STRATEGIC

MANAGEMENT NOTES
SM Modules 3, 4 & 5
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Strategic analysis
2
Strategic Analysis
 GE Nine cell analysis
 Green = Invest / Expand
 Yellow = Select / Earn
 Red = Harvest / Divest

Business Strength
High Medium Low
A
t
t
r
a
c
t
i
v
e
n
e
s
s

High
Medium
Low
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Strategic Analysis -2
 BCG Matrix

Market share
High Low
G
r
o
w
t
h

r
a
t
e

High
Stars
Question
marks
Low
Cash cow Dogs
4
Strategic choice
5
Strategic Choice
Focusing
on the
strategic
alternative
Analysing
the strategic
alternative
Evaluating
the
strategic
alternative
Choosing
the
alternative
6
Subjective factors affecting
strategic choice
Governmental policies
Perception of critical success factors and competencies
Commitment to past actions
Attitude to risk
Internal policies
Timing the competitive considerations
7
Strategic implementation
8
Strategic implementation
considerations
Interdependence of
strategy formulation and
implementation
―Knowing vs. Doing‖
gap
Organization culture
mismatch
Implementation
levers
People
and
rewards
Systems
and
process
Structure
9
Organizational structure
Functional
• Based on value chain
functions
Multi- divisional
• Based on product or
geography
Matrix
• Specialist teams
Network
• Semi autonomous groups
 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
10
Strategic leadership
 Task of managing
an overall enterprise
and influencing key
organizational
outcomes
Role of
senior
management
Interpersonal
Informational Decisional
11
Nature of strategic
implementation
Action orientation
Comprehensive in scope
Demanding varied skills
Wide ranging involvement
Integrated process
12
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
13
Model for strategy
implementation
Strategic plan
Activating
strategies
Project
implementation
Procedural
implementation
Resource
allocation
Managing
change
Structural
Leadership
Behavioural
Achieving
effectiveness
Functional
implementation
Operational
implementation
Evaluation and
control
14
Structural implementation
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 inter-
relationship
15
Factors in organization design
Structural
Formalization
Specialization
Hierarchy
Centralization
Professionalism
Personnel ratios
Contextual
Environmental
Goals
Culture
Size
16
Behavioural implementation-
Stakeholder analysis
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
17
Tasks of strategic leader
Strategic direction
Managing organization resource pool
Sustaining and effective culture
Ethical practices
Establishing balanced controls
18
Functional and operational
implementation – Need for plan
Needs to be
implemented in
all parts
Controlling the
activities of the
business
Reduced
planning time for
functional
manager
Coordination
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Components of functional plan
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
20
Factors to be considered which
integrating functional plan
Need for internal consistency
Relevance to organizational capability
Making trade-off decisions
Determining intensity of linkage
Timing and implementation of plan
21
4 P’s of operational
effectiveness
Productivity
Processes
People
Pace
22
Strategic evaluation
23
Stages in evaluation control
process
Set performance
targets and
standards
Measure actual
performance
Identify /
diagnose
deviation
Analyse and
measure
deviation
Modify or revise
targets
24
Strategic controls
• Key assumptions of
environment and organization
Premise control
• Planned vs. actual
Implementation
control
• Generic
Strategic
surveillance
• Crisis management
Special alert
control
25
Techniques and tools for
evaluation
Strategic
momentum
control
Check if basic
assumptions
are still valid
Strategic
leap control
Strategic issue
management
Field analysis
Modelling
Scenarios
Internal
analysis
Comparative
analysis
Comprehensive
analysis
Techniques Tools
26
Corporate governance
27
Corporate governance
 Corporate governance is a system by
which business corporations are
directed and controlled
 A corporate governance structure
specifies the distribution of rights and
responsibilities among different
participants in the corporation such as
board members, shareholders and
spells out the rules and procedure for
making decisions on corporate affairs
 By doing this, it also provides the
structure through which company
objectives are set and means of
attaining those objectives and
monitoring performance are spelt out
 Key
considerations
 Concept of
agents and
principal
 Conflicting
requirements of
executives
 Solution is
the code of
governance
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Key aspects of 1992 Cadbury code
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 company’s position and prospects
• Risk management
• Auditor
Remuneration
Relation with shareholders
29
Sections of the Sarbanes- Oxley’s
act 2002
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
30
CII – Corporate governance in
India - 1997
Commitment
Board
structure
Business
policy
Transparency
and
disclosure
Corporate
ethics
31
Executive compensation
Executive
compensation
Bonus
Stock
option
Restricted
stock
Salary
32
Knowledge management
33
Basics of knowledge
management
 Tacit 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

Data
Information
Knowledge
34
Fundamentals of knowledge
management
How to attain
knowledge ?
How to deploy
knowledge ?
How to protect
the knowledge
?
Attain
Deploy Protect
35
Attaining knowledge
Individual
capability
Knowledge
sharing
Knowledge
utilization
36
Single and double loop learning
Organization
s theories
and
assumption
Observation
of problem
Try to
correct the
problem
Learn how
to fix the
problem
Reinforce
the
assumptions
New
assumptions
and theories
Assumptions
and theories
are
challenged
Double loop
Single loop
37
Attributes of a learning
organization
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
38
Paradox of organizational learning
Too much
single loop
learning
Too much
double loop
learning
Learning too
fast
Misinterpreting
success and
failures
39
Attaining knowledge through
acquisition
Why it
is
needed
Legal and
social
characteristics
of a new
market
How a new
technology
works
The culture of
new business
area
The
competitive
forces in a new
industry
40
Chances of losing knowledge
Not being recorded or documented
People don’t recognize the value
Attrition
Lack of use
Too difficult or manage knowledge
No architecture which encourages sharing
41
Tools of Knowledge
management
Tools
Create
knowledge
repositories
Improve
knowledge
access
Enhance
the
knowledge
environment
42
Protecting knowledge
Copyright
Patents
Design rights
Trademark
& Brand
mark
43
Knowledge management
framework
44
Innovation management
45
Basics of innovation
management
 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

Invention
Creativity
Innovation
46
Risk of innovation
Cost of development
Time scales of success
Lack of competence in management
Unpredictability of take-up
Disruption of existing products and organizational routines
47
Stages of innovation
Marketing
Production Launch Penetration
Implementation
Development Prototyping Testing
Conception
Requirement analysis Idea generation Idea evaluation
48
Conditions for innovation
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
49
CORPORATE SOCIAL
RESPONSIBILITY (CSR) AND
ETHICS
50
Definitions and relationships
 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

51
Reasons for CSR activities
 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
52
CSR continuum
Do what it
takes to
make a
profit; skirt
the law; fly
below
social
radar
Fight CSR
initiatives
Comply
with legal
requiremen
ts
Do more
than legally
required,
e.g.,
philanthrop
y
Articulate
social
(CSR)
objectives
Integrate
social
objectives
and
business
goals
Lead the
industry on
social
objectives
53
Businesses CSR activities
 Philanthropy
 give money or time or in kind to charity
 Integrative philanthropy—select 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
54
Integrate CSR globally
 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

55
Business ethics development
 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
56
The evolving context for ethics
 From domestic where ethics are shared
 To international where ethics are not shared
when companies:
 Make assumptions that ethics are the same
 Ethical absolutism—they adapt to us
 Ethical relativism—we adapt to them
 To global which requires an integrative
approach to ethics
57
Emergence of a global business
ethic
 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 world—everyone in the same
game
 Companies wish to avoid problems and/or be
good public citizens
58
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
59
Challenges to a global ethic
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
60
THANK YOU
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