 Dell Computers, performing better when it compares with

Why do some other players in personal computer industry

 South West Airline Manages to get profits in good and bad

organization
times

succeed while  In Retail Industry Kmart is out performed by Wal-Mart

others fail?  In Software market, Microsoft still maintains strong market

position

These organizations have taken ”Actions” to achieve superior Performance relative to rivals

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  Low-cost Production
 Increasing quality
 Increase their distribution
 Wider product line
Actions /  Enhance performance of their product / service
 Through value added services
Decisions ?  Styling their product / service to increase their attraction
 Offers value for money
 Focusing on narrow market niche
 …….Many more

Prof. Vijay K S, MBA Programme`-BIET, Davangere

What do we
call these Strategy ….

Actions as?

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Preserve the Core

Strategy….
Stimulate Progress

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 There are three Big Strategic Questions

- Where are we now?

Think
- Where do we want to go?
Strategically
- How will we get there?
means
A Company’s answer to “How will we get there?” - Is its
strategy

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  How to please customer?

 How to respond to changing market conditions

 How to out compete rivals

The strategy  How to grow the business

is how to ….
 How to manage each functional piece of the
business and develop needed organizational
capabilities

 How to achieve strategic and financial objectives

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 ………the Action that managers take

 To attain one or more of the organizational goals

 To achieve superior performance relative to rivals

 By having superior performance, said to have Competitive position

Strategy?

It is Unified, Comprehensive, and Integrated long term plan that

relates to the strategic advantages of the firm to the challenges of the
environment.
In essence, the strategic plan is a company’s game plan
Prof. Vijay K S, MBA Programme`-BIET, Davangere
 “…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”
Strategic
Management?
Art & science of formulating, implementing, and evaluating,
cross-functional decisions that enable an organization to
achieve its objectives

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 “…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”

Superior Performance - Profitability - return that it makes on the capital

Strategic
invested. The more efficient a company is, higher are its profitability.
Management?
Competitive Advantage- profitability is greater than the
average profitability of all firms in its industry.

Sustained Competitive Advantage – When the firm maintains

above-average profitability for a number of years.

Prof. Vijay K S, MBA Programme`-BIET, Davangere
 Competitiveness Financial Performance

Differentiation
Competitive
Economic Market
Advantage – The Cost Leadership
Competitive
Value Value
Focal Point of Advantage
Added Added
Strategy
Quick Response

Value Created for Customers Value Captured for Investors

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Strategy is concerned with understanding the relationship
between Prices, Customer demand and Cost structure and
manipulating these variables in a way that lead to higher
profitability
At the basic
level….
Price

Customer
Demand
Cost
Structure

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Strategic Management is a set of managerial decisions and actions
that determines the long-run performance of a corporation. It
includes environmental scanning (both external and internal),
strategy formulation (Strategic and long-range planning), strategy
Meaning of
implementation and evaluation and control.
Strategic
Management
It emphasizes the monitoring and evaluating of external
opportunities and threats in light of a corporation’s strengths
and weaknesses

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  Strategic management is well-organized approach

 Strategic management is both an Art and Science of

Nature of formulating, implementing, and evaluating
Strategic
Management  SM allows to take cross-functional decisions that facilitate an
organization to accomplish its objectives.

 it demands awareness to the

"big picture" and a rational assessment of the future options.

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  SM offers
 a strategic direction endorsed by the team and stakeholders

 a clear business strategy and vision for the future

Nature of  a structure for governance at the different levels
Strategic
Management  a logical framework to handle risk in order to guarantee
business continuity

 the capability to exploit opportunities

 react to external change by taking ongoing strategic

decisions.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
  Identification, prioritization, and exploitation of opportunities.
 Objective view of management problems.
 It represents a framework for improved coordination and
control of activities.
Importance of  It minimizes the effects of adverse conditions and changes.
Strategic  It allows major decisions to better support established
Management objectives.
 It allows more effective allocation of time and resources to
identified opportunities.
 It allows fewer resources and less time to be devoted to
correcting erroneous or ad hoc decisions.

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  It creates a framework for internal communication among
personnel.
 It helps to integrate the behavior of individuals into a total
effort.
 It provides a basic for the clarification of individual
Importance of responsibilities.
Strategic  It gives encouragement to forward thinking.
Management
 It provides a cooperative, integrated, and enthusiastic
approach to tackling problems and opportunities.
 It encourages a favourable attitude towards change.
 It gives a degree of discipline and formality to the management
of a business.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
  Has support of organization’s executive officer.
 Long Term Process
 Is fresh and continuous, not static and stale.
 Is participatory, not left to planners.
 Is flexible.
Characteristic  Leads to resources decisions. Resource Mobilization and
s of Strategic Application
Management  Integrated System
 Hierarchical Strategy
 Proactive and not a quick fix
 Management by Process
 Analytical tools are used every time
 BCG, Five Force Model

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Companies are operating in age of discontinuing change - an age of creative &
constructive destruction.
Business, technology and product life is shrinking.
Demographic shift in terms of consumer preference and requirements.
A direct promotion from Agricultural economy to service or Hi-tech economy
Relevance of in the new growth economy.
Strategic Shift from controlled economy to market driven economy.
Management Rich countries adopt deindustrialization.
Emergence of new Global Socio – economic system and world orders.
Knowledge is replacing Infrastructure
Self-leadership is in, command and control out
Networks are replacing hierarchies
Wanted - employees with Emotional Intelligence.

Prof. Vijay K S, MBA Programme`-BIET, Davangere

Strategic “…is the process by which managers choose a set of strategies

Management for a company that will allow it to achieve Superior

Process? performance and to have Competitive Advantage”

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Strategic Management Process / Model

Environmental Scanning
Strategy Formulations Implementation of Strategy Evaluate & Control
Or Analysis

External Opportunities Mission

and Threats Reason
for existence Objectives
Natural Environment
What results
Resources and Climate
to accomplish Strategies
Social Environment by when Plan to achieve
General force mission and Policies
Task Environment Objectives Broad
Industry Analysis guidelines
Programs
for decision Activities
Internal Strengths & Needed to Budgets
making
Weaknesses accomplish a Cost of the Procedures
plan programs
Structure: Sequence
Chain of Command of steps
Performance
Culture: needed to Actual
Belief, expectations, do the job Results
values
Resources:
Assets, Skills,
Competencies, knowledge
Feedback and Control
Prof. Vijay K S, MBA Programme`-BIET, Davangere
  Business Model is usually composed of five elements
Relationship
 Who it serves?
between
Companies  What it provides?
Strategy and  How it makes money?
Its Business  How it differentiates and sustains competitive advantage?
Model
 How it provides its product/service?

Prof. Vijay K S, MBA Programme`-BIET, Davangere

  Business Model in context of Stretegy
 A Company’s business model is management’s story line for how the
Relationship strategy will be a Money Maker
between  Is strategy is capable of earning profit?
Companies  How will business generates revenue?

Strategy and  Is revenue enough to cover cost?

Its Business  Value to customer @ Profitable price?

Model
The Business Model is more narrowly focused than the concept of Strategy

Companies Strategy is relates broadly to its competitive initiatives and action plans

The bottom Line result of Strategy is “Business Model” i.e. Making Profit
Prof. Vijay K S, MBA Programme`-BIET, Davangere
  Business Model is a outcome or result of your strategy, but
not itself, a strategy.
Relationship  Strategy is a firm’s contingent plan as to the business model
between
it will use
Companies
Strategy and
Its Business
Model

Prof. Vijay K S, MBA Programme`-BIET, Davangere

Relationship
between
Companies
Strategy and
Its Business
Model

Prof. Vijay K S, MBA Programme`-BIET, Davangere

 Strategic Management Process / Model
Environmental
Scanning Implementation of Evaluate &
Strategy Formulations
Or Analysis Strategy Control
External Opportunities Mission
and Threats Reason
for existence Objectives
Natural Environment
What results
Resources and Climate
to accomplish Strategies
Social Environment by when Plan to achieve
General force mission and Policies
Task Environment Objectives Broad
Industry Analysis guidelines
Programs
for decision Activities
Internal Strengths & Needed to Budgets
making
Weaknesses accomplish a Cost of the Procedures
plan programs
Structure: Sequence
Chain of Command of steps
Performance
Culture: needed to Actual
Belief, expectations, do the job Results
values
Resources:
Assets, Skills,
Competencies, knowledge
Feedback and Control
Prof. Vijay K S, MBA Programme`-BIET, Davangere
 Scanning
 Where are we now?

Strategic Strategy Formulation

Management  Where do we want to be?
Model / Strategy Implementation
Process  How do we get there?

Evaluation / Control
 How do we measure our progress?

Prof. Vijay K S, MBA Programme`-BIET, Davangere