Chapter 1

Introduction

# What is strategy?
A strategy is a plan or method put in place to achieve a goal or result, as in Blanca’s strategy for
passing the test was to study every night until test day.
Strategy can refer to the use of tactics in the planning of military operations, usually to succeed
in a battle or war. In a military context, a strategy can refer to an overall plan, a specific or broad
goal, or the execution of said plan or goal.
Strategy can also refer to the use of a strategy to meet a goal, as in the only way to win a war is
with a solid strategy.
Example: Their strategy was to distract the enemy and then sneak in from behind.

# Where does strategy come from?

The first records of the term strategy come from the 1680s. It comes from the
Greek stratēgía, meaning “military commander.”
A distinction is made between strategy and tactics in military usage. A strategy is the
long-term plan for using one’s military forces to win peace or maintain security,
while tactics are the specific movement of troops and resources during a battle.
Business is another area in which strategy is commonly used. A company will have an
overall strategy for growing sales and profits. Meanwhile, the different divisions within the
company will have their own strategies for reaching their goals, which help the whole
company reach its goals.

# Define strategic Management

Strategic management is the process of formulating and implementing strategies to achieve the
goals and objectives of an organization.

# Example of Strategic Management

Amazon employed several strategic management techniques to overcome local players like
Snapdeal and Flipkart in the Indian market:
Strong Market Entry: Amazon entered the Indian market with significant investment and long-
term vision, demonstrating its commitment to success. They strategically focused on building a
robust logistics infrastructure, expanding product offerings, and offering competitive pricing.
Customer-Centric Approach: Amazon prioritized providing exceptional customer experience
by offering fast and reliable delivery, easy returns, and a wide range of products. They leveraged
their global expertise in e-commerce to create a seamless online shopping experience for Indian
customers.
Continuous Innovation: Amazon introduced innovative features and services tailored to the
Indian market, such as Hindi language support, regional content, and localized payment options.
They constantly adapted their offerings based on customer feedback and market trends.
Competitive Pricing: Amazon employed a competitive pricing strategy to attract customers,
offering discounts and deals on popular products. They leveraged their global scale and supply
chain efficiencies to provide cost-effective solutions.

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Strategic Partnerships: Amazon forged partnerships with local retailers, brands, and small
businesses, enabling them to expand their product range and offer exclusive deals. This approach
helped them tap into the vast Indian market and build trust among local sellers.
Investments in Technology: Amazon significantly invested in technology and data analytics to
enhance customer personalization, improve operational efficiency, and drive insights for
strategic decision-making.
These strategies allowed Amazon to differentiate itself, gain market share, and gradually surpass
local players like Snapdeal and Flipkart in terms of customer trust, brand recognition, and market
dominance.
# Task of Strategic Management
The strategy-making, strategy-implementing process consists of five inter-related managerial
tasks:
1. Deciding what business the company will be in and forming a strategic vision of where
the organization needs to be headed - in effect, setting the organization with a sense of
purpose, providing long-term direction, an establishing a clear mission to be achieved.
2. Converting the strategic vision and mission into measurable objectives and performance
targets.
3. Crafting a strategy to achieve the desired results.
4. Implementing and executing the chosen strategy efficiently and effectively.
5. Evaluating performance, reviewing new developments, and initiating corrective
adjustments in long-term direction, objectives, strategy, or implementation in the light of
actual experience, changing conditions, new ideas, and new opportunities.

# Why is strategic management important?

Strategic management is important from a financial and non-financial perspective for
organizations of any size.

Specifically, strategic management is important in organizations because:

1. strategic management helps an organization move past short-term thinking and strategies
the future of the company.
2. strategic management helps an organization fulfill its responsibilities (especially if it’s a
listed company), including regulatory and reporting obligations.
3. strategic management helps an organization to establish and monitor its progress against
long-term plans (as opposed to strategic planning, which is generally thought of as a one-
time plan), resulting in greater operational efficiency and profitability
# Strategic management process

The strategic management process can be broken down into five key stages.

1. Goal-setting
First thing’s first. Where do you want to go? Effective goal-setting involves understanding what
your organization stands for and what it wants to achieve. For this, you’ll need your company
mission, vision, and long-term objectives.

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Begin by revisiting and deeply understanding your organization’s mission and vision. These are
values that encapsulate the essence of what your organization is and aspires to be.

Think about how your goals can reflect and advance these fundamental principles in the long
term. These values act as a guiding compass and should be evident in every goal you set. For
example, if ‘innovation’ is a core value, your goals should reflect a commitment to new ideas.

Questions for goal-setting

• What are our key priorities, and how do they align with our mission and vision?
• How do our proposed goals reinforce our values?
• Are these goals ambitious yet achievable?
• How will these goals impact our employees, customers, and stakeholders?
• How will we measure the success of these goals?

2. Analysis

You need to know what you’re working with and what you’re up against. This involves looking
inside your organization to understand your strengths and weaknesses and looking outside at the
market and competitors to identify opportunities and threats. A SWOT diagram will come in
handy here. Use a template to make the process headache-free.

3. Strategy formulation

Here’s where you map your route. Based on what you’ve learned from your analysis, you work
out how you’re going to reach your goals.

This could involve diversification, market penetration, product development, partnerships, cost
leadership, or differentiation strategies, among others. The secret is to generate multiple options
that align with the results of your SWOT diagram.

Not every strategy you mastermind will be viable. So as part of this step, you’ll need to critically
assess the pros and cons of each option. Considerations include feasibility, value alignment,
resource availability, market trends, and potential risks and rewards. Ask around so you get a
range of perspectives and insight. Once you’ve gathered all you need, run it past management
and decide on a strategy or mix of strategies that will best serve your goals.

4. Strategy implementation

Now, it’s time to put all that planning into action. The implementation stage involves allocating
resources, assigning tasks, and making sure everyone in your organization knows what they’re
supposed to be doing.

Using project management software can make this stage a lot easier. Instead of creating
spreadsheets and sending out emails like wedding invites, simply add all your deadlines and

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tasks to a cloud-based timeline, then assign tasks and let the software do the heavy lifting when it
comes to tracking.

5. Evaluation and control

As you move along, you need to check you’re still on the right path. This stage is about
monitoring your progress, comparing it with your plan, and making adjustments like the captain
of a ship. Maybe you’ve hit some unexpected challenges, or maybe there are new opportunities
you hadn’t considered before. The more you check, the more you’ll know.

# SWOT Analysis

SWOT analysis is known worldwide and widely applied in many companies. SWOT
Analysis stands for: Strengths, Weaknesses, Opportunities and Threats. So, what is the
purpose of SWOT analysis?

SWOT analysis – or the SWOT matrix – was developed in the 60s by Albert Humphrey. He led
a research project at Stanford University to analyze data of the 500 largest corporations
reported by Fortune magazine. As a result, they created a method that quickly turned into an
exercise used by all of the world’s leading companies in formulating strategies.

SWOT analysis is a simple analysis system designed to check the strategic position of a
particular company in its field of operation, and because of its methodological simplicity can be
used to analyze any scenario or environment, from the creation of a website to the management
of a multinational corporation.

# What is the purpose of SWOT analysis?

We can say that the purpose of SWOT analysis is to study the internal and external environments
of a company, through the identification and analysis of the strengths and weaknesses of the
organization, and the opportunities and threats to which it is exposed.

Part of the purpose of SWOT analysis is to also assertively identify factors that influence the
functioning of the organization providing very useful information in the strategic planning
process.

You can divide SWOT analysis into two parts: the internal environment where strengths and
weaknesses are identified, and the analysis of the external environment, where threats and
opportunities are determined.

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# What Is a Stakeholder?
A stakeholder is an individual or a group of individuals with an interest, often financial, in the
success of a business. The primary stakeholders in a corporation include its investors,
employees, customers, and suppliers.

Fig. Types of Stakeholders

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Types of Stakeholders

Customers

Stake: Product/service quality and value

Many would argue that businesses exist to serve their customers. Customers are actually
stakeholders of a business, in that they are impacted by the quality of service/products and their
value. For example, passengers traveling on an airplane literally have their lives in the
company’s hands when flying with the airline.

Employees

Stake: Employment income and safety

Employees have a direct stake in the company in that they earn an income to support themselves,
along with other benefits (both monetary and non-monetary). Depending on the nature of the
business, employees may also have a health and safety interest (for example, in the industries of
transportation, mining, oil and gas, construction, etc.).

Investors

Stake: Financial returns

Investors include both shareholders and debt holders. Shareholders invest capital in the business
and expect to earn a certain rate of return on that invested capital. Investors are commonly
concerned with the concept of shareholder value. Lumped in with this group are all other
providers of capital, such as lenders and potential acquirers. All shareholders are inherently
stakeholders, but stakeholders are not inherently shareholders.

Suppliers and Vendors

Stake: Revenues and safety

Suppliers and vendors sell goods and/or services to a business and rely on it for revenue
generation and on-going income. In many industries, suppliers also have their health and safety
on the line, as they may be directly involved in the company’s operations.

Communities

Stake: Health, safety, economic development

Communities are major stakeholders in large businesses located in them. They are impacted by a
wide range of things, including job creation, economic development, health, and safety. When a
big company enters or exits a small community, there is an immediate and significant impact on

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employment, incomes, and spending in the area. With some industries, there is a potential health
impact, too, as companies may alter the environment.

Governments

Stake: Taxes and GDP

Governments can also be considered a major stakeholder in a business, as they collect taxes from
the company (corporate income taxes), as well as from all the people it employs (payroll taxes)
and from other spending the company incurs (sales taxes). Governments benefit from the overall
Gross Domestic Product (GDP) that companies contribute to.

# Factors shaping Strategy of a company

Below are six factors taken from the PESTLE model that you need to be aware of to give your
business strategy its best chance of success; let’s take a look:

Political
There hasn’t been a climate of political volatility like what we’re seeing now for quite some time.
The decisions politicians make on things like wars, taxes, pandemics and trade deals have very
profound implications on our businesses, and with the current chaos following Boris
Johnson’s resignation, more uncertainty lies ahead.
These moment-notice changes we see – taxes, schemes and legislation – mean that your strategy
needs to be ready to adapt at a moment’s notice.

Environmental
Being environmentally conscious can no longer be viewed as a nice-to-have; if you want to appear
as an attractive employer and company to do business with, protecting the environment should be
on your agenda.

Social
Our behaviours, expectations and accepted social norms have shifted and continue to change on an
almost daily basis. These social changes impact everything from how we lead our teams to what
our customers expect from us.
Take, for example, the sudden rise in instant-gratification culture, where people expect things
immediately.

Technology
While tech is largely an enabler of business, keeping up with developments requires a keen eye and
ongoing investment of time and money. It may seem like a huge pain to keep on top of the latest
tech, but relying on the ways of yesterday could hold your business back from seeing tomorrow.

Economic
Economies around the globe are now, at best, challenged and at worst broken. We have almost all
of the major world economies experiencing high inflation or already in recession, with some on the

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verge of a great depression-like scenario as a result of recent events. How various economies are
coping, whether that’s the micro-economies within the UK (towns and cities) or entire economies
(countries), needs to be factored into your strategy when determining where you’re targeting your
business.

Legal
Legislation from the Government impacts many parts of our ability to run businesses
effectively. From employment law to data protection, these legislative considerations mean
businesses have to adapt constantly to ensure they’re compliant.