Ans.

Strategic Management:
Strategic Management is all about identification and
description of the strategies that managers can carry so as to achieve better
performance and a competitive advantage for their organization.

Concepts of Strategic Management:

1.The study of strategic management:
Strategic management is the set of managerial decision and action that
determines the long-run performance of a corporation. It includes environmental
scanning (both external and internal), strategy formulation (strategic or long-
range planning), strategy implementation, and evaluation and control.
2.Evolution of strategic management:
From his extensive work in the field, Bruce Henderson of the Boston
Consulting Group concluded that intuitive strategies cannot be continued
successfully if (1) the corporation becomes large, (2) the layers of management
increase, or (3) the environment changes substantially.
Phase 1 - Basic financial planning: Seek better operational control by trying to
meet budgets.
Phase 2 - Fore-cast based planning: Seeking more effective planning for growth
by trying to predict the future beyond next year.
Phase 3. Externally oriented planning (strategic planning): Seeking increasing
responsiveness to markets and competition by trying to think strategically.
Phase 4. Strategic management: Seeking a competitive advantage and a
successful future by managing all resources.
3.Learning-A part of strategic management:
Strategic management has now evolved to the point that it is primary value is to
help the organization operate successfully in dynamic, complex environment.
To be competitive in dynamic environment, corporations have to become less
bureaucratic and more flexible
4.Initiation of strategy: Triggering Events:
A triggering event is something that stimulates a change in strategy .Some of the
possible triggering events is: New CEO: By asking a series of embarrassing
questions, the new CEO cuts through the veil of complacency and forces people
to question the very reason for the corporation’s existence. Intervention by an
external institution: The firm’s bank suddenly refuses to agree to a new loan or
suddenly calls for payment in full on an old one. Threat of a change in
ownership: Another firm may initiate a takeover by buying the company’s
common stock. Management’s recognition of a performance gap: A
performance gap exists when performance does not meet expectations. Sales
and profits either are no longer increasing or may even be falling.

Characteristics of strategy Management:

1. Strategy is a systematic phenomenon:
Strategy involves a series of action plans, no way contradictory to each other
because a common theme runs across them. It is not merely a good idea; it is
making that idea happen too. Strategy is a unified, comprehensive and
integrated plan of action.

2. By its nature, it is multidisciplinary:

Strategy involves marketing, finance, human resource and operations to
formulate and implement strategy. Strategy takes a holistic view. It is
multidisciplinary as a new strategy influences all the functional areas, i.e.,
marketing, financial, human resource, and operations.

3. By its influence, it is multidimensional:

Strategy not only tells about vision and objectives, but also the way to achieve
them. So, it implies that the organisation should possess the resources and
competencies appropriate for implementation of strategy as well as strong
performance culture, with clear accountability and incentives linked to
performance.

4. By its structure, it is hierarchical:

On the top come corporate strategies, then come business unit strategies, and
finally functional strategies. Corporate strategies are decided by the top
management, Business Unit level strategies by the top people of individual
strategic business units, and the functional strategies are decided by the
functional heads.

5. By relationship, it is dynamic:
Strategy is to create a fit between the environment and the organisation’s
actions. As environment itself is subject to fast change, the strategy too has to be
dynamic to move in accordance to the environment.

Ans 2.

ENVIRONMENT ANALYSIS: Environment analysis is the study of the

organizational environment to pinpoint environmental factors that can
significantly influence organizational operations.

MANAGERS commonly perform environmental analyses to help them

understand what is happening both inside and outside their organizations and to
increase the probability that the organizational strategies they develop will
appropriately reflect the organizational environment.

For purposes of environmental analysis, the environment of an organization is

generally divided into 3 distinct levels:

1. General Environment
2. Operating Environment
3. Internal Environment
Managers must be well aware of these 3 organizational environmental levels,
understand how each level affects organizational performance and then
formulate organizational strategies in response to this understanding.

THE GENERAL ENVIRONMENT:

The components normally considered part of the general environment are:

 Economic

 Social: Including Demographics and Social Values

 Political

 Legal

 Technological

THE OPERATING ENVIRONMENT:

The operating Environment includes various components like:

 Customer

 Competition

 Labour

 Supplier

 International Issues.

THE INTERNAL ENVIRONMENT:

The level of an organization’s environment that exists inside the organization

and normally has immediate and specific implications for managing the
organization is the internal environment.

It includes marketing, finance and accounting, planning, organizing, influencing

and controlling within the organization.
Porter’s five forces model
Porter’s five forces model is an analysis tool that uses five industry forces to
determine the intensity of competition in an industry and its profitability level.

Five forces model was created by M. Porter in 1979 to understand how five key
competitive forces are affecting an industry. The five forces identified are:

These forces determine an industry structure and the level of competition in that
industry. The stronger competitive forces in the industry are the less profitable it is.
An industry with low barriers to enter, having few buyers and suppliers but many
substitute products and competitors will be seen as very competitive and thus, not so
attractive due to its low profitability.

stakeholder analysis:

A stakeholder analysis is a process of identifying these people before the project

begins; grouping them according to their levels of participation, interest, and
influence in the project; and determining how best to involve and communicate
each of these stakeholder groups throughout.

The purpose of stakeholder analysis

Project managers, program managers, and product managers alike may conduct
a stakeholder analysis for several strategic reasons, including:

1. To enlist the help of key organizational players.

By approaching company influencers, executives, or valuable stakeholders for

help early in your project, you can leverage the knowledge and wisdom of these
key players to help guide the project to a successful outcome.

2. To gain early alignment among all stakeholders on goals and plans.

Because your stakeholder analysis will help you determine which people to
involve in the project, you will then be able to bring these people together for a
kick-off and early-stage meetings to communicate the project’s strategic
objectives and plans.

3. To help address conflicts or issues early on.

Without a stakeholder analysis, you and your team could be well into a
company project before you realize a key person in your organization—perhaps
an executive—does not see the value of your initiative, or would prefer to
redeploy some of your resources to other projects. Such a person might actively
work to thwart or derail your project.

Ans3.

Michael Porter, one of the best management thinkers, wrote about strategy and
was/is taught in every major MBA in the world. He is considered the Godfather
of strategy and his model, which describes the Five Forces that determine
competitive power in a business situation, has been very influential in this area
for more than two decades. But how relevant is his work in today´s changing
world?

Porter argues that the goal of the strategist is to understand and cope with
competition. When competition is considered, it is important to look at direct
competitors, but also contemplate broader competitive forces against which the
company is fighting for profits. The Five forces that should be considered
include:

 Supplier Power: how easy it is for suppliers to drive up prices

 Buyer Power: how easy it is for buyers to drive prices down

 Competitive Rivalry: the number and capability of your competitors

 Threat of Substitution: ability of your customers to find a different way of

doing what you do

 Threat of New Entry: the ability of people to enter your market

According to Porter, strategy is “the creation of a unique and valuable position,
involving a different set of activities” and is based on competitive difference.

Some argue that strategy has changed and new priorities should be considered
today when performing industry analysis:

 Stable versus dynamic markets: while Porter´s framework suggests that

markets are stable and so positioning oneself is enough to survive over
time, in dynamic markets one has to think about where to compete and
then how. It is not just about being different but also to develop purpose,
innovate more in terms of business models, trajectories and customer
experiences.

 Power shift to customers: today businesses are focusing more on

customers, not just in terms of serving them best but are also considered a
guiding star. Porter doesn´t give customers much importance in his
model.

 Blur boundaries in today´s markets: strategic opportunities might be to

move across sectors and geo boundaries or to even fuse them together. So
for example, communication becomes media which becomes
 entertainment which becomes sports…It is not just about being different,
cheaper or better but out-thinking others.

 Big is not always best: the old thinking was that companies win through
scale by generating more revenue and more power but they addressed
homogenous markets with undifferentiated products and services. Some
of today´s winners succeed with better visions and ideas, focusing on
niche and highly relevant customers- small agile and smart.

There is no question that Porter´s five forces is a robust framework that is at the
heart of what constitutes a strategy. It is a tool that should allow one to
understand the current industry´s dynamics and major trends. In fact, no one can
deny that his framework helped shape modern-day strategy but taken as it is, it
might appear outdated in the light of the social era.