01 DS Introduction to Strategic Mgmt

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Basic Concepts of

Strategic Management

By Deepak Sharma


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Origin The word strategy has been in use since Sun Tzuwrote the Art of Warin the fourth Century B.C.

Sun Tzu was talking about military

strategy.

The word strategy has been derived from strategos in Greek, which

means art of the army general, or art of deploying army.

Strategy signified the skill of planning the movements of armies before

actual battle starts !

In 1960-70s the term strategy was used in business due to theoutstanding work of Porter, Drucker, Mintzberg, DAvine

Who saw business as a WAR and the Market the BATTLE

GROUND for a business.


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What is Strategy?

Sales

Time

PLC

Introduction

Growth

Maturity

Decline

Entire emphasis is on sustaining the business by generating demand

The organisation tries to build systems which can make day to day

operational decisions.Now top management wants to secure its position by grooming and

developing competencies which cannot be copied easily.

This is making strategy!


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Von Neumann and Morgernstern

Thought of strategy as an elaborated game of moves and countermoves, bluffs

and counterbluffs, between competing yet independent Business.

Bryson

A strategy is defined as a pattern, of purposes, policies, programmes, actions,decisions, or resource allocations that define what an organisation is, what it does,

and why it does it. Strategies can vary by level function, and by time frame.

Kenneth AndrewsStrategy is the pattern of objectives, purposes, or goals, stated in such a way

as to define what business the company is in or is to be in and the kind of

company it is or is to be.

The determination of the long-run goals and objectives of anenterprise, and the adoption of courses of action and theallocation of resources necessary for carrying out these goals.

Alfred Chandler


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define a strategy as thepattern orplan that integrates an organizations majorgoals, policies, and action sequences into a cohesive whole. The strategy helps to

marshal and allocate an organizations resources into a unique and viable posturebased on its relative internal competencies and shortcomings.

The essence of strategy is choosing to perform activities differently than rivals

do.

Michael Porter (1996)

takes the view that strategy is not only the creation of advantage but also the creative

destruction of the opponents advantage.

DAveni (1994)

Glueck,A unified , comprehensive and integrated plan designed to assure that thebasic objectives of the enterprise are achieved.

Kenneth Andrews


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In Fact its difficult to define strategy in one way so different

approaches are used

Strategy is

a plan or a direction, a guide or course of action into the future to achieve

specific objectives.

a path to get from current position to desired position.

a pattern that is consistent in behavior over time.

a perspective, namely an organizations fundamental way of looking at

things.

a position, i.e it reflects decisions to design a particular product fora particular market,

or how an organisation will offer value to its customers or how to compete.

These are called as 5 Ps of Strategy.


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Strategy is A Plan that is intended to achieve a particularpurpose.

Plan is consciously developed course of action

Are all plans Strategy?

No! Strategy has a pattern which is consistentin behaviour over a time span.

For example

Amitab Bachan in 70s Signed only angry young mans

movies .

Just as ford Motor offered his model T only in Black.

Plans dont have a pattern, they are independent of previous plans.

Picasso painted blue pictures

Amir Khan does only one movie at a time

Strategy starts with identifying desired ends and then working it backwards

plans dont start with ends.


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Strategy in general refers to

How a given objective will be achieved, it is concerned withthe relationship between ends and means; i.e. between the

results we seek and resources at our disposal.

Is concerned with long term plan.

Is consistent over time i.e. does not change.

Comes from top levels.


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What is Strategy in Management?

A companys strategy consists of the set of competitive movesand business approaches that management is employing to

run the company

Strategy is managementsgame planto

To earn above average ROI.

Stake out unique and valuable market position.

Conduct activities differently to create unique value.

Compete successfully by offering more value.

Achieve organizational objectives.

Attract and please customers.


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Strategic Management

Defined:Set of managerial decisions andactions that determines the long-

run performance of a firm.

In essence, strategic Management has

to do with understanding where anorganizationwill go in the future and how it will

get there.


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trengths

WeaknessOpportunities

ThreatsInternal FactorsExternal Environment


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First, strategy should include a clear set of long term goals.

Second it should define the scope of the business ( in terms of

the types of products the firm will serve, or in terms of need

that is satisfied by the firms products etc.)

Thirdly, a strategy should have a clear statement of what or

which competitive advantage it will achieve and sustain.

Finally, the strategy must represent the firms internal contest

that will allow it to achieve a competitive advantage in the

environment in which it has chosen to compete.

Strategic Management has Four basic Characteristics

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Thinking Strategically:The Three Big Strategic Questions

Where are we now?

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?

How do we get there?

Most Important


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Be Careful

Top

Mgmt.

Strategic Manager


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A Review

1. Is their any relationship between the size of an organisation

and the strategy formulation.

2.

Impact of LPG crisis(1991) on strategy of IndianCompanies like TATA Automobiles, BPL , & ONGC.

3.

The management scholar in 2001 put 1,435 good

companies through a rigorous performance analysisand discovered only 11 became great. Why?Sales Figs can be misleading


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McDonald's is a classic case in this regard! In the early1960s, by redefining the way that hamburgers would beprepared and sold, and by being first to market, it created the

fast food industry. And until new entrants into the marketsubsequently forced it down one step in the profit ladder, itwas an amazingly profitable business! Today McDonald's isbut one important differentiated brand name among anexpanded field of important brand names. Similarly, as aresult of its thirty-minute delivery innovation, Domino's Pizzain its early days enjoyed the above-average profits of a nichemarketer. Once again, competition subsequently arose thusreducing Domino's original niche position to the more

conventional differentiation level. The fact of entropy exists,then, in both the physical and the economic world.


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Chapter 3

InternalEnvironment

Chapter 2

External

EnvironmentThe Strategic

Management

Process

Strategic Intent

Strategic Mission

Strategic

Competitiveness

Above Average

Returns

Feedback

Strategy Formulation

Chapter 4Business-Level

Strategy

Chapter 5Competitive

Dynamics

Chapter 6Corporate-Level

Strategy

Chapter 8

International

Strategy

Chapter 9

CooperativeStrategies

Chapter 7

Acquisitions &

Restructuring

Strategy Implementation

Chapter 10Corporate

Governance

Chapter 11Structure

& Control

Chapter 12

Strategic

Leadership

Chapter 13Entrepreneurship

& Innovation

Strategic

Inputs

Strategic

Actions

Strategic

Outcomes

Documents

01 DS Introduction to Strategic Mgmt