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STRATIGIC MANAGEMENT

UNIT 1
MEANING NEED

PROCESS OF ST. MANAGEMENT


PHASES IN STRATEGIC MANAGEMENT PROCESS

ESTABLISHMANT OF STRATEGIC INTENT

FORMULATION OF STRATEGIES

IMPLEMENTATION OF STRATEGIES

STRATEGIC EVALUATION

Establishing the hierarchy of strategic intent:


Creating and communicating a vision Designing a mission statement Defining the business Setting objectives

ELEMENTS OF STRATEGICMANAGEMENT PROCESS

Formulation of strategies
Performing env. appraisal Doing orgz. appraisal Formulating corporate level strategies Formulating business-level strategies Undertaking strategic analysis Exercising strategic choice Preparing strategic plan

Implementation of strategies:
Activating strategies Designing the structure, systems and process Managing behavioral implementation Managing functional implementation Operational implementation Operationalising strategies

Performing strategic evaluation and control


Performing strategic evaluation Exercising Strategic control Reformulation of strategies

STRATEGIC MANAGEMENT PROCESS


Strategic control
Strategy Formulation Strategy Implementation

Strategic Intent Vision Mission Business Definition Business Model Objectives

Environmental organizational appraisal appraisal SWOT Analysis

Project Procedural Resource allocation Structural behavioral Functional & operational

Strategic evaluation

UNIT - 3
Environmental Threat and Opportunity Profile (ETOP) Environmental Nature Impact Sector of impact of each sector Socioeconomic Market International Political Regulatory Customer Supplier Technology Competitor

Internal strengths and weaknesses


Marketing and Distribution Factors
includes: market research, identifying market, developing product, testing customer reaction,

R&D & Engineering Factors


1) Can lead to new or improved product 2) Can lead to improved manufacturing or material process

Production and Operation Management Factors Corporate Resource and Personnel factors Financial and Accounting Factors

Strategic Advantage Profile(SAP) Capability Nature of Competitive str.& Factor impact weaknesses 1. Finance 2. Marketing 3. Operation 4. Personnel 5. Information 6. General management

Finance- source, usages, management Marketing-product related, price related, promotion related, Operation-product, raw material, system,. Personnel Information related General management capabilities

UNIT-4
Grand strategies and their sub strategies

Corporate level strategies

Stability

Expansion

Retrenchment

Combination

Stability strategy

No change /Do nothing

Profit

PAUSE/Proceed with caution

Stability
When stability strategy
Same product Same service Similar sector Incremental improvement Defensive mood Reduce competition Maintain comfort ability

why stability strategy


Perceives itself as successful Less risky No searching for alternative No disruption in routine work Environment is stable Stop performance gap

Expansion strategy

Concentration

Integration

Diversification

Internationalization

Cooperation

Digitalization

Stability

combintion simultaneo us Profit Sequential both

No change Pause

retrenchm ent Turn around Grand strategies Expansion divestment liquidation

concentrati on Market developme nt Product developme nt Market penetration

Integration

Diversificati on Concentric / related Conglomer ate/ unrelated

internation alization Inter national

cooperatio n Joint venture Horizontal

Digitalizatio n Strategic Alliance

vertical

horizontal

Market related
Technology related Both

multidome stic
global Transnation al

vertical

Procompetitive Merger and Acquisition Noncompetitive


competitive Precompetitive

Concentric Conglomer ate

Expansion strategy
When
Additional product Additional service Major increase in present definition Redefining business definition

Why
Volatile environment Expansion with effectiveness Social benefit from expansion Financial reward Experience curve Growth yields monopoly Stock holders and securities analysts

Retrenchment strategy
When
Reduction of service Reduction of product Functional improvement through reduction of activity

Why
Not doing well Perceived itself performing poorly Not met objectives Environmental threats Better opportunities are perceived else were

Combination strategy
When
Simultaneous Sequential

Why
Environment Economy

Unit 5
Strategy choice making

Narrowing the choice

Managerial choice factor


Who is a manager- a MBA a BBA or.. Ex- . How will they take decisions. By alternatives. By assumptions and collective wisdom..

Which is the better way of making decision?

Strategic choice is influenced by 4 Managerial selection factors:


Perception of external dependence Attitude towards risk Awareness of past enterprise strategies Power relationship

Perception of external dependence


Example What r the factors

Attitude towards risk


Managerial attitude towards risk Risk is necessary for success. Optimistic. Risk is a fact of life & acceptable. Probable choice filter High risk projects are acceptable. Probable strategy Expansion

High-risk destroy organization so minimize.

Balance high risk choices with low risk one.(bet hedging) Risk aversion: risky projects are rejected.

Combination

stability

Awareness of past enterprise strategies


Present strategies evolves from past strategies developed by powerful leaders Then the new strategy become programmed When the strategy fail due to external or internal conditions new sub strategies are drafted They work for new strategies Example .

Power relationship

Contingency strategies
Generation of alternatives First generation planning Contingency or second generation planning Dimensions of to alternative strategies: Programmed (fixed) Contingency (flexible, unstable env.)

Prescription for choice for business strategy

Choosing international strategies

ETOP SAP MATCHING


ETOP
Socioeconomic Market International Political Regulatory Customer Supplier Technology Competitor

SAP
Finance Marketing and Distribution Operation and Production Personnel Information General management

GE Nine Cell Portfolio Matrix


Components of Industry attractiveness Nature of rivalry number, size & strength of competitors, price wars Strength of buyers and sellers Ease of New Entrants Economic Factors market saturation or growth, capital intensity, profitability Components of Business strength Cost advantage, quality image, manufacturing flexibility, delivery speed, liquidity, profitability, skillful personnel

GE Nine Cell Matrix


Based on the subjective assessments on the levels of market attractiveness and business strengths, each SBU falls in one of the NINE different cells of strategic option.

High High Invest and Grow Selective Growth

Medium Selective Growth Grow or Let Go Harvest

Low Grow or Let Go Harvest Divest

Medium

Grow or Let Go Low

Portfolio of Strategic Business Units


High 1
stars

2 question marks

Industry Growth Rate 3

cash cows

Low

$$$
High Market Share

dogs

Low

Boston Consulting Group Matrix


1. Stars. These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income. Keep and build your stars. 2. Question Marks (Problem Children). These are products with a low share of a high growth market. They consume resources and generate little in return. They absorb most money as you attempt to increase market share.

3. Cash Cows. These are products with a high share of a low growth market. Cash Cows generate more than is invested in them. So keep them in your portfolio of products for the time being. 4. Dogs. These are products with a low share of a low growth market. They do not generate cash for the company, they tend to absorb it. Get rid of these products.

Key
Each circle represents one of the firms business units

Size of circle represents the relative size of the business unit in terms of revenue

Strategy implementation
Unit VI

Implementation: to match plans, policies, resources, structure and administrative style with the strategy Mckinsey 7-S framework

Implementation process

Evaluate result assess gap &provide feedback

Determine strategy and communicate

Determine key managerial task

Assign task

Delegate authority

Develop talent and educate managers Reward and reinforceme nt Allocate resources

MIS for data supply

Design way to measure performance

Clarify goal for various managers

State policies

Develop talent and educate

managers Evaluate result assess gap &provide feedback

Determine strategy and communicate

Determine key managerial task

Assign task

Regulator y control mechanis m

Delegate authority

Reward and reinforce ment

Allocate resources

Design way to measure performa nce

Clarify goal for various manager s

State policies State policies