Strategic

Management
 History
• Strategic mgmt. originated in the 1950s & 1960s
• Influential pioneers: Alfred Chandler, Philip
Selznick, Igor Ansoff , Peter F. Drucker.
 Alfred Chandler(1962) developed the idea that long-term
coordinated strategy was necessary to give a company structure,
direction and focus.
 Philip Selznick(1957) developed the idea of matching
organization’s internal factors with external environmental
circumstances.
 Igor Ansoff(1965) developed the ideas of “gap
analysis” still used to understand the gap
between where we currently are & where we
would like to be, then developed what he
called “gap reducing actions.”
 Peter F. Drucker(1954) developed the concept
of MBO.
• The most influential strategists of the
decades are Michael E. Porter, Henry
Mintzberg , Gary Hamel & C.K. Prahalad.
 Definitions
• “Strategic management is a stream of decisions and actions
which leads to the development of an effective strategy or
strategies to help achieve corporate objectives”.'-by Glueck.
• “Strategic management is a systematic approach to a major
and increasingly important responsibility of general
management to position and relate the firm 13 ^34 to its
environment in a way that will assure its continued success
and make it secure from surprises” . -by Ansoff.
• “Strategic management is the formulation and
implementation of plans and carrying out of activities relating
to the matters which are of vital, pervasive, or continuing
importance to the organisation” . -by Sharplin.
Strategic management can be defined “ as the
dynamic process of formulation,
implementation, evaluation and control of
strategies to realize the organization’s
strategic intent.”
 Strategic Planning
“ is a process that involves the review of market
conditions; customer needs; competitive
strengths and weaknesses ; PESTLEG analysis;
and the availability of resources that lead to
specific opportunities or threats facing the
organization.”
Elements of strategic management theory

• Both strategy formation and strategic

implementation.
• Partially planned and partially unplanned.
• Pervasive
• Both conceptual and analytical thought
processes.
• Provides direction.
• External environment adaptation.
 Characteristics of Strategic Decisions

• Long- term direction

• Gain competitive advantage
• Defines scope of the firm
• Strategic fit
• Stretching the firm’s resources & competencies
• Requires major changes in the organization of resources &
products
• Affect operational decisions
• Affected by values & expectations of top stakeholders
• Complex and uncertain
 Four Phases in Strategic Management
Process

Implementation
Establishment of Formulation of Strategic
Strategic Intent Strategies
of
Strategies evaluation

Strategic Control

Source : Azhar kazmi, “Business Policy and Strategic Management”,

2nd edn, (New Delhi: Tata Mcgraw-Hill Publishing Company Ltd.,
2004),
 Comprehensive Model Of Strategic
Management
Implementation
Strategic Formulation of Strategies of
Intent Environmental appraisal Organizational Strategies
Appraisal Project
Vision Strategic
(SWOT Analysis Procedural
Mission
Business model
Corporate-level Strategies Resource allocation evaluation
Business-level Strategies Structural
Objective
Strategic analysis and choice Behavioural
Strategic plan) Functional and
Operational

Strategic Control

Source : Azhar kazmi, “Business Policy and Strategic Management”,

2nd edn, (New Delhi: Tata Mcgraw-Hill Publishing Company Ltd.,
2004),
 Elements in Strategic Management
Process
A. Establishing the hierarchy of strategic intent
1. Creating & communicating a vision
2. Designing a mission statement
3. Defining the business
4. Adopting the business model
5. Setting the objectives

Cont…
B. Formulation of strategies
6. Performing environmental appraisal
7. Doing the organizational appraisal
8. Formulating corporate-level strategies
9. Formulating the business-level strategies
10. Undertaking strategic analysis
11. Exercising strategic choice
12. Preparing strategic plan

Cont…..
C. Implementation of Strategies
13. Activating strategies
14. Designing the structure, systems and processes
15. Managing behavioural implementation
16. Managing functional implementation
17. Operationalising strategies
D. Performing strategic evaluation
18. Performing strategic evaluation
19. Exercising strategic control
20. Reformulating strategies
 Strategic Intent(Gary Hamel & C.K.
Prahalad,1989)
• On the one hand, Strategic intent envisions a desired
leadership position & establishes the criterion the
organization will use to chart its progress…At the same time,
strategic intent is more than simply unfettered ambition.
• The concept also encompasses an active management
process that includes: focusing the organization’s attention
on the essence of winning, motivating people by
communicating the value of the target, leaving room for
individual & team contributions, sustaining enthusiasm by
providing new operational definitions as circumstances
change & using intent consistently to guide resource
allocations.
• Strategic intent answers the question “What exactly are we
trying to accomplish?”
• Strategic intent is defined as a compelling statement about
where an organization is going that briefly & clearly expresses
a sense of what organization wants to achieve in the long
term.
• SI provides- a sense of direction, a sense of discovery, a sense
of destiny.
• SI describes how the firm’s energy & resources are channeled
into a focused & unified overall goal.
• It is the strategic direction and destiny to be pursued by the
company.
 VISION
• A vision should be:
 An organizational charter of core values & principles
 The ultimate source of our priorities, plans & goals
 A puller(not pusher) into the future
 A determination & publication of what makes us unique
 A declaration of independence

• A Vision shouldn’t be:

× A ‘ high concept ‘ statement, motto or literature or an advertising slogan
× A strategy or plan and a view from the top
× A history of our proud past
× A ‘soft’ business issue
× Passionless

Finally , Vision is a “description of something ( an organization, a corporate culture, a business, a

technology, an activity) in the future.

Lucas,J.R., ‘Anatomy of a vision statement’

 Mission

While the essence of Vision is a forward-looking view

of what an organization wishes to become, Mission is
what an organization is & why it exists.
Thompson(1997) defines mission as the “ essential
purpose of the organization, concerning particularly
why it is in existence, the nature of the business(es) it
is in and the customers it seeks to serve and satisfy”.
 Characteristics of a Mission Statement:
• It should be feasible
• It should be Precise
‘ Manufacturing bicycle ‘ is a narrow mission since it severely limits the organization’s
activities while ‘mobility business’ is too broad as it doesn't define the reasonable
contour within which an organization should operate.
Hero cycle define its mission : “ It’s our mission to strive for a synergy between
technology, systems & human resources, to produce products and services that meet
the quality, performance and price aspirations of our customers. While doing so, we
maintain the highest standards of ethics and societal responsibilities.”
• It should be clear
• It should be motivating
• It should be distinctive
• It should indicate the major components of strategy:
The mission of HCL Infosystems is: ‘ To provide world-class information technology
solutions & services to enable our customers to serve their customers better.’ It
provides a clear indication of the emphasis in the strategies of the company on
providing cutting edge technology and customer-orientation .
• It should indicate how objectives are to be accomplished
 Amazon.com
Vision Statement
“Our vision is to be earth's most customer-centric company; to build a place
where people can come to find and discover anything they might want to buy
online.”
Mission Statement
“We strive to offer our customers the lowest possible prices, the best available
selection, and the utmost convenience.” 
Amazon is guided by four principles: customer obsession rather than
competitor focus, passion for invention, commitment to operational
excellence, and long-term thinking.
Values
Customer Obsession, Ownership, Invent and Simplify, Learn and Be Curious,
Hire the Best, The Highest Standards, Think Big, Bias for Action, Earn Trust,
Deliver Results
Concept of Stretch, Leverage and Fit
 Business Model
• The success of Wal-Mart as a retailer, Google as a search
engine, Dell Computers as an Internet- based marketer or
Amazon.com as a virtual book seller .
• A business model can be defined as : ‘ a representation of a
firm’s underlying core logic and strategic choices for creating
and capturing value within a value network.’
• Business Model have an intimate relationship with the
strategy of an organization.
• Business models are down –to-earth prescriptions to
implement the strategies.
Formality in Strategic Management
• Formality is the degree to which participants, responsibility,
authority & discretion in decision making are specified in
starategic management.
• Forces determining in strategic management:
 Organizational size
 Predominant management styles
 Complexity of environment
 Production process
 Problems in the firm
 Purpose of the planning system
 Stage of firm’s development

CONT……………..
 Modes of formality
• Entrepreneurial Mode: informal, intuitive & limited approach to strategic
mgmt. associated with owner-manager of smaller firms. The sole goal is
growth of the company. The focus is on opportunities; problems are
secondary.

• Adaptive mode: emphasizes on the incremental modification of existing

competitive approach. Also known as muddling through. Characterized by
reactive solutions to existing problems. Followed in a stable environment.
The decision maker reviews the decision and makes necessary adaptation
if required.

• Planning mode: associated with large firms that operate under a

comprehensive, formal planning system.
Strategic Objectives vs Financial
Objectives
 Long-term vs. Short-term Objectives
Strategic managers commonly establish long term objectives in seven
areas( Pearce and Robinson,2012) :
Objectives Expression

1. Profitability Earning per share or return on equity

2. Productivity Number of items produced or number of service

rendered per unit of output
3. Competive Sales amount/ quantity or sales growth
Position
4. Employee Increase in productivity or decrease in turnover
development
5. Employee Create a vibrant working environment
relations
6. Technological Innovation in product and process
leadership
7. Public CSR
responsibility