Strategic Management

22MBA203
 Course Objectives

1. To provide insights into the core concepts of strategic

management.
2. To expose students to various perspectives and
concepts in the field of Strategic Management
3. To evaluate various business strategies in dynamic
market environments.
4. To gain insights into various strategic management
models.
 Course Outcomes
1. Analyze and synthesize the overview of the strategic management, the
process & the decision-making process involved.
2. Acquire an understanding of how firms successfully institutionalize a
strategy and create an organizational structure for domestic and overseas
operations and gain competitive advantage.
3. Integrate knowledge from developing strategic vision & mission for a
company using strategic management techniques to solve problems in a larger
multidisciplinary context.
4. Understand the strategic drive-in multinational firms and their decisions in
different markets.
 Text Books
• Strategic Management, Dr K Govinda Bhat, N R Govinda
sharma, ( HPH)
• Essentials of strategic management, J David Hunger, Thomas
L Wheelen
• Strategic Management, Charles W L Hill, Gareth R Jones.
• Strategy and the Business Landscape, Pankaj Ghemawat.
• Strategic Management – Competitiveness and Globalization,
Michael A. Hitt, Duane Ireland, Robert E. Hokinson, South
Western, Thomson Learning.
• Crafting and executing Strategy, A Thompson Jr, Margaret A.
and John E Gamble, Mc Graw Hill Publication, New Delhi.
 MBA – II SEMESTER
Sub: STRATEGIC MANAGEMENT
Sub Code: 22MBA203

UNIT 1: Introduction to Strategic Management

Introduction to Strategic Management : Meaning and
Nature of Strategic Management , Importance and
relevance, Characteristics of Strategic Management,
Importance of strategy in the success of organisation, Basic
model of strategic management, The strategy Making
Process, Strategic Decision making, Strategic Leadership.
Strategic Managers: Corporate level, Business Level and
Functional Level, Roles and Responsibilities.
 Strategic Management
Meaning
Meaning:
• Strategic management provides overall direction by
developing plans and policies designed to achieve
objectives and then allocating resources to implement the
plans. Ultimately, strategic management is for organisations
to gain a competitive edge over their competitors.
• Strategic management is the process of setting goals,
procedures, and objectives in order to make a company or
organization more competitive. Typically, strategic
management looks at effectively deploying staff and
resources to achieve these goals.
 Strategic Management: Definition
• Strategic management is the process by which top
management determines the long-term direction of the
organization by ensuring that careful formulation,
implementation and continuous evaluation of strategy
takes place.

The strategic management process can be broken down into

three phases;
• Strategy formulation
• Strategy implementation
• Strategy control
 Nature of Strategic Management:
• Strategy management is a contingent plan as it is designed to
meet the demands of a difficult situation.
• Strategy management provides direction in which human and
physical resources will be deployed for achieving organizational
goals in the face of environmental pressure and constraints.
• Strategy management relates an organization to its external
environment.
• Strategic management decisions are primarily concerned with
expected trends in the market, changes in government policy,
technological developments etc.
• Strategic management is both an Art and science of
formulating, implementing, and evaluating, cross-functional
decisions that facilitate an organization to accomplish its
objectives.
 Importance of Strategic Management

1. The first important aspect about strategy is that management

needs to proactively craft how the organization’s business will be
conducted.

2. They further assert that a clear and well thought out strategy
– is management’s prescription for doing business,
– its road map to competitive advantage,
– its game plan for pleasing customers and
– improving financial performance.

3. Effective strategy formulation and execution have a significantly

positive impact on revenue growth, earnings, and return on
investment.
 Importance of Strategic Management

Crafting and executing strategy shows how well an

organization’s management team charts the
following:
4. Develops competitively effective strategic moves
and business approaches
5. Pursues what needs to be done internally to
produce good day-in, day-out execution and
operating excellence,
6. Determines an organization’s ultimate success or
failure.
 Relevance of Strategic Management

• The following are the main areas that

organizations find strategic management to be
relevant to organizational goals:
1. Improvement in sales
2. Improvement in profitability
• Through Cost reduction
• Increasing profit margin
• Sales volume
• efficient utilization of assets
• minimizing the time inventory or stocks

3. Productivity improvement
Characteristics of Strategic Management:

1. Performance oriented
2. Ongoing nature
3. Dynamic than static
4. Oriented to present & future
5. Concerned with external & internal factors
6. Concerned with performing well and satisfying the
shareholders
7. Developed by top mgmt.
8. Involved in allocation of large resources
9. Impact on long term prosperity of the firm
 Importance of strategy in the success
of organization
• Strategic management helps a decision-maker
to get equipped with management tools or
anticipating changes and directing
the organizational activities along the right
path.
• Practice of strategic management reduces the
risk of operation by helping the enterprise to
innovate in time and take an early action.
 Critical Tasks of Strategic Management
1 Formulate the company’s mission

2 Develop company profile, reflecting its internal conditions

3 Assess company’s external environment

4 Analyze company’s options

5 Identify most desirable options

6 Select long-term objectives and grand strategies

7 Develop annual objectives and short-term strategies

8 Implement the strategic choices

9 Evaluate success of the strategic process

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Strategic Planning Process / Strategy
Making Process
Identifying the organisation’s current mission,
objectives, and strategies
Mission: the firm’s reason for being
• Who we are,
• What we do, and
• Where we are now
Goals: the foundation for further planning
Measurable performance targets
 Example of TATA Steel
Vision: We aspire to be the global steel industry benchmark
for Value Creation and Corporate Citizenship

Mission:
• Tata Steel strives to strengthen India’s industrial base through
the effective utilization of staff and materials.
• The means envisaged to achieve this are high technology and
productivity, consistent with modern management practices.
 Conducting an external analysis
– The environmental scanning of specific and
general environments
– Focuses on identifying opportunities and threats
 Conducting an internal analysis
– Assessing organizational resources, capabilities,
activities and culture:
• Strengths (core competencies) create value for the
customer and strengthen the competitive position of
the firm.
• Weaknesses (things done poorly or not at all) can place
the firm at a competitive disadvantage.

Steps 2 and 3 combined are called a SWOT analysis

(Strengths, Weaknesses, Opportunities, and Threats)
 Formulating strategies
– Develop and evaluate strategic alternatives
– Select appropriate strategies for all levels in the
organization that provide relative advantage over
competitors
– Match organizational strengths to environmental
opportunities
– Correct weaknesses and guard against threats
 Implementing strategies
– Implementation: effectively fitting organisational
structure and activities to the environment

– Effective strategy implementation requires an

organisational structure matched to its
requirements.
 Evaluating results
– How effective have strategies been?
– What adjustments, if any, are necessary?
Model of strategic management
 Basic Model of Strategic Management

The strategic Making Process can be broken down into three phases;

• Strategy formulation (SWOT - External

analysis, internal analysis)
• Strategy implementation
• Strategy control
Strategy formulation involves;
• Through understanding of VISION of the organization.
• Defining the organization’s guiding philosophy & purpose or mission.
• SWOT Analysis of the organization.
• Establishing long-term objectives in order to achieve the mission.
• Selecting the strategy to achieve the objectives.
Strategy implementation involves;
• Establishing short-range objectives, budgets and functional strategies
to achieve the strategy.
• Implementing / following the strategies.
Strategy control involves the following;
• Establishing standards of performance.
• Monitoring progress in executing the strategy.
• Initiating corrective actions to ensure commitment to the
implementation of the strategy
 Strategic Decision making process
• Investigate the situation in detail.
• Create a constructive environment.
• Generate good alternatives.
• Explore your options.
• Select the best solution.
• Evaluate your plan.
• Communicate your decision, and take action.
 Dimensions of Strategic Decisions
Strategic issues . . .
– Require top-management decisions
– Require large amounts of firm’s resources
– Affect firm’s long-term prosperity
– Are future oriented
– Usually have multifunctional or multibusiness
consequences
– Require consideration of firm’s external and internal
environment
 Strategic Leadership
• Strategic leadership refers to a manager's potential to express
a strategic vision for the organization, or a part of the
organization, and to motivate and persuade others to acquire that
vision.
• Strategic leadership can also be defined as utilizing strategy in the
management of employees.
• Types of leadership / approach matters based on the situation or
context.
– Authoritarian / Autocratic Leadership.
– Participative/ Collaborative / Democratic Leadership.
– Delegative / bureaucratic Leadership.
– Transactional / process oriented / system oriented Leadership.
– Transformational / development oriented / research oriented Leadership.
 Three Levels of Strategy in Organizations

Corporate-Level Strategy:
What business are we in?
Corporation

Business-Level Strategy:
How do we compete?

Textiles Unit Chemicals Unit Auto Parts Unit

Functional-Level Strategy:
How do we support the business-level strategy?

Finance R&D Manufacturing Marketing

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 Single-Business Firms

Corporate/
Corporate/
business
businesslevel
level

Financial/
Financial/ Human
Human
POM/R&D
POM/R&D Marketing
Marketing
accounting
accounting relations
relations
strategies
strategies strategies
strategies
strategies
strategies strategies
strategies

31
 Multiple Business Firms

Corporate/
business level

Business
Business11 Business
Business22 Business
Business33

Financial/
Financial/
POM/R&D
POM/R&D Marketing
Marketing Human
Humanrelations
relations
accounting
accounting
strategies
strategies strategies
strategies strategies
strategies
strategies
strategies
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 Strategic Managers:
• Corporate level: Corporate level strategies occupy the highest level of strategic
decision making and cover actions dealing with the objective of the firm,
acquisition and allocation of resources and coordination of strategies of various
SBUs for optimal performance. Top management of the organization makes
strategic decisions.

• Business Level: Business-level strategy is an integrated and coordinated set of

commitments and actions the firm uses to gain a competitive advantage by
exploiting core competencies in specific product markets. It indicates the
choices the firm has made about how it intends to compete in individual
product markets.

• Functional Level: Functional level strategies are the actions and goals assigned
to various departments that support your business level strategy and
corporate level strategy. These strategies specify the outcomes you want to see
achieved from the daily operations of specific departments (or functions) of
your business.
 Roles and Responsibilities of Strategic Managers:
There are five essential tasks of strategic manager -
They include developing a strategic vision and mission, setting
objectives, crafting tactics to achieve those objectives, implementing
and executing the tactics, and evaluating and measuring performance.

Strategic Managers should involve in Identifying threats and

opportunities, Monitoring and reporting on projects, Conducting
research, Assessing market trends, Analysing competitors and market.
He also works on improving the existing strategic planning process.

Strategy Managers review organizations and determine their strengths,

weaknesses, operational effectiveness and opportunities. They make
recommendations based on internal and external factors to minimize
risks and formulate plans to achieve an organization's long-term goals.
Thank you