Chapter 1

1. Introduction

Nalanda Small Scale Industries Development Corporation was

established in the year 1962, to help the development of small scale
industries (SSIs) in the state of Nalanda1. The company was
enjoying good profitability and sales upto the early seventies. All
of a sudden the company's sales started falling down from Rs. 18
crores in 1974 to Rs. 13 crores in 1975 and it was expected to touch
a low of Rs. 5 crores in 1976. The company also started making
losses. Reason? The corporation could not see the changes taking
place in its environment. The situation of glut appeared as the
government decontrolled the iron and steel industry. The
corporation, which was engaged primarily in trading of iron and
steel, lost the market overnight. It did not know where to look for.
It was a late realisation to its management that the corporation did
not have any strength to fall back upon. Worse still, in the process
of making profit the soft way (by trading in a regulated item), it lost
sight of its mission itself, the SSI was no longer the focus of the
organisation.

Hindustan Tractors Limited2, a manufacturer of 35 and 50 h.p.

tractors, was doing pretty well till 1967, when all of a sudden it
faced the crisis of survival, wrought by government regulating the
price of tractors, even though it had been given the margin that was
somewhat higher than the competitors. Reason? The
owner/manager did not realise what all was required to
manufacture tractors with local content; be it the development and
retention of skilled manpower, institution of appropriate costing
and control system and the design of suitable organisation structure
or the timing of expansion of capacity/massive indigenisation
programme.

International Manufacturing Company3, after 100 years of

undisputed leadership in the sewing machine business world over
1
(having operations spread over more than 125 countries) all of a
sudden started losing market share both in the domestic as well as
international markets, accompanied by heavy erosion of
profitability. Reason? A vertically integrated company, single
product, high cost of operations and conservative top management,
could not withstand the onslaught of competition from low cost
machines from Japan, until a new, young chief executive took over
the reins.

Olivetti Company4, another world leader, in the field of office

equipment, faced rough weather in the early sixties, after over 50
years of successful operations. It was on the verge of collapse.
Reason? Too ambitious, unplanned / growth aimed to be achieved
not only through internal expansion but also through acquisitions
and unrelated diversifications, all leading to huge capital
requirement that the company could not afford.

All the above cases look different, but have one thing in common.
They could not maintain a good fit with the changing environment
of their company. They did not notice the changes in time and make
necessary changes in the design of organisation to adjust with the
changed environment.

In the mid-fifties, Hindustan Levers Ltd.5, forecasted an acute

shortage of edible oil in India during tile next twenty years. The
forecast came true with pinpoint accuracy. However, the company
was able to avert a collapse .by undertaking diversification in a big
way, taking up many new products, over a period of ten to fifteen
years. The conscious analysis of the company's environment,
keeping the long term perspective in mind, enabled the company to
make painless transition. The company had realised the importance
of a crucial management function, that or strategic management,
that of shaping the future of organisation, which the other
companies cited above had not. Before going into detailed
discussions on various aspects of this crucial management
function, let us understand the importance of the subject in simple
terms.

2
1.1 Why to Study Strategic Management

From time to time many executives have been asking me to

recommend a short book so that they can understand strategic
management. Many a time faculty members have also been asking
me as to what should be design of an appropriate curriculum and
course design for students of strategic management programmes.
Although I found it a difficult to answer in simple and categorical
way I have been pondering over whether there could be a guideline
to help answering this question.

I found a silver line in the questions that are typically asked by

industrial engineers in improving design of processes, namely what
is to be done, how it is to be done, where it is to be done, when it
is to be done, who should do it, how it should be done, and
occasionally asked why it is to be done. We can add one more
namely; for whom it is to be done to fill our platter.

Unfortunately, the order in which these questions are asked is often

not very clearly given, especially why it is to be done. To me it
looks if the order is changed and why is brought as the first
question, it will be easy to develop a practical guideline for teaching
training and self- learning of the strategic management subject,
which is very vast and complex in scope and perhaps can’t be
covered totally. Perhaps there is no need to attempt it, but leave it
at indicative level as discussed below.

Every business organization is created (aims) to serve (meet) some

or the other need(s) of a (set of members) of the Society, whom we
refer as customers.. This can be called the purpose or the Mission
of the organization Thus the purpose or Mission of every
business is to serve (meet) some or the other need(s) of a (set of
members) of the Society whom we refer as customers, in the
form of providing goods or services

The Mission has to operationalised for action purpose (how much

the organisation aims to serve), in foreseeable future, and to
evaluate how well it has served/ not served, for taking corrective
3
action. This is done by defining Mission in a measurable form as
an Objective (in terms of quantity supplied). Multiplied by price,
it is expressed as revenue. Increasing Sales/ Revenue Growth
thus, and should, become the first and the key objective of a
successful organisation

For this it has to organise to arrange one or more inputs, process

them and arrange delivery of it to the customer. In a nutshell, thus,
managing a business involves arranging the following:

Inputs Output
Process
Fig. 1.1

To do each of these tasks it requires different types of resources/

infrastructure. Each contributor is an important one and has a stake
in success of the organization. They are often termed as stakeholder
alongside the customer. Further they contribute to the organisation
in expectation of getting something or the other in return. The
returns that different set of contributors expect for making
contribution, vary a lot in terms of kind (material and non-
material), quantum and time, and change dynamically, at times in
very unpredictable way.

Organisations are cooperative systems and each contributor is a

part/ member of organization, but and at the same time separate
from it, and their expectations of return for their contribution keeps
on changing influenced by what all happens in the environment
(society).
4
The changes in expectations and contributions that they are willing
to make can be perceived as a threat or as an opportunity, by
managers of the cooperative system, depending upon how much
one knows the stakeholders and their ability to manage shifts in the
relationship of contribution and returns expected from each
stakeholder.
Table 1.1
Infrastructure/ Input Contributed (Provided by)
-Real estate agents/ government
Land & Building
(normally on one time basis)
Machines -Machine manufacturers
(normally on one time basis)
-Promoters/ owners, shareholders,
Money banks, financial institutions etc.
Raw materials, components -Various suppliers
etc.
-Various suppliers like electric
Supplies cos.
Water department etc.
Physical labour -Skilled/ unskilled workers
Intellectual Labour -Officers, managers etc.
Permission, license, -Government & regulatory
supporting infrastructure etc. agencies
Allowing peaceful conduction -Society at large
of business

New stakeholders may join this cooperative system. Some existing

ones may quit/ stop making contribution. If due care is not taken,
the withdrawl of contributions and the contributors from the
organisation, may be sudden and even massive, without suitable
new ones joining. In such a case the organisation may start sliding
in performance and eventually collapse.

Coming back to the four different types of resources/ infrastructure

(namely; the physical infrastructure, human resources,
organization resources and financial resources and technogical and
intangible resources), they are to be managed in tandem, because
each one of them involves cost, which have to be covered with
5
revenue realised from the customers. Difference between Revenue
and Cost is Profit. In the long term no organisation can sustain/
survive without Profit. Profit thus becomes second most important
objective.

This task is not easy. If infrastructure is created and it is not used

fully (for example market does not accept/ like the product or
service), the cost is incurred, but revenue not realised, thus creating
difficulty in covering up the costs. Even if the market accepts, all the
infrastructure components are rarely available in matched
condition and hence the smallest one creates a bottleneck. The final
output that gives revenue is thus constrained by this bottleneck, and
hence costs of other, extra infrastructure is not covered. Further, if
any other input, raw material or supplies, get interrupted, the
infrastructure created is not utilised and so are other inputs. Lots of
costs are thus incurred, but revenue not realised. If one create less
infrastructure he may not be able to spread the fixed costs over
larger volume (quantity), and therefore the revenue may not cover
all costs.

The problem is further complicated if there are others who aim to

meet the same needs of the society, (whom we call competitors),
especially if they have better ability, access or control over
supplying the products/ services to meet the same needs.

Managing various infrastructure and inputs, in tandem with the

Fig 1.2
market, in a dynamically changing input and output stakeholders’

6
expectations (environment), to achieve the twin objectives in the
presence of formidable competitor(s) becomes a complex, critical
and demanding managerial task. An understanding of Strategic
Management process, its concepts, tools and techniques helps
in handling this task.

So long as the business is small, it is easy to comprehend and

understand the nitty- gritty of various tasks and consider all the
related issues. As the business grows, the number of people
engaged in different specialised jobs ranging from procuring
diverse inputs, processing of complex chains of production and
finally delivering products to variety of customers at different
locations in different quantities and different times, making the task
extremely complex and demanding. Special skills are required to
manage various infrastructure/ resources contributors with diverse
and dynamically changing expectations of return for contributions
made by each one of them. The significance and importance of
strategic management thus increases exponentially with size of
organisation, diversity of customers, processing technologies,
variety of inputs and dynamics of environment.

Ironically, if the organisation is successful (i.e., it grows and

diversifies), it leads to complexities. The challenge is as much if it
does not grow as much because others (competitors) will take away
the business and the organisation will struggle for survival.

The above discussion on why to learn/ teach strategic management

should help instructors in deciding whom to teach, what all to teach
different target groups, when to teach, how to teach it, where to teach and
who to teach it. For practicing managers, the issues will be when to learn,
what all to learn, where to learn and from whom to learn.

From the above discussion, the topics shown in table 1.2 emerge as
the critical inputs for designing the Foundation course of Strategic
Management. The focus may be on concepts and to some extent on
tools. The details of tools and techniques may be covered in
advance courses. Full courses may be designed on strategic
alternatives (diversification, strategic alliances, joint ventures,
merger & acquisitions, turnaround and transformation,
7
international strategies etc.), management of change (including
creative problem solving), management control systems and
various inter and intra functional interplays (which create
Table 1.2

Table 1.3

complexities and need high level of integrative thinking) shown in

8
 table 1.2. This can be done by illustrating strategic incoherences
and how they can be resolved. While intra-functional interplays
may be left to functional area courses, inter-functional and inter-
resources interplays may be covered in SM courses.

1.2 A Glimpse of Task of Managing Strategy Implementation

Strategic management process has two parts, the strategy

formulation and strategy implementation, normally discussed in
that order. However, the strategy implementation is more vast in
scope and difficult to handle and is impinges on formulation also. It
therefore, requires a brief introduction to appreciate detailed issues,
before a detailed discussion follows on strategy formulation and
implementation in that order.

Implementation is critical for success of a strategy. If a strategy

can’t be successfully and speedily implemented, it is immaterial
how good was the strategy formulated and whether it was
formulated or not. Indeed in many cases it might have been better
if the strategy was not formulated. At least the blemish of failure
and a good amount of financial loss/strain could be avoided, which
in certain cases could be colossal. It is also observed that successful
and expeditious execution of strategy may prove to be a competitive
advantage. In certain cases like sugar processing or education, a
delay can cause substantial loss of revenue and throw the financial
planning out of year.

1.2.1 Nature and Scope of the Task of Strategy Implementation

Before we proceed further, it is necessary to remember that strategy

implementation has two parts, thinking (analysis) and doing. Here
the discussions are confined to thinking part only6.

How do we go about implementing strategy? There are repeated

iterations between proposed strategy and its implementation plan,
before the strategy and its major action plans are finalized, although
all the details are not possible at the time of strategy formulation.
For ease of understanding of strategy implementation process we
9
need to assume some strategy to develop action plan so that steps,
road blocks, task involved and associated managerial challenge are
clear. We can take first simple, straight forward cases like business
of milk, which will help in appreciating more complex cases like
diversification, mergers and acquisitions, international strategies
and turnaround and transformation, which are discussed in later
chapters.
Table 1.4

For implementation of any strategy, successfully, even in the most

simple form of a single product business in a narrowly defined
market area, the organisation must have/ create necessary
resources and infrastructure of four types7 , namely; physical
infrastructure, human resources, organization resources and
10
international strategies etc.), management of change (including
creative problem solving), management control systems and
various inter and intra functional interplays (which create

Fig. 1.3

financial resources, for the entire supply chain, i.e., from

procurement of all the inputs, processing them and finally
delivering the product/ services to the end user (customers)
including after sales service, if and where necessary / applicable,
as shown in the diagram above.

It may be noted here that creating infrastructure or developing

resource for any element of supply chain does not mean actually
starting/ doing that activity which is covered under operating
decision category8. For example creating distribution network or
procurement network of milk does not mean actually selling or
procuring the milk. It would mean deciding how the distribution or
procurement would be done, open a distribution/ procurement
office, deploying adequately trained personnel, arranging training

11
or even training infrastructure to develop trained manpower for
delivery/ procurement etc. and developing suitable policies for the
same. So is the creation of physical infrastructure and skilled
human resources for processing to produce a product/service.
These activities are one time, not done on regular or repeat basis,
although phasing out of creation of infrastructure or development
of human resources or even incremental additions/ modification
over time is possible. Also since these activities are one time, and
the expenditure normally is significant, the expenditure is to be
recovered over a period of time, not on piecemeal basis, but
proportionate to value are or quantity of output.

Prima facie, the strategy implementation is a simple 3-step process.

First, identify various tasks in creating infrastructure and
development of various resources to carry out the operations.
Second to visualise the ways in which these tasks are to be carried
out. The third step is to visualise the ways in which problems which
are likely to come in the way of carrying out these tasks are to be
overcome.

1.2.2 Roadblocks in Strategy Implementation

After identifying the needed infrastructure and resources, the next

task is to assess how much of it the organisation already possesses
or has at its disposal. It may be a great surprise, if not a startling
revelation at times, to know and realize that a good number of them
the organisation already possess in varying degrees. This exercise
will result in a check list of what all is required9, out of which what
already exists. The balance is to be developed, acquired or arranged
through various means. This step is significant and if formally,
explicitly and properly attended to, it may help in identification of
new opportunities also, which can lead to strategy implementation
driven formulation10 of corporate, functional and divisional
strategies discussed later. It is similar to what is popularly known
as SWOT analysis11, but is different in the sense that while SWOT
analysis is general and not so concrete and task specific, the
preparation of checklist for strategy implementation is an action
oriented task, and the identification of new opportunities is add on
12
to other methods of identification of opportunities emanating from
environment analysis. It is concrete and specific and result of
strength based opportunity and specific threats identification
(which may be key vulnerabilities?

Once the checklist of balance tasks is prepared, the next step is to

visualize the ways they can be done. Part of the balance tasks can be
done following rational/ logical thinking12 like creating standard
infrastructure and acquire/ develop or arrange resources based
upon inventory of knowledge existing and past experiences. But
wait a while. Many a times the obvious, immediate solutions
emerging from rational thinking are suboptimal and costly. A little
pondering and use of lateral, creativethinking13 can lead to new
insights and solutions, which may lead to achievement of
objectives more than initially set, for which a strategy was
considered, or achieving more on those objectives. The more the
lateral thinking, the better it is. At times it is the only way to
overcome formidable roadblocks. A vivid example of it was seen
in IMP institute where a serious constraint of land was holding
consideration of larger size of staff dining hall. Use of creative
problem solving increased the capacity 10-fold, from 50 seats to
over 500 seats while the cost increased from Rs. 60 lakh to Rs. 160
lakhs only (see exhibit 1). Further discussion on the power and use
of lateral thinking/ creative problem solving is deferred to the
chapter on managing strategic change.

The biggest problem comes in the form of getting things done. No

person, even chief executive, can do everything all by himself14,
except in case of small shops. As business expands and diversifies,
several other persons join to assume functional or business
responsibilities. The chief executive has to get the things done from
them. This is where the catch and managerial challenge of two
types. One, and a common one is that others seek various
gratifications, which at times may be difficult to meet. Second, often
not realized one, is the fact that the person (the delegatee) can’t do
the things exactly the same way as delegator would have done and
the variations could be substantial, because different people have
different experience and live in different worlds, which impinges
13
on the way they perform the tasks given. This is more so with
people outside the rolls of organization, the other stakeholders. It
is an onerous task to make all the connected persons think and act
the way chief executive wants, all across the organisation and the
outside stakeholders. It is however, not impossible and
management techniques and philosophies are available to handle
the same.

An even bigger challenge is managing necessary cooperation

among various people as per the task requirements to manage
various inputs, process them and deliver to the end user. The role
of organization structure, systems, policies and procedure to ensure
the above is an important task, details of which are deferred to
chapter 9.

Apart from meeting a large number of tasks and galvonising human

resources into action, another major challenge emanates from the
fact that various tasks are to be managed in tandem15, in terms of
time and space coordination/ matching with one another16. The
slips in this coordination may delay or create loss of final delivery
and generation of revenue, while costs keep up piling, which can
throw even the very viability of otherwise a sound strategy, out of
gear.

In the creation of physical infrastructure, the use of PERT

technique is a common knowledge, how well it is used in practice is
altogether different matter for discussion. What is important to
appreciate is the behavioural side of it. An important part in PERT
technique is the time estimates for various activities. It is often done
only to complete the formality of PERT design, not watched and
strictly monitored and controlled. The time for completion keeps
on increasing on various pretext and the indifference of superiors
towards project management, often due to perception that the
subject is outside their area of expertise. This is as much a matter
of heart17, (the lack of willingness to complete the task as per the
PERT design), as the matter of ability. The case Time Estimates 18
brings out this fact in a very interesting manner.

14
There is another important point to note here. Often one may tend to
think that only creation of physical infrastructure requires the
expertise of project management. But it is not so. The development,
acquisition or arranging the three other resources require as much
expertise of project management. Indeed, it may not be wrong to
say that strategy implementation is nothing but managing several
major projects of different kinds (requiring expertise from different
disciplines) in tandem.

If management of just physical infrastructure (like constructing a

house) makes people sweat a lot, one can visualize the enormity of
task demands and associated managerial challenges of strategy
implementation. That too, it is be done on a sustained basis, one
after another, year after year. Unfortunately, in most organisations
no conscious efforts are made to develop this important expertise
and overall development of it is assumed away or left to dictum of
“learn while you earn”, with attendant consequence of failure or
inefficient implementation of strategy, resulting in failure or
suboptimal performance of a strategy chosen.

The biggest and perhaps the most significant challenge emerges

from the fact that management of different types of resources
requires expertise of several different disciplines of specialization
and it becomes difficult to get a person with such overall expertise,
especially in this era when most experts are going for more and
more acute specialization in a very narrow area19. How to get/
develop people who have adequate understanding of issues of four
different disciplines to manage the development of
fourdistinctively different kinds of infrastructure and resources, in
tandem, matching in time and space (place)20, is a significant
challenge.

Last but not the least, as the complexities in terms of variety of

output and variety of input for different output increase, the
complexities and managerial challenges of organizing them also
increase, which is found in the case of diversifications, acquisitions
and mergers, turnaround and transformation and international
business cases.
15
In a nut shell, the variety and diversity of inputs, process and
outputs, creation, development or acquisition of four different
kinds of infrastructure and resources (requiring expertise of four
different streams) in tandem, makes the task of strategy
implementation truly demanding and challenging.

1.2.3 Putting Life in Organization

Even if all the infrastructure and resources are developed, acquired

or arranged, nothing will happen unless life is put in the
organsation. It will be only an assemblage of various inputs,
infrastructure and resources, a passive thing which is galvanized
into action only when life is put the organization and people start
acting individually and together. It is like putting soul in the human
body. Further insights into how it can be done, could be had from a
serious look at motivational literature, especially the work of
Bernard21.

1.2.4 Strategy Implementation: The Fine Art of Detailing

From the forgoing discussions it will be clear that the first step in
strategy implementation is the fine art of detailing, detailing, and
detailing: what all is to be dome, when various tasks are to be
performed, where are they to be performed, how they are to be
performed and who will perform them. Once this detailing is done
we are ready for performing “doing” part or actually implementing
the strategy.

But wait a while, not all the tasks and issues will be so very clear,
especially “who will do them”, particularly if they are to be done
first time and or if new person(s) is to be recruited or developed.
How much time he (they) will take to acquire or develop? When
they will be ready to assume full responsibility of one or more tasks
envisaged to be assigned to him (them) and deliver results, be it
arranging license, import and commissioning of technology,
acquiring or developing other resources like land or distribution
channels?
16
Same or similar questions will have to be answered for getting
cooperation from other (outside) stakeholders. These lurking
doubts make the strategy implementation plans a little judgemental
and tentative, depending upon one’s past experience of getting the
things done, which determines the confidence level to arrange the
infrastructure and other resources.

Due to the above, the overall experienced based judgements, the

detailed action plans are “probabilistic”. Indeed, if there are several
strategic alternatives, they are evaluated on how much each will
achieve on various objectives set out initially. Different alternative
strategies are likely to achieve different levels of the objectives set
out.

Now this exercise is to be done for various strategic alternatives

generated based up on SWOT22 or ETOP & SAP23 analysis,
discussed in chapter 4 & 5. These alternatives are evaluated on
various criteria (discussed in chapter 6) and the confidence of the
strategist(s). The strategy which scores highest on various criteria
combinations may be selected. Even more than one strategic
alternatives may be selected if found attractive

But even this selection may be tentative, because it is impossible to

visualize every detail and have confidence that they will be done.
To overcome this dilemma, Andrew’s approach to corporate
strategy24 may be useful which limits to practical detailing, limited
to major plans and programmes of action. Things which can be
done easily and resources which are easily and freely available may
be left to be decided based upon dictum “will cross the bridge as
they come”, but not major tasks and actions which have important
bearing on the strategy and which may not be easily done, before
the strategy is finalized. Strategists need an eagle’s, penetrating,
eyes on such issues of strategy implementation so that there are no
problems when the actions start rolling. Sound strategists are
determined persons, who have ability to ask relevant questions on
various strategy implementation issues and can weed out
significant and relevant from insignificant and irrelevant issues.
17
Strategy implementation is, thus, not just a pack of actions (as the
name sounds) but it is as much the fine art of visualizing various
tasks (with an eagle’s eye) and creatively crafting workable actions
plan which can be executed with confidence and high probability
of success.

It may be noted that since different people have different success

experiences for various tasks/ action proposed, different alternative
(proposed) action plans have different levels of confidence,
depending upon proposer’s confidence levels. The strategy
implementation and therefore (final) action plan of strategy is
unique to strategist(s). Furthermore, as context changes, tasks will
change and thus confidence levels will also change. Strategy,
coming out of iterations between formulation and implementation
plans, is therefore unique to strategists as also the context in which
he formulates it.

Thus, two different strategists are most likely to decide different

strategies in the same context. Also, same strategist may or may
not decide same strategy in two different contexts, even at the same
point of time and for same organisation.

While the discussion on details of various tasks is deferred to later

chapters, it is necessary to mention here that the extent to which
any one more tasks are not performed adequately and completely,
and any one or more links are missing, strategic incoherence get
created, which decide the degree of failure of strategy and thus
decline in performance of the organization.

1.2.5 Strategic Incoherence

Strategic incoherence refers to mismatch, misfit or inconsistency

among various elements in the strategy formulation and or
implementation. There could be mismatch between the
environment and strategy (formulation issue), between strategy and
structure, systems, shared values, skills, styles and staff (number
and their motivation as highlighted by McKinsey’s 7S model25.
18
There could be mismatch between the strategy and financial
structure or funds flow. There could he mismatch between strategy
and physical infrastructure and technology. Put it in the frame work
of various resources we have discussed so far it can be represented
by the diagram shown below.

Physical resource incoherence with strategy hampered the growth

of Apollo Hospitals Enterprise Ltd26. in mid 1980s. Inability to get
license for international flights sowed the seeds of demise of
Kingfisher Airlines27 in the last decade. Inability to successfully
absorb technology speedily led to acquisition of Neycer by Spartek
Ceramics28 in 1980s. Poor technology and financial structure and
other incoherence led to sickness of Scooters India Ltd.29 for almost
quarter of a century. This was compounded by leadership style
which led to loss of many wonderful opportunities that came over
twenty years.

Fig. 1.4 Strategic Incoherence

Orgnisation resources incoherence with strategy led to threat of

missing opportunities in case of Birch Paper Company30 caused by
creation of divisional structure, without appropriate transfer pricing
policies. The strategy- incoherence with information system and
divisional managers’ style and poor organisational ethos led to
chopping of a division which was created in Tanner Corporation31
by acquiring a company.

Strategy financial resource incoherence is a very common

occurrence like the sellout of JP Group’s Power Plants32 and fall of

19
Kingfisher Airlines33 in recent times. Indeed the accumulated
physical, human and organisatinal resources incoherence with
strategy is often compounded in the form of financial incoherence
with strategy as funds/cash inflows do not cover funds/cash
outflows.

The mismatch may be not be simple and direct between two

elements only, it could be complex and between multiple elements
simultaneously. It may be stable but also vary over time, making it
a very complex and be harmful for the overall performance of the
organisation, both in the short and the long term one.

The short term consequences of strategic incoherences are

declining or suboptimal performance of the organisation. The long
term consequences are more damaging and less noticed. They are
also in terms of number of wonderful opportunities being missed
out due to human resource and organisational resource incoherence
with environment and strategy.

How do incoherences affect the functioning of an organiaations?

Some like physical and financial incoherence create bottlenecks
and thus limit the level of organisation’s output, which can be
increased by removing bottlenecks in a quantified manner. Others
like strategic incoherence of human resource and organisational
resources have choking effects, like blockage of arteries and
malfunctioning of various glands in the human body, which are
silent, not easily visible and identifiable, and are often noticed
when they have crippling effect like heart attack or kidney failure.
They need special diagnostics test conducted by an external expert
or consultant like doctors. These diagnostics are audits34 of
systems, structure, policies, procedures, styles and organisational
culture.

Do the organizations having one or more strategic incoherence

perform very badly in the market? Evidences do not support it
conclusively. Because performance to the extent it suffers vis-a-vis
competitors on account of strategic incoherence, is determined by
relative strategic incoherence of competitor(s). Instead of focusing
20
too much of attention to relative strategic incoherence,
organisations would do better by focusing on their own strategic
incoherence and try to overcome or remove them.

How much is the damage caused by strategic incoherence? It is

difficult to say. It is like how much a person can’t deliver due to
prevailing conditions of surroundings, preparedness and body
condition for performance. Whether there are any preventive care
possible? Yes, like in medical science, through regular checkups.
Whether and to what extent it can be prevented is again a difficult
question to answer like what will happen if a person appears in
examination. But by not appearing he can’t get selected. Likewise,
without regular checkups one can’t guard against poor performance
of the organisation.

The strategic incoherence can occur by mistake, due to indifference

or due to deliberate misdeavour of one or more key executives of
the organisation playing petty politics35, one manipulating
organisational policies and systems for personal gains and benefit.
Above all it could be caused by gross incompetence of the Chief
and other key executives.

The incoherences are not unusual phenomenon. Every organisation

has few or many of them at any point of time. It would be a surprise
if an organization has few and insignificant ones. It would happen
only if necessary care was taken by enlightened management of the
organization. Indeed, not having any strategic coherence would be
a utopian idea. Organistions are dynamic, especially better
preforming ones. As they stabilise one set of relationships between
various elements of organisations to achieve coherence, the
organisation performance goes up and aspirations rise, creating
demand for new chain of relationships between various elements
which would take time to establish and stabilise. Indeed, most of
the time, demand for new relationships arise before the existing
relationships stabilize

Apart from the audits mentioned above to diagnose the incoherence

for remedial action, there is a tonic for guarding against strategic
21
incoherences. It is sustained and concerted efforts for developing
and enhancing the integrative thinking ability (in all three
dimensions) among the middle, senior and top level executives36).
1.3 Framework of Discussion

The purpose is to give the basics of Strategic Management (SM)

function. The discussion gradually develops the concept of
Strategic Management, in a way that highlights why SM is an
important, albeit complex management function; requiring a
specialised and exclusive set of managerial competencies (skills,
orientation and perspectives), which need and can be consciously
cultivated, to fully realise the benefits accruing from SM function.
The discussion then proceeds to the conceptual framework of
Strategic Management Process (SMP). The need for considering
ownership influence on Strategic Management process (which is
an important though inadequately explored aspect in Indian
context) is highlighted. The subsequent sections provide the details
of each element in the two phases of the strategic management
process; namely the strategy formulation and strategy
implementation. The former covers issues of mission, objectives,
need gap, environmental analysis, strength and weakness analysis,
strategic alternatives, and strategic choice issues. Strategy
implementation covers the communication of corporate strategy,
resource allocation and mobilisation, organisation structure,
systems, skills, staff, top management styles, culture and leadership
issues.

Attempt here has been made to present various issues in a way

which highlights the intricate relationship between them, to enable
the reader to appreciate the importance and integrative character of
Strategic Management. Likewise the presentation has been made
in a way that highlights the importance of considering strategy
implementation issues at the time of strategy formulation itself.
Care has also been taken that the issues, which are very important
in the Indian context (e.g. managing human resources) are
highlighted. Also more details are provided about concepts which
are critical and ate prone to confusion (e.g. long range strategic
planning and long range action planning, different dimensions of
22
human resource .management, information system etc.). Attempt
has also been made to identify characteristics of strategic
leadership and the developmental efforts required to groom the
strategic leaders, an aspect which requires serious attention and
concerted efforts to reap the advantages of Strategic Management.
Finally, conscious efforts have been made to make to the text as
concise as possible covering significant points and avoiding details.
This is done to enable the reader to go through it more than once,
be able to comprehend various issues in the entire strategic
management process, realise its complexities (and appreciate what
makes it so) and be able to retain the concepts and tools and
techniques used in Strategic Management without getting bogged
or lost in details.

Review Questions

1. Why should one study strategic management?

2. What must be studied at the minimum level?
3. Conceptually, what are the tasks in strategy implementation?
What makes them challenging?
4. What is strategic incoherence? What is it significance?
5. Discuss the importance and process of detailing in
strategy implementation.
6. What are the roadblocks in strategy implementation? How
they can be removed?
7. What is the importance of strategy implementation
expertise for strategy formulation?
8. “Corporate strategy is unique to strategists”. Why?
9. How the input-process-output model can help in corporate
strategy development?
10. What are advantages of having strategic management expertise?

References

1. Case: Nalanda Small Scale Industries Development

Corporation, Indian Institute of Management, Ahmedabad.
2. Case: Hindustan Tractors Ltd, Indian Institute of
Management, Ahmedabad.
23
3. Case: International Manufacturing Company (A) (B)
Harvard Business School.
4. Case: Ing. C. Olivetti and Co. S.P.A., Harvard Business School.
5. Case: Hindustan Levers Ltd. (A) and (B), Indian
Institute of Management. Ahmedabad.
6. Kumar, Krishna, “Ansoff and Strategic Management”,
Short Teaching Note www.smgi.in/ansoff.pdf
7. Rue, Les]ie, W., and Holland. Phillis G., Strategic
Management: Concepts and Experiences, Singapore
(1989), McGraw Hill, p.3.
8. Ansoff, H.I., Corporate Strategy, New York (1965)
McGraw Hill, p.18.
9. Kumar, Krishna “Power of Preparing Checklist”, Short
Teaching Note www.smgi.in/checklisting.pdf
10. Srivastava Ritu & Kumar, Krishna, Cases “Is Small Beautiful
(B), (C), (D) & (E)” in Cases in Strategic Management
http://www.smgi.in/booksad.pdf
11. Andrews, K.R., Concept of Corporate Strategy, Homewood,
Illinois (1987) Irwin
12. Khandwalla. Pradip, N., The Fourth Eye, Allahabad (1984)
A.H. Wheeler,
13. Ibid.
14. Barnard, Chester I, Functions of Executive, Cambridge,
Mass, (1938) Harvard University Press.
15. Kumar, Krishna, Teaching Note of the Case Time Estimates
www.smgi.in/cases/tncases/tn43.pdf
16. Bernard, C.I., Functions of Executives op.cit.
17. Kumar, Krishna, “Role of Heart in Strategic Decision
Making”, Short Teaching Note
http://smgi.in/cases/tncases/heart.pdf
18. Kumar, Krishna, Case “Time
Estimates”, www.smgi.in/cases/c43.pdf
19. Kumar, Krishna, “Contribution of Economics and Operations
Research to Management Discipline”, Short Teaching Note
www.smgi.in/cases/tncases/contribution.pdf
20. Kumar, Krishna, Teaching Note of the Case Time Estimates op.cit.
21. Bernard, C.I., Functions of Executives op.cit.
22. Andrews, K.R, op.cit.
23. Jauch, Lawrence R. and Glueck, William F., Business Policy
24
 and Strategic Management, Singapore (1988), McGraw Hill,
24. Andrews, K.R, op.cit.
25. Waterman and Robert, H. and Peters Thomas., “Structure is
Not Organisation” Business Horizons, June 1980
26. Kumar Krishna, Case “Apollo Hospital Enterprise Ltd.” in
Cases in Strategic Management www.smgi.in/booksad.pdf
27. Kumar, Krishna, Kovid. R.K.Case “Kingfisher Airlines”, in
Cases in Strategic Management www.smgi.in/booksad.pdf
28. Venkiteshwaran, K., Case Spartek Ceramics Ltd (B), Indian
Institute of Management Ahmedabad
29. Kumar Krishna, Case “Scooters India Ltd. (A), (B) & (C)”, in
Cases in Strategic Management www.smgi.in/booksad.pdf
30. Anthony R.N., Management Control Systems op.cit.
31. Ibid
32. Kumar, Krishna, Case “Kingfisher Airlines” op.cit
33. Jaypee Group inks pact to sell 3 power plants to JSW energy,
https://www.google.co.in/webhp?sourceid=chrome-
instant&ion=1&espv=2&ie=UTF-
8#q=JPGroup+sells+power+plants
34. Kumar, Krishna, “Managing Transformation” see Ch.12 of this book.
35. Kumar, Krishna, “Streams of Influences in Strategic Decision
Making”
www.smgi.in/cases/tncases/streams.pdf
36. Kumar, Krishna, “Integrative Thinking Ability” see
www.smgi.in/rp/integrative thinking ability.pdf

25
 Exhibit 1

The Kick of Creativity

The Phase II of construction work of IMP Institute’s campus was

getting delayed so much so that only 40% progress was reported in
24 months for a project that was to be completed in just 15 months.
The Phase II work included, inter-alia, a staff dining hall for 50
persons.
A new Director joined the institute. He felt that the 50 seater dining
hall will prove to be too inadequate for a growing institute as could
be seen from the crowd at lunch time in the students’ canteen,
which was being used for staff dining as a stop gap arrangement.
There was no dining facility for participants of management
training programmes, which were being conducted at a low key for
want of hostel, dining and class room facilities.

The Director asked the Architects to increase the capacity of

proposed staff dining hall to 100 persons, who regretted it because
no land was available for the purpose in the campus, which was
spread over two small hills and any unwarranted cutting of hills
could result in land slide, which the institute was facing at some
buildings under construction. He pondered over the matter for few
months. One night it occurred to him that land means area, which
is expressed in x and y axes. What about Z axis that he studied in
geometry and building drawing? And then idea crossed his mind
and he suggested to the Architects to design 100 seater dining hall,
expandable to 200 (by raising one more floor), erecting pillars on
both sides of the road (no more cutting of hill was required) and
making dining hall above the road. The Architects designed it. The
Director then requested to make it 200 seater one, expandable to
400 seats. The Architect then made a new design, which could
accommodate 150 seats, comfortably, on each of two floors
(including a VIP dining room on each floor). It also had a service
area on each floor, which could accommodate another 15-20 seats..
The pillars on the valley side of the road were so wide that two
small rooms could be carved, which could be used as a 20 seater
seminar room, as room for small Management Development
26
Programmes or as additional dining rooms, taking the total capacity
to about 400.

Rains in Kerala are heavy and the roof had to be provided with
shelter to avoid accumulation of water. Very strong aluminum
sheets, covering the entire roof, had to be used to withstand high
velocity of winds, coming directly from the Arabian sea,. The iron
rails surrounding the roof were not considered safe and hence walls
with doors and windows had to be constructed to cover the sides,
which converted the top floor also into a large dining hall (which
could be used even for conference purpose), taking the total seating
capacity of the staff dining hall to almost 600 (which could
accommodate even higher number in a buffet arrangement).

The initial capacity of 50 seater staff dining hall thus went up 10-
fold. The Rs. 60 lakhs estimated cost went up to Rs. 160 lakhs, but
the impressive three story dining hall could meet the requirements
of not only the staff even when the academic activities
tripled, but also accommodated students of increased intake (till
new facilities were created) but also participants of management
development programmes for the next 7-8 years (till new facilities
were created).

Was increased capacity a kick of creativity? Is delay in project

completion a bane or blessing in disguise? Is constraint as serious
a land an opportunity to grow? How much capacity augmentation
could be done by Architects through creative designs, if one
requests them. These questions make one ponder as strategist.
More example of it can be seen in cases Is Small Beautiful (C), (D),
(E) and (F).

27
28