

Focus on long-term financial health Integrates financial management functions into

business strategy and every other part of an organization’s operation

Defined as “the application of financial techniques to strategic decisions in order to help achieve the decision-maker’s objectives”

Assesses complex decision-making necessary at the higher levels of management, including evaluating and setting up reward systems for subordinates and other personnel, evaluating expansion opportunities, mergers and acquisitions, spin-offs and sales of existing assets, and making decisions on complex investment opportunities and managing risk

FUNCTIONS OF STRATEGIC FINANCIAL MANAGEMENT

Strategic or tactical Operational Continual search for investment opportunities Selection of most profitable opportunities Analysis of financial results

DECISIONS RELATED TO FINANCIAL STRATEGY

Financial intelligence Usage of funds Tax management Equity management Working capital management Relationship management Organization infrastructure Pension fund management Long-term debt financing Risk management Sources of funds Management of funds Capital budgeting

IMPORTANCE OF STRATEGIC FINANCIAL MANAGEMENT

Understand limitations of traditional accounting models

Contribute more effectively to corporate strategy React to conditions of rapid change Understand and use alternative expressions of profit Understand different relationships between profits,

expansion and cashflow model

ROLE OF STRATEGIC MANAGEMENT IN HUMAN RESOURCES

Refers to the human resource management in a proactive manner and describes the organizational objectives and strategies in order to make effective utilization of human resources for attaining business goals

Formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims

NATURE OF STRATEGIC HRM

Long-term focus Associated with goal setting Interrelated with business strategies Fosters corporate excellence skills

DECISIONS RELATED TO HR STRATEGY

HRM intelligence Recruitment of right personnel Organizational appraisal Development of personnel Motivation system Personnel mobility Industrial relations Organization infrastructure

IMPORTANCE OF STRATEGIC HRM

Cost-effective engagement of labor Meet changing needs Provides clear-cut goals, direction and future focus Ensures optimum utilization of organizational

resources Enhances coordination Develop base for measurement Planning and executing organizational changes

ROLE OF STRATEGIC MANAGEMENT IN GLOBAL COMPETITIVENESS

It is achieved when a firm successfully formulates and implements a value creating strategy

A firm has a competitive advantage when it implements a strategy competitors are unable to duplicate or find it too costly to try to imitate

Vital to economy and to business Must use scarce resources wisely to maintain the

lowest possible cost; constantly anticipate frequent changes in customers’ preferences; adopt rapid technology changes and become more agile, identify , emphasize and effectively manage

RULES OF ACHIEVING GLOBAL COMPETITIVENESS THROUGH STRATEGIC MANAGEMENT

1. Keep it simple, make it concrete2. Debate assumptions, not forecasts3. Use a rigorous framework , speak a common

language4. Discuss resource deployments early5. Clearly identify priorities6. Continuously monitor performance7. Reward and develop execution capabilities

IMPORTANCE OF GLOBAL COMPETITIVENESS

Assesses the ability of countries Renew and regenerate Provide new insight on competitiveness Face challenge of international competition Re-assess products, customers, markets and rivals

ENVIRONMENTAL SCANNING

Process by which organizations monitor their relevant environment to identify opportunities and threats affecting their business

Monitoring internal and external environment Useful for evaluating present strategy, setting

strategic objectives and formulating future strategies SWOT analysis is one of the major techniques for

environment scanning

NEED OF ENVIRONMENTAL SCANNING

Identification of strength, weakness, opportunity and threat

Optimum use of resources Survival and growth Plan long-term business strategy Decision-making

PROCESS OF ENVIRONMENTAL SCANNING

1. Identifying environmental factors2. Scanning and selecting relevant and key factors3. Defining variables for analysis4. Using different methods, techniques and tools5. Forecasting environmental factors6. Designing profiles7. Strategic position and report writing

ETOP ANALYSIS

W.F.Glueck prepares Environmental Threat and Opportunity Profile(ETOP)

Helps business identify the opportunities and threats in the business environment on the basis of which competitive strategies can be formulated

Involves dividing the environment into different sectors and then analyzing the impact of each sector in the organization

QUEST ANALYSIS

Acronym for “Quick Environmental Scanning Technique”

Future research process designed to permit executives and planners in an organization to share their views about trends and events in future external environments that have critical implication for organization’s strategies and policies

Systematic, intensive and relatively inexpensive way

SWOT ANALYSIS

Simple and widely used tool that helps in understanding strengths, weaknesses, opportunities and threats

Provides an overall view of company’s environment Strengths and weaknesses are usually internal to the

organization, while opportunities and threats are usually external

PEST ANALYSIS

Stands for “Political, Economic, Social and Technological analysis”

PEST factors combined with external micro-environmental factors and internal drivers can be classified as opportunities and threats in a SWOT analysis

Referred to as “PESTEL” in UK which stands for “Political, Economic, Social, Technological, Environmental, Legal factors”

OCP: ORGANIZATIONAL CAPABILITY PROFILE

OCP: ORGANIZATIONAL CAPABILITY PROFILE

Related to internal strengths and weaknesses Expressed in numerical form by assigning degrees or

values along say a five-point scale Negative rating for weaknesses and positive rating for

strengths Significance of the factor to the organization has been

expressed in terms of ‘0’(for neutral), ‘-’ (for negative), ‘+’ (for positive)

SAP: STRATEGIC ADVANTAGES PROFILE

Known as Critical Success Factors Provides a “picture of the more critical areas which

can have a relationship to the strategic posture of the firm in the future”

Tool for making systematic evaluation of the strategic advantage factors which are significant for the company in its environment

INDUSTRY ANALYSIS

Primary focus is on increasing market share within defined industry boundaries, and the competition is defined as those competitors who directly compete with them in individual product or service categories

Buyers, suppliers and competitors form substance of a firm’s industry environment

Porter’s Five Forces Model as a framework for analyzing the competitive forces within industry

FACTORS ANALYSED IN INDUSTRY ANALYSIS

Industry environment Industry structure Industry attractiveness Industry performance Industry practices Emerging trends and likely future

SIGNIFICANCE OF INDUSTRY ANALYSIS

Industry attractiveness Competitive position Environmental survey becomes complete Serves as an introduction to strategy formulation Helps firm identify and build competitive advantage

COMPETITIVE INTELLIGENCE

Refers to the techniques for systematically discovering, monitoring, and analyzing both behaviors of competing firms and structure of marketplaces where the firms compete

Establishes the types and sources of competitive information, continuously collects, validates, interprets, organizes, and distribute information, and is responsive to queries and feedback

Gathering information on a company’s competitors

PROCESS OF COMPETITIVE INTELLIGENCE

1. Setting the objectives2. Collecting and organizing the data3. Analyzing and interpreting the data

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