TYBBI SEM-V

STRATEGIC MANAGEMENT
- Prof. Sagar Tipnis
Syllabus at Glance :
MODULE I-
Strategic Management an Overview
Definitions, Strategic Decision Making, Levels of Strategic Management,
Process of Strategic Management, Principles of Good Strategy, Elements of
Strategic Management, Models of Strategic Management.

Module II-
Strategic Management Environment:
Importance of Politics in Strategic Management, Social, Political, and
Technological forces, Role of Competition, National and Global Business
Environment.
Components of Environment, Environmental Scanning, Analysis of Strategies
and Choice of Strategy. Ethics, Social Responsibility, Impact of Legal Factors in
Strategic Management, SWOT Analysis.
MODULE III-
Levels of Strategies and Analysis
Corporate Level Strategies- Concentration, Integration and Diversification,
Internationalization, Digitization.
Process of Strategic Choice, Factors of Strategic Choice, Strategic Analysis.

MODULE IV-
Activating Strategy and Implementation
Process and Nature of Strategy implementation, Barriers, Model of Strategy
Implementation- Structural, Behavioral and Functional.

MODULE V-
Strategic Evaluation and Control
Standards, Benchmarking, Gap Analysis.
Features and Importance of Evaluation, Barriers in Evaluation, Types.
Strategic Control- Setting Standards, Comparison, Control Process, Systems,
Approaches, Techniques of Evaluation and Control.
Role of Information System.
EVALUATION PROCESS-

Total Marks- 100

➢ Internal Assessment- 25 Marks ( 10 Marks Internal Exam + 15 Marks

Assignment and Class Work)

➢ External Assessment- 75 Marks Paper

 Chapter 1-
Strategic
Management :
An Overview
What is a Strategy ?

➢ Direction and Scope of Organisation towards long term

➢ Plan of action designed to achieve a particular goal

➢ Determination of basic long term goals and objectives of enterprise

and adoption of course of action and allocation of resources
Background of Strategy :

Strategy = Greek Word “Strategos”

Strategos= “Art of General”

“Art and Science of Military Forces in War or Battle”.

Features of Strategy –

1. Unified, Comprehensive, Integrated

2. Universal Applicability
3. Strategy Alternatives
4. Strategy Review
5. Applicable to all functional areas
6. Allocation of Resources
7. Objective Oriented
8. Relates to the Environment
9. Future Oriented
Levels of Strategy :
Components of Strategy Statement :
MISSION STATEMENT :

✓ Statement on organizational philosophy and purpose

✓ Describes “What the Organisation is now”

E.g- “To be the most reliable global network for customers and
suppliers, that delivers value through products and services. To
be a responsible value creator for all our stakeholders.”
(Mission Statement of TATA Group)
Features of Mission Statement:

❑ Clarity
❑ Feasible
❑ Current
❑ Enduring
❑ Distinctive
❑ Precise
❑ Comprehensive
❑ Focus on Long Term Objectives
VISION STATEMENT

✓ What do we want to be ?

✓ Vision Statement of TATA Motors

“Most admired by our customers

employees business partners and
shareholders for the experience and
value they enjoy from being with us.”
Features of Vision Statement :

➢ Unambiguous

➢ Clear

➢ Harmonize with Organisation’s Culture and Values

➢ Realistic

➢ Shorter
GOALS AND OBJECTIVES :

➢ Targets to be achieved over a

specific period of time.

E.g- “To sell 20000 cars in the month

of August 2021”.
Features of Goals and Objectives:

✓ Precise and Measurable

✓ Significant Issues
✓ Realistic and Challenging
✓ Specific Time Frame
✓ Financial and Non financial components
✓ Not Single but Multiple
✓ Short term as well as Long Term
✓ Flexible
✓ Operational
Strategic Management :
What is Strategic Management ?

➢ Stream of decisions and actions which leads to the

development of effective strategy or strategies

➢ Systematic approach of general management which assures

continued success and makes the business secured.
Features of Strategic Management:

➢ Conscious Process
➢ Futuristic
➢ Dependent upon Personal Qualities
➢ Oriented Process
➢ Facilitates Decision making
➢ Primary Process
➢ Pervasive Process
➢ Risk Management
➢ Innovation
Importance of Strategic Management :

✓ Choice of Strategy
✓ Competitive Advantage
✓ Corporate Image
✓ Organisational Efficiency
✓ Organisational Objectives
✓ Organising Resources
✓ SWOT Analysis
✓ Facilitates Planning
✓ Facilitates Evaluation and Control
✓ Reduces Disputes
Strategic Management Process:

Environmental Strategy Strategy

Strategy Evaluation
Scanning Formulation Implementation
Guiding Principles to Successful
Strategy Management:

✓ Focus on most important

✓ Leverage Strengths
✓ Communicate
✓ Raise the energy level
✓ Flexibility
✓ Invest in Outside help
Models of Strategic Management :

o Mission

o Objectives

o Situation Analysis

o Strategy Formulation

o Application

o Control
Strategic Management Models :

1) Andrew’s Model:

Model Name: Framework for Strategy Formulation and Implementation

Creator: Kenneth Andrews

Year: 1971

Purpose: To implement strategies in terms of objectives, purposes, goals and major policies and plans
to achieve goals in such a way that it aligns the company’s business, mission, and values. To implement
the strategy as the common thread among the organization’s activities and product markets.
Glueck’s Model:
➢ Developed by William F. Glueck

➢ Strategic Management Elements

➢Analysis and Diagnosis

➢Choice

➢Implementation
Dan Schendel and Charles Hofer Model :

✓ Incorporation of both Planning and Control

Includes Various steps :

➢ Goal Formulation
➢ Environmental Analysis
➢ Strategy Formulation
➢ Strategy Evaluation
➢ Strategy Implementation
➢ Strategy Control
Thompson and Strickland
Model
Korey’s Model

➢ Modern theorist and writer Jerzy Korey-Krzeczowski, founder and

President Canadian School of Management

➢ Three Stages- Preliminary Analysis Phase, Strategic Planning Phase,

Strategic Management Phase

➢ It incorporates both planning and control functions.

Strategic Decision Making :

✓ Decision making according to

company’s goals or mission
Features of Strategic Decision Making :

➢ Decisions have major resource propositions

➢ Harmonizes Capabilities with Threats and Opportunities
➢ Deals with range of Organisational activities
➢ Involves a change of major kind
➢ Complex in Nature
➢ Decisions at the top most level
➢ Different from administrative and operational decisions
➢ Focus on reduction of Cost
 Gather
Identify the Identify the
Relevant
Decision
Information
Alternatives
Strategic
Weigh the
Choose Decision
among Take Action
evidence
alternatives
Making
Review your
decision and
Process :
consequences
Limitations of Strategic Management :

✓ Limitation of Assumption
✓ Problem in Analysing Environment
✓ Unrealistic Mission and Objectives
✓ Problem of Setting Targets
✓ Problem in Implementation
✓ Lack of Evaluation
✓ Lack of Commitment at Lower Level
✓ Problem of Internal Politics
✓ Problem of Traditional Management
2.ENVIRONMENT OF
STRATEGIC MANAGEMENT
PROF. SAGAR TIPNIS
PEST
ANALYSIS
PEST
ANALYSIS-

PROF. FRANCIS
AGUILAR

(1967)
POLITICAL FACTORS
✓Tax Policy

✓ Political Stability

✓ Foreign Trade Regulations

✓Employment Laws

✓Levels of Corruption
ECONOMIC
FACTORS
✓Stages of Business Cycle

✓Impact of Globalisation

✓Labour Costs

✓Likely Changes in Business Environment

SOCIAL
FACTORS
➢ Population Growth Rate

➢ Health, Education and Social Mobility

➢Lifestyle, Choices and Attitudes

➢ Socio Cultural Changes

TECHNOLOGICAL
FACTORS
❑Research and Development Activity

❑ Impact of Emerging Technologies

❑ Impact of Technology Transfer

STRATEGIC ADVANTAGE:

“Strategic Advantage refers to

marketplace benefits that has an influence
on the likelihood success of the
organization”
Importance of Strategic Advantage:
➢ More Customers

➢ Brand Loyalty

➢ Higher Prices

➢ Differentiation

➢ Corporate Image

➢ Cost Leadership

➢ Economies of Scale

➢ Availability of resources
NATIONAL AND GLOBAL BUSINESS ENVIRONMENT:

Importance of International Business:

✓ Raises Country’s Standard of Living

✓ Exports Increases Sales

✓ Imports Benefits Domestic Customers

✓ Improved International Relations

✓ Increased Revenues

✓ Better Risk Management

✓ Disposal of Surplus Goods

✓ Benefit from Currency Exchange

BUSINESS ENVIRONMENT
What is Business Environment ?

According to Keith Davis,

“ Environment of Business means the aggregate of all conditions, events and
influences that surround and affect it”.
COMPONENTS OF BUSINESS ENVIRONMENT

Business
Environment

Internal External
Environment Environment

Micro Macro
Environment Environment
INTERNAL BUSINESS ENVIRONMENT

Management Philosophy

Mission and Objectives

Plans and Policies

Human Resources

Physical Resources

Financial Resources

Corporate Image

Labour Management Relations

 External
Business
Environment

Micro Macro
Business Business
Environment Environment
MICRO BUSINESS ENVIRONMENT

Customers

Competitors

Suppliers

Channel Intermediaries

Society
MACRO BUSINESS ENVIRONMENT

Demographic Environment
Economic Environment
Natural Environment
Technological Environment
Political Environment
Social and Cultural Environment
Legal Environment
International Environment
ENVIRONMENTAL SCANNING
NEED & IMPORTANCE :

✓ Identification of Strengths
✓ Identification of Weaknesses
✓ Identification of Opportunities
✓ Identification of Threats
✓ Effective Planning
✓ Facilitates Organising of Resources
✓ Optimum use of Resources
✓ Survival and Growth
✓ Corporate Image
✓ Innovation
✓ Motivation to Employees
ETHICS IN STRATEGIC MANAGEMENT

✓ Business Ethics refers to carrying business as

per moral standards

✓ Structure of Moral Principles and Code of

conduct applicable to the business

✓ It is the worth of right and wrong things

from business point of view
➢ Protect the rights of employees/workers

➢ Follow health, safety and environmental standards

➢ Improvement in the products, operations and production facilities

➢ Do not copy the packing style to fool the customers

➢ Truthful and Reliable Advertising

➢ Adhere to Product Safety Standards

➢ Accept new ideas

➢ Present Factual Information

➢ Maintain accurate and true business records

SWOT ANALYSIS

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS
ADVANTAGES OF SWOT ANALYSIS

✓ Strategic Planning
✓ Builds Strengths
✓ Reverse Weaknesses
✓ Maximise response to opportunities
✓ Overcome Organisations Threats
✓ Helps in Identifying Core Competencies
✓ Setting of Objectives for Strategic Planning
✓ Helps in knowing Past, Present and Future
✓ Helps in Synchronising firm’s resources and capabilities with competitive
environment.
CORPORATE SOCIAL
RESPONSIBILITY (CSR)

“CSR is a process with the aim to embrace

responsibility for the company’s actions and
encourage a positive impact through its activities
on the environment, consumers, employees,
communities, shareholders and all other
members of the society”.
CSR Towards Owners

✓ Should run the business efficiently

✓ Proper Utilization of Capital and Resources

✓ Timely Repayment of Capital Invested

CSR Towards Investors

✓ Providing Assurance to their Investment

✓ Paying Timely Interest to Investors

✓ Giving Important Updates to the Investors

✓ Repayment of principal amount timely

CSR Towards Employees

✓ Proper Working Conditions

✓ Providing Better Opportunities for Career
Prospects
✓ Job Security
✓ Proper Remuneration
✓ Payment on Time
✓ Identifying and Fulfilling Training and
Developmental Needs
CSR Towards Suppliers

✓ Giving Regular Orders

✓ Dealing with fair Terms and Conditions

✓ Maintaining Reasonable Credit Period

✓ Payment of Dues on Time

CSR Towards Customers

✓ Fulfill Requirements of Customers

✓ Quality of Products and Services
✓ Regularity in Supply
✓ Prices should be fixed, reasonable and
affordable
✓ Complete information to be disclosed
✓ After Sales Service
✓ Settlement of Grievances
✓ Adulteration should be avoided
CSR Towards Competitors

✓ Not to offer high sales commission to

dealers and agents

✓ Not to offer heavy discounts purposely

✓ False Advertisements should be avoided

✓ Should not bribe competitors

employees
CSR Towards Government

✓ Fees, Duties and Taxes to be paid regularly

and honestly

✓ Should not follow restrictive trade

practices

✓ Should follow Pollution Control Norms

✓ Should not involve in Corruption and

other Unlawful Activities
CSR Towards Society

✓ Firms should help weaker section of the

society

✓ Protect Social and Cultural Values

✓ Generate Employment by extending

business

✓ Protection of Environment
IMPACT OF LEGAL FACTORS IN STRATEGIC
MANAGEMENT
Legal Factors Affecting Business Environment :
➢ Organizational Law

➢ Securities Law

➢ Contract Law

➢ Consumer Protection Law

➢ Laws regarding Health and Safety at Work Place

➢ Immigration Laws

➢ Government Procurement Laws

ANALYSIS AND CHOICE OF STRATEGY

1) BCG MATRIX- BOSTON CONSULTING GROUP MATRIX

LIMITATIONS OF BCG MATRIX:

✓ Classifies Business as Low and High but it can be medium also

✓ Market is not clearly defined

✓ High Market Share does not always lead to higher profits

✓ Growth Rate and Relative Market share are not only indicators of profitability

✓ Too Simplistic Approach

7 S FRAMEWORK OF MC KINSEY
PORTERS FIVE FORCES
GE NINE CELL MATRIX
3. Levels of
Strategies and
Analysis
-Prof Sagar Tipnis
CORPORATE
LEVEL
STRATEGY
Features of Corporate Level Strategy :

 Formulated by Top Management

 Decisions are complex

 Concerned with efficient allocation and

utilization of scarce resources

 Revolves around goals or objectives of

Organization
 TYPES OF
CORPORATE
STRATEGY
 Stability
Strategy
 Growth
Strategy
RETRENCHMENT
STRATEGY
Strategic Choice
Definition :

" Strategic Choice is the decision,

which selects a strategy from
among the alternative strategies,
which will best meet the
objectives of enterprise".
Steps in Strategic Choice
 Analysis of Internal
Environment

Analysis of External
Environment

Setting of Objectives
 Framing Alternative
Strategies

Evaluating Strategies

Consideration of
Decision factors
Choice of Allocation of Implementation Review
Strategy Resources
Factors influencing
Strategic Choice
 Factors

Objective Subjective
Factors Factors
Objective Factors
Competitors

Suppliers

Dealers and Customers

Organisation's Mission

Objectives and Policies

Resources
Subjective
Factors
Top Management Past Strategies Attitude towards
risk
Internal Politics

Timing Considerations
Digitalization in
Strategy
Characteristics of Most Efficient Digital
Companies
Customer Centric

Data means Power

Consistency and Continuity

Redefinition of Operational
Process
Business Model Monetization

IT Leadership and integration

with business management
unit
4. Activating
Strategy and
Implementation
-Prof Sagar Tipnis
STRATEGY IMPLEMENTATION
DEFINITION
"Strategy Implementation consists of securing resources,
organising these resources and directing the use of these
resources within and outside the organisation
Failure of Strategy
Lack of Communication

Lack of Ownership

Confusing, Overwhelming

Crucial aspects missing

Steps in Strategy
Implementation
Communication of Acceptance of Formulation of Design Organisation
Strategy Strategy Action Plans Structure
Values and Motivation Resource Procedural Review of
Ethics and Training Allocation requirements performance
Organisation Structures
Line
Organisation
ADVANTAGES
Quick decision Simple Structure Unity of Command Coordination
making
Simple Authority &
Responsibility

Direct flow of
Authority
Disadvantages
Lacks Specialisation

Burden on Executives

Retards Growth & Expansion

 LINE & STAFF
ORGANISATION
Features
Specialisation Systematic Planning & Sound Decisions
Control
Suitability CRISIS MANAGEMENT AUTHORITY &
RESPONSIBILITY
Conflicts

Misinterpretation of advice

Shifting of responsibility

Confusion
DIVISIONAL
STRUCTURE
 PROJECT
ORGANISATION
STRUCTURE
Characteristics
Direction and Control of Project
Manager

Coordination of Project and

Functional Manager

Support to Project manager

Effective Communication

Expert Services

Sharing of Authority and Responsibility

Conflicts
MATRIX ORGANISATION
ADVANTAGES
 Decentralised Project Coordination Environmental
Decision making Monitoring
Fast response to Flexible use of Efficient Support
change resources Systems
DISADVANTAGES
High Administration Cost Confusion Conflicts Excess focus on internal
relations
HYBRID STRUCTURE
ADVANTAGES
Alignment of
Adaptability and
Corporate and Functional Expertise
Flexibility
Divisional Goals
DISADVANTAGES
Conflicts EXCESSIVE ADMINISTRATION SLOW RESPONSE
OVERHEAD
INFORMAL
ORGANISATION
CHARACTERISTICS
Satisfy personal needs

Continuously Changing

Members from various levels

Pecking Order
ADVANTAGES
Completion of Work Faster

Removes Weaknesses

Additional Channel of Communication

Emotional Support

Better Management
DISADVANTAGES
May work against Formal Organization

Reduces Degree of Predictability and Control

Reduces number of Practical Alternatives

Time Consuming
BEHAVIORAL STRATEGY
IMPLEMENTATION
Role of Leadership in Strategy
Implementation
Introducing Change Integrating Conflicting Developing Leadership
Interests ability of Managers
Appropriate Organisational Climate

Motivational System

Clarity in Goals
Relations Leadership Styles
FUNCTIONAL
STRATEGIES
 Functional Strategies

Human Resources Marketing Finance Production

HUMAN RESOURCES
STRATEGY
Recruitment and Training Performance Promotion
Selection Appraisal
Transfer Compensation Motivation
MARKETING STRATEGIES
Product Price Promotion Distribution
FINANCIAL STRATEGIES
SOURCES OF FUNDS APPLICATION OF FUNDS
PRODUCTION
STRATEGIES
Production Capacity

Size and Location of Plants

Technology

Quality of Products
Research & Development Modernisation
5. Strategic Evaluation
and Control
- Prof Sagar Tipnis
 STRATEGIC
EVALUATION
PROCESS
Fixing Benchmark

Measurement of Performance

Analysing Variance

Taking Corrective Action

CHARACTERISTICS
Process

Goal oriented

Guide to Operations

Involves Measurement
Continuous in Nature

Effective Use of Resources

Helps to recognize change

Facilitates Direction
PROBLEMS
Corrective Lack of Measurement Reporting
Action Cooperation
IMPORTANCE
Facilitates Coordination

Optimum use of resources

Guide to operations

Validity of Strategic choice

Feedback

Motivates Employees

Fixes Responsibility

Inputs for Future Planning

STRATEGIC
CONTROL
TYPES
Premise Control

Implementation Control

Strategic Surveillance

Special Alert Control

PROCESS
Determine what to
control

Set Standards

Measure Performance
Compare

Determine reasons of
deviation

Take Corrective Action

BENCHMARKING
TYPES
 Peer
Benchmarking

SWOT

Collaborative
Benchmarking
PROCESS
Planning COLLECTION OF ANALYSIS OF IMPLEMENTATION MONITORING
INFORMATION DATA
STRATEGIC
GAP
ANALYSIS
TYPES OF GAP
Performance Gap PRODUCT PROFIT GAP
Manpower
Gap

Market
Gap
STRATEGIC INFORMATION
SYSTEM
CHARACTERISTICS
Tangible Benefits INTERCONNECTING HIGHLIGHTS
ACTIVITIES INFORMATION
New Business Opportunities

Meet the requirements

Functional Based

Support existing strategies

THANK YOU