What is Strategic Management? Why it matters?

Prof.P.V.S.SAI. Siva Sivani institute of Management Secunderabad.

Managing Organizations according to a strategy is known as Strategic Management. Then What is a Strategy? It consists of Competitive moves and business approaches, that managers employ to attract and please customers, Compete successfully, Grow the business, Conduct operations and Achieve targeted objectives.

Hows of Strategy
Wide Product Lines Vs. Limited Product Lines Targeting High end Segments Vs. Targeting Low end Segments Competitive Advantage on the basis of low cost Vs. on the basis of Product Differentiation, Personalized Service or added convenience. Present in one part of the Value Chain Vs. Present in the entire Value Chain Confining to Local Markets Vs. Extending to national and international markets. Operating in only one industry Vs. Entering into various industries through related or unrelated diversification.

Offensive Vs. Defensive Strategies

Companies which try to gain market share by beating the competition will go for Offensive Strategy. Conservative and Risk Avoiding companies prefer Defensive Strategy. Offensive strategies focus on frequent launching of new initiatives while defensive strategies concentrate on gradual gaining of the market, fortifying companys market position and defending against the competitors strategy.

Identifying a Company Strategy What to look for

Action to respond to changing market conditions Action to enter new geographic or product markets or exit existing ones Action to merge with or acquire rival companies Action to form strategic alliance and collaborative partnerships Effort to pursue new market opportunities and defend against threats to the companys well being Action to manage research and development Action to strengthen companys competitive strengths and to overcome weaknesses Action to diversify companys revenues and earnings by entering new business Action to gain sales and market share via lower prices.

Strategic Approaches
Four of the most frequently used strategic approaches are Being the industrys low cost provider Outcompeting rivals through differentiating on the basis of quality, wider product selection, added performance, better service, more attractive styling, technological superiority or unusually good value for the money. Focusing on a narrow market and winning a competitive edge. Developing expertise and resource strengths that give the company competitive abilities

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Strategy is partly Proactive and Partly Reactive

Proactive Reactive TATA SONS HLL

Company Strategy emerges incrementally and then evolves over time

Changing circumstances and ongoing management efforts to improve the strategy cause a companys strategy to emerge and evolve over time a condition that makes the task of crafting a strategy a work in progress, not a one-time event. A companys strategy is driven partly by management analysis and choice and partly by the necessity of adapting and learning by doing.

The Relationship between a Companys Strategy and its business model

A companys business model relates to whether the revenue-cost-profit economics of its strategy demonstrate the viability of the business enterprise as a whole.

What makes a strategy a Winner?

How well does the strategy fit the companys situation? Is the strategy helping the company achieve a sustainable competitive advantage? Is the strategy resulting in better company performance? A winning Strategy must fit the enterprises external and internal situation, build sustainable competitive advantage and prove company performance.

Why are crafting and executing strategy important?

There is a compelling need for managers to proactively shape, how the companys business will be conducted. A strategy focused organisation is more likely to be a strong bottom line performer. Our competitors are acquired with the same fundamental concepts and techniques and approaches that we follow and they are free to pursue them as we are. More often than not, the difference between their level of success or ours lies in the relative thoroughness and self disciplines with which we and they develop and execute our strategies for the future.

GOOD STRATEGY AND GOOD STRATEGY EXECUTION = GOOD MANAGEMENT

Excellent execution of an excellent strategy is the best test of managerial excellence and the most reliable recipe for turning companies into standout performers.