UNIT I

Strategy and the Strategic Planning Process

Prof. Bhavya Vinil, Presidency Business School

Unit I: Strategy and the Strategic Planning Process

• Fundamentals of Strategic Management:

• Basic concept of strategy and strategic management,
• Importance of strategy in organizations,
• Strategy as a winning phenomenon.
• Managerial Process of Strategy Planning:
• Process of strategy planning,
• Developing strategic vision, setting objectives
• Execution of strategy and strategic plans
Prof. Bhavya Vinil, Presidency Business School
 Thinking
Strategically:
• The Three Big Strategic
Questions
1. Where are we now?
2. Where do we want to go?
3. How do we get there?

Prof. Bhavya Vinil, Presidency Business School

Prof. Bhavya Vinil, Presidency Business School
 What is Strategy?

Strategy is management’s “game plan” to

A company’s strategy consists of the set Attract and please customers

of competitive moves and business Stake out a market position
approaches that management is Conduct operations
employing to run the company Compete successfully
Achieve organizational objectives

Prof. Bhavya Vinil, Presidency Business School

 Strategy??

A strategy is an
Strategy is the means by
organization’s way of saying
which an organisation can
how it creates unique
achieve its goals and
value and thus attracts the
objectives.
custom that is its lifeblood.

Prof. Bhavya Vinil, Presidency Business School

Why Strategy?

• Strategy is related to pursuing those

activities which move an organization from
its current position to a desired future state.

• It helps in understanding:
• How to compete against rivals
• How to position the company in the
marketplace
• How to capitalize on attractive
opportunities to grow the business
• How best to respond to changing
economic and market conditions
Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
Strategic Management:

Strategic management is the sum of strategic planning and strategic thinking.

Strategic planning is the identification of achievable goals. Strategic thinking is the
ability to identify the needs of the organization to achieve the goals identified
through strategic planning.

Strategic management includes setting objectives for the company,

analyzing the actions of competitors, reviewing the organization's internal
structure, evaluating current strategies and confirming that strategies are
implemented company-wide.

Companies of all sizes and in all industries can benefit from the
practice of strategic management.

Prof. Bhavya Vinil, Presidency Business School

 Role of Strategic Management in business organization:

1) It gives direction to business.

2) It gives sense of identity and unity towards business objectives.
3) It helps an organization in achieving its goals in an efficient and effective
manner.
4) It helps in getting rid of the threats or else neutralizes them.
5) It enables organization to grasp every opportunity that is available in the
market.
6) Strategic management decisions are usually made in a rational and in a logical
manner.
7) It helps in forecasting.
8) It helps in grasping every opportunity that is available in the market.
Prof. Bhavya Vinil, Presidency Business School
 1. Allows Firms to Anticipate Changing Conditions
2. Provides Clear Objectives and Direction for
Employers
3. Accomplishment of Long-Term Objectives
4. Helpful to Study the Business Environment
5. Helpful to Identify Business Opportunities
6. Diagnosis of Business Environmental Threats
Importance of 7. Suggestions to Overcome Internal Weakness

Strategic 8.
9.
Suggestions to Maximize Internal Strengths
Helpful to Face Competition Effectively
Management 10. Effective Control
11. Helpful to Face Uncertainties in Future
12. Maximization of Profits
Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
 1. Corporate Level Strategy:

• Defines the business areas in which your firm will

operate.
• Involves integrating and managing the diverse
businesses and realizing synergy at the corporate
level.
• Top management team is responsible.

2. Business Level Strategy:

Levels Of • Involves defining the competitive position of a

strategic business unit.

Strategy • Decided upon by the heads of strategic business

units and their teams.

3. Functional Level Strategy:

• Formulated by the functional heads along with their

teams.
• Involve setting up short-term functional objectives.
Prof. Bhavya Vinil, Presidency Business School
 Formulated where - At the corporate level

Formulated by - Top management

Corporate Formulated why? - To oversee the interests and operation of

organizations

level Level of decision making- It occupies the highest level of strategic

decision making
strategy
Covers what - Cover action dealing with the objectives of firm,
acquisition and allocation of resources, and coordination of
strategy of various units.
Applicability - It applies to the enterprise as a whole

Level - It is highest level of strategy

Prof. Bhavya Vinil, Presidency Business School
 Planned by whom – Managers

Concerned with what? - Concerned with managing the

interests and operations of a particular line of business.

Business What type of plan? - A managerial game plan for a

single business.
level
Strategy Deals with questions –

• 1. Business competition in market

• 2. Business offer of products and Services
• 3. Customers to serve
• 4. Distribution of company resource with is the business

Builds - Competitively valuable capabilities

Prof. Bhavya Vinil, Presidency Business School
 Definition- A functional strategy is a short term game
plan for a key functional area within a company.

Implements- Functional strategies help in

Functional implementing grand strategy.

level Focus- on external environment

strategy
Decision making- At operational level with respect to
specific functional areas-
• - Production
• - Marketing
• - Personnel
• - Finance etc
Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
 Strategic Business Unit:
• A strategic business unit, popularly known as SBU, is a fully-functional unit of a business that has
its own vision and direction. Typically, a strategic business unit operates as a separate unit, but it
is also an important part of the company. It reports to the headquarters about its operational status.
• A strategic business unit or SBU operates as an independent entity, but it has to report directly to
the headquarters of the organisation about the status of its operation. It operates independently
and is focused on a target market. It is big enough to have its own support functions such as HR,
training departments etc. There are several benefits of having an SBU. This principle works best
for organisations which have multiple product structure. The best example of SBU are companies
like Proctor and Gamble, LG etc. These companies have different product categories under one
roof.
• For example, LG as a company makes consumer durables.
• It makes refrigerators, washing machines, air-conditioners as well as televisions. These small
units are formed as separate SBUs so that revenues, costs as well as profits can be tracked
independently. Once a unit is given an SBU status, it can make its own decisions, investments,
budgets etc. It will be quick to react when the product market takes a shift or changes start
happening before the shift happens
Prof. Bhavya Vinil, Presidency Business School
 • When a company has
many products and a
diversified portfolio, it becomes
difficult for the top management to
manage the products individually.
Hence strategic business units are
formed in the organization.
• Thus, a company like HUL may
group its shampoos together in one
strategic business unit, soaps in
another and similarly, it may make
multiple strategic business units as
per its requirement.

Prof. Bhavya Vinil, Presidency Business School

Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
 CASE ANALYSIS:
BIGG BASKET
Strategy as a winning
phenomenon

Prof. Bhavya Vinil, Presidency Business School

 What is strategic planning?
Strategic planning is an ongoing process by which an organization sets its forward
course by bringing all of its stakeholders together to examine current realities
and define its vision for the future.

A dedicated strategic management team works with those senior leaders and
managers throughout the organization to communicate, coordinate and
evaluate progress against goals. They tie strategic objectives to day-to-day
operational metrics throughout the enterprise.

A good team of strategists can assist in creating a culture of empowerment

and learning in the organisation. It holds regular meetings with employees. It
sets a clear agenda and expectations to make the strategic plan real and
compelling to the organization through concrete objectives, results, and
timelines. Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
Strategic Management Process

Prof. Bhavya Vinil, Presidency Business School

Vision
• A vision articulates the position that an organization would like to
attain in the distant future.
• A good vision is one which foster risk taking and experimentation.
• It answers the question: ‘What will success look like?’
• A good vision possesses the following features:
• It should be inspiring.
• It should foster long term thinking.
• It should be original and unique.
• It should be competitive.
• It should be realistic. Prof. Bhavya Vinil, Presidency Business School
Mission
• Mission refers to the purpose of an organization.
• Mission states the business reason for the
organization's existence.
• It relates the organization to the society.
• The mission of an organization should aim high and at
the same time it must be realistic.
• It should provide a strategic direction for the
organization.
Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
 • "A good vision statement should be
bold and ambitious.
• They’re meant to be inspirational, big-
picture declarations of what your
What makes a company strives to be in the future.
good VISION • They give customers a peek into your
statement? company’s trajectory and build
customer loyalty by allowing them to
align their support with your vision
because they believe in the future of
your brand as well."
Prof. Bhavya Vinil, Presidency Business School
Prof. Bhavya Vinil, Presidency Business School
 What makes a good mission statement?

• It is a sentence that captures your company purpose, a catchy slogan, or

something more.
• The best mission statements leave a lasting impression of your brand in the
minds of your consumers, encouraging them to choose you over another
vendor.
• A quality mission statement incorporates your company core values and
reflects your organization’s personality.
• A mission statement is defined as an action-based statement that declares
the purpose of an organization and how they serve their customers.
• This sometimes includes a description of the company, what it does, and its
objectives. Prof. Bhavya Vinil, Presidency Business School
• Most mission statements are between one and three
sentences, never exceeding 100 words. The best mission
statements are typically a single sentence, so keep this in mind
when crafting yours.
• "TED: Spread ideas, foster community and create impact.
• Microsoft: To empower every person and every organization on
the planet to achieve more.
• Disney: To entertain, inform and inspire people around the
globe through the power of unparalleled storytelling.
• Meta: Giving people the power to build community and bring
the world closer together."

Prof. Bhavya Vinil, Presidency Business School

Prof. Bhavya Vinil, Presidency Business School
 Strategic
Decision
Making:

Prof. Bhavya Vinil, Presidency Business School

Prof. Bhavya Vinil, Presidency Business School
 Why Do
Luxury
Brands Burn
Their Own
Goods?

Prof Bhavya Vinil, School of Management, CMR University

Prof Bhavya Vinil, School of Management, CMR University
 PPT Should Be Used For Reference Only,
Refer Text Book For Complete Information
Prof Bhavya Vinil, Presidency Business School
GENERAL INFORMATION

Prof. Bhavya Vinil, Presidency Business School

COCO Model

What is COCO Model (Company Owned Company Operated) –

COCO stands for Company Owned and Company Operated, where the brand owns
the franchise store unit and operates the business itself.
It basically does not have to do anything with franchising. So, the company invests
its own money in the franchise.
And the franchise is managed by employees of the brand.

COCO Brand Example – Reliance Jio Mart, Fresho, Spar

Prof. Bhavya Vinil, Presidency Business School

FOCO Model

• What is FOCO Model (Franchise Owned Company Operated) –

• The initial setup cost is born by the investor (franchise) in the FOCO
model.
• And operations are managed by the Brand.
• The running cost (operations) is borne by the Brand.
• So, the franchisee gets a minimum guarantee or percentage of revenue
earned in return .
• Here, the franchise investor is the owner of the business, and the company
will be responsible for operating it and taking care of all the things
necessary to run an outlet.
• The company will also have to give a fixed percentage of profit shares to
the owner of the franchise.
• FOCO Brand Example – Kalyan Jewellers
Prof. Bhavya Vinil, Presidency Business School
FICO Model

• What is FICO Model (Franchise Invested Company Operated) –

• This model is similar to the FOCO model.
• But in the FICO model, Brands raise money from Investors with
the commitment of opening franchises.
• Basically, the investor (franchise) only invests in the business.
• So, the franchise investor does not involve themselves in
business operations at all.
• The Company runs the business operations with end-to-end
control of the supply chain. It’s more like an angel investment.
• FICO Brand Example – Cult Fit Gym Franchise
Prof. Bhavya Vinil, Presidency Business School
FOFO Model

• What is FOFO Model (Franchise Owned Franchise Operated) –

• In this model, the company gives its brand name to the franchise
investor.
• And they give it for a particular non-refundable sum (franchise fee)
and for a pre-agreed time period.
• The Prices and merchandise for the outlet are decided by the brands.
• So, the franchise investor is the owner of the store, and all the
operational cost has to be borne by the franchise itself.
• Moreover, the Franchise has to pay some percentage share of
revenue (royalty) to the Brand as well.
• Eg: Dominos Pizza
Prof. Bhavya Vinil, Presidency Business School