1

STRATEGIC MANAGEMENT
SUMMARY – 1

J J SHRIKHANDE
 Strategic Management
What is Strategic Management
1. Formulate Company’s Vision , Mission , including broad Statements about its purpose philosophy &
goals
2. Conduct an analysis that reflects Company’s internal conditions & capabilities
3. Assess Company’s external environment including both the competitive and general contextual
factors
4. Analyse company’s options by matching available resources with external environment
5. Identify the most desirable options by evaluating each option in the light of Company’s vision &
mission
6. Select a set of long term objectives and general strategies that will achieve the most desirable
options
7. Develop annual objectives & short term strategies that are compatible with the selected set of long
term objectives and grand strategies
8. Implement the strategic choices by means of budgeted resource allocations in which the matching of 2
tasks , people , structures , technologies and reward systems is emphasized
J J SHRIKHANDE
9. Evaluate the success of strategic process as an input for future decision making
 Corporate Level Strategy Environment
Value Creation Strategic Management Porter’s 5 Forces
Corporate Parent Portfolio Framework
Mgr PESTEL
Corp Portfolio BCG , GE SWOT
Matrix Hofstede Cultural
Product Market Diversity Dimensions
Related/Unrelated Internationalisation
International Strategy
Organizational Purpose
Business Level Strategy Core Values , Ideology
Generic Strategies Vision ,Mission
Cost Leadership ,Objectives
Product Differentiation Stakeholder Mapping
Hybrid Strategy Communication
International Strategy Organizational Purpose
Market Selection & Entry

Directions for Strategy Strategic Capability

Strategy Development
Development Critical Success Factors
Strategic Planning Systems
Product Development Strategic Capability
Logical Incrementalism
Market Development Core Competence
Strategic Leadership 3
TOWS Matrix Resource Based Value
Intended , Realised , Emergent Strategy
Strategy Implementation Strategic Drfit
Mckinsey 7 S Framework J J SHRIKHANDE Value Chain Analysis
 Strategic Management
Competing For Future Corporate Restructuring TurnaroundManagement
Beyond Restructuring & Forms of Restructuring Turnaround Stage
Reengineering Asset Capital Theory
Emerging Strategy Restructuring outcomes Decline Response
Paradigms Numerator & Initiation
Unlearning Curve Denominator Transition Outcome
Strategy as Stretch & Management
Leverage Force Field Analysis
Co -Creation

Strategic Alliance & Mergers & Acquisitions Strategic Tools

Joint Ventures Organic Vs Inorganic Bench Marking
Franchising Growth Business Process
Licensing Theories of M&A Reengineering
Motives & Types Types & Motives Reverse Engineering
Successful Life Cycle of Synergy Balance Score Card
4
a JV Financing ( LBO )
JV Failures Issues leading to
J J SHRIKHANDE failures of M&A
 Strategic Management Processes
• I/O ( Input , Output )Model RBV (Resource Based View )Model
External
Resources
Environment

Industry
Capabilities
Attractiveness

Strategy
Formulation Sustainable

Assets/Skills Strategy
Assessment Formulation
5

Implementation Implementation
J J SHRIKHANDE
 Resource Based View ( RBV )
Tangible Assets Intangible Assets Organizational
Examples of Different Resources
Capabilities
• Singapore Airline’s • Tata’s Brand Name • Biocon’s capability in
Reservation system Solid State
Fermentation
• TCS’s Cash Reserves • Apple’s reputation
• Wal Mart’s Purchasing
• DLF’s Land Reserves • Nike’s Advertising & inbound Logistics
in NCR Region
• Google’s Product
• FedEx’s Air Plane fleet • Arnab Goswami of Development Process
Republic TV
• Coca Cola’s Coke • Coke’s Global
Formula • Alibaba’s Product Distribution
Development Team coordination

• 3 M’s Innovative
Processes

J J SHRIKHANDE
 Levels of Strategy

Corporate Corporate Level

Strategies Level

Business 1 Business 2 Business 3 Business Level

Financial/ Human
R&D,Operation Marketing Functional
Accounting Relations
Strategies Strategies Level
Strategies Strategies 7

J J SHRIKHANDE
 Vision

Top Management decides the directional path

To know what changes in the company’s-

Product Market
Customer Technology
Focus

Would improve its current market position & future prospect.

8
Thus Strategic ‘Vision’ provides a particular direction to the organization
J J SHRIKHANDE
 Vocabulary of Strategy
Term Definition A Personal Example
Mission Overriding purpose in line with the values Be Healthy & Fit
or expectations of stakeholders

Vision or Strategic Desired future state: the aspiration of the To Run Mumbai Marathon
Intent organization

Goal General statement of aim or purpose Lose weight and strengthen muscles

Objective Quantification (if possible) or more precise Lose 5 kilos by 1 September and run the marathon
statement of the goal next year

Strategic Resources, activities and processes. Some Proximity to a fitness centre, a successful diet
Capabilities will be unique and provide ‘competitive  
advantage’

Strategies Long Term Direction Exercise regularly, compete in marathons locally,

stick to appropriate diet

Business Model How product, service and information Associate with a collaborative network (e.g. join
‘flow’ between participating parties running club)

Control The monitoring of action steps to: Monitor weight, kilometres run and measure times: 9
assess effectiveness of strategies and if progress satisfactory, do nothing; if not, consider
actions other strategies and actions
modify as necessary strategies and/or
J J SHRIKHANDE
actions
 Strategic Management Process

• Defining Vision
Mission& Business
Objectives

Environmental Organizational
Analysis Analysis

Setting Objectives &

Goals Choice of Strategy

Identifying Alternate
Strategies

Choice of Strategy Reformulate if

Required
Strategy Reimplement if
Implementation Required
Evaluation & Control

Feedback 10

J J SHRIKHANDE
 Components of Mission Statement
Customers: Who are the firm’s customers

Product/Services: What are firm’s major products./Services.

Markets: Geographically, where does firm competes

Technology: Which technology firm is using

Concern for Growth/Survival: Is the firm committed to growth & Financial

soundness

Self Concept: Firm’s major competitive advantage

11
Concern for Public Image: Is the firm responsive to Environment , Society etc.
J J SHRIKHANDE
Concern for Employees : We value our Employees
 Porter’s 5 Forces

12

JAYANT SHRIKHANDE
 Conditions That Cause High Rivalry Among Competing Firms

• 1. High number of competing firms

• 2. Similar size of firms competing
• 3. Similar capability of firms competing
• 4. Falling demand for the industry’s products
• 5. Falling product/service prices in the industry
• 6. When consumers can switch brands easily
• 7. When barriers to leaving the market are high
• 8. When barriers to entering the market are low
• 9. When fixed costs are high among firms competing
• 10. When the product is perishable
• 11. When rivals have excess capacity
• 12. When consumer demand is falling
• 13. When rivals have excess inventory 13

• 14. When rivals sell similar products/services

• 15. When mergersJAYANT SHRIKHANDE
are common in the industry
Comparative industry structure analysis

14
Figure 2.5 Comparative industry structure analysis
J J SHRIKHANDE
 The industry life cycle

15
Figure 2.4 The industry life cycle
J J SHRIKHANDE
Bases of market segmentation

16

Table 2.1 Some bases of market segmentation

J J SHRIKHANDE
 The PESTEL framework
The PESTEL framework categorises environmental
influences into six main types:
Political Economic
Social Technological
Environmental Legal

Thus PESTEL provides a comprehensive list of influences on

the possible success or failure of particular strategies.

17

J J SHRIKHANDE
1] Political 2] Economic
These include factors that affect the extent to which Economic factors have a huge effect on the firm and
the government has an impact on the economy of a its success. Some of the factors to consider when
country. For example, the laws, taxation monitoring the economic environment are as follows:
policies, monetary policies, etc are all a part of the
 Economic growth
political environment. Additionally, some political
factors to consider are as follows:  The current phase of the Trade Cycle (Expansion,
Depression, etc)
 The political stability of the country
 Inflation rates
 Political ideologies of the government
 Unemployment Rates
 Taxation policies
 Current Interest Rates prevailing in the economy
 Regulatory practices and governing bodies
 Important factors of the specific industry
 Term of the government and any expected
changes in the future  Consumer Spending potential
 Influential political leaders and their ideas

18

JAYANT SHRIKHANDE
3] Social
Everything that goes on in a society greatly affects the
organization. Therefore, it is important to analyze
social factors while studying the social environment.
For example,
 Demographics of the market
 Consumer Buying Patterns
 Religious and Cultural factors
 State and influence of the media
 Lifestyle trends in place at the time
JAYANT SHRIKHANDE
4] Technological
The changes in the technological environment can be
either an opportunity or a threat to the firm. Hence,
some technological factors to look for are:
 New production technology
 Manufacturing technology (increase in output,
lowering of production cost, etc.)
 New innovations
 Intellectual Property, Patents, etc.
 Maturity of technology
19
5 Environmental
These factors affect industries and their ability to
function smoothly. For example, such factors are:
 Environmental Issues
 Energy/Power Consumption
 Safe Waste Disposal
 Dealing with hazardous material
6] Legal
This refers to the laws made by the government that
the company has to follow in order to continue its
operations. For example,
 Business Laws
 Environment Laws and guides
 Health and safety guidelines
 International Trade Agreements and Treaties

 Regional/Local Laws and Circulars

20

JAYANT SHRIKHANDE
 Hofstede Cultural Dimensions

21

J J SHRIKHANDE
Applicability of HOFSTEDE CULTURAL DIMENSIONS to various countries -

o Power distancing – China and Saudi Arabia have high Power Distancing index

o Uncertainty avoidance – Chile, Peru and Argentina are highly Uncertainty avoiding
countries

o Individualism vs. Collectivism - USA is considered to be one of the most Individualistic

countries

o Masculinity vs. Feminism – Japan is considered to be a very Masculine country,

whereas Norway and Sweden are considered to be highly feminine

o Long term vs. Short term orientation – China and Japan have a long term orientation,
whereas Morocco is very short term oriented

o Indulgence vs. Restraint – USA has one of the most Indulgent cultures 22

J J SHRIKHANDE
Cultural frames of reference

23

Figure 5.4 Cultural frames of reference

J J SHRIKHANDE
The cultural web of an organisation

24

Figure 5.7 The cultural web of an organization

J J SHRIKHANDE
 Stakeholders of a large organisation

25
Figure 4.3 Stakeholders of a large organization
Source: Adapted from R.E. Freeman, Strategic Management: A Stakeholder Approach, Pitman, 1984. Copyright 1984 by R. Edward Freeman.

J J SHRIKHANDE
Strategy development contexts

26

Figure 12.5 Strategy development contexts

J J SHRIKHANDE
 Strategy development routes

27

Figure 12.6 Strategy development routes

J J SHRIKHANDE
The strategy lenses summary

28
Table C.ii A summary of the strategy lenses
J J SHRIKHANDE
 Components of strategic capabilities

29
Table 3.1 Components of strategic capabilities
J J SHRIKHANDE
 Strategic capability: The terminology
Term Definition Example – Athletics
Strategic Capabilities The ability to perform at the level required Equipment and athletic ability suited to a
to survive and prosper. It is underpinned by chosen event
the resources and competences of the  
organization

Threshold Resources The resources needed to meet customers’ A healthy body (for individuals) Medical
minimum requirements and therefore to facilities and practitioners Training venues
continue to exist and equipment Food supplements
 

Threshold Competencies Activities and processes needed to meet Individual training regimes
customers’ minimum requirements and Physiotherapy/injury management Diet
therefore to continue to exist planning

Unique Resources Resources that underpin competitive Exceptional heart and lungs Height or
advantage and are difficult for competitors weight
to imitate or obtain World-class coach

Core Competencies Activities that underpin competitive A combination of dedication, tenacity,

advantage and are difficult for competitors time to train, demanding levels of
to imitate or obtain competition and a will to win

30

J J SHRIKHANDE
Criteria for the inimitability of strategic capabilities

31
Figure 3.3 VRIN
J J SHRIKHANDE
 Competitors’ Offerings – 3 circles Analysis
Company’s Offerings Customers’ Needs
E F
A
Our points of
difference

B
Points of Parity

D
C
Their Points of
Common
Difference
Features

32

Competitors’ Offerings J J SHRIKHANDE


Resource
Tangible Resources
Financial resources
Physical Resources
Intangible Resources
Technological Resources
Reputation
J J SHRIKHANDE
Firm’s Resources
Relevant Characteristics
Borrowing Capacity & internal funds
generation
• Size , location ,technical
sophistication and flexibility of
Plant & Equipment
• Location and alternative uses of
buildings
• Reserves of Raw Materials
• Intellectual Property ,Copy
rights , trade secrets
• Resources for innovation,
Research facilities , Technical &
scientific employees
Reputation with customers through
ownership of Brands and trade marks ,
established relationship with
customers , reputation of products for
quality & reliability .Reputation with
suppliers , banks , Govt agencies and
community
Key Indicators
• Debt: Equity Ratio
• Operating Cash Flow
• Credit Rating
• Market value of Fixed assets
• Vintage of Capital equipment
• Scale of Plants
• Flexibility of Fixed Assets
• Number and significance of
patents
• Revenue from licensing patents &
copy rights
• R&D staff as a percentage of total
employment
• Number & location of research
facilities
• Brand Recognition
• Brand Equity
• Percent of Repeat Buying
• Objective ratings like JD Power
rating ,consumer associations
ratings
• Survey’s of corporate reputation 33
like Business Week
 34

J J SHRIKHANDE
 Strategy canvas

35
Figure 2.9 Strategy canvas for electrical components companies
ource: Developed from W.C. Kim and R. Mauborgne, Blue Ocean Strategy, 2005, Harvard Business School Press

J J SHRIKHANDE
 Strategic leadership

Strategy may be the deliberate intention of a leader.

This may manifest itself in different ways:

 Strategic leadership as command.

 Strategic leadership as vision.
 Strategic leadership as decision-making.
 Strategic leadership as symbolic.

36

J J SHRIKHANDE
Emergent strategy development processes

37

Figure 12.2 A continuum of emergent strategy development processes

J J SHRIKHANDE
Corporate strategy directions- Ansoff Matrix

38
Figure 7.2 Corporate strategy directions
Source: Adapted from H.I. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6. Ansoff originally had a matrix with four separate boxes, but in practice strategic directions involve more continuous
axes. The Ansoff matrix itself was later developed – see Reference 1
J J SHRIKHANDE
 Market development
• Market Penetration • Market
Extension

Moderate
Low Risk
Risk

Medium
High Risk
Risk
• Diversification • Product
Development 39

J J SHRIKHANDE
 Way Forward
Market Penetration Product Development Market Development Diversification

This strategy involves This involves developing Finding a new group of Related Diversification
an
attempt to increase new products for buyers for an existing involves the production
market share within existing markets by product. of a new category of
existing industries, thinking about how new   goods that
either by selling more products can meet   complements the
product to established customer needs more   existing portfolio, in
customers or by finding closely and outperform   order to penetrate a
new customers within competitors.   new but related market.
these markets –     Unrelated
typically
by adapting the     diversification entails
‘Promotion’ element of     entry into a new
the Marketing Mix.     industry that lacks 40
      important similarities
      with the company’s
J J SHRIKHANDE
      existing markets
Diversification and performance

41
Figure 7.3 Diversity and performance
J J SHRIKHANDE
 Corporate rationales (1)

42
Figure 7.5 Portfolio managers, synergy managers and parental developers
Source: Adapted from M. Goold, A. Campbell and M. Alexander, Corporate Level Strategy, Wiley, 1994

J J SHRIKHANDE
 The parenting matrix (1)

43
Figure 7.9 The parenting matrix: the Ashridge Portfolio Display
Source: Adapted from M. Goold, A. Campbell and M. Alexander, Corporate Level Strategy, Wiley, 1994

J J SHRIKHANDE
The growth share (or BCG) matrix (1)

44
Figure 7.6 The growth share (or BCG) matrix
J J SHRIKHANDE
The directional policy(GE–McKinsey) matrix (2)

45
Figure 7.8 Strategy guidelines based on the directional policy matrix
J J SHRIKHANDE
International strategy framework

46

Figure 8.1 International strategy framework

J J SHRIKHANDE
Internationalisation drivers

47

Figure 8.2 Drivers of internationalisation

Source: Adapted from G. Yip, Total Global Strategy II, Financial Times Prentice Hall, 2003, Chapter 2
J J SHRIKHANDE
Location advantages : Porter’s diamond

48

Figure 8.3 Porter’s Diamond – the determinants of national advantages

Source: Adapted with permission of The Free Press, a Division of Simon & Schuster, Inc., from The Competitive Advantage of Nations by Michael E. Porter. Copyright © 1990, 1998 by
Michael E. Porter. All rights reserved
J J SHRIKHANDE
 The CAGE framework

Cultural Administrative and

distance political distance

Geographic Economic/ wealth

distance distance

49

J J SHRIKHANDE
 International cross-cultural comparison

50

Figure 8.5 International cross-cultural comparison

Source: M. Javidan, P. Dorman, M. de Luque and R. House, ‘In the eye of the beholder: cross-cultural lessons in leadership from Project GLOBE’, Academy of Management
Perspectives, February 2006, pp. 67–90 (Figure 4: USA vs China, p. 82). (GLOBE stands for ‘Global Leadership and Organizational Behavior Effectiveness’.)
J J SHRIKHANDE
Modes of international market entry

51

Figure 8.7 Modes of international market entry

J J SHRIKHANDE
 Market Entry Modes – Advantages & Disadvantages
Advantages EXPORTING Disadvantages
 
No operational facilities needed in the host country Does not allow the firm to benefit from the locational advantages of the host
nation
Economies of scale can be exploited Limits opportunities to gain knowledge of local markets and competitors
By using Internet, small/inexperienced firms can gain access to May create dependence on export intermediaries
international markets Exposure to trade barriers such as import duties
Incurs transportation costs
May limit the ability to respond quickly to customer demands

Advantages JOINT VENTURES Disadvantages

 Investment risk shared with partner
Combining of complementary resources and know-how
May be a governmental condition for market entry
 
Difficulty of identifying appropriate partner and agreeing appropriate
contractual terms
Managing the relationship with the foreign partner
Loss of competitive advantage through imitation
Limits ability to integrate and coordinate activities across national
boundaries

Advantages LICENSING Disadvantages

   
Contractually agreed income through sale of production and Difficulty of identifying appropriate partner and agreeing contractual terms
Loss of competitive advantage through imitation
marketing rights Limits benefits from the locational advantages of host nation
Limits economic and financial exposure

Advantages FOREIGN DIRECT Disadvantages

INVESTMENT  
  Substantial investment in and commitment to host country leading to economic
Full control of resources and capabilities and financial exposure 52
Facilitates integration and coordination of activities across national boundaries Acquisition may lead to problems of integration and coordination
Acquisitions allow rapid market entry Greenfield entry time consuming and less predictable in terms of cost
Greenfield investments allow development of state-of-the-art facilities and can
attract financial support from the host government
J J SHRIKHANDE
 A Taxonomy of the Firm’s Environment

Mega Environment

Relevant Environment
Micro Environment
Internal Environment

: Constituents of the “Mega Environment”

Regulatory Political Economic Technological Social

The Mega
Environment

Constituents of the “Micro Environment”

Suppliers Marketing Intermediaries Market Types Market Demand Competition

The Micro Environment

53
Financial Institutions Regulatory Industrial Availability of
Provisions Relations Climate Skilled Manpower

J J SHRIKHANDE
 Three generic strategies

54
Figure 6.2 Three generic strategies
Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance
by Michael E. Porter. Copyright © 1985, 1998 by Michael E. Porter. All rights reserved
J J SHRIKHANDE
 Strategy Clock

55

J J SHRIKHANDE
Economies of scale and the experience curve

56
Figure 6.3 Economies of scale and the experience curve
J J SHRIKHANDE
Costs, prices and profits for generic strategies

57
Figure 6.4 Costs, prices and profits for generic strategies
J J SHRIKHANDE
 58

J J SHRIKHANDE
Exhibit 6.6
Competition and collaboration

59

J J SHRIKHANDE
J.J.SHRIKHANDE 18
J.J.SHRIKHANDE 19
J.J.SHRIKHANDE 20
Value Chain in a Sales Process

J.J.SHRIKHANDE 21
J.J.SHRIKHANDE 22
J.J.SHRIKHANDE 23
 66

J J SHRIKHANDE
 SWOT Analysis
Numerous Environmental
Opportunities

Cell 3 : Cell 1 :
Supports a turnaround Supports an Aggressive
oriented Strategy Strategy

Critical Internal Substantial Internal

Weaknesses Cell 4 : Cell 2 : Strengths
Supports a defensive Supports a diversification
Strategy Strategy

67

Major Environmental Threats J J SHRIKHANDE

Strengths Weakness
 Gaps in capabilities
 Capabilities
 Lack of competitive strength
 Competitive advantages
 Reputation
 USP's (unique selling points
 Financials
 Resources, Assets, People
 Cash flow
 Experience, knowledge, data
 Supply chain robustness?
 Financial reserves, likely returns
 Effects on core activities, distraction
 Marketing - reach, distribution,
 Reliability of data
 Innovative aspects
 Morale, commitment, leadership
 Locational advantage
 Accreditations, etc
 Price, value, quality
 Processes and systems, etc
 Accreditations, certifications
 Processes, system 68

JAYANT SHRIKHANDE
Opportunities Threats
 Market developments
 Political effects
 Competitors' vulnerabilities
 Legislative effects
 Industry or lifestyle trends
 Environmental effects
 Technology development and innovation
 IT developments?
 Global influences
 Competitor intentions/actions
 New markets
 Market demand
 Market need for new USP's
 New technologies, services, ideas
 Major contracts, tenders
 Employment market
 Business and product development
 Financial and credit pressures

69

JAYANT SHRIKHANDE
 Exhibit 7.4: Areas of Strength and Weakness
Functions Facilities & Personnel Skills Organisational Management
Equipment Capabilities Capabilities

1. General
Management

2. Finance

3. R&D

4. Operations

5. Marketing •Warehousing • Door to Door •Direct Sales • Industrial Marketing

(examples) •Retail Outlets Selling •After Sales • Household Marketing
•Sales Offices •Retail Selling •Service Network • Large Customer Base
•Training Facilities •Advertising •Customer Loyalty
for Sales Staff •After Sales 70
Service

J J SHRIKHANDE
 Key Factors for Success
A key Success Factor is a competitive skill or asset that is particularly relevant to the industry. To “PLAY IN
THE GAME” a competitor will usually need to have some minimum level of skill or asset with respect to each
of the industry’s Key Success Factors. If a firm has strategic weakness in a Key Success Factor and it is not
neutralized by a well conceived strategy, the firm’s ability to compete will be weak. Conversely sustainable
competitive advantages usually will be based on Key Success Factors. In general the successful firm will have
strengths in the Key Success Areas and unsuccessful competitor will lack one or more of them
Key Success Factors To Increase Profits To Gain Market Share
Raw-Material Procurement Gold-mining, Wine-making Sugar-industry,
Petroleum industry

Raw-material Processing Steel & Paper Industry Steel & Paper Industry

Production Fabrication Integrated Circuits, Tire Integrated Circuits, Tire

Industry Industry
Assembly Apparel Industry, Instrumentation
Instrumentation
Design Heavy Engineering Industry Heavy Engineering Industry

Distribution Bottled water, Metal cans Home Appliances,

Cement Industry

Marketing Branded Cosmetics, Liquor Branded Cosmetics, Liquor 71

Service Automobiles Hotel Industry

J J SHRIKHANDE
 TOWS MATRIX
Internal Factors : Controllable ( Capabilities , Resources & processes )
External Factors : Cannot Control but Impact

CAPITALIZE
INVEST

72

J J SHRIKHANDE ADDRESS IDENTIFY

 Dell’s TOWS Matrix

73

J J SHRIKHANDE
 Suitability of strategic options in relation to strategic position(1)

74

Suitability of strategic options in relation to strategic

Table 11.2
J J SHRIKHANDE
position
 Suitability of strategic options in relation to strategic position (2)

75
Table 11.2 Suitability of strategic options in relation to strategic position (Continued)
J J SHRIKHANDE