PAN African E-Network Project D B M: Iploma in Usiness Anagement
PAN African E-Network Project D B M: Iploma in Usiness Anagement
Session-1
Learning Objectives:
The objective of this course is to familiarize the students
with the core concepts, process and framework of
Strategic Management and to develop among them an
understanding of:
Strategy and its significance at Corporate Level, Business
Level and Functional/Operational Level Planning of
Business Organizations
Strategic Management Process and various issues
pertaining to different steps of Strategic Management
Process
Technique of Environmental appraisal and analysis
followed by internal organizational analysis
Application of Strategic Management framework in real
life case analysis involving formulation, implementation,
evaluation and control of strategies
Module-1 (Contents)
Managerial Challenges and Management
Concerns
Concept of Planning
Understanding Strategy
Understanding Strategic Management and
Strategic Management Process
Framework of Strategic Position, Strategic
Choices and Strategy into action
Levels of Strategy
Strategic Leadership
Managerial Challenges
Start up Challenges
Progress Challenges
Think Big
Forget
Start Small
Borrow
Scale up
Learn
Focus
Operation
Resources
Concern
Efficiency
Risk
Position
Execution
Renewal
Long
Range
Planning
Strategy
Excellence
in
Execution
Innovation
Phase-III
1980s
Phase-IV
1990s
Phase-V
2000
onwards
Budgeting
Response
&
Procedures
Phase-I
1950s
Phase-II
1960s &
1970s
Conception Performance
Change
Concept of Planning
Defining the organizations goals,
establishing an overall strategy,
and developing a hierarchy of
plans to achieve goals
A Planning Architecture
Understanding Strategy
Alfred Chandler
Strategy & Structure
W. Chan Kim
INSEAD Faculty
Kenichi Ohmae
Domain of Strategy
strategic competitiveness and above normal returns
concerns managerial decisions and actions which materially
affect the success and survival of business enterprises
involves the judgment necessary to strategically position a
business and its resources so as to maximize long-term profits in
the face of irreducible uncertainty and aggressive competition
strategy is the linkage between a business and its current and
future environment
Successful
Strategy
EFFECTIVE IMPLEMENTATION
Long-term, simple
and agreed upon
objectives
Profound
understanding of
the competitive
environment
Objective
appraisal of
resources
Thinking Strategically
Answers to the following define an overall
direction for the organization's grand strategy
Where is the organization now?
Where does the organization want to be?
What changes are among competitors?
What courses of action will help us achieve our
goals?
Understanding Strategic
Management
Strategic Management
Managers ask such questions as...
What changes and trends are
occurring?
Who are our customers?
What products or services should we
offer?
How can we offer these products or
services most efficiently?
Evaluate Current
Mission,
objectives,
Strategies
Scan Internal
Environment Core
Competence, Synergy,
Value Creation
Identify Strategic
Factors
Opportunities, Threats
SWOT
Define new
Mission
objectives,
Grand Strategy
Identify Strategic
Factors Strengths,
Weaknesses
Formulate
Strategy
Corporate,
Business,
Functional
Implement
Strategy via
Changes in:
Leadership
culture,
Structure, HR,
Information &
control systems
global socio-cultural
forces
global technological
forces
competitors
suppliers
THE ORGANIZATION
owners/board of directors
managers
employees
customers
unions
local communities
government
global economic
forces
financial
intermediaries
activists
global political/lega
forces
Broad
Task
All trends and stakeholders in the external environment
should be analyzed at both the domestic and
international level
Broad Environment
The broad environment consists of domestic and global
forces such as
socio-cultural trends (e.g. demographics)
technological trends (e.g. internet)
political trends (e.g. open markets)
economic trends (e.g. growing economy)
The broad environment forms the context within which
the firm and its task environment exist.
Task Environment
The task environment consists of external
stakeholders -- groups or individuals outside the
organization that are significantly influenced by
or have a major impact on the organization -such as\
Customers
Suppliers
Competitors
Strategic Direction
Strategic direction involves
setting long-term goals and objectives,
such as mission and vision
defines the purposes for which an
organization exists and operates
Strategy Formulation
Strategy is an organizational plan of action
intended to accomplish goals.
Corporate strategy formulation refers to domain
definition, or the choice of business areas. Usually
decided by the CEO and the board of directors.
Business strategy formulation involves domain
direction and navigation, or how to compete in a
given area. Usually decided by division heads and
business unit managers.
Functional strategy formulation contains the details
of how the functional areas such as marketing,
operations, finance, and research should work
together to achieve the business-level strategy.
Alternative Perspectives on
Strategy Development
Resource-based View
Forecasting-based Planning
-(Incorporating predictions
beyond next year)
Strategic Management
Levels of Strategy
Company
Division
Strategic Business Unit (SBU)
Corporation
Industry
Value Chain
Person
Department
Market
Corporation
Division / SBU
Company
CORPORATE STRATEGY:
Overall Direction of Company and Management of Businesses
BUSINESS STRATEGY:
Competitive & Cooperative Strategies
It occurs at Business unit or Product level.
It emphasizes on improvement of competitive position of
FUNCTIONAL STRATEGY:
Maximize Resource Productivity
It is concerned with developing & nurturing a distinctive
competence to provide a company or business unit with a
competitive advantage
ORGANIZATIONAL STRUCTURE
&
LEVELS OF STRATEGY
Corporate
Head Office
Corporate
Strategy
Business
Strategy
Functional
Strategy
Div-B
Div-A
Prod.
HR
Fin.
Div-C
Marketing
Valuable
strengths
Firm
Status
Corporate-Level Strategies
Concentric Diversification
(Economies of
Corporate
Scope)
growth
strategies
Conglomerate
Diversification
(Risk Mgt.)
Corporate
stability
strategies
Corporate
retrenchment
strategies
Critical
weaknesses
Abundant
environmental
opportunities
Critical
environmental
threats
An example.
Business L.S.: Become
the low cost producer of
widgets
Functional L.S. (Mfg.):
Reduce manufacturing
costs by 10%
Operational (Plant #1):
Increase worker
productivity by 15%
Research and
Development
Functional
Level
Strategy
Business
Manufacturing
Marketing
Human
Resources
Finance
Multibusiness
Corporation
Business
Level
Business 1
(Related)
Business 2
(Related)
Business 3
(Related)
Functional
Level
Research and
Development
Manufacturing
Marketing
Human
Resources
Finance
SBU:
or collection of related
businesses that is
independent and
formulates its own
strategy
A
(Multi-business)
Corporation
Strategic Business
Unit 1
Company 1
Co. 2
S.B.U.
2
Co. 3
Division 1
Div. 2
Div. 3
Strategic Leadership
1. Define and explain strategic leadership.
2. Define the meaning of a top management team and the
value of having a heterogeneous top management team.
3. Explain the importance of managerial succession.
4. Define human capital and social capital and describe their
value to the firm.
5. Describe an entrepreneurial culture and its contribution to a
firm.
6. Explain the importance of managerial integrity and ethical
behavior.
7. Discuss why firms should have a control system that
balances the use of strategic controls and financial controls.
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Strategic Leadership
Strategic leadership involves developing a
vision for the firm, designing strategic
actions to achieve this vision, and
empowering others to carry out those
strategic actions.
Is strategic leadership important?
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Strategic Leadership
Effective strategic leaders can develop a
vision of the future and inspire stakeholders
to commit to sharing it.
Example: Porsche and CEO Wendelin
Wiedeking
Strategic leaders use their team of managers to
help make major decisions esp. to define and
implement a vision for the firm and its strategy.
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Management Succession
Strategic leaders must develop people
who can succeed them.
Example: GE and the Ten-Step Talent
program
Management Succession
Most new CEOs selected for the job in an
inside succession are unlikely to change in
any drastic way the strategies designed
under the leadership of the former CEO.
However, when the firm is performing
poorly, it is more common to select an
outside successor.
Example: GE & CEO Lou Gerstner
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Management Succession
Both insiders and outsiders have strengths
and weaknesses depending on the
conditions of the firm.
However, the key is forming a succession plan
and developing a strong set of training
programs for managers so that the firm can
develop internal candidates who have a
strong inside perspective.
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Building an Entrepreneurial
Culture
An entrepreneurial culture encourages
employees to identify and exploit new
opportunities.
encourages creativity and risk taking
tolerates failure
championing innovation is rewarded
Examples: Steve Jobs & Apple
3M
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Strategic Management
The Evolution
Some Questions
Major Timeline
DOMINANT
THEME
MAIN
ISSUES
KEY
CONCEPTS&
TOOLS
MANAGEMENT
IMPLICATIONS
1950s
2000s
Budgetary
planning &
control
Corporate
planning
Positioning
Competitive
advantage
Strategic
innovation
Financial
control
Planning
growth &diversification
Selecting
sectors/markets.
Positioning for
leadership
Focusing on
sources of
competitive
advantage
Reconciling
size with
flexibility &
agility
Capital
budgeting.
Financial
planning
Forecasting.
Corporate
planning.
Synergy
Industry analysis
Segmentation
Experience curve
Portfolio analysis
Resources &
Cooperative
capabilities.
strategy.
Shareholder
Complexity.
value.
Owning
E-commerce.
standards.
Knowledge Management
Coordination
& control by
Budgeting
systems
Corporate
Diversification.
Restructuring. Alliances &
planning depts. Global strategies. Reengineering. networks
created. Rise of Matrix structures Refocusing.
Self-organiz
corporate
Outsourcing.
ation & virtual
planning
organization
Alfred Chandler
Strategy and Structure
structure follows strategy
Philip Selznick
Organization's internal factors with
external environmental circumstances
SWOT analysis
Igor Ansoff
market penetration strategies
product development strategies
market development strategies
horizontal and vertical integration
diversification strategies
Corporate strategy
Peter Drucker
stressed the importance of objectives
management by objectives (MBO)
Relatively low value of the Yen leading to low interest rates and capital
costs, low dividend expectations, and inexpensive exports;
McKinsey 7S Framework
Strategy, Structure, Systems, Skills, Staff,
Style, and Supra-ordinate goals
The Mind of the Strategist was released in
America by Kenichi Ohmae
Tom Peters -In Search of Excellence
Strategic change
In 1968, Peter Drucker (1969) coined the phrase
Age of Discontinuity
In 2000, Gary Hamel discussed strategic decay
In 1978, Abell, D. described strategic windows
and stressed the importance of the timing (both
entrance and exit) of any given strategy
Strategy as plan - a direction, guide, course of action intention rather than actual
Strategy as ploy - a maneuver intended to outwit a
competitor
Strategy as pattern - a consistent pattern of past
behaviour - realized rather than intended
Strategy as position - locating of brands, products, or
companies within the conceptual framework of
consumers or other stakeholders - strategy determined
primarily by factors outside the firm
Strategy as perspective - strategy determined primarily
by a master strategist
Peter Drucker had theorized the rise of the knowledge worker back
in the 1950s
Criticisms of strategic
management
marketing myopia
In 2000, Gary Hamel coined the term strategic
convergence
Ram Charan, aligning with a popular marketing
tagline, believes that strategic planning must not
dominate action. "Just do it!",
Strategy Toolbox
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Thank You
Please forward your query
To: [email protected]