Strategic Management

By: Kavitha Reddy Gurrala

Senior Manager QA
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 Strategic Management-Questions
 What are the foundations for Strategic
Competitiveness?
 What is the Strategic Management Process?
 What types of Strategies are used by
Organizations?
 How are Strategies Formulated?
 What are current issues with Strategy
Implementations?
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Question 1: What are the foundations for
Strategic Competitiveness?

 Basic concepts of Strategy:

– Competitive Advantage — operating with an
attribute or set of attributes that allows an
organization to outperform its rivals.
– Sustainable Competitive Advantage — one that
is difficult for competitors to imitate.

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Question 1: What are the foundations for
Strategic Competitiveness?

 Basic concepts of Strategy (cont.):

– Strategy — a comprehensive action plan that
identifies long-term direction for an
organization and guides resource utilization to
accomplish organizational goals with
Sustainable Competitive Advantage.
– Strategic Intent — focusing all organizational
energies on a unifying and compelling goal.
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Question 1: What are the foundations for
Strategic Competitiveness?

 Basic concepts of Strategy (cont.):

– Strategic Management — the process of

formulating and implementing strategies to

accomplish long-term goals and sustain
Competitive Advantage.

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Question 1: What are the foundations for
Strategic Competitiveness?

 Goal of Strategic Management is to create

above-average returns for investors.
– Returns exceeding those for alternative
opportunities at equivalent risk.
– Earning above-average returns depends on the
organization’s competitive environment.
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Question 1: What are the foundations for
Strategic Competitiveness?
 Environments and Competitive Advantage:
– Monopoly.
• Only one player and no competition.
• Creates absolute Competitive Advantage.
– Oligopoly.
• Is a market form which is dominated by a small number of
large sellers.
• Interdependence among rival sellers.
– Hyper Competition.
• Several players directly competing against each other.
• Any Competitive Advantage is only temporary.
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Question 2: What is the Strategic
Management Process?

 Strategy Formulation
– The process of creating a Strategy.

– Involves assessing existing Strategies,

Organizations, and Environments to develop
new Strategies and Strategic Plans capable of
delivering future Competitive Advantage.

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Figure: Strategy Formulation and Implementation in the
Strategic Management Process.

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Question 2: What is the Strategic
Management Process?

 Questions for Strategy Formulation:

– What is the business mission?

– Who are the Customers of the Organization under

consideration?

– What will the Customers value the most?

– How are the past Business Results?

– What are the Future Plans? 10

Question 2: What is the Strategic
Management Process?

 Strategy Implementation
– The process of allocating resources and putting
strategies into action.
– All Organizational and Management Systems
must be mobilized to support and reinforce the
accomplishment of the Strategies planned.

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Question 2: What is the Strategic
Management Process?
 Essential tasks for Strategy Implementation:
– Identify Organizational Mission and Objectives.
– Assess current performance vis-à-vis Mission and
Objectives.
– Create Strategic Plans to accomplish the Purpose and
Objectives.
– Implement the Strategic Plans
– Evaluate Results; change Strategic Plans and/or
Implementation Processes as necessary.
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Study Question 2: What is the Strategic
Management Process?
 Analysis of the Mission:
– The reason for an Organization’s existence.
– Good Mission statements identify:
• Customers
• Products and/or services
• Location
• Underlying philosophy
– An important test of the mission is how well it
serves the organization’s stakeholders.
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How External Stakeholders can be valued as Strategic
Constituencies of the Organizations.

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Study Question 2: What is the Strategic
Management Process?

 Analysis of values:
– Values are broad beliefs about what is or is not appropriate.

– Strong core values for an organization helps build institutional

identity, gives character to an organization, and it backs up the
mission statement.

– Organizational culture reflects the dominant value system of the

organization as a whole.

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Study Question 2: What is the Strategic
Management Process?
 Organizational Culture 
– Shapes the values of Managers and other organization
members.
– Aligns people in common directions.
– Helps build institutional identity.
– Defines the character of the organization for employees
and external stakeholders.
– Backs up the mission statement.
– Guides the behavior of organizational members in
meaningful and consistent ways.
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Study Question 2: What is the Strategic
Management Process?
 Analysis of Objectives:
– Operating objectives direct activities toward key and
specific performance results.
– Typical operating objectives:
• Profitability
• Market share
• Human talent
• Financial health
• Cost efficiency
• Product quality
• Innovation
• Social responsibility
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Study Question 2: What is the Strategic
Management Process?
 List the Strengths?  List the Weaknesses?
– Manufacturing – Outdated facilities?
efficiency? – Inadequate research
– Skilled workforce? and development?
– Good market share? – Obsolete technologies?
– Strong financing? – Weak management?
– Superior reputation? – Past planning failures?

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Study Question 2: What is the Strategic
Management Process?
 Analysis of Organizational Resources and
Capabilities:
– Important goal of assessing core competencies.
– Potential core competencies:
• Special knowledge or expertise.
• Superior technology.
• Efficient manufacturing approaches.
• Unique product distribution systems.

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SWOT Analysis of Strengths, Weaknesses,
Opportunities and Threats.

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Study Question 2: What is the Strategic
Management Process?
 List the  List the Threats?
Opportunities? – New competitors?
– Possible new markets? – Shortage of resources?
– Strong economy? – Changing market
– Weak market rivals? tastes?
– Emerging – New regulations?
technologies? – Substitute products?
– Growth of existing
market?

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Study Question 2: What is the Strategic
Management Process?
 Analysis of the Industry and the Environment:
– Assessment of the Macro Environment:
• Technology.
• Government.
• Social structures and population demographics.
• Global economy.
• Natural environment.
– Analysis of the Industry environment:
• Suppliers.
• Competitors.
• Customers.
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Porter’s Model of five Strategic forces
affecting industry competition.

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Three levels of Strategies within Organizations—Corporate,
Business, and Functional Strategies.

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Study Question 3: What types of Strategies
are used by Organizations?
 Questions addressed at each Strategic level:
– Corporate strategy
• In what Industries and Markets should a Firm
compete?
– Business strategy
• How to compete for customers in this industry and
market?
– Functional strategy
• How to best utilize the resources to implement the
business strategies? 25
Study Question 3: What types of Strategies
are used by Organizations?
 Growth and Diversification strategies:
– Growth strategies
• Seek an increase in size and the expansion of current
operations.
– Types of growth strategies:
• Concentration strategies
• Diversification strategies
– Related diversification
– Unrelated diversification
– Vertical integration

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Study Question 3: What types of Strategies
are used by Organizations?
 Restructuring and Divestiture Strategies:
– Readjusting operations when an organization is in
trouble.
– Retrenchment
• Correcting weaknesses by making changes to current
operations.
• Liquidation
• Restructuring
– Downsizing and rightsizing
• Restructuring through divestiture

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Study Question 3: What types of Strategies
are used by Organizations?
 Global Strategies:
– Globalization Strategy.
• World is one large market; standardize products and
advertising as much as possible.
• Ethnocentric view.
– Multi-domestic Strategy.
• Customize products and advertising to local markets as much
as possible.
• Polycentric view.
– Transnational strategy
• Balance efficiencies in global operations and responsiveness to
local markets.
• Geocentric view.
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Study Question 3: What types of Strategies
are used by Organizations?

 Cooperative Strategies
– Strategic Alliances — two or more
organizations partner to pursue an area of
mutual interest.
– Types of Strategic Alliances:
• Outsourcing alliances
• Supplier alliances
• Distribution alliances
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Study Question 3: What types of Strategies
are used by Organizations?

 E-Business Strategies
– The Strategic use of the Internet to gain
competitive advantage.
– Popular e-business strategies
• Business-to-business (B2B) strategies
• Business-to-customer (B2C) strategies

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Study Question 4: How are Strategies
Formulated?

 Opportunities for achieving Sustainable

Competitive Advantage:
– Cost and Quality
– Knowledge and Speed
– Barriers to entry
– Financial resources

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Study Question 4: How are Strategies
formulated?
 Porter’s generic Strategies Model
– Business-level Strategic Decisions are driven
by:
• Market Scope
• Sources of Competitive Advantage
– Market scope and sources of competitive
advantage are combined to generate four
generic strategies.
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Porter’s Generic Strategies framework: Soft-
Drink Industry examples.

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Study Question 4: How are Strategies
Formulated?

 Portfolio Planning Approach

– Designed to help managers decide on investing
scarce organizational resources among
competing business opportunities.
– Useful for multi-business or multi-product
situations.

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Study Question 4: How are Strategies
Formulated?

 BCG matrix
– Ties strategy formulation to analysis of
business opportunities according to …
• Industry or market growth rate
– Low versus high

• Market share
– Low versus high

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The BCG Matrix Approach to Corporate
Strategy Formulation.

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Study Question 4: How are Strategies
Formulated?

 BCG matrix — business conditions and

related strategies:
– Stars
• High share/high growth businesses.
• Preferred strategy — growth.
– Cash cows
• High share/low growth businesses.
• Preferred strategy — stability or modest growth.

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Study Question 4: How are Strategies
formulated?
 BCG matrix—business conditions and
related strategies (cont.):
– Question marks
• Low share/high growth businesses.
• Preferred strategy — growth for promising question
marks and restructuring or divestiture for others.
– Dogs
• Low share/low growth businesses.
• Preferred strategy — retrenchment by divestiture.

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Study Question 5: What are current issues
with Strategy Implementation?

 Strategic Planning failures that hinder

Strategy Implementation:
– Failures of Substance
• Inadequate attention to major Strategic Planning
elements
– Failures of Process
• Poor handling of Strategy Implementation &
Control

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Strategy Implementation

 Corporate Governance:
– Corporate governance is the system of rules,
practices and processes by which a firm is
directed and controlled.
– Corporate governance essentially involves
balancing the interests of a company's many
stakeholders, such as shareholders,
management, customers, suppliers, financiers,
government and the community.
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Strategy Implementation

 Strategic Leadership
– The capability to inspire people to successfully
engage in a process of continuous change,
performance enhancement, and implementation
of organizational strategies.

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Strategy Implementation

 Critical tasks of Strategic Leadership …

– Be a guardian of trade-offs.
– Create a sense of urgency.
– Ensure that everyone understands the
strategy.
– Be a teacher.
– Be a great communicator.
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Thank You