Strategy?
STRATEGY IMPLEMENTATION
Strategic management is the ongoing
planning, monitoring, analysis and
assessment of all necessities an organization
needs to meet its goals and objectives.
Changes in business environments will
require organisations to constantly assess
their strategies for success.
characteristics of strategic management
Long-term issues ,Competitive advantage ,
Future-oriented. ,Organisation-wide impact ,
Complex. ,On-going process. ,Broad plans
shaping. ,Strategic goals
Internal and external environment
Strategic thinking
Phase in SM
1: Annual budgeting
2;long range planning
3: Environmental scanning
4: strategic planning phase
Q2: Mission- vision of the firm
The first task of Strategic Management is
formulating the organization's vision and
mission statements. They have the greatest
impact on the identity and the future of the
organization and reflect the strategic intent of
the organization.
Vision
Vision is what keeps the organization moving
forward. Vision statement provides direction
and inspiration for organizational goal setting,
Vision is a single statement dream or
aspiration.
well-crafted Vision Statement should be:
realistic and credible
well-articulated and easily understood
appropriate, ambitious and responsive to
change
Easy to read and understand.
Compact and crisp to leave something to
people's imagination
Mission statement :Mission follows vision,
Mission of an organization is the purpose for
which the organization is. A mission
statement is a statement of purpose and
function. The mission statement should have
clear answers to the following questions of
purpose:
1 Why does the organization exist?
2 What is its value addition?
3 What is its function? How does it want to be
4 positioned in the market?
5 What business is it in?
Q3,Strategic planning
1 specify objectives
2 generate strategy
3 evaluate strategies
4 monitor results
Q.3. STRATEGIC MGT PRACTICS IN INDIA
Strategic management is the formulation and
implementation of the major goals and
initiatives taken by a company's top
management on behalf of owners, based on
consideration of resources and an
assessment of the internal and external
environments in which the organization
competes.
Strategic management provides overall
direction to the enterprise and involves
specifying the organization's objectives,
developing policies and plans designed to
achieve these objectives, and then allocating
resources to implement the plans.
Process of Strategic Management
1. Environmental scanning
2. Strategy formulation
3. Strategy implementation
4. Evaluation and controls
Major objectives
1:innovation as strategy and strategy as
innovation;
2: globalisation of Indian firms
3: India as innovation source
Q.4. INTERNAL & ENVIRONMENTAL
ANALYSIS (SWOT AUDIT)
The very first process in Strategic
Management is Environmental Scanning. It is
the process of monitoring, evaluating and
disseminating information from the external
and internal environments to key people
within the corporation. Its purpose is to
identity strategic factors that will determine
the future of the corporation
The simplest way to conduct environmental
scanning is through SWOT (Strengths,
Weaknesses, Opportunities and Threats)
analysis. The SWOT analysis provides
information that is helpful in matching the
firm's resources and capabilities to the
competitive environment in which it operates.
It can be used in strategy formulation and
selection.
Identify Opportunities and Threat:
Competitive & Environment Analysis
1) Competitiveness Profiling
a) the market wants and
b) what the firm's best competitors can offer
2) Strategic Group Analysis
3) Five Forces Model
(a) Threat of New Entrants(b) Bargaining
Power of Suppliers(c) Bargaining Power of
Buyers:(d) Existence of Substitute Products:
(e) Intensity of Rivalry:
Identify Strength & Weaknesses: Value
Chain Analysis SWOT
Michael Porter suggested that there must be
a 'fit' between a strategy and the elements of
the internal environment of an organization.
He distinguishes between two types of
activities
1) Primary Activities
a) Inbound logistics:b) Operations:
c) Outbound logistics: d) Marketing and Sales
e) Service
2) Support Activities
a) Procurement (b) Technology Development:
c) Human Resource Management:
d) Infrastructure:
SWOT Matrix
The relationships in a SWOT analysis are
generally represented by a 2 × 2 matrix. The
matrix identifies the Strengths, Weaknesses,
Opportunities and Threats of a firm.
1: Build its strength. 2:Reverse its weakness
3: Maximise its response to opportunities
4: Overcome its threat
Q.5. STRATEGY FORMULATION
Strategy formulation is the development of
long-range plans for the effective
management of environmental opportunities
and threats, in light of corporate strengths
and weaknesses.
Strategy formulation requires continuous
observation and understanding of
environmental variables and classifying them
as opportunities and threats. It also involves
knowing whether the threats are serious or
casual and opportunities are worthy or
Marginal
Levels of Strategy Formulation
1. Corporate Level Strategy:
(a) Growth strategy, (b) Portfolio strategy
c) Parenting strategy
2. Business Level Strategy
3. Functional Level Strategy
4. Operational Strategy
Steps in Strategy Formulation Process
1.Define the organization and its environment
2. Define the strategic mission
3. Define and set the strategic objectives
4. Define the competitive strategy
5. Implementation of strategies
6. Evaluate progress and effectiveness
1: Generic Strategies
*Low cost or *Differentiation.
(a) Cost Leadership: (b) Differentiation
Strategy
(2) Focus and Niche Strategies
the cost focus and the differentiation focus
Q.6. TOOLS OF STRATEGIC PLANNING &
EVALUATIONThe following are the
commonly used tools of strategic planning
and evaluation:
(1) Competitive Cost Dynamics
This strategy emphasises efficiency. By
producing high volumes of standardised
products, the firm can take advantage of
economies of scale and experience curve
effects. Maintaining this strategy requires a
continuous search for cost reductions in all
aspects of the business.
(2) Learning Curve
Learning curve theory states that as the
quantity of items produced doubles,
costs decrease at a predictable rate. This
predictable rate is described by the
following equations:
Yx=Kx log²b[²]
K is the number of direct labour hours to
produce the first unit ,Y is the number of
direct labour hours to produce the xth unit,x is
the unit number b is the learning percentage
(3) Experience Curve
Experience Curves are an expansion of the
Learning Curve idea from individual and
group learning to factories, companies or
entire industry sectors. Companies can use
Experience Curves to develop marketing and
manufacturing strategy.
(4) BCG's Growth - Share Matrix Approach
The basic idea underlying BCG's
Growth-Share Matrix approach is that a firm
should have a balanced portfolio of
businesses such that some generate more
cash than they use and can thus support
other businesses that need cash to develop
and be
(5) The IA-BS Metrix
In this approach, each of a company's SBU's
is plotted in a two-dimensional matrix of
industry attractiveness and business
strength, as shown below
(6) Life Cycle-Competitive Strength Matrix
The underlying assumption of the Life
Cycle-Competitive Strength Matrix is that
industries will move through the life-cycle
stages from introduction to growth to maturity
and then to the decline stage.
Q.7.
Strategy implementation is the process of
allocating resources to support the chosen
strategies. This process includes the various
management activities that are necessary to
put strategy in motion, institute strategic
controls that monitor progress and ultimately
achieve organisational goals.
Approaches for implementation of business
strategy
1. Commander approach - Once the best
strategy is decided the top management
passes on to subordinates for execution , 2.
Organisational change approach - Adopted
to implement more difficult strategies
because of behavioural science techniques
involved in change management , 3.
Collaborative approach - takes collective
participation by considering the views of the
senior managers in the organisation. , 4.
Cultural Approach - strategic manager plays
role of a mentor in giving general direction,
but encourages individual decision making. ,
5. Cursive approach - strategic manager
encourages subordinates to develop,
champion and implement sound strategies on
their own
General Framework for Strategy Imp
1. Building an organization capable of
executing the strategy. , 2. Establishing a
strategy-supportive budget. , 3. Installing
internal administrative support systems. ,4.
Devising rewards and incentives that are
tightly linked to objectives. , 5. Shaping the
corporate culture to fit the strategy
The 7-s's Framework
1. Strategy ,2. Structure, 3. Systems. , 4.
Style. ,5. Staff. ,6. Shared-values. ,7. Skills
The four soft S's shared values, style, staff
and skills are difficult to
Q.8. STRATEGIC CONTROL PROCESS
Different types of Strategic Control Systems
are required to effectively exercise control.
Standard systems of controls are generally
classified into the following four
types: 1. Premise Control Rate of inflation,
Interest rates Legislations and regulations by
government, Demographic changes ,Social
changes ,Competitors ,New entrants,
Suppliers ,Substitutes
2. Implementation Control: It is of two types:
Assessing Strategic Thrust and Milestone
Reviews
3. Strategic Surveillance : Strategic
surveillance is intended to monitor a very
broad range of events inside and outside the
firm. The choice of the events is not
pre-selected or pre-planned.
4. Special Alert Control
This control is a subset of the other types of
controls. This is a rapid but thorough review
of the entire strategy in the light of sudden
and unexpected events. These reviews often
lead to contingency plans.
DU PONT'S CONTROL MODEL
Du Pont analysis is a model widely used in
financial ratio analysis to designate the ability
of a company to increase its return on equity
ratio (ROE).
REO= Profit margin × Asset turnover ×
Financial leverage
1. Profit margin. This ratio reflects a
company's strength in generating profit from
each dollar of sales. 2. Asset turnover. This
ratio measures how efficiently a company
uses its assets to generate sales. 3.Financial
leverage or equity multiplier. This ratio shows
the extent to which a company uses debt
financing.
Explain Advantages and disadvantage
BALANCED SCORE CARD
The Balanced Scorecard (BSC) moves
beyond the traditional goals of income, cash
flow and financial ratios. It adds process
performance measurements around issues
like continuous improvement, supply chain
management and customer satisfaction
BSC identifies the four related core
processes
1: Learning and growth capability 2:
Efficiency of internal processes, 3: Customer
value , 4: Financial returns BSC introduces
four new management processes :1
Translating the vision, 2: Communication and
linking.3 : Business planning and, 4:
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