STRATEGIC MANAGEMENT

Revision Package
Birat Shrestha/ Resta Jha
MBA, KFA [Lincoln University]
March 2020 Saturday, 9:30AM-1:00/2:00PM
Thursday 10AM/11AM – 7AM/6PM
Sessions: Class/Skype/Zoom
Strategy and Strategic Management
• A strategy of a corporation forms a
comprehensive master plan stating how the
corporation will achieve its mission and
objectives
• It is formulating, implementing, and evaluating
cross-functional decisions that enable an
organization to achieve its objectives
• It is developing a competitive advantage
 Strategic Management Model
Environmental Strategy Evaluation
Strategy Formulation and Control
Scanning Implementation

INTERNAL
Mission
Structure
Chain of Command What
Culture results to Vision
accomplis
Beliefs, Reason
Strategies
h by
Expectations, Values when for
Plan to Policies
Resources existence
achieve
Assets, Skills, the Broad
Competencies, mission & guidelines
Programs
Knowledge objectives for
decision Activities
needed to Budgets
making
accomplish
a plan Cost of
Procedures
the
EXTERNAL program
Societal Sequence
of steps Performance
Environment: needed to
General Forces do the job Actual
Task Environment results
Industry Analysis

Feedback/Learning
 Strategic Decision Making Modes

Strategic Decision Making Modes Strategic Management Levels

• Entrepreneurial mode • Corporate Level Strategy

• Adaptive mode • Business Level Strategy
• Planning mode • Functional Level Strategy
• Logical incrementalism
Corporate Governance & BOD
• Corporate governance refers to the relationship among
investors, management, and directors as a
representative of shareholders, in determining the
direction and performance of the corporation
• Role of BOD
– Setting corporate strategy, overall direction, mission, or
vision
– Hiring and firing the CEO and top management
– Controlling, monitoring, or supervising top management
– Reviewing and approving the use of resources
– Caring for shareholder interests
Value Chain Diagram
 Entry Barriers Substitute Products
Five Forces of Industry Analysis
Brand identity Performance
Capital Switching costs
Network Buyer’s propensity to
Government policy substitute
Rivalry
Determinants

Industry growth
Product differences
Competitors
diversity
Supplier Power Exit barriers
Buyer Power
Number of suppliers
Buyer switching costs
Input differentiation
Buyer information
Importance of volume
Options available
to suppliers
Buyer volume
Environmental Scanning
1. Internal Strengths and Weaknesses
2. External Opportunities and Threats
[ETOP – Environmental Threat and Opportunities Profile]

Environmental Factors Impact

Political environment Opportunities [+] Threats [-]

Economical environment Opportunities [+] Threats [-]

Socio-cultural environment Opportunities [+] Threats [-]

Technological environment Opportunities [+] Threats [-]

Legal environment Opportunities [+] Threats [-]

 Strengths Weaknesses

Competence Poor track

Internal
Finance Employee turnover
Analysis
Market share Bureaucracy
SWOT Table

Economies No R&D trend

Technology Narrow product line
Management

Opportunities Threats

New market segments Competitors

External
Vertical integration Substitute products
Analysis
Market growth Government policies
Income level changes Changing economy &
Strategic alliances demography
Technological advances
 Strengths (S) Weaknesses (W)

List List
Opportunities (O) SO strategies WO strategies
Maxi-Maxi Mini-Maxi
TOWS Matrix

List
Generate strategies Generate strategies
here that use strengths here that take
to take advantage of advantage of
opportunities opportunities by
overcoming
weaknesses

Threats (T) ST strategies WT strategies

Maxi-Mini Mini-Mini
List Generate strategies
Generate strategies here that minimizes
here that uses weaknesses and avoid
strengths to avoid threats
threats
Corporate Strategy
• Growth Strategy
– Intensive growth - “product-market expansion grid”
• Market penetration – gain more market share in the current market
• Product development – develop new product for its current market
• Market development – find or develop new markets for its current
products
– Integration
• Vertical backward (supply side) vertical forward (client side)
• Horizontal (internal branch expansion or external M&As)
– Diversification – related within concentric industry or
unrelated conglomerate
• Stability
• Retrenchment
Business Strategies
• Cost Leadership
– Its building cost advantage over competitors and value for money –
Nirma, Alto, Wal-Mart effective for price sensitive markets
– Building competitive advantage through – economies of scale, experience
curve effect, vertical integrations with suppliers
• Differentiation
– Presenting products or services in a unique way for premium prices
– Differentiation can take various forms – brand image (Rolex, Levi’s, Pepsi,
Coca Cola), Technology (Samsung, Sony, Honda), customer service (HDFC
Bank, Kingfisher Airlines), channel (Amway, Tupperware, Eureka);
Mc Donald's environment & brand perception
• Focus
– It is targeting a niche segment of specific narrow market (Rolls-Royce,
Harley Davidson, Cross Pens, Nikon)
– Its appropriate to launch a product with superior expertise where gaps
are not covered by existing players
 Corporate Partnering
• Joint Venture
– It is a way of implementing a strategy like M&A
– It helps firms to spread risks by jointly undertaking projects
– Companies involved take an equity stake in the newly formed entity as both
the companies will also be functioning as separate entities
• Strategic Alliances
– Partners contribute their skills, expertise in a project
– It can also be a licensing agreement
• Consortia – it is an interlocking relationships between businesses of
an industry
 BCG Matrix
Relative Market Share
High Low
STARS QUESTION MARKS

Strategy: invest for position Strategy: invest for growth

Market Growth Rate

High maintenance & growth as market potential exists or

else sell

CASH COW DOGS

Strategy: invest to maintain Strategy: wait till it brings in

Low current level as they bring in money or divest to focus on
cash that can be used to stars
maintain stars or grow
question marks, or divest
 Business Strength/Competitive Position
Strong Average Weak
GE-Nine Cell Matrix A Winners B Winners C
High Question Marks
Industry Attractiveness (Protect Position) (Invest to
Build) (Build
Selectively)
E Winners F Average
Medium Businesses Losers
(Build Selectively) (Selectively/
Manage for (Limited
Earnings) Expansion or
Harvest)
Profit Producers G Losers H Losers
Low
(Protect and Re- (Manage for (Divest)
focus) Earnings)
 Functional Strategies
• Marketing Strategy
– Marketing mix strategy – 4Ps
– Market growth strategy
• Financial Strategy
– Capital structure and its sources
– Budget expenditure and revenue model
• Human Resource Strategy
– Recruitment source and selection
approach
– Motivation, compensation, training, and
employee retention plan
• Operations and Production Strategy
– Manufacturing or outsourcing
– Quality control mechanism
 Functional Pyramid
General Manager

Finance Personnel Engineering Research

Manufacturing Marketing
 Board of Directors

General Manager

Manufacturing Personnel Finance Marketing

Metal Plastics
Products Products
Division Division

Personnel Accounting Personnel Accounting

Manufacturing Marketing Manufacturing Marketing

 Geographic Division Organization

Sales Director

Area Sales Area Sales Area Sales Area Sales

Manager Manager Manager Manager
North South East West

Sales Executive 1 Sales Executive 1

Sales Executive 1 Sales Executive 1

Sales Executive 1 Sales Executive 1

Sales Executive 1 Sales Executive 1

 Matrix Design Organization

General
Manager

Production Marketing Finance Personnel

Department Department Department Department

Manager Production Marketing Finance HR

Project A Group Group Group Group
 Types of Strategic Control
• Premise Control (management process of checking to determine
whether premises – environmental and industry, upon which the
strategy is based are still valid)
• Implementation Control (it is designed to assess whether the
overall strategy should be changed in light of result associated
with the incremental actions that implement the overall strategy)
• Strategic Surveillance (management efforts to monitor a broad
range of events inside and more often outside the firm that are
likely to affect the course of its strategy over time)
• Special Alert Control (management actions undertaken to
thoroughly, and often very rapidly, reconsider a firm’s strategy
because of a sudden, unexpected event)
Balanced Score Card
Grand Strategy Matrix
 The Grand Strategy Matrix Quadrants - used for formulating
alternative strategies on competitive position and market (industry) growth
• Quadrant I (market growth – strong position)
– Excellent strategic position
– Product development, market penetration and development
– With excessive recourses – integration
• Quadrant II (market growth – weak position)
– Intensive strategy
– Horizontal integration [M&A] to strengthen position and capitalize on
growth
– Divest or liquidate (if horizontal integration is not happening)
• Quadrant III (weak position – slow growth)
– Avoiding further decline by cost control and asset reduction
– Shift resources away to other businesses (divestiture) or liquidation
• Quadrant IV (slow growth – strong position)
– High cash flow with limited internal growth
– Unrelated diversification in growth area through joint ventures
The Internal-External [IE]Matrix positions an organization’s various divisions in a
nine-cell display like BCG or GE Nice Cell Matrix

Intensive
Market Penetration,
Product development,
Market development
Integrative - integration
 Assignment (Individual/Group)
Company Strategy Report Presentation
• Select a company and provide its introduction
• The environment that affects its industry the most and its
reason
• Define its mission statement, vision & its corporate
objective
• Industry analysis using P5F Model
• Discuss its strategy in terms of
– The opportunity it has capitalized on and its major strengths
– Corporate, business, and its functional strategies
– BCG Matrix for its four of the business portfolios
– Its strategic alliances
– Business growth strategy
 Thank You/Best Wishes
• Questions/Answers/Discussions