Strategic Management

MM ZG611/QM ZG611/ MBA ZG611/

POM ZG611
Lecture 2
Elements of Strategic Management Process
BITS Pilani Dr. Neetu Yadav
Pilani|Dubai|Goa|Hyderabad
neetu.yadav@pilani.bits-pilani.ac.in
 Course Outline
• Course name: Strategic Management
• Course code: MM ZG611 /QM ZG611/ MBA ZG611/POMZG611

• Number of modules: 7

• Number of lectures: 22
• Textbook: “Wheelen, Thomas L. and J. David Hunger, Concepts in
Strategic Management and Business Policy, Pearson Education, 13th ed..

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 Lecture 2: Learning Outcomes
• Elements of Strategic Management Process
• Levels of Strategies
• Crafting Strategy
• Strategic Decision-Making

• Readings: Henry Mintzberg, “Crafting Strategy”, Harvard Business Review, 1987.

• Collins and Porras, “Building your company’s vision’, Harvard Business Review, 1996.
• Bingham, Eisenhardt, and Furr, “Which Strategy When?” MIT Sloan Management Review, 2011.

Text Book Ch. 1 (1.5, 1.7)

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 Strategic Management Process

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 Elements of Strategic Formulation
• Vision- What core to preserve and what
future to stimulate progress towards; Core ideology
what we preserve and envisioned future is what we
Inspire to become
IKEA: To create a better everyday life for many people

• Mission- Purpose or reason for the organization’s

Existence. Mission statement defines the fundamental, unique purpose
that sets a company apart from other firms and identifies scope or domain
of company’s operations. (Source: Collins and Porras, “Building your company’s vision”, HBR)
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 Elements of Strategic Formulation
• Objectives: End results of planned activity; specifies what is to
be accomplished by when and quantified, if possible.

• Strategies: form a comprehensive master plan that states how

the corporation will achieve its mission and objectives

• Policies: Broad guideline for decision making that links the

formulation of a strategy with its implementation.
• Eg: 3M says researchers should spend 15% of their time working on something other
than their primary project
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 Three Types of Strategy

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 Three Types of Strategy
• Corporate Strategy- Company's overall direction in terms of its general
attitude toward growth and the management of its various business and
product lines. Three main categories-Growth, Stability, Retrenchment

• Business Strategy-Occurs at the business unit or product level, it

emphasizes improvement of the competitive position of corporation’s
products or services in specific industry or market segment

• Functional Strategy- Approach taken by functional area to achieve

corporate and business unit objectives and strategies by maximizing
resource productivity
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 Crafting Strategy-Henry Mintzberg
• Manager-Craftsman, Strategies-Clay
• Strategies are both plans for future and patterns from the past
• Strategies need not to be deliberate, they can also emerge
• There is no one best way to make strategy
• To manage strategy is to craft thought and action, control and
learning, stability and change.

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 4 P Strategy by Mintzberg
• Perspective describes the Vision & direction.

• Plan is often referred to an Intended Strategy, it is the deliberate course

of action charting path towards strategic objectives.

• Positioning becomes the mediating force between the Organization and

the environment i.e. between internal & external context.

• Patterns describe a series of consistent decisions and actions over time.

They are the basis for Emergent Strategies.
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 Types of Strategy by Mintzberg

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 Illustration: Southwest Airlines (1993)
• 1993-Southwest airlines the seventh-largest airlines, strong financial
performance
• Focused, point-to-point airlines model, low cost-high frequency, quick
turnaround, high productivity, equipment usage, clear target market,
customer services
• Southwest Model-
– Southwest Service-Family fun
– Operations-No booking through agents, point-to-point route system, flying into
uncongested airports of small cities, only drinks and snacks, 84% unionized
workforce, using only Boeing 737 jets, turned in time was 15 min as compared to
industry average was 55 min
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 Illustration: Southwest Airlines (1993)
• Cost control- Great services at low cost-buying fuel from variety of
vendors depending on the best price; gate cost and landing fees lower at
small airports; optimizing number of departure from each airport
• Marketing- ‘we have a lot of ambassadors out there-our customers’
• People- hiring process-customers part of selection process, peer hiring,
turnover averaged 7%, training at Southwest’s People University, profit-
sharing plans
• Corporate Culture- unwritten rules: You have to compassionate to
internal and external customers; You have to have a positive attitude;
You have to want to work and use common sense; You have to have a
great sense of humor
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 BITS Pilani
Pilani Campus

Question Session
 BITS Pilani
Pilani Campus

End of Lecture