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STRATEGIC MANAGEMENT NOTES

SM Modules 3, 4 & 5

Strategic analysis

Strategic Analysis
3

GE Nine cell analysis

Green = Invest / Expand Yellow = Select / Earn Red = Harvest / Divest

Business Strength High Attractiveness High Medium Low Medium Low

Strategic Analysis -2
4

BCG Matrix
Market share High Low Growth rate

High
Low

Stars

Question marks

Cash cow

Dogs

Strategic choice

Strategic Choice
6

Analysing the strategic alternative Focusing on the strategic alternative

Evaluating the strategic alternative

Choosing the alternative

Subjective factors affecting strategic choice

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Governmental policies Perception of critical success factors and competencies Commitment to past actions Attitude to risk Internal policies

Timing the competitive considerations

Strategic implementation

Strategic implementation considerations

9

Interdependence of strategy formulation and implementation Knowing vs. Doing gap Organization culture mismatch

People and rewards

Implementation levers
Structure

Systems and process

Organizational structure
10

Functional
Based on value chain functions

Multi- divisional
Based on product or geography

Matrix
Specialist teams

Organization structure is relatively stable arrangement of responsibilities, tasks and people within the organization. Structure
Ensures control Coordinates the information, decisions and activities of the employees at all level

Network
Semi autonomous groups

Strategic leadership
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Task of managing an overall enterprise and influencing key organizational outcomes

Interpersonal

Role of senior management

Decisional

Informational

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Nature of strategic implementation

Action orientation Comprehensive in scope
Demanding varied skills Wide ranging involvement Integrated process

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Barriers to strategic implementation

An inability to change Poor and vague strategy Not having a guidelines for implementation efforts Poor information sharing

Unclear responsibility
Working against organization power structure

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Model for strategy implementation

Strategic plan Activating strategies
Project implementation

Managing change
Structural

Achieving effectiveness
Functional implementation

Procedural implementation

Leadership

Operational implementation

Resource allocation

Behavioural

Evaluation and control

Structural implementation
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Identification of key activities to be performed to achieve to objective

Group the activities based on

Nature Skills required

Choose the structure

Create departments, division etc

Establish interrelationship

Factors in organization design

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Structural
Formalization

Contextual
Environmental Goals Culture Size

Specialization
Hierarchy Centralization

Professionalism
Personnel ratios

Behavioural implementationStakeholder analysis

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Identify the stakeholders

Identify stakeholder expectations

Identify the claims the stakeholders are likely to make on the organization

Identify the stakeholder who are most important from the organization perspective

Identify strategic challenge that are involved in managing the relationship

Tasks of strategic leader

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Strategic direction
Managing organization resource pool Sustaining and effective culture

Ethical practices
Establishing balanced controls

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Functional and operational implementation Need for plan

Needs to be implemented in all parts Reduced planning time for functional manager Controlling the activities of the business

Coordination

Components of functional plan

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Financial plan Source of funds Usage of funds Management of funds Accounting Risk management Cost control

Marketing Product Price Place Promotion

Operation Production system Capacity Layout Operations planning and control Inventory Cost and quality Maintenance Research & development

Personnel System Planning Selection Compensation Organizational and employee characteristics Industrial relations

Information Acquisition and retention Processing and synthesis Retrieval and usage Transmission and dissemination

Factors to be considered which integrating functional plan

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Need for internal consistency Relevance to organizational capability

Making trade-off decisions Determining intensity of linkage Timing and implementation of plan

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4 Ps of operational effectiveness
Productivity

Pace

Processes

People

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Strategic evaluation

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Stages in evaluation control process

Set performance targets and standards Measure actual performance Identify / diagnose deviation

Analyse and measure deviation

Modify or revise targets

Strategic controls
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Premise control

Key assumptions of environment and organization

Implementation Planned vs. actual control

Strategic surveillance Special alert control

Generic

Crisis management

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Techniques and tools for evaluation

Techniques Tools

Strategic momentum control

Strategic leap control

Strategic issue management

Internal analysis

Comparative analysis

Comprehensive analysis

Check if basic assumptions are still valid

Field analysis Modelling Scenarios

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Corporate governance

Corporate governance
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Corporate governance is a system by Key which business corporations are considerations directed and controlled Concept of agents and A corporate governance structure principal specifies the distribution of rights and Conflicting responsibilities among different requirements of participants in the corporation such as executives board members, shareholders and spells out the rules and procedure for Solution is making decisions on corporate affairs the code of By doing this, it also provides the governance structure through which company objectives are set and means of attaining those objectives and monitoring performance are spelt out

Key aspects of 1992 Cadbury code

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Leadership
CEO and chairman of the board must be separated

Effectiveness of the Board

Balanced skill set Independence Experience Formal appointment Re- election

Accountability
Assessment of companys position and prospects Risk management Auditor

Remuneration Relation with shareholders

Sections of the Sarbanes- Oxleys act 2002

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Public company accounting oversight board

Auditor independence

Corporate responsibility

Enhanced financial disclosure

Analyst conflicts of interest

Commission resources and authority

Studies and reports

Corporate and criminal fraud accountability

White collar crime penalty enhancement

Corporate tax returns

CII Corporate governance in India - 1997

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Commitment

Board structure

Business policy

Transparency and disclosure

Corporate ethics

Executive compensation
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Stock option

Restricted stock

Bonus
Executive compensation

Salary

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Knowledge management

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Basics of knowledge management

Tacit knowledge

Data
Information Knowledge

Unwritten rules and know-how about operating in the organization

Learning organization is skilled at creating, acquiring and transferring knowledge and at modifying its behaviour to reflect new knowledge and insights

Fundamentals of knowledge management

35

How to attain knowledge ? How to deploy knowledge ?

Attain

Protect
How to protect the knowledge ?

Deploy

Attaining knowledge
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Individual capability

Knowledge sharing

Knowledge utilization

Single and double loop learning

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Double loop Organization s theories and assumption Reinforce the assumptions Single loop
New assumptions and theories

Observation of problem

Learn how to fix the problem

Try to correct the problem

Assumptions and theories are challenged

Attributes of a learning organization

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Top managers are committed to the learning process People have strong understanding of the assumptions they make about the organization

The culture encourages openness even in the case of non-performance

Systematic use of quantitative measurement and logical tools for analysing and solving problems Organization has some prior knowledge in the areas where it is trying to learn Organization has high level of absorption capacity

Paradox of organizational learning

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Too much single loop learning

Too much double loop learning Misinterpreting success and failures

Learning too fast

Attaining knowledge through acquisition

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How a new technology works

The culture of new business area

Legal and social characteristics of a new market

Why it is needed

The competitive forces in a new industry

Chances of losing knowledge

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Not being recorded or documented People dont recognize the value Attrition Lack of use Too difficult or manage knowledge No architecture which encourages sharing

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Tools of Knowledge management

Improve knowledge access Create knowledge repositories Enhance the knowledge environment

Tools

Protecting knowledge
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Copyright

Trademark & Brand mark

Patents

Design rights

Knowledge management framework

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Innovation management

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Basics of innovation management

Invention
Creativity

Innovation

Innovation implies that there is a steep change or discontinuity in normal pace of development within a industry. The changes may be seen in
Technology Product Process

Risk of innovation
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Cost of development

Time scales of success

Lack of competence in management Unpredictability of take-up Disruption of existing products and organizational routines

Stages of innovation
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Conception
Requirement analysis Idea generation Idea evaluation

Implementation
Development Prototyping Testing

Marketing
Production Launch Penetration

Conditions for innovation

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Outside the organization

A culture of risk taking Favourable tax policies Government funded R&D programmes Liquid stock market Information sharing between academics and industry

Within the organization

Commitment of tap management Availability of resources Reward system for employees Culture the supports innovation

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CORPORATE SOCIAL RESPONSIBILITY (CSR) AND ETHICS

Definitions and relationships

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Corporate social responsibility (CSR) is the process by which businesses negotiate their role in society In the business world, ethics is the study of morally appropriate behaviors and decisions, examining what "should be done Although the two are linked in most firms, CSR activities are no guarantee of ethical behavior

Reasons for CSR activities

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CSR activities are important to and even expected by the public

And

they are easily monitored worldwide

CSR activities help organizations hire and retain the people they want CSR activities contribute to business performance

CSR continuum
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Do what it takes to make a profit; skirt the law; fly below social radar

Comply with legal requiremen ts

Articulate social (CSR) objectives

Lead the industry on social objectives

Fight CSR initiatives

Do more than legally required, e.g., philanthrop y

Integrate social objectives and business goals

Businesses CSR activities

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Philanthropy
give money or time or in kind to charity Integrative philanthropyselect beneficiaries aligned with company interests

Philanthropy will not enhance corporate reputation if a company

fails to live up to its philanthropic image or if consumers perceive philanthropy to be manipulative

Integrate CSR globally

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Incorporate values to make it part of an articulated belief system Act worldwide on those values
Cause-related

marketing Cause-based cross sector partnerships

Engage with stakeholders

Primary

stakeholders Secondary stakeholders

Business ethics development

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The cultural context influences organizational ethics Top managers also influence ethics The combined influence of culture and top management influence organizational ethics and ethical behaviors

The evolving context for ethics

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From domestic where ethics are shared To international where ethics are not shared when companies:
Make

assumptions that ethics are the same Ethical absolutismthey adapt to us Ethical relativismwe adapt to them

To global which requires an integrative approach to ethics

Emergence of a global business ethic

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Growing sense that responsibility for righting social wrongs belongs to all organizations Growing business need for integrative mechanisms such as ethics
Ethics reduce operating uncertainties Voluntary guidelines avoid government impositions

Ethical conduct is needed in an increasingly interdependent worldeveryone in the same game Companies wish to avoid problems and/or be good public citizens

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Ways companies integrate ethics

Top management commitment in word and deed
Company codes of ethics Supply chain codes

Develop, monitor, enforce ethical behavior

Seek external assistance

Challenges to a global ethic

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Global rules emerge from negotiations and will reflect values of the strong Global rules may be viewed as an end rather than a beginning Rules can depress innovation and creativity Rules are static but globalization is dynamic

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