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Table of Contents
FIVE TASKS OF STRATEGIC MANAGEMENT.................................................................................... 2
EXTERNAL ANALYSIS .............................................................................................................................. 4
THE ENVIRONMENT .................................................................................................................................. 6
PESTEL ANALYSES ..................................................................................................................................... 6
SCENARIOS ANALYSES ........................................................................................................................... 8
INDUSTRY AND SECTOR ......................................................................................................................... 9
COMPETITIVE FORCES – THE FIVE FORCES FRAMEWORK ........................................................10
FIVE TASKS OF STRATEGIC MANAGEMENT1

3. Crafting a 5. Evaluating
1. Defining a 4.
2. Setting Strategy to Performance
business and Implementing
the achieve the and initiating
developing a and Executing
objectives performance corrective
mission the Strategy
objectives actions

1. Developing a vision and a mission

 What we are?
 Where we are going?

2. Setting objectives
 The purpose of setting objectives is to convert the mission statement into
specific performance targets.
 Objectives serve as yardsticks for tracking an organization's
performance and progress
 The objectives set must ideally embrace a time horizon
 Two types of performance yardsticks
o Financial objectives -These objectives are needed because
acceptable financial performance is critical to preserving an
organization's viability and well-being
o Strategic objectives - Strategic objectives provide consistent
direction in strengthening a company’s overall business position. They
relate more directly to a company’s overall competitive situation and
involve such performance yardsticks as growing faster than the
industry’s average and making gains in market share.

1
Adopted from http://aabri.com/papers/JCR07-2.pdf
3. Crafting a strategy
 Strategy is the pattern of organizational moves and managerial
approaches used to achieve organizational mission.
 Objectives are the “ends” and strategy is the “means” of achieving them.
 Strategy is a management tool for achieving strategic targets.
 Formation of a strategy starts with the analysis of the organization's
internal and external situation. The managers are required to have an
understanding of both environments for devising strategies to achieve,
targeted strategic and financial results.
 An organization's strategy is always a blend of prior moves and
approaches already in place and new actions being mapped out.

Strategy is constantly evolving as The task of strategizing is always an ongoing

exercise. “The whats” of an organization's mission and long-term objectives, once
chosen, may remain unaltered for several years. But the “hows” of strategy evolve
constantly for three particular reasons;
 ever-changing external environment,
 managers’ efforts to create new opportunities, and
 fresh ideas about how to make the strategy work better.

How strategies emerge?

Changes in strategy emerge when a big strategy works better. On occasion,
changes in strategy emerge when a big strategic move is put to test when a crisis
strikes and managers see that the organization's strategy needs radical
reorientation.

4. Strategy Implementation
The strategy-implementation function consists of seeing what it will take to
make the strategy work and to reach the targeted performance on schedule.
The job of implementing strategy is primarily an action-driven administrative
task that cuts across many internal matters.

5. Evaluating Performance and Initiating Corrective Adjustments

It is noted in literature that none of the previous four tasks are one-time
exercises. New circumstances always crop up that make corrective
adjustments desirable. Long-term range or plans may need to be altered, the
business redefined and management’s vision of the organization's future course
narrowed or broadened.

[From UNIT ONE]

THE STRATEGY MANAGEMENT PROCESS
It includes the following steps:
1. Select the corporate mission and major corporate goals.
2. Analyse organisation’s external competitive environment (O, T).
3. Analyse organisation’s internal competitive environment (S, W).
4. Select Strategies.
5. Implement the strategies.
6. Feedback

EXTERNAL ANALYSIS
The second component of the strategic management process is an analysis of
the organization’s external operating environment. The essential purpose of the
external analysis is to identify strategic opportunities and threats within the
organization’s operating environment that will affect how it pursues its mission.
Three interrelated environments should be examined when undertaking an
external analysis:
 the industry environment in which the company operates,
 the country or national environment, and
 the wider socioeconomic or macro-environment

The goal is to understand the opportunities and threats confronting the firm,
and to use this understanding to identify strategies that will enable the
company to outperform its rivals. Opportunities arise when a company can take
advantage of conditions in its industry environment to formulate and implement
strategies that enable it to become more profitable.

Threats arise when conditions in the external environment endanger the

integrity and profitability of the company’s business.
MINI CASE 6

Strategic analysis at Time Inc

6. The first sign of trouble?

7. List out the issues that evolved through external analysis
8. What were the strategies initiated by Martha Nelson?
9. State the major strategic initiatives at Time Inc initiated in 2005 and 2006
https://forms.gle/iJpx8oje4fsNf6fR8
THE ENVIRONMENT2
The environment is what gives organisations their means of survival. It creates
opportunities and it presents threats. Although the future can never be
predicted perfectly, it is clearly important that entrepreneurs and managers
try to analyse their environments as carefully as they can.

For example, the success of Apple’s iPhone created rich market opportunities
for the writers of mobile phone apps. On the other hand, the rise of electronic
encyclopaedias such as Microsoft’s Encarta and online Wikipedia nearly
destroyed the market for the traditional print market-leader, Encyclopaedia
Britannica, after two hundred years of existence.

Layers of Business Environment

PESTEL ANALYSES
The Concept of PESTEL ANALYSES provides a wide overview; key drivers help
focus on what is most important; and scenarios build on key drivers to explore
different ways in which the macro-environment might change.

The PESTEL framework categorises environmental influences into six main

types:
1. political,
2. economic,
3. social,
4. technological,

2 Adopted from “Exploring Strategies, Texts and Cases” (9th Ed) By Gerry Johnson, Richard Whittington, Kevan
Scholes
 5. environmental and
6. legal.

Thus PESTEL provides a comprehensive list of influences on the possible

success or failure of particular strategies. In particular,
 Politics highlights the role of governments;
 Economics refers to macro-economic factors such as exchange rates,
business cycles and differential economic growth rates around the world;
 Social influences include changing cultures and demographics, for example
ageing populations in many Western societies;
 Technological influences refer to innovations such as the internet, nano-
technology or the rise of new composite materials;
 Environmental stands specifically for ‘green’ issues, such as pollution and
waste;
 Legal embraces legislative constraints or changes, such as health and
safety legislation or restrictions on company mergers and acquisitions.

For managers, it is important to analyse how these factors are changing,

drawing out implications for their organisations. Many of these factors are
linked together.

Environmental influences on organisations can be summarised within six

categories. For the airline industry, an initial list of influences under the
six PESTEL analysis categories might include the following:
SCENARIOS ANALYSES
When the business environment has high levels of uncertainty arising from
either complexity or rapid change (or both), it is impossible to develop a
single view of how environmental influences might affect an organisation’s
strategies – indeed it would be dangerous to do so.
Scenario analyses are carried out to allow for different possibilities and help
prevent managers from closing their minds about alternatives. Thus scenarios
offer plausible alternative views of how the business environment might develop
in the future, based on key drivers for change about which there is a high level
of uncertainty. Scenarios typically build on PESTEL analyses and key drivers
for change, but do not offer a single forecast of how the environment will
change. The point is not to predict, but to encourage managers to be alert to a
range of possible futures.

SCENARIO ANALYSES can be carried out as follows:

1. Identifying the scope is an important first step. Scope refers to the
subject of the scenario analysis and the time span.
2. Identifying key drivers for change comes next. Here PESTEL analysis can
be used to uncover issues likely to have a major impact upon the future of
the industry, region or market.
3. Selecting opposing key drivers is crucial in order to generate a range of
different but plausible scenarios. Typically, scenario analyses select
from the various key drivers for change, two key drivers which both
have high uncertainty and have the potential for producing
significantly divergent or opposing outcomes.
4. Developing scenario ‘stories’: as in films, scenarios are basically stories.
Having selected opposing key drivers for change, it is necessary to knit
together plausible ‘stories’ that incorporate both key drivers and other
factors into a coherent whole. involve incorporating other consistent
factors: for example, slow economic growth resulting
5. Identifying impacts of alternative scenarios on organisations is the final
key stage of scenario building.
INDUSTRY AND SECTOR3
A distinction can be made between an industry and a sector. A sector is a
group of closely related industries. For example, the computer sector
comprises several related industries: the computer component industries (for
example, the disk drive industry, the semiconductor industry, and the computer
display industry), the computer hardware industries (for example, the personal
computer [PC] industry; the handheld computer industry, which includes
smartphones such as the Apple iPhone and slates such as Apple’s iPad) and the
mainframe computer industry, and the computer software industry.
Industries within a sector may be involved with one another in many different
ways. Either the industries complement each other or they compete with each
other, sometimes aggressively and other times passively.

@ Smartphones became perfect substitutes for Pagers and the industry for
Pagers just did not grow.
@ The Tablet industry stagnated in India. Reasons?
@ Late entry of MI in the laptop industry with the Horizon and the Students.
@ about the google chromebook and the launch of HP 11a to capture the
segment of Online Teaching
The Computer Sector: Industries and Segments

3 Adopted from “Strategic Management, Theory” (11th Ed) by Charles W. L. Hill, Gareth R. Jones, and Melissa A.
Schilling
COMPETITIVE FORCES – THE FIVE FORCES FRAMEWORK4
Porter’s five forces framework helps identify the attractiveness of an
industry in terms of five competitive forces:
1. the threat of entry,
2. the threat of substitutes,
3. the power of buyers,
4. the power of suppliers and
5. the extent of rivalry between competitors.
These five forces together constitute an industry’s ‘structure’, which is
typically fairly stable. For Porter, an attractive industry structure is one that
offers good profit potential. His essential message is that where the five
forces are high, industries are not attractive to compete in. There will be too
much competition, and too much pressure, and only reasonable profits.

The Five Forces Framework

4 Adopted from “Exploring Strategies, Texts and Cases” (9th Ed) By Gerry Johnson, Richard Whittington, Kevan
Scholes.