Course: Strategic Management

Introduction to Strategy

Dr. Pratima Verma

Email: Pratima@iimk.ac.in

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

“Those who can not remember the Past are condemned to repeat it”
--George Santayan

• The history of strategy or strategic management can be traced back several

thousand years.

• Military strategy ---- Strategy

• Great wisdom/knowledge about strategy can be acquired by understanding

the past.

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

A Chinese general, military, strategist , writer,

and philosopher.

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

• Influential work on “military strategy” that has affected both western and east Asian
philosophy and military thinking.

• Focus on much more on alternative to battle, such as stratagem, delay, the use of
spies, and alternative to was itself, the making and keeping of alliance etc.

• Accepted as “masterpiece on strategy” and has been frequently cited and referred to
by many authors and theorist.

• One of his idea that has implemented in numerous businesses applications-

• “Winning a battle without fighting is the best way to win”

• For Example: Apple Behavior it in personal computers

• Ideas into Action
• Apple develop unique features that have created a fiercely loyal set of customers.
• Not worried about the compatibility with software

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

• Various military conflicts and events shaped the understanding the of strategic
management.

• The word strategy has its roots in warfare.

• Greek verbs (Strategos --- Army leader).

• Stratego refers to defeating an enemy by effectively using resources.

• For Example: Gap Inc.

• The company decided to create their own stores rather than competing for shelf
space for their clothing within traditional departmental store.

• Strategy/strategic management/strategic thinking truly inspired by military strategy.

• Major business decisions are often categorized as “Strategic” while minor decision
are referred to as “Tactical”

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

Indian context of Strategy

• Informal sense or Formal sense

• Example: Mahabharata days.

• Approximately, 5000 years back, the Epic of Mahabharata is supposed to have taken
place in this country.

 The war happened between Kauravas and Pandavas.

 Kauravas had 11 and Pandavas had 7 Aksauhini Sena.

 Kauravas had really got about 5 lacs more soldiers than the Pandavas.

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

• The strategy was:

• Example: “Chakravyuha” as strategy
• The army of Kaurvas was formulate in this Chakravyuha in the forms of Chakras.

• So , the term strategy or strategy formulation is not something new as far as Indian are
concerned. (Informally the terms also used in Indian context)

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

Modern Context of strategy:

• In 1965, Ansoff used the term strategy.

• In India, the term strategy has been used as a “corporate planning”.

• The first Indian industry to start corporate planning was the public sector BHEL in the
year of 1974.

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

Corporate
Strategy
planning

• BHEL coming up with the plan of action for the next 5 years and focus
on
i.e. what we want to do

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

• In the mid 1980s, country face the competition.

• Telecommunication sector.

• ITI (Indian Telephone Industry) was thrown open to competition.

• Liberalization 1991

• IT revolution and Electronic revolution

• The term corporate planning as soon as the liberalization process started gaining
momentum, rechristening itself and it became Strategic management.

• Organization look at shorter time horizon of 3 years for strategic management.

Pratima Verma, Indian Institute of Management, Kozhikode

 History of Strategy or Strategic Management

• IT companies look at even a smaller horizon like 1 year.

• IT company: Infosys

• Whole industry of IT and electronic have changed their domain of corporate planning
brought in this strategic management.

• Strategic management is an ongoing decision making process in which a firm’s

managers select and implement activities & investments, under conditions of
competition and constrained resources, in pursuit of superior organizational
performance.

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy

• hh

Pratima Verma, Indian Institute of Management, Kozhikode

Strategy Development Simplified

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Simplified

• “As-is” state to “to -be” state is strategy.

• Corporate strategy = “what business to be in”.

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Simplified

For Instance: I have 2 million dollars where should I invest:

Real
estate
business

Real
Invest in
all stock estate
market business

Corporate strategy
Basket of
multiple
revenue
sources

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Simplified

• Business strategy is achieving competitive advantage in chosen industry.

• Business strategy = buy only town houses in a specific location like specific area or
street where It will appreciate in value more than the others.

• Example: If one organization wants to manufacture the electric cars. Then:

• Corporate strategy is to enter into auto industry.
• Business strategy is to invest in electric cars.

• Functional strategies viz. Marketing, HR, Operations, and Finance.

• Outsource the operations to third party for real estate company:

• The outsourcing operation company responsible for entire paper work– maintenance
rental house collection of rents, dealing tenants; and they will do in exchange for 10%
revenue model.

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Simplified

• Another functional strategy like finance strategy, that was pay everything in cash
instead of loaning from the bank. Because its less risky business and don’t have to pay
5%interest to the bank.

Real Estate
Business

Town house in a
specific location

Operations and
finance strategy

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Tools/Strategy canvas

• The purpose of tools is to help us make decisions and find competitive

advantage.
• Tools for analyzing external environment and internal environment

• There are various tools/framework

• Porter’s Five forces framework
• Industry value curve
• Resources and capabilities
• Mackinsy 7 S framework

• Knowing the tools is not difficult, but the difficult part is to have a
strategic thinking ability.

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Development Tools/Strategy canvas

• Strategic Canvas gives overall picture and create positioning strategies.

• Example: Hospitality Industry- Hotels

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

Pratima Verma, Indian Institute of Management, Kozhikode

Strategy Development Simplified

Pratima Verma, Indian Institute of Management, Kozhikode

Strategy Development Simplified

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas
STEP 1: what would be the key competing factors for industry/competitor?

STEP 2: Draw the industry value curve where is the industry stand?

STEP 3: know your “as-is” (present situation) state.

Need to run a customer surveys and find out the other company/competitor value curve
in the canvas.

STEP 4: Four action framework to the canvas, in which the competing factors wants to
eliminate, reduce, raise and create new one.

Exercise:
1. Draw a value curve for hotel for Backpackers with the using of same key competing
factors.
2. Draw a value curve for hotel which is situated in a business center with the using of
same key competing factors.

Pratima Verma, Indian Institute of Management, Kozhikode

Strategy Development Simplified

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

• This is the way to create a competitive advantage and it appears in all

industry without exception.

Pratima Verma, Indian Institute of Management, Kozhikode

 Question?

• How the value curve looks like in case of direct competitor?

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

• Example: Automobile sector

• Subaru

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

• High luxury, high reliability, high price but low performance

• Rolls Royce

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

• Medium luxury, Medium reliability, very high performance, and very high
price
• Ferrari

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

• High luxury, Medium reliability, High performance, and High price

• E.g: Aston Martin

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy Canvas

Key Takeaway
Don’t need to be best in everything to win, firm/organization
have to be unique in own segments.

Pratima Verma, Indian Institute of Management, Kozhikode

 Strategy

Strategy: Course of action or a plan –unified comprehensive and

integrated to assure that the objectives of the organization are
achieved.

Pratima Verma, Indian Institute of Management, Kozhikode

 Thank you!
谢谢你
Xièxiè nǐ

Pratima Verma, Indian Institute of Management, Kozhikode