STRATEGIC MANAGEMENT

Ridhi Nahata

OBJECTIVE
To develop an understanding of strategic management concepts To develop an understanding of evolution of the field of strategic management and business enterprise perspective To link it and understand case method of pedagogy

Evolution of the Concept

Source: Bracker J (1980) The Historical Development of the Strategic Management Concept, AMR, 5, 2, 219-224

Strategic management
Set of managerial decisions that determine the long term performance of a firm
--- Wheelan and hunger (2002)

Entails the analysis of external and internal environments of a firm to maximize the effective use of resources in relation to its objectives
Bracker 2001

Chronological evolution
Adapted from Pettigrew et al (2002), Whittington (2002), Gould and Campbell (1993) Descriptor Environment 1950s and 1960s Stable Content Top management 1970s Dynamic complex Content Top management 1980s Dynamic complex Content Top management Rational, participative Distinct Given Cross sectional Cross sectional 1990s Highly dynamic Process, Organisation Context dependent 21st century Hyper competitive Process Organisation Context depende nt Integrated Processual Longitudinal Learning, Organic Dynamic adaptive

Focus

Decision making

Rational, synoptic

Rational synoptic

View of Implementatio n
Research

Distinct Given Processual , longitudinal Design Static, exploit Opportunities,

Distinct Given

Integrated Processual Longitudinal Cultural Learning Static, adaptive

Dominant school Strategy paradigm

Planning Static, detailed planning

Positioning Static, position defense

Strategy definitions
Mintzberg 1979 A mediating force between the organization and environment: consistent patterns in streams of organizational decisions to deal with the environment. Andrews(1970)pattern of objectives, purposes, or goals stated in such a way so as to define what business the company is in or is to be in and the kind of company it is or to be Chandler 1962: strategy is the determinator of the basic long term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

Concepts
Process is
Sequence of events, actions and activities unfolding over time in a context ( Pettigrew 1997)

Content is
matter dealt in a field of study
(Merriam Webster dictionary 2007)

Content
Answers question what

Process
Answers question how and why (Van de ven and Huber 1990) Resource: is an asset, competency, process, skill or knowledge over which control is maintained (Wheelen and Hunger 2001, pp81)

Components of Strategy
Context (why/where?) Process (how?) Content (what?)

Conceptualization
Environment
Possessions

Environment
Possessions

The Firm
Possessions

The Firm
Possessions

Time t = 0

Time t = 1

Strategy -- definitions

Decision Making
Are Rare, consequential and directive

Strategic

Tactical

Operational

Source: Hambrick and Fredrickson, 2001, Are you sure you have a strategy?, Academy of Management Executive, 15, 4

Source: Hambrick and Fredrickson, 2001, Are you sure you have a strategy?, Academy of Management Executive, 15, 4

Components of Strategy
Culture and stakeholder expectations The environment Resources and strategic capabilities

Identifyin g strategic options

Context: Strategic Analysis

Planning and allocatin g resource s Firm structure and design

Evaluatin g options

Content: Strategic Choice

Process: Strategy Implementation

Selecting strategy

Managin g strategic change

Strategy Hierarchy

Prentice Hall, 2006

Tools for Managing Strategy

TOWS Matrix

BCG Matrix
Ansoffs Growth Matrix Industry Attractiveness Business Strength Matrix Porters Five Forces Model Porters Generic Strategies Core Competence

TOWS Matrix (from SWOT Analysis)

Prentice Hall, 2006

Portfolio Analysis

Boston Consulting Group

Ansoffs Growth Matrix

Industry Attractiveness Business Strength Matrix

General Electric

Porters Five Forces Model

Porter M. E, 1980

Porters Generic Strategies

Porter M. E, 1980

Core Competence of Corporation

Wide Access to Markets

Core Competence
Difficult to Imitate by competition Add value to
the customer

Idea C.K. Prahalad and Gary Hamel, 1990

Resource based view

Step 4: select a strategy which matches. These steps

Strategy

Step 3: appraise rent gathering potential in terms their potential for sustained competitive advantage and appropriability

Competitive advantage

Step 5: identify resource gaps. Invest in replenishing, upgrading and augmenting resource base.

Step 2: identify capabilities which are its strengths. Identify resource inputs for it

Capabilities

Step 1: identify and classify firms resources. Assess strengths and weaknesses of these relative to competitors. Identify opportunities

Resources

Grant 1991

Summing Up
What is Strategy? Conceptualization
Firm & Environment Decision level Content, Process, Context Stakeholders Tools Concept of time Flow of initiatives Outcomes-- SCA

What is strategy
Competitive strategy is being differentdeliberately choosing a different set of activities to deliver a unique mix of value Strategy is creation of a unique and valuable position Strategy is about combining activities and creating a fit between them

Strategy is creating fit among a companys activities so as to enable it to position its product in such a way that competitive advantage is clear.

episodic

Type of change

incremental

individual
different

Locus of analysis

group
Logical Incremen talism

position planning cultural power

mechanistic Design/ rational

linear

organic learning evolutionary environmental Inter pretive

adaptive

configurational Same

Entre Pren eurial individual rational

cognitive

Locus of decision making Type of strategic decision process

group political

Key points
Plan to achieve objectives Analysis gives objectivesuse tools Converting of strategy to actions--- detailed planning implementation Actual field level actions service delivery All decisions strategic, tactical, operational interlinked stream of decisions

Key points
Need to be done over time Role of time Path dependency, forecasting of trends, dynamic process

Require feed back, correction learning

Strategy is
process Dynamic Non linear

THANKS