STRATEGIC

MANAGEMEN
T-I
Faculty Neelam Mehra
Class PGDM IV

SYLLABUS
Objective
To understand the basic issues and
concepts
related
to
Strategic
Management and learn in detail the
most relevant and up to date
methodologies and tools to address
these
Issues.

UNIT 1
OVERVIEW
Overview to Strategic Management
Evolution
of
Strategic
Management,
Definition
&
Meaning, Concept of Strategy,
Levels
of
Strategy,
Strategic
Decision
making,
Strategic
Management Process.

UNIT - 2
STRATEGIC INTENT
Meaning
of
Strategic
Intent,
Understanding
Vision,
Mission,
Concepts of Stretch, Leverage & Fit,
Objectives & Goals of Business,
Business
Definition,
Balanced
Scorecard Approach, Critical Success
factors & Key Performance Indicators.

UNIT - 3:
ENVIRONMENTAL APPRAISAL

Concept of Environment, Internal &

External environment, Macro &
Micro environment, SWOT analysis,
TOWS matrix, PESTLE framework,
ETOP, environmental scanning,
Porters five forces model, methods
& techniques used for scanning.

UNIT 4
ORGANIZATIONAL APPRAISAL

Dynamics
of
internal
environment, organizational
capability
factors,
organizational
appraisal
methods & techniques, OCP,
SAP.

UNIT 5
CORPORATE LEVEL STRATEGY

Expansion strategies, Stability Strategy,

Retrenchment
Strategy,
Combination
Strategy,
Concentration,
Integration
(Horizontal & Vertical), Diversification
(Concentric
&
Conglomerate),
Internationalization,
Cooperation
(Joint
venture, Mergers, Acquisition, Strategic
Alliance), Corporate Restructuring.

UNIT 6
BUSINESS LEVEL
STRATEGY
Porters Generic Strategy Model,
Market Location tactic (Leader,
challenger,
follower,
nicher),
Market Timing tactic, Industry
Cycle Strategy.

UNIT 7
FUNCTIONAL LEVEL STRATEGY

Marketing strategy, financial

strategy, human resource
strategy,
production
strategy, etc.

REFERENCE BOOKS
Author/Publication
1. Strategic Management and Business
policy
Azhar Kazmi, Mcgraw Hills
2. Strategic Management,
Alpana Trehan, Dreamtec

UNIT 1 : OVERVIEW OF
STRATEGIC
MANAGEMENT

Why are some business organisations so

successful and so many others fail in the
same given environment ??
Because those successful manages its
resources most effectively, exploits all the
available opportunities at right time through
right methods and prepares in advance
against
all
anticipated
threats
and
weaknesses.

Business strategy
Refers to the senior management decisions
oriented towards achieving the objectives.
Strategic Management is the process of
formulating, implementing and evaluating
strategies for an organisation.

WHAT IS STRATEGY
Strategy is a greek word strategos, means
generalship ie the art of generalship..
Giving direction in military forces.
Strategy means Managerial decisions of long term
significance
to achieve long term objectives

EVOLUTION
Day to day planning
Short term future planning
Long range future plannning
Strategic planning

Evolution Phases

Phase I In around 1930, in US Cos. With

singly product catering unique set of
customer in limited geographical area
started expanding.
Thus the need of integerating the functional
areas arose from earlier informal control
and coordination.

Phase II
Due to business enviroment changes from
1930-1940 in US,
Ad hoc policy formulation

Planned policy formulation

Phase III
Due to further increase in complexities and
accelerating changes in environment
Planned policy formulation & integration of
functional areas could no longer served the
challenging business needs

Thus in 1960 Strategy formulation concept

ie was a demand for a critical look at the
concept of business and its relationship with
environment

Phase IV
In 1980s strategic managements very intial
focus on
Intersection of two broad fields of enquiry
1. Strategic processes of business firms
2. responsibilities of general management

Current Scenario

Thus Approaches and Methods of Analysis

of Strategic Management have still not
completely merged into the theory of how
to manage a business enterprise
But Definitely Represent
a Powerful way of thinking to resolve
Strategic Issues.

Thus Management of Companies

Strategically by senior management is
termed as STRATEGIC MANAGEMENT.

Hambrick & Fredrickson

Model of Strategic
Internal &
Management
External Strategic
Analysis

Vission &
Mission

Goals &
Objective
s

Strategy :
Arenas
Vehicles
Differentiat
ors
Staging
Economic
logic

Impelmntatio
n levers &
Strategic
Leadership

1. Arenas: Where will we be Active ?

ie the products, services, distribution
channels, geographical markets and technology
in which the firm participates.
2. Vehicles: How will we get there ?
Means for entering new arenas such as
throughAcquisitions, Alliances or Internal
development.
3. Differentiators: How will we win the Market ?
Features of the firms products/ services that
helps to compete in market. Like Price, Quality
or
Reliability of products.

4.

Staging : What will be our speed, timing

and sequence of moves ?
There are resources and limitations that
determine when a firm moves into the
market and at what speed.

5.

Economic logic: How will we obtain our

Returns ?
Explaining how PROFITS will be created.
Thus when the 5 elements of strategy are
alligned Reinforce each other
Success is more

Understanding Strategy
In business Parlance, there is no definite meaning
assigned to strategy. It is often loosely means a
number of things.
A strategy could be :
A plan or course of action or set of decision rules
to achieve cos objectives and goals.
Related to persuing those activities which move
an organisation from its current position to a
desired future state
Connected to the strategic positioning of a firm,
making trade offs between its different activities
and creating a fit among these activities

 Connected

to the strategic positioning of a firm,

making trade offs between its different activities
and creating a fit among these activities.
Decisions to continuously co-align the firm with
its environment to achieve goals and objectives.
Thus in short Strategy is the means to achieve
objectives.

Levels of Strategic Management

Corporate
level
Business
Level SBU

Corporate
Office

SBU
B

Finan
Marketi
Operatio
ce
ng Level ns
Functional

SBU
C

HRM

Informat
ion

A major distinction between policy and

strategy is
Policy
is
a
guide
to
the
thinkingandactionofthosewhomakedeci
sions,
Whilestrategyconcernsthe direction in
which human and physical resources will
be
deployed
and
applied
in
ordertomaximisethechanceofachieving
aselectedobjectiveinthefaceofdifficultie
s.

The problems of policy in business have to do

with
the choice of puposes
the moulding of organisational identity and
character
Mobilisation of resources to achieve the goal of
enterprise
Thus the senior management, while
determining the future course of action
has a mental picture of the type of
organisation they want their company to
become.

Who is Senior Management

(SM) ??
SM consists of the senior most officials of a company
who are responsible for long term decisions and
ultimate growth and success of the company.
Senior Management carry designations such as
Chief executive officer (CEO)
President
General Manager
Executive Director etc
SMs are not concerned with day to day problems but
are expected to devote their time and energy to
thinking and deciding about the future course of
action of the company.

STATEGIC DECISION
MAKING
Decision making is the most important
function of any manager
& Strategic decision making is the primary
task of the senior mgt.
Both are essentially same with the
difference in the levels at which they
operate.

Decision making process

I.
objectives determination
II.
alternatives of achieving objectives are
identified.
III.
each alternative evaluated in terms of
its objective achieving ability
IV.
the best alternative is chosen.
Such a process is deceptively simple. In
practice, it is a highly complex n difficult
phenomenon.

In strategic management process, the basis

thrust of strategic decision making is to
make the choice regarding the course of
action to adopt.

STRATEGIC DECISION MAKING

(SDM)- A COMPLEX PROCESS
Like the working of human mind, strategic
decision makers are also unable to describe
the exact manner in which strategic
decisions are made.
Its a complex mental process, not exposed
to view.
They are complicated n mysterious.
More intuitive than intellectual.

Thus no theoretical model, however

painstakingly formulated cam adequately
explain the different dimensions of the
process of strategic decision making.
Despite these limitations, we can still
attempt to understand SDM by considering
some important issues related to it.

ISSUES IN STRATEGIC DECISION

MAKING
1.
2.
3.
4.
5.
6.

Criteria
Rationality
Creativity
Variability
Person related factors
Individual versus group decision making

4 PHASES IN SMP
1.

2.
3.
4.

Establishment of strategic
intent
Formulation of strategies
Implementation of strategies
Strategic evaluation
Strategic control

STRATEGIC MANAGEMENT
PROCESS (SMP)
SM is a dynamic process.
Not a one time or static process but a
continual and evolving process.
Thus SMP can not be rigid steps in a fixed
sequence.
steps are taken and repeated as the situation
demands.

ELEMENTS OF SMP
A. Establishing strategic
intent
I.
II.
III.
IV.
V.

Creating and communicating a vision

Designing a mission statement
Defining the business
Adopting the business model
Setting objectives

B. Formulation of strategies

6. Performing environmental appraisal

7. Doing organisational appraisal
8. Formulating corporate level strategies
9. Formulating business level strategies
10. Undertaking strategic analysis
11. Exercising strategic choice
12. Preparing strategic plan

C. Implementation of strategies
13. Activating strategies
14. Designing the structure, systems and
processes
15. Managing behavioral implementation
16. Managing functional implementation
17. Operational strategies

D.Strategic evaluation and

control
18. Performing strategic evaluation
19. Exercising strategic control
20. Reformulating strategies

UNIT II
STRATEGIC
INTENT

STRATEGIC INTENT (SI)

SI is target that an organisation set to
achieve.
SI is the obsession of an organisation of
having ambitions to win at all levels of the
organisation in the quest for global
leadership.
SI is the obsession of having ambitions that
may even be out of proportion to their
resources and capabilities.

STRATEGIC INTENT (SI)

SI is the hierarchy of the following intentions of
an organisation -

BROAD VISSION
MISSION
OBJECTIVES & GOALS

STRETCH
STRETCH - The misfit between resources
and aspirations.
Stretch belongs to the school of strategy
where capabilities are no constraints to
achieve and environment is not any given
condition but something which can be
created and moulded.

LEVERAGE
Leverage refers to accumulating and
conserving resources in a manner that
limited resource base is stretched to meet
the aspirations that an organisation dares
to have.

While Stretch & Leverage are the

idealistic concepts, Fit is an realistic
concept.
Fit means positioning of the firm by matching
the organisational resources to its environment.
In Fit SWOT is used to assess organisational
capabilities and environmental opportunities.
Environments has
got to offer
capabilities.

what are
FIT
organisations
STRATEG
Y

VISION
Vision is the dream of any
organisation.
It can be hazy and vague, yet a strong
motivator to action.
Vision is the mental perception of the kind
of environment an individual/ organisation
aspires to create in the future.

Eg. Henry Ford wished to democratise the

automobile when he visualised that an
affordable vehicle must be available for the
masses.
Walt disney wanted to make people happy.
Jamshedji Tata dreamt of a self reliant India
in steel making.
All these visionaries had a vision that
gradually become clear as they took actions
to materialise their dreams.

A vision should be

An organisation charter of core values and

principles.
The ultimate source of our priorties, plans
and goals.
A puller (not pusher) into the future
A determination and publication of what
makes us unique.
A declaration of independence

VISION

contd..

A Vision should not be

A high concept statement, motto or an
advertising slogan
A strategy or plan
A soft business issue
Passionless

Benefits of Vision
Good vision are
Competitive, original, unique and practical.
inspiring and exhilarating
Help creating a common identity and a
shared sense of purpose
Foster risk taking and experimentation
Foster long term thinking

MISSION
Mission is a statement which
defines
the
role
that
an
organisation plays in the society.
Mission
represents
the
purpose
existence of an organisation.

of

Eg. A book publisher & a magazine editor both

satisfies the information needs of the society.
But they do it differently.
Publisher - Producing excellent reading
material,
Editor
Presenting news analysis in a
balanced n unbiased manner.
Thus both have different objectives but an
identical mission.

CHARATERISTICS OF

MISSION STATEMENT
It should be Feasible realistic n achievable,
not an impossible statement.
It should be precise neither so narrow to
resrict co.s activities nor too broad to make
itself meaningless.
Should be clear
Should be motivating

CHARATERISTICS OF MISSION
STATEMENT
Should be distinctive
Should indicate major components of
strategy.
Should indicate how objectives are to be
accomplished.

VISION & MISSION OF RELIANCE

POWER
Vision
To build a global enterprise for all our
stakeholders
To be the largest private sector power
generation company in India
To be the largest hydro power generation
company in India
To be the largest power company in India
To be the largest coal mining company in
India

VISION & MISSION OF

RELIANCE POWER

Mission

To attain global best practices and become a leading power

generating company.

To achieve excellence in project execution, quality, reliability, safety

and operational efficiency.

To relentlessly pursue new opportunities, capitalizing on synergies in

the power generation sector.

To consistently enhance our competitiveness and deliver profitable

growth.

To practice highest standards of corporate governance and be a

financially sound company.

To be a responsible corporate citizen nurturing human values and

concern for society.

VISION & MISSION OF RELIANCE

POWER
Mission
To improve the lives of local community in all our projects
.
To be a partner in nation building and contribute towards
Indias economic growth.
To promote a work culture that fosters learning, individual
growth, team spirit and creativity to overcome challenges and
attain goals.
To encourage ideas, talent and value systems and become the
employer of choice.
To earn the trust and confidence of all stakeholders, exceeding
their expectations.
To uphold the guiding principles of trust, integrity and
transparency in all aspects of interactions and dealings.

VISION & MISSION OF

INFOSYS INTERNATIONAL
Our Vision

To help our clients meet their goals through our people, services and solutions

Our Mission

Infosys International Inc. is dedicated to providing the people, services and solutions
our clients need to meet their information technology challenges and business goals.

Work to understand the needs and requirements of our clients before proposing a
solution

Develop responsive proposals that provide cost-effective solutions to our clients

needs

Deploy the right mix of people and products to deliver value-added services and
solutions to our clients

Follow-up on the quality of our services and solutions to our clients

Appreciate the trust that our clients put in us as we work with them to improve their
business and information technology.

BUSINESS OBJECTIVES & GOALS

Goals denote what an organisation
hopes to accomplish in a future
period of time.
They represent the future state or
outcome of effort put in now.

Objectives are the ends that state

specifically how the goals shall be achieved.
Objectives are concrete and specific in
contrast to Goals that are generalised.

ROLE OF OBJECTIVES
1.

2.

3.

4.

It defines the organisations relationship

with its environment.
Helps an organisation persue its vision and
mission
Provides the basis for strategic decision
making
Provides the standards for performance
appraisal.

CHARACTERISTICS OF OBJECTIVES
It should be understandable
Should be concrete and specific
Should be related to a time frame
Should be measurable and controllable.
Should be challenging
Different objectives should correlate with
each other
Should be set within contraints.

ISSUES IN OBJECTIVE SETTING

Specificity
Multiplicity
Periodicity
Verifiability
Reality
Quality

HOW ARE OBJECTIVES

FORMULATED

1.
2.

3.
4.

Following are the 4 factors to be considered

for objective setting
The forces in the environment
Realities of the cos resources and internal
power relationship
Value system of top executives
Awareness in management of the past
objectives of the co.

BALANCE SCORECARD MODEL

Basically
Balance
scorecard
approach help an organisation to
set objectives.
Balance scorecard approach has
become very popular around the
world, including India.

The 4 perspective are important

in the following in the following
order
1.
2.
3.
4.

Financial perspective (most imp)

Customers perspective
Internal business perspective
Learning and innovation
perspective

BALANCE SCORE CARD

APPROACH TO OBJECTIVE
SETTING
Financial
Perspective
Objective
Targets
Customer
Perspective
Objectives
Targets

Vision
&
Strateg
y

Internal Process
Perspective
Objectives
Targets

Learning/ Innovation
Perspective
Objectives

Targets

CRITICAL SUCCESS FACTORS

Critical Success Factors (CSFs) are the
factors crucial for organisational success.
When strategist consciously consider these
factors for strategic management, they are
likely to be more successful while putting
relatively less efforts.

Rockart has applied the CSFs approach through a

three step procedure for determining CSF
1.

TO GENERATE THE SUCCESS FACTORS what does it take to be successful in

business

2.

REFINING CSFs INTO OBJECTIVES what should organisations goals and

objectives be with respect to CSFs.

3.

IDENTIFYING MEASURES OF PERFORMANCE

how will we know whether the organisation has
been successful on this factor.

 CSFs

are the basic business strategy for

competing wisely in any industry.

CSFs

are identified in an industry/ business

and then resources are injected into a
particular area where company sees an
opportunity to gain significant advantages
over its competitors.

1. CSFs of a shoe manufacturing co. high

manufacturing quality

Cost efficiency
Sophisticated retailing
A flexible product mix
Creation of a product image

2.

CSFs of a toothpaste manufacturing co.

Form, Flavour, Foam, Freshness

3.

SFs of a courier co.

Speedy dispatch, Reliability, Price.

KEY PERFORMANCE
INDICATORS (KPIs)
KPIs are the measures in terms of which the CSFs are
evaluated.
KPI is very important because of their relationship to CSF
and ultimately to the Vision of the Co.
Eg.
1. A Co. has vision To be the most profitable company
of the industry
KPIs of the Co.
Pre tax profit, shareholder equity
2.

B Co. has vision To be a responsible corporate

citizen
KPI Profit % contributed to community causes.

BENEFITS OF KPIs
1.

Help oraganisation to define and measure

progress towards its objective.

2.

Gives a clear picture to everyone in

organisation of what is important and what they
need to do to accomplish objectives.

3.

Tool to motivate employees towards objectives

4.

Helps benchmarking the performance of

organisation over time and to compare with
rival companies.

UNIT II
IS OVER

UNIT III
CORPORATE
LEVEL
STRATEGIES

BUSINESS DEFINITION
According to Derek Abell, any business can
be defined along the 3 dimensions 1.
2.
3.

Customer groups
Customer functions
Alternative technologies

Ie. Who is being satisfied

What is being satisfied
& How the need is being satisfied

Eg. Abells Three Dimensions model for defining the

business of a watch company
Customer
Functions:
Utility /
Ornamental
Alternative
technologies:
Mechanical /
quartz (digital/
analogue)
technology

Customer
groups:
Children,
men or
women

Eg. Abells Three Dimensions model for defining the

business of a Time keeping business
Customer Functions:
Finding time, recording time, using
watches as fashionable accessory, a
gift item or a piece or art
Alternative
technologies:
Mechanical /
quartz digital/
quartz analogue
technology

Customer
groups:
Individual
customers
or industrial
users

Such clarification of business helps in

defining business clearly.
Thus helpful for strategic management
and deciding the right strategy for the
business.

CORPORATE LEVEL
STRATEGIES
Corporate strategies are basically the choice of
direction the organisation adopts.

They are basically about decisions related to :

Allocating resources among different businesses of a firm

Transferring resources from one set of businesses to

others and

Managing and nurturing a portfolio of businesses.

These decisions are taken to achieve the overall
objectives of the company.

The business definition analysis

of any
organisation provides a set of strategic
alternatives that it can consider.

Strategic alternatives revolves around the

questions of
whether to continue or change the business
or

improve the existing efficiency and effectiveness in

the existing sector.

CORPORATE LEVEL
STRATEGIES
According to Glueck, there are 4 strategic
alternatives :
1.
2.
3.
4.

Expansion
Stability
Retrenchment
Any combination of these 3

EXPANSION STRATEGY
Corporate strategy is followed when an
organisation - aims at high growth - through
any of the 3 dimensions of its business
-singly or jointly - in order to improve its
overall performance.
Expansion strategy are also termed as
growth or intensification strategies.

EXPANSION STRATEGY
Major reasons for adopting expansion strategy
1.

It may become unavoidable when the environment

demands increase in pace of activity.

2.

Psychologically, strategists may feel more satisfied

with the growth

3.

Increasing size may lead to more control over the

market vis--vis competitors

4.

Advantages from the experience curve and scale of

operations

EXPANSION STRATEGY
Egs. Of expansion strategies along the 3 three business
dimension

A chocolate manufacturer expands its customer groups to

include middle aged and old persons to its existing
customers comprising kids and youngsters

A stockbrokers firm offers personalised financial services

to small investors apart from its normal functions of
shares and debentures, in order to increase the scope of
its business.

A printing firm changes from traditional letter press

printing to desk top publishing to increase it production
and efficiency.

EXPANSION STRATEGY

Thus expansion strategies

have a profound impact of the companys
internal configuration
causing extensive changes in almost all
aspects of internal functioning.

STABILITY STRATEGIES
The corporate strategy of stability is adopted
when
the
company
tries
improving
its
performance by marginally changing one or more
of its business dimensions.
In this the company do not go beyond what they
are doing presently and serves the same market
with the same products using the existing
technology only.
It just marginally improves the performance or
remain the same in volatile environment.

STABILITY STRATEGIES
Thus Stability strategy is not doing anything extra but sustaining
moderate growth in the line with the existing trends.
Eg.
1.
A packaged tea company provides special service to
institutional buyers apart from its consumer sales through
market intermediaries in order to encourage bulk buying and
thus improve marketing efficiency.
2.

A copier machine company provides better after sale service

to existing customers.

3.

A steel company modernizes its plant to improve efficiency

and productivity

STABILITY STRATEGIES
Reasons for adopting stability strategies are
1.

2.
3.

4.

It is less risky, involves less changes and

people feel comfortable with the things as
they are.
The environment faced is relatively stable
Expansion may be perceived as being
threatening
Consolidation is sought through stabilizing
after a period of rapid expansion.