Strategic Mgmt

What is Strategic Management?

Strategic management is the ongoing process of planning, implementing, monitoring, and adapting strategies to achieve an organization's goals and objectives. It's about making sure your company's capabilities align with market needs, allowing you to outperform competitors and thrive in a dynamic environment.

Think of it as a continuous loop:

• Analysis: Understanding your internal strengths and weaknesses, as well as the external opportunities and threats. This involves things like market research, competitor analysis, and assessing your resources.

• Formulation: Developing a strategic plan with clear goals, objectives, and initiatives. This is where you decide what your organization wants to achieve and how you'll get there.

• Implementation: Putting your strategic plan into action by allocating resources, assigning responsibilities, and executing projects. This stage requires strong leadership, communication, and organizational skills.

• Evaluation: Monitoring your progress, measuring results, and making adjustments as needed. This involves tracking key performance indicators (KPIs), analyzing data, and learning from your successes and failures.

Why is Strategic Management Important?

• Provides direction: It gives your organization a clear sense of purpose and helps everyone work towards common goals.

• Enhances competitiveness: It allows you to identify and capitalize on opportunities while mitigating threats.

• Improves resource allocation: It ensures that your resources are used effectively and efficiently.

• Increases profitability: By making informed decisions and executing strategies effectively, you can improve your bottom line.

• Fosters adaptability: It helps your organization anticipate and respond to changes in the market.

What is Strategic Planning?

Strategic planning is a systematic process that organizations use to define their strategy, or direction, and make decisions on allocating their resources to pursue this strategy. In other words, it's a roadmap to achieve your organization's goals. It involves defining your long-term vision and then identifying the best way to reach that desired future state.  

Key Steps in Strategic Planning:

• Define your mission and vision:

Mission Statement: Clearly articulates the organization's purpose, what it does, and who it serves.

Vision Statement: Paints a picture of the organization's desired future state.

• Conduct a SWOT analysis:

Internal: Identify your organization's Strengths and Weaknesses.

External: Analyze the Opportunities and Threats in the environment.

• Formulate objectives:  Set specific, measurable, achievable, relevant, and time-bound (SMART) goals that align with your mission and vision.

• Develop strategies:  Determine the broad approaches or actions you'll take to achieve your objectives. This could include things like market penetration, product development, diversification, or strategic alliances.

• Establish action plans:  Create detailed plans outlining the specific steps, resources, and timelines required to implement your strategies.

• Allocate resources:  Determine how you'll allocate your financial, human, and technological resources to support your strategic initiatives.

• Implement your plan:  Put your strategic plan into action, ensuring effective communication and coordination across the organization.

• Monitor and evaluate:  Track your progress, measure results, and make adjustments as needed to stay on course.

Importance of Strategic Planning

• Provides Direction: Gives your organization a clear sense of purpose and aligns everyone towards common goals.

• Enhances Proactive Thinking: Encourages you to anticipate challenges and opportunities instead of just reacting to them.

• Improves Decision-Making: Provides a framework for making informed decisions that support your overall strategy.

• Increases Efficiency: Helps you allocate resources effectively and avoid wasting time and effort on non-strategic activities.

• Fosters Collaboration: Brings people together to work towards shared objectives, improving teamwork and communication.

• Boosts Adaptability: Prepares your organization to respond effectively to changes in the market or competitive landscape.

By engaging in a thorough strategic planning process, organizations can increase their chances of success and achieve sustainable growth.

Defining Strategy

Strategy is the carefully crafted plan of action that an organization uses to achieve its long-term goals and objectives. It involves making key decisions about:

• Where to compete: Which markets or industries to focus on.

• How to compete: What unique value proposition to offer.

• What resources are needed: Financial, human, technological, etc.

Think of it as a roadmap guiding the organization towards its desired future.

Levels at Which Strategy Operates

Strategy isn't just a single, monolithic plan. It operates at different levels within an organization, each with its own focus and scope:

1. Corporate-Level Strategy:

• Focus: The overall direction and scope of the entire organization.

• Key Decisions:

  • Defining the organization's mission, vision, and values.

  • Diversification into new businesses or markets.

  • Mergers and acquisitions.

  • Resource allocation across different business units.

Example: A company like Google deciding to invest in self-driving cars (Waymo) in addition to its core search business.

2. Business-Level Strategy:

• Focus: How to compete successfully in specific markets or industries.

• Key Decisions:

  • Competitive advantage (cost leadership, differentiation, focus).

  • Product development and innovation.

  • Pricing and marketing strategies.

Example: Within Google, YouTube might focus on a differentiation strategy by offering unique content and features.

3. Functional-Level Strategy:

• Focus: How each functional department (marketing, finance, HR, etc.) will contribute to the business-level strategy.

• Key Decisions:

  • Optimizing departmental processes and efficiency.

  • Resource allocation within the department.

  • Aligning departmental goals with the overall business strategy.

Example: YouTube's marketing team developing campaigns to attract new users and increase engagement.

4. Operational-Level Strategy (Often Overlooked):

• Focus: Day-to-day decisions and actions that implement the higher-level strategies.

• Key Decisions:

  • Production scheduling.

  • Inventory management.

  • Customer service protocols.

Example: YouTube's content moderation team ensures that videos comply with community guidelines.

Approaches to Strategic Decision Making

Strategic decision-making involves choosing the best path to achieve long-term goals and objectives. It requires careful analysis, evaluation, and selection of options considering various internal and external factors. Here are some common approaches:

1. Rational Approach:

• Systematic and analytical: Involves a structured process of identifying problems, gathering data, analyzing alternatives, and selecting the most logical solution.

• Pros: Minimizes biases, increases transparency, and improves the chances of making optimal decisions.

• Cons: Can be time-consuming, may not be suitable for complex situations with limited data, and assumes perfect information.

Example - Example: A company uses market research data, financial analysis, and competitor analysis to decide whether to launch a new product. They evaluate potential profitability, risks, and resource allocation based on this data.

Another Example: A government agency uses statistical models and cost-benefit analysis to determine the best location for a new infrastructure project, considering factors like population density, environmental impact, and economic benefits.

2. Intuitive Approach:

• Based on gut feeling and experience: Relies on intuition, instincts, and judgment developed through experience.

• Quick decision-making: Useful when time is limited or information is scarce.

• Pros: Can be effective for experienced decision-makers in familiar situations.

• Cons: Prone to biases, difficult to justify or explain, and may not be suitable for high-stakes decisions.

Example: An experienced firefighter makes a split-second decision to evacuate a building based on their gut feeling that the fire is spreading rapidly, even without complete information.

Another Example: A seasoned investor decides to invest in a startup based on their intuition about the company's potential, even though the available data might be limited.

3. Political Approach:

• Recognizes the influence of stakeholders: Acknowledges the impact of power dynamics, competing interests, and negotiation among stakeholders.

• Building consensus: Focuses on building coalitions, bargaining, and compromising to reach a decision that satisfies key stakeholders.

• Pros: Considers diverse perspectives, increases buy-in and commitment to the decision.

• Cons: Can be slow and complex, may lead to suboptimal decisions due to compromises, and can be influenced by personal agendas.

Example: A company decides to relocate its headquarters after negotiations with different city governments offering various tax incentives and infrastructure support. The final decision reflects a compromise between the company's needs and the interests of the chosen city.

Another Example: Different departments within a university negotiate for budget allocation, with each department advocating for its own priorities. The final budget reflects the relative power and influence of each department.

4. Entrepreneurial Approach:

• Visionary and risk-taking: Driven by the vision and intuition of a leader willing to take risks.

• Proactive and bold: Focuses on seizing opportunities and pursuing innovative solutions.

• Pros: Can lead to breakthroughs and competitive advantages.

• Cons: Can be risky and unpredictable, may not be suitable for all organizations.

Example: Elon Musk's decision to invest in SpaceX, despite the high risk and uncertainty associated with space exploration, driven by his vision of colonizing Mars.

Another Example: Steve Jobs' decision to develop the iPhone, a revolutionary product that redefined the mobile phone industry, despite skepticism from industry experts.

5. Planning Approach:

• Structured and deliberate: Involves a formal planning process with clear goals, objectives, and action plans.

• Long-term perspective: Focuses on anticipating future trends and aligning decisions with the overall strategic direction.

• Pros: Provides a roadmap for achieving goals, promotes coordination and alignment across the organization.

• Cons: Can be rigid and inflexible, may not adapt well to unexpected changes.

Example: A city council develops a comprehensive urban development plan with specific goals for housing, transportation, and economic development over the next 20 years, guiding their decisions on zoning, infrastructure investments, and public services. 

Strategic intent: Vision, mission and objectives

Strategic intent is about setting a clear, ambitious direction that motivates and mobilizes an organization to achieve exceptional outcomes.

Strategic Intent is also known as Vision Statement or Mission Statement.

Vision Statement: This often encapsulates an organization's long-term aspirations and goals. A broad, forward-looking view of what the organization aspires to become. 

Mission Statement: Defines an organization's purpose and role. An effective mission statement should include a brief description of the company's strategic position within the market. 

Objectives

Specific, measurable targets that support achieving the goals. Objectives specify goals to be achieved within a set time period.

Syllabus

SIXTH SEMESTER

GBAH6B24T- STRATEGIC MANAGEMENT

Total Teaching Hours for Semester: 80 No of Lecture Hours/Week: 5

Max Marks: 100 Credits: 4

Course Objectives/Course Description

An Organization consists of different departments and processes. Managers at all level must understand how a company‘s departments and processes ―fit‖ together to achieve its goal. It focuses on all the functional areas of business and presents a cohesive strategic management model from a strategic perspective. The subject provides an insight on the strategy adopted by the companies in response to environmental change. The course provides a comprehensive and integrated presentation of current strategic management thinking in a clear and succinct format.

Course Objective

•  To learn the fundamentals of strategic management using the case method.

•  To understand the fundamental principles & interrelationships among business functions

• such as: R & D,Production, Marketing, Customer Service, finance, human resources and

• Information Technology

•  To understand the interrelationships of business to individuals, other organizations,

• government and society.

Course Learning Outcome

•  To explain the strategy adopted by the companies in response to environmental changes

•  To understand the manner in which strategic and competitive advantage is developed.

•  To study various methods and techniques for internal analysis.

•  To observe how positioning of the firm in the industry help to determine the competitive

• advantage.

•  To explore the tools and technique for strategic analysis o understand different business

• strategies

•  To study the interrelationship of formulation and implementation.

•  To examine how strategic management contributes to effective corporate governance of an

• organization

•  To study the importance of values and ethics in Business

Unit-1 (8 Hrs) Strategic Planning and Strategic Management, Defining strategy- levels at which strategy operates- approaches to strategic decision making, the

strategic management process- Strategic intent: Vision, mission and objectives

Unit-2 (8 Hrs) Environmental Analysis - The organizations environment- External and internal environment, components of external and internal environment- Environment scanning- Organizations responses to the environment

Unit-3 (8 Hrs) Industryand Resource Analysis A framework for industry analysis, Michael porter‘s analysis- usefulness of Industry analysisCompetitive analysis: Forces shaping competition in an industry- interpreting the Five force models- Strategic group, and competitor analysis- Internal analysis: Resource based strategy- the resource based view, Resources- capabilities and competencies- approaches to internal analysiscarrying out SWOT 

Unit-4 (8 Hrs) Strategy Formulation And Choice Corporate level strategy: Introduction- The balanced score card- Grand strategiesGrowth/Expansion strategy-Diversification Strategy- Stability strategy- Retrenchment strategycombination strategy, BCG matrix 

Unit-5 (8 Hrs) Corporate Restructuring The concept of corporate restructuring- the process of restructuring- mergers and acquisition take overs-cooperative strategies- Reasons for strategic alliances- risks and costs of strategic Alliances 

Unit-6 (8 Hrs) Global Strategies Globalisation-risks- global expansion strategies- the MNC mission statement- deciding which market to enter-market entry strategy international strategy - Business level strategy - Strategic analysis and choice 

Unit-7 (8 Hrs) Strategy Implementation And Functional Stategies Issues in strategy implementation- Activating strategy and resource allocation- strategy-structure relationship- the functional structure- divisionalisation- Functional level strategies: Operational strategy, financial strategy, marketing strategy and Human resource strategy 

Unit-8 (8 Hrs) Behavioural Implementation Corporate Governance and strategic management- Strategic Leadership- Corporate culture and Strategic management- Corporate Politics and Power- Personal values and Business Ethics 

Unit-9 (8 Hrs) Strategic Evaluation and Control Importance, barriers- evaluation criteria- strategic control- operational control- evaluation techniques foroperational control- characteristics of an effective control system 

Unit-10 (8 Hrs) Strategy And Technology Management Designing a technology strategy- Technology forecasting and R & D Strategies- Strategies for acquisition and absorption of technology- Social audit Learning Activities: Lecture led discussions, Case studies, Movie Reviews, self-assessments exercises, role plays, group discussions, team based activities, games and research papers based review.