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|

 
 
 DELL COMPUTERS |

 
 

‡ In 1984 Micheal Dell, started business

from his DORM room.
‡ ««this is this a Good motivation for all of
you
 |

 
 

Strategic Management
 



‡ Systematic analysis of the factors associated
with customers and competitors (the external
environment) and the organization itself (the
internal environment) to provide the basis for
rethinking the current management practices. Its
objective is to achieve better alignment of
corporate policies and strategic priorities
 |

 
 

Strategic Management
 



‡ Alternative chosen to make happen a desired future, such as
achievement of a goal or solution to a problem.
 



‡ Art and science of planning and marshalling resources for their most
efficient and effective use. The term is derived from the Greek word
for generalship or leading an army. See also tactics.
 |

 
 

Strategic Planning process

 |

 
 

Types of strategy
Functional strategy
‡Corporate and business unit objective

Business Strategy
‡Business and product level

Corporate Strategy
‡Stability,growth and retrenchment
 |

 
 

PROCESS
‡


|
, in the form of information gained by scrutinising the
internal environment and scanning the external environment, is used to
develop the company¶s strategic intent and strategic mission.

‡
   
is guided by the company¶s strategic intent and
strategic mission, and is represented by strategies that are formulated or
developed and subsequently implemented or put into action.

‡
   
strategic competitiveness and above-average
returns result when a company is able to successfully formulate and
implement value-creating strategies that others are unable to duplicate.

‡
 
  links the elements of the strategic
management process together and helps companies continuously adjust or
revise strategic inputs and strategic actions in order to achieve desired
strategic outcomes.
|

 
 
 Strategic formulation |

 
 

‡ The task of analysing the organisations

external and internal environment and
selecting the appropriate strategy is called
strategic formulation
 |

 
 

Strategic Management
‡ What is strategy ?
‡ As per Ansoff it has four components
1. Product ± market scope
2. Growth Vector
3. Competitive advantage
4. Synergy
 |

 
 

‡ Superior performance is measured as company¶s

profitibility with respect other companies in the same or
similar business .
‡ Profitibility is measured by return it makes on capital
invested .
‡ ROI is defined as profit over the capital invested .
‡ Competitive advantage over its rivals ,when its
profiribility is greater than the average profitibility of
others in the same industry.
 |

 
 

Strategy formulation

Development of
‡ Mission
‡ Objectives
‡ Strategies
‡ Policies
Example for vision |

 
 
 |

 
 

Strategy Formulation
Some terms |

 
 
 |

 
 

Objectives and Goals

Organisation can set Goals and Objectives in following areas

Efficiency Contribution to employees

Profitibility Brand reputation

Growth Societal Contributions

Wealth for shareholders Leadership in Market

Resource Utilisation Leadership in Technology


 

 

|

 
 

‡ This typically includes designing

organisational structures and controls
 |

 
 

Matrix Structure
 |

 
 

Ú s Framework
 Mission statement
|

 
 

It generally has 3 components

1. A statement of mission or vision of
company ± ³the reason for existance´
2. A statement of key values or guiding
standards
3. And major goals and objectives
 Examples |

 
 

‡ Microsoft ± run on any device ³Any time

,Any place´
‡ Boeing ± ³wants to become a Global
enterprise´
 Goals |

 
 

1. Official goals- -public relations value and

legitimising the business
2. Operative goals-what they are really
attempting to do
3. Operational goals- for supervisory
personnel to supervise subordinates

Page 4 Srinivasan
 Policies |

 
 

‡ Guide to action
‡ Channels for thinking
 |

 
 

Stiner¶s proposed Policy pyramid

 
 


Secondary
policy
Functional
policy
Procedures and
standard operating plan

RULES
 Procedures |

 
 

‡ Steps to achieve the goal

‡ Standad operating plan
‡ Generally not flexible
‡ RULES refer to a specific course of action
 The Mission Statement
|

 
 
How to write?

‡ http://www.samples-help.org.uk/mission-statements/index.htm
‡ Every company has a Mission Statement. But they are very difficult
to write - they should short, clear, vivid, inspiring and concise without
using jargon, complicated words or concepts. A Mission Statement
is generally included in documents such as Business Plans and
Staff Handbooks and can be described as a cross between a
company or corporate slogan, or tagline, and an executive
summary! A highly successful Mission Statement is both memorable
and engaging. A combination of both a company's Y

 and a
company's 
 of the future may be included in a Mission
Statement. No wonder a Mission Statement is hard to write and
there is so much confusion between a Mission Statement and a
Vision Statement!
 Formulating the mission
|

 
 

‡ Derek Abell- Product oriented

Who is being satisfied?
Customer groups

Business
defination

How are customer needs

What is being satisfied?
being satisfied ?
Customer needs
Distinctive competancies
 Formulating mission
|

 
 
statement

‡ Defining the organisation¶s business

‡ What is our business?

‡ What will we be?
‡ What should it be?
 Vision |

 
 

‡ A mission or vision is a formal declaration

of what the company is trying to achieve in
long or medium term
‡ It provides the platform to think
strategically
 Major goals
|

 
 
and objectives

‡ Well constructed goals have four

charecterstics
1. Precise and measureable
2. Adress crucial issues
3. Challenging but realistic
4. Specificto a time frame
 Values |

 
 

‡ To fully implement and thus institutionalize a value in a company the following steps need to all
occur:
‡
 !"-- Choose the values that you are interesting in fully implementing in the company.
‡ ! " -- There needs to be a full commitment to implement the chosen values. Senior
and middle management, and other employees need to fully commit to those values; commit to
improving performance on those values.
‡
|"|#
-- A set of standards for each activity in the company needs to be implemented for
each value.
‡
#$ $#-- The company needs to have the right structure (of job positions, divisions,
departments, etc.) to implement the values.
‡ %!
&| ' 

(

-- The company must have clearly defined job positions,
activities, and streamlined systems to facilitate to implement the values. Values need to be
incorporated into every job position, activity, every system. Standard operating procedures and
even individual job position tasks need to be linked to these values.
‡ )!(#
)!"
 (-- The responsibility of each person to implement each value
must be clearly defined and understood (e.g. in their job orientation, in their job descriptions, from
their manager, etc.).
‡
*
-- Everyone must have the skills to achieve high performance on the values. Everyone
must have the skills they need to fulfill their responsibilities for the value. If necessary, additional
training should be implemented to upgrade the skills for value implementation.
 Some points about strategy
|

 
 

‡ Managers must try to forecast the future environment

‡ SWOT analysis generall deals with present environment
‡ Use the Scenario approach- optimistic and pessimistic
,given to different teams of managers
‡ Involve functional managers
‡ Avoid Ivory towers ± in planning

Page 25 of book
Strategy for BESA class
|

 
 
 Intended and emergent
|

 
 
strategies

Planned Delibrate strategy

Realized
strategy
strategy

Unrealized
strategy

Emergent
strategies
Honda example page 21
 Strategic planning |

 
 

in practice
‡ The issue of planning is that we plan with the present
scenario to get a competitive advantage in the future
‡ SO, it is better to practice the scenario approach both
optimistic and pessimistic
‡ Generate a range of strategies by Brainstorming or
similar methods by involving functional managers
‡ Do not plan in IVORY towers
 The astute use |

 
 
of power

Edward Wrapp stated Strategic leaders

must make use of their power
1. Build consensus ,rather than use
authority
2. Decide when to commit publically
3. Must be able to push through programs
in a piecemeal fashion
 |

 
 

Emotional intelligence
By Daniel Goldman

‡ Self awareness- understand moods ,

emotions
‡ Self regulation- think before acting
‡ Motivation- passion beyond money,
‡ Empathy ± understand subordinates
‡ Social skills ± friendliness in purpose
 Process for improving
|

 
 
decision making
Devil¶s Advocacy
Expert plan1 Expert plan1
Thesis Antithesis

Expert Plan

Devil¶s
Advocate Debate
Critises Synthesis

Final plan
Final plan
 Environment analysis
|

 
 

‡ Covered earlier

‡ Task environment
‡ Mega environment
‡ Now includes
1. Industry environment
2. National environment
3. Macro environment
 Next |

 
 

‡ Chapter 2 of your book

 |

 
 

Impact on firm due Mega environment

legal

Socio cultural political

The Mega
Environment

Technological Economic
 |

 
 

Microenvironment¶s impact on firm

Suppliers

Financial Marketing
Institutions intermediaries

Regulatory
Markets
provisions
Micro
Environment

Industrial
Relations Compensation
Climate

Skill level
E commerce
of workforce
 SWOT ANALYSIS |

 
 

‡ http://www.valuebasedmanagement.net/m
ethods_swot_analysis.html
|

 
 
|

 
 
|

 
 
|

 
 
 External analysis |

 
 

‡ Michel E Porter¶s Five Forces Model

 Levels of strategy |

 
 

Strategy Location Responsibility

Corporate level strategy Head office CEO,senior

executives,board of
directors and corporate
staff
Business level strategy Divisions Divisional managers and
staff

Functional level Functional managers Business functions

|

 
 
 Model of strategic
|

 
 
planning process

‡ FIVE STEPS
1. Select corporate mission goals
2. Analyse competitive environment
,opportunities and thrests
3. Analyse internal strength and weakness
4. Select strategies to build on strength and
take advantage of environment
5. Implement strategy
 |

 
 

Charecterstics of Strategic decisions

‡ RARE- No presendents
‡ Consequential ± Committing resources
‡ Directive ± Less important decisions
 |

 
 

Types of Strategies
According to Mills and Snow

‡ Defenders ± one product emphasis on

effeciency
‡ Prospectors ± production innovation and
market opportunities
‡ Analysers ± operate in two markets one
stable others innovate
‡ Reactors- No consistent strategy,
Interested Guerilla Warfare
 |

 
 

Porter¶s Model
 |

 
 

Porter¶s Generic strategies

 |

 
 

SWOT Analysis

STRENGHTS AND WEAKNESSES

OPPORTUNITIES AND THREATS
 |

 
 

 ++ + |  | 

 +, - 

‡ Management
‡ Operations
‡ Finance
 |

 
 

 ++ + |  | 

 +, - . 
 +/

Dimensions to evaluate strategic planning

‡ Critical factors
‡ Resources
‡ Objectives
‡ Appraisal
‡ Resource development
 |

 
 

Criteria to classify an element

as strength or weakness

‡ Historical- compare with past data

‡ Normative ± Power plant at 80 % capacity
‡ Competative- Credit 60 days ?
‡ Critical factors for sucess
 |

 
 

Format to Analyze
Strength and Weakness
‡ Marketing
‡ Finance and accoumting
‡ Production /operational/technical
‡ Personnel
‡ Organisational/General management
‡ Page Ú5
 |

 
 

Typical Value Chain Analysis of

Manufactured product

Raw Primary Product

Fabrication
material manufacturing
producer
Distributer Retailer
 |

 
 

Product life Cycle

 |

 
 

Finding a NICHE

‡ A Niche can be referred to as a need in

the market place that is currently no
satisfied
 |

 
 

TOWS Matrix (SWOT)

Generates business and corporate strategy

Strength (S) Weakness (W)

List 5 internal strenghts List 5 internal weaknesses

Opportunities(O) SO ± Strength take WO-Advantage of

List 5 external advantage of opportunity by overcoming
opportunities opportunity weakness
Threats (T) ST- strength to avoid WT Minimise weakness to
List 5 external threats threats aviod threats
 |

 
 

BCG Matrix
MORE Stars Question
Mark
LESS Cash Cow Dog

LESS MORE
 |

 
 

Eight Dimensions of Quality

BY GARWIN

‡ Performance
‡ Features
‡ Reliability
‡ Conformance
‡ Durability
‡ Serviceability
‡ Aesthetics
‡ Perceived quality
 |

 
 

Porter on Strategy
‡ # 0
 +|1



‡   + 

‡ process innovation
‡ product design with regard to simple production
‡ cost-saving distribution
‡ high investment - access to capital
‡ 
  


‡ marketing experience
‡ product engineering
‡ creativity
‡   

‡ reputation of technological leadership and good quality
‡ combination of above mentioned abilities
 |

 
 

EVALUATION AND CONTROL

FIVE STEP MODEL

‡ Determine what to measure
‡ Establish performance standards
‡ Measurement of actual performance
‡ Compare results with standards\
‡ Corrective action