Conceptual Framework of Strategic Management

Concept of Strategy:
Strategy The art of General.
Competition for use of resources, Objective to realise some goals, A set of key decision
to meet objectives
Characteristics of Strategy:
Long-term direction of an organisation
To achieve some advantages for the organisation
May involve major changes in business (Product change or service change)
It has major financial or other resource implications
Building or stretching an organisations resources and competencies. Significant
amount of change.
Major impact outside the organisation.
Entails significant risks to business
Strategy decisions:
Demands integrated approach to the management Has to cut across functional and
operational boundaries to make strategic decisions.
Need for Strategy:
Gives direction to the company
An early commitment to a course of action is highly beneficial. (commit resources,
increase capacity)
To take action, which has long payback period
Difference of opinion is ironed out. One consistent course of action is followed
throughout the organisation.
Allocate scares resources to the most promising initiatives.
Strategic Management:
The process by which the organisation tries to determine: a) what needs to be done to
achieve corporate objectives 2) How these objectives are met. (analyse, decision and
action) Helps to achieve its goal.
Involves a series of decision and action. Performs SWOT analysis about the organisation
Role of Management in finalizing Strategy:
Top Management: Decide goals, policies and strategies. All CXO and VPs. General
Focus: Long-term issues, survival, growth and overall effectiveness.
Middle Management: Implement plan and policies of the top management. Corporate
objectives are broken into business unit targets.
Frontline Managements: Supervise and co-ordinate the activities of operations.
Implements plan developed by middle management. Put system, methods, procedures,
rules and regulations in place.
Elements of Strategy Management:
Strategy Formulation: Deciding firms business, setting vision and long-term objectives.
Finding out best for total org
Strategy Analysis: Analyse internal and external environment. SWOT analysis. Include multiple
stakeholders.
Strategy Choice: Selecting appropriate strategy and implementing them. Deciding on new
business to enter, business to abandon, resource allocation, expand operations, international
market entry. Effect of short term decision on long-term goals (Short term: Employee layoff.
Long-term: Emp morale decreases)
Strategy Implementation: Operations. Allocate & Motivate employees, Supportive culture,
Effective organisation structure, prepare budget, employee rewards.
Strategy Evaluation: Evaluate to see the results. Review external and internal factors.
Measure performance. Take corrective action.
Important Attributes of strategic management:
How to create competitive advantage, which is difficult for rivals to copy or substitute.
Being different from everyone else.

Create, communicate and deliver differently.

Leveraging its own unique skills and capabilities.
What is best for the total organisation and not for a single department
Trade-off between efficiency (doing things right) and effectiveness (doing right things)
Price is not the only weapon to outfit competition
Managerial talents with creative thinking and concrete action plan.
Strategic planning:
Deciding on long-term goals such as survival, growth etc. Setting long term objectives.
Deciding about the judicious deployment of resources to achieve objectives.
Tactical Planning:
Translates broad strategic goals and plan into specific goals and plan. Eg. Marketing
plan, operation plan, HR
1-2 years plan.
Operational Planning:
Plans and procedures for low level organisations. Short term. < 12 months.
Benefits of Strategic planning:
1. Provides roadmap for the firm.
2. Shows way to achieve targets.
3. Resources are utilised in best possible manner.
4. Helps to exploit opportunities. Avoid costly mistakes.
5. Minimises mistakes and unpleasant surprises.
Strategic Makers:
Board of directors, - The board functions as the brain and soul of the organisation and as
guardian of stakeholders.
CEO : Principal strategist and brand ambassador of an organisation. Putting right people on
right job at right time.
Three critical elements: Strategy, Operations (Have clear roadmap), People.
Others: VPs, GMs, etc
Strategic Decisions:
Mainly concerned with the selection of the product-mix that the firm intends to produce and
the markets in which it will sell its products.
Has tremendous impact on the firm, Requires large commitment of company resources,
Effect on longterm prosperity of the firm, Future oriented, Multifunctional or Multi
business concequences, Focus on External group
Reasons for Failure of Strategy:
Poor planning, weak leadership, improper communication or ineffective control
Directional Journey : It does everything, everywhere. Failure to understand market
dynamics
Leadership team: over-confident, strategy developed from ego, perconceptions.
Lack of team involvement: work with enthusiasm, zeal and commitment
Poor communication: Weak commitment of management to the plan.
Failure to establish effective feedback and monitoring of the plan. Inconsistent
functional plan.
Incorrect resource requirements/allocation Disruptive Technologies.
Strategic Management process:
Refers to the steps by which management converts a firms mission, objectives and goals into
a workable strategy.
Core competencies, Synergy, Value creation.
Steps in strategic management process: Vision, mission and objectives, External and Internal
analysis, Strategy formulation, Strategic Analysis and strategic choice, Strategy
implementation, Strategy evaluation.
Strategic Formation process
Strategic Formation:

Process of offering proper direction to the firm.

Deliberate attempt to focus on what the firm can do better than its rivals.
Best fit between goals, resources and efforts put by people.
Deliver outstanding value to customer.
Role of Strategic Manager:
Environmental Scanning (Analyse threats and opportunities)
Analyses Internal Strength and weakness (SWOT analysis)
Competitive Intelligence (Competitors plan, Customer data, customer complaints data)
Strategy formation process : Corporate level strategy + Business level strategy +
operational level strategy.
Corporate Level Strategy:
Managing a portfolio of products or business
Formulated by top level management. Also called as grand master strategy.
Product / Service to produce, Market (locations ) to focus
Gives direction to organisation to achieve its objectives
Four General Categories:
Growth or Expansion Strategy To survive in a competitive terrain, enter new business,
develop new products or portfolios, changing the product mix, enter new market,
External growth (Mergers, takeovers and joint ventures)
Stability strategy Maintaining status quo, growing in a slow manner, safety oriented,
focus on current product/services, current market.
Retrenchment Strategy Defensive strategy followed by the firm when the
performance is disappointing, when survival is at stake. Is adopted out of necessity and
not by deliberate choice.
Disinvestment: Company sells or spin offs its own business
Turnaround: Reverse the negative trend. Getting rid of unproductive or
unprofitable products, trimming workforce.
Liquidation: Selling or disposing of an organisations asset.
Bankruptcy: court protects from creditors. Distribute all the assets to creditors.
Combination Strategy: different strategy for different business.
Business Level Strategy:
How business competes successfully in a particular market.
How to gain competitive advantage or superiority in a particular business
How to acquire unique strengths or core competences.
How to acquire differentiation advantage - A firm is able to create value for its
customers using resources. Valuable, scarce and relevant resources and capabilities
helps to build differential advantage.
How to acquire distinctive advantage The ability of the firm to perform
competitively critical tasks relatively well.
Distinctive competencies enables innovation, efficiency, quality and customer
responsiveness.
Porters Competitive Strategy:
Taking offensive or
Source of
defensive actions to create
Competitive
a defendable position in an
advantage
Cost
Differentiation
industry, to cope with
Scope

Broad
Cost
Leadership
Differentiation
competitive forces and
Scope Narrow
Cost Focus
Differentiation focus
thereby yield a superior
return for the firm.
Cost Leadership Strategy:
Low cost producer, enjoy pricing power, grabs market from rivals.
Offer standard product, Discount results in sales maximisation
Buyers can drive the price to next efficient producer
Provides entry barrier in many instances. (Substantial capital is required to achieve
economy of scale)

Internal strength:
Significant investment in production
Skill in designing products for efficient manufacturing.
High level expertise in Manufacturing process engineering
Efficient distribution channel
Differentiation Strategy:
Value addition enables the firm to charge premium price. Earn above average profit.
Should be important for customer.
Should be difficult for competitor to copy.
Internal Strength:
Access to leading scientific research
Highly skilled, creative product development team
Strong sales team.
Corporate reputation for quality and innovation.
Focus Strategy:
Specific regional market, product line or buyer group.
Target narrow market.
Low volume, hence less bargaining power with suppliers.
Niche segments are able to put excellent product development strategies.
Functional level or operational level strategy:
Key focus : Resources, people, process, method, procedures. Align with corporate or business
level strategies. Eg. A cost leader should ensure cost advantage.
Objectives of highly efficient operation system:
Achieve superior customer responsiveness, superior innovation with speed and flexibility,
superior quality and superior efficiency.
It should have reliable, high quality , reasonably prices suppliers and materials.
Formulating operational strategy:
1. Business objectives are set without taking operation capability into account. Prime focus
labour cost and operational efficiency.
2. Operation department set goals according to industry practice. Competitive as per market
standards.
3. Operation strategy is aligned with company strategy. Operation department will find new
ways to enhance competitiveness
4. Operational manager adopts new technology on their own to deliver high quality services.
Now it is a genuine competitive weapon.
Designing Operating System:
Product Mix: What to produce, How many, What kind of offer
Productivity : Firms operational capacity. Aim Cost efficiency, simple design etc
Quality: excellence of the product or services. Reliablity Degree to which the customer can
count on the product.
Flexibility Respond to product changes, product mix and product volume.
Capacity Planning: How many to produce. Process of forecasting the demand and then
deciding what resources will be required to meet the demand.
Steps for Capacity planning:
1. Predict Future demands and competitive reactions
2. Translate above estimates into capacity needs
3. Create alternative capacity plan
4. Evaluate each alternatives
5. Select and execute a particular capacity plan.
Technology and facility planning: How to produce. Major Technological Choice, Process
Planning repetitive or batch process
Facilities: Facilities location planning, Facility layout planning (Product layout , process layout,
fixed-position layout).
Stakeholders in Business:
Individuals and group who affects or affected by the strategic outcome.
Stakeholders or Groups
Membership
Expectation or Demand

Capital Market
Stakeholders
Product Market
Stakeholders
Org. stakeholders

Shareholders,
Lenders
Customers,
Suppliers
Employees, Union

Secondary Stakeholders

Environmental
Group
Government

Wealth enhancement, Wealth preservation

Least possible price, receive highest price
Secure, rewarding career, environment,
ideal working condition.
Environmental protection
Honest tax payment, Safety of public

Strategic Intent:
It is all about what a firm what to achieve in the long-term. It is an ambitious, bold and
obsessive target.
Think beyond obvious.
Leveraging of a firms internal resources, capabilities and core competencies to accomplish the
vision, mission, goal and objectives.
It is a stretching exercise. It helps individuals and organisations to extend themselves in space
and time.
Hierarchy of Strategic Intent:
Broad vision -> Objective Mission -> Strategic Objectives and specific goals -> Plans to
accomplish the same.
Vision or guiding philosophy
What we want to be
Core values and Beliefs
Who we want to be

Purpose
What we are here for
Mission
What we want to achieve

Strategies and Plan

Critical Success factors (CSF)
How we are going to achieve
What is needed to achieve it.
it
Core Process: The activities we need to perform particularly well to achieve it.
Vision: A long-term goal describing what an organisation wants to become. A kind of idealistic
dream. Quantum leap. Fundamental reason for existence. Timeless and unchanging core
values.
Mission Statement:
Clarity To lead to actions. Long-term purpose, Broad and enduring, Identity and
Image, Realistic and achievable, Specific, Values, Beliefs and Philosophy.
Business Definition:
A clear statement of the business the firm is engaged or is planning to enter.
Three Vital aspects:
The product / service concept : The way in which a firm likes to position its product /
services.
Customer Segment:
Value Creation : The factors that offers value to the customers in terms of low price,
high quality, fast delivery etc.
Objectives and Goals:
A goal or an objective is a specific target that the firm intends to reach in long term.
Characteristics of Objectives: Form hierarchy, Form a network Interrelated and
interdependent, Multiplicity of objectives, Long and short-range objectives.
Corporate Governance and Social Responsiblity

Corporate governance: It is the acceptance by the management => inalienable rights of

shareholders as the true owners of the corporaton. => Ther own role as trustees on behalf of
the share holders.
The strategic decisions should be implemented in the best interest of shareholders (owners)
and not primarily self-serving(in the best interest of managers only)
Governance mechanism used:
Ownership Concentration Relative amount of stock owned by individual shareholders
and institutional investors.
Board of directors Represent company owners. Monitor strategic decisions of top level
managers.
Executive Compensation Use of salary, bonuses and long-temr incentrives
Objective: To prevent problem of separation of ownership and control by positively
influencing the managerial behaviours.
Ethical Side Sound business ethics, Achievement of goals keeping the interest of all
stakeholders, Employees, customers, Environment and local community interest, legal
compliance
Principle of Corporate Governance:
1. Rights and Equitable treatment of shareholders.
2. Interest of other stakeholders
3. Roles and responsibilities of the board Chairperson and CEO should not be held by the
same person.
4. Integrity and Ethical Behaviour
5. Disclosure and Transparency
Five golden rule of best corporate governance.
Ethics, Align business goals Strategic Management, Organisation, Reporting.
Corporate Social Responsibility (CSR)
Argument against social responsibility:
1. A competitive business cannot be genuinely selfless.
2. It is an economic institution not a charitable institution.
3. Managers are not trained to pursue social goals.
4. Managers are not magicians. They cannot solve all the problems and provide goods at fair
price.
5. Managers cannot distribute what they dont own.
Arguments for social responsibility:
1. A healthy business cannot exist in a sick society
2. Business has surplus to distribute
3. Inexpensive insurance
4. Profit motive is the villan
5. Conflicting interests.
Types of social responsibility:
To Owners:
Commit fund in best possible manner
Ensure fair rate of return
Fair and honest reporting
To Customers:
Avoid false and highly exaggerated
advertisements
Provide goods of superior quality at
reasonable price
To community
Develop constructive relationship
Promote community welfare

To employees
Recognise the social needs of workers.
Fair and reasonable rate of pay
Work life balance
To Creditors and Suppliers
Provide correct information regarding health
of org.
Reasonable price for supplier items
Treat them as partners
To government
Fair trade policies and practices
Pay taxes honestly
Obey the government law

To society
Eliminate poverty
Quality health care services
Reduce level of pollution. Avoid race, gender and color bias.
External Environment
External Environment:
Consists of those forces that affect a firm from outside the environment.
Features of External Environment: Aggregative, Interrelated, Complex, Dynamic (Technology,
Legal, competitive forces) , Challenging (Political, legal, economical, etc)
Importance of Business Environment:
Exploit opportunities early, Contain Damanges, Serve Customer Well, Put Resources to best
use, Keep the firm alert, Flexible and Dynamic, Learn from Mistakes and Get past competiton.
Components of External Environment:
Political-Legal Environment Labour law, tariffs, trade restrictions, tax policies etc
Economic Environment Interest rate, Inflation rates, unemployment rates,
Social and Cultural Environment Values, attitudes, beliefs, opinions and lifestyles of persons.
Demographic Factors Nation, state, region, age, gender, religion, income
Cultural Factors Festivals (Offers etc), Beliefs, Trends in society, concern for health
and fitness, Religious, ethical and moral factors.
Technological Environment Technological breakthroughs, Technological advancements,
Technological changes.
Environmental Analysis or Scanning:
The process of monitoring an organisational environment to identify both present and future
threats and opportunities that may influence the firms ability to reach its goals.
Helps Organisations in the following ways:
To adjust to the environmental changes at the right time
Encasing opportunites & Eliminating threats / negative impacts
To turn problem into opportunities
Improve organisational performance.
Purpose of Environmental Scanning:
Helps the firm to decide future strategic direction.
Important events are identified
Major trends influencing various elements of environment
Significant issues that need to be looked into.
Process of Environmental Scanning:
Identify the environmental scanning needs. (Purpose of scanning, Time and resource
allocation)
Gather the information and Translate the needs into list of questions.
Analyse the information for trends and issues.
Communicate the results to decision makers
Make informed decisions based on information provided.
Modes of Environmental Scanning:
Undirected viewing Reading a variety of publications for no specific purpose.
Conditioned viewing Responding to informations in terms of assessing relevant
information.
Informal Searching Actively seeking specific information
Formal Searching A proactive mode of scanning.

Passive Scanning - Read journals and news papers

Active Scanning Attention of information resources that span the task.

Irregular scanning ,Periodic scanning, Continuous scanning.

Technique of environmental scanning SWOT analysis.

Porters five forces model
Five force Model:
Provides ground work for strategic action.
Competitive force determines profitability and therefore it is very important to the firm.
Competition is rooted in underlying economic structure.
The unit or product under this model should be in such a way that there is no big difference
between the five forces. If there is large difference, the unit should be broken down.
Five Forces: - Threat of New Entrants, Bargaining power of suppliers, Bargaining power of
buyers, Threats of substitute products, Intensity of rivalry.
Threats of New Entrants:
Bring new capacity, Desire to gain market share
Entry Barriers Economies of scale, Proprietary product differences, Brand Identity, Capital
Requirements, Access to Distribution Channels, Government Policy.
Bargaining Power of Suppliers:
By raising prices or by changing the quality of their goods or services. When its product is
unique or differentiated, it does not have sufficient competition.
Determinants of supplier power: - Differentiation of Inputs, Switching costs, Presence of
Substitute items, Supplier concentration, Importance of supply volume, Total purchase in the
industry.

Strategic Alternatives
Generic Strategic Alternatives:
Objective of an organisation : To yield superior rate of return on their investments.
How to Achieve: By having competitive advantage over its rivals. By providing what customer
want or needs, in better or more efficient way than its competitors, and it should be difficult to
intimate by the competitor.
Competitive Advantage Types : Low Cost, Differentiation.
Competitive Advantage Strategies: Cost Leadership, Differentiation, Focus and Niche
Strategies.
Required Skills and Resources
Organisational Requirements
Cost Leadership:
Sustained Capital Investment
Tight Cost control
Capability and access to Capital
Frequenct, detailed control reports
Intense supervision of labour
Structured organisation and responsibilities
Product desiged for ease in manufacturing
Incentives based on meeting strict
quantitative targets
Differentiation
Strong manufacturing abilities
Strong co-ordination between R&D, product
Product Engineering
development and marketing.
Creative flair
Subjective measurements instead of
Strong capability in basic research
quantitative measures.
Reputation for quality or technological
Attract highly skilled labour, scientists or
leadership
creative people.
Long tradition in the industry or unique
combination of skills from other areas
Strong cooperation from channels

Focus
Combination of the above, directed at the
particular strategic target

Combination of the above, directed at the

particular strategic target

Type of Strategies: Stability Strategy, Expansion Strategy, Retrenchment Strategy,

Combination Strategy.
Stability Strategy Maintain the status quo, growing in a methodological, but a slow manner.
Where the environment is unstable. Steady as it goes.
Incremental Growth One product line at a time. Low-risk, low-market share.
Profit or Harvesting Strategy Generate cash to ensure steady business growth. Done
in a stable / decline market. Units contribution is not significant to the total sales.
Sustainable Growth- External environment is not favourable.(cost reduction and quality
improvements)
Stability as a Pause A turbulent period of rapid growth, consolidate their position,
improve efficiency, pause for a while then take another step. Big leap forward.
Expansion Strategy Accelerate the pace of growth of an organisation. Most popular. Most
managers equate it with their success. Great improvement in sales. Advancement,
promotions, interesting jobs.
Ensure Survival , Obtain economies of scale, Simulate Talent, Reach Commanding
Heights.
Retrenchment Strategy- Revolves around cutting sales. To remain financially stable. Economic
recessions, Product inefficiencies and innovative breakthroughs by competitors.
To cut extra fat, Layoff employees, close offices / depts., cutting salaries, eliminating lowmargin groups.
Combination Strategy: Combination of all the above three.
Recent Strategies Joint Ventures, Strategic Alliances, Consortia ( 50+ firms, interlocking
between business of an industry)
Corporate level Strategies:
Corporate Level Strategy
Vertical Integration
Diversification
Strategic Alliances
Corporate Restructuring

Backward Integration
Forward Integration
Concentric or related diversification
Unrelated or conglomerate diversification
External Restructuring
Internal Restructuring

Strategic Alliances:
Objective: Reduce Risk, New Market Entry, Define Future Industry Standards, Learn and apply
new technologies, Fill gaps in product line.
Risks: Imcompatiblity of Partners, Risk of knowledge / skills drain, risk of dependencies.
Corporate Restructuring:
Destroying old paradigms, old technology, old ways of doing things and starting all afresh.
Process of restructuring: Customer focus, Core Business process, Structural changes through
Reengineering, cultural changes.
Methods of Restructuring: External & Internal
External Restructuring : Acquisition / takeover, merger / amalgamation, Asset swaps,
demerger & spinoff. Capital restructuring (Leveraged buyouts, Share buyback, Conversion of
debt to equity)
Internal Restructuring: Improving employee morale, bring about a change in an organisational
culture, eliminate redundant staff.
Strategic Analysis and Choice
Strategic Choice: - Where shall we go?
The decision to select among the grand strategies, select the strategy which will best meet
the organisational objectives.

Steps: Focus on few alternatives, determine the selection factor, evaluate the alternatives,
making strategic choice.
Gap Analysis:
Finding out the difference between what was intended and what was achieved. More modest
ambition might be more rewarding, less risky but feasible.
ETOP Environment Threat and Opportunity Profile:
Positive impact factor = Opportunity. Negative Impact factor = Threat.
Involves : Diving environment into sectors and sub-sectors. Analyse the impact of each on the
organisation, Describing the impact in form of statement.
Disadvantages: Cant reflect a dynamic environment. It is very subjective

Distinctive Competitiveness
GE9 Cell Matrix: BCG Matrix, portfolio-planning framework. Industry Attractiveness Vs
Business Strength.
Factors affecting Industrial Attractiveness
Competitive or Business Strength
Market Size, Market Growth, Profitablity, Price Strength of assets and competencies,
trends, Rivalry, overall risk of return, entry
Relative brand strength, Market share,
barriers, Distribution structure, Technology
customer loyalty, Relative cost position,
development
Innovation, Quality, Management strength
Industry
Attractiveness
High
Med
Low

Business Strength
Strong

Average

Weak

Invest and grow

Invest and grow

Invest and grow

Maintain

maintain

Harvesting or
divesting

Maintain
Harvesting or
divesting
Harvesting or
divesting

Circle : Relative size of industry.

Mckinsey 7S framework:
Strategy , Structure, Systems (Flow of activites involved in the daily operation of business),
Sytle (Time spend by Manager ), Staff (develop employees and shape basic values), Shared
values (commonly held belief, mindset and assumptions), Skills (dominant capabilities and
competencies)
Balanced Scorecard:
VISION AND STRATEY
Financial
To succeed finaincially, how should we
appear to our stakeholders
Customer
To Achieve our vision, how should be appear
to our customers.

Learning and growth

To achieve our vision, how will we sustain
our ability to change and improve
Internal Business Process
To satisfy our shareholders and customers,
what business process we must excel with.

Objectives
Profits,
Market
share, ROI
Customer
loyalty,
acquiring
new
customers
Learn,
Innovate and
improve
Long term &
short term
goals,

Measures

Targets

Intiative
s

Process
Advantages:
Balance, Scalability (From lowest level to highest level), Customer focus, employee focus,
Proactive approach
Disadvantages:
It is not a tool. It is a recommendation. Do not paint whole picture, use metrics that are
meaningless.
Strategic Implementation
Resource Allocation Tangible Resources (Plant, machinery, building, physical presence)
Intangible Resources (Invisible, difficult to quantify, competitors cannot purchase, imitate or
substitute)
Means of resource allocation:
Strategic Budget Joint Budgeting effort. Team discuss and finalize
Capital Budget Maximise long-term profitablitity.
Performance Budget Based on work to be carried out.
Zero-based Budget Future oriented. Re-justify the past objectives to get budget.
Decision package Scope of work, Anticipated benefits, time schedule, Expected
concequences.
Ranking Packages are ranked based on proposed project at Organisational level.
Resource allocation Organisation wide list prioritized, build from zero-base or ground
up
Problems in resource allocation.
Strategy Implementation Process:
The process through which the choosen strategy is put into action.
1. Evaluate the strategic plan
2. Create a vision for implementing the strategic plan
3. Select team members
4. Schedule meeting to discuss progress report
5. Involve the upper level management wherever appropriate.
Nature of Strategy Implementation:
Action Focus, Involvement, Blessing of Top management, Coordination (connect people,
process, structure, environment, technology etc)
Key Issues in Strategic Implementation:
Requires an effective organisation, Peoples should know how their actions helps in firms
strategy, roles should be clear, services of capable and talented leaders are required, should
not sacrifice ethical and social values, political factors.
Steps involved in Strategic Implementation:
Institutioalization of strategy, Formulate action plan, Project related and procedural issues in
implementation, Resource mobilisation and allocation, structural issues & behavioural issues
in implementation, leadership issues in implementation.

Institutionalizaton of stragety:
People should support strategy, Should not be treated as a personal choice made by
strategists, People must own it, should not feel that it is imposed from above, benefits should
be clearly communicated, doubts and objections should be clarified, periodic reviews.
Barriers to strategy implementation:
Poor or vague strategy, Inability to manage change, Refusal to share information, working
without clear guidelines, lack of support and whole-hearted commitment from people.

Strategic Control and Evaluation

Strategic Evaluation and Control (SEC) Final phase of strategic management.
i.
Examining the underlying base firms strategy
ii.
Comparing expected results with actual results
iii.
Taking corrective actions for any deviations.
iv.
Allows managers to anticipate responses to expected problems.
Importance of SEC:
Dont leave it chance.
Feedback Major trends , proper direction, how to adjust, performance, Reward , Future
planning
Barriers:
Limits of control Too much control (prevents taking initiatives, creative ideas, risk-taking),
Little control (waste resources, go off the hook without any fear of punishment)
Difficulty in measurements Reliability and validity
Motivational problems admit mistakes when things go off-the-track.
Evaluation Criteria
Quantitative Factors Return on Investment, Return on Equity, Z-Score, Return on capital
employed, Economic Value added, Market Value added, Ratio Analysis (Liquidity ratio, Activity
ratio, Leverage ratio, profitability ratio)
Qualitative factors Strategic control:
Is concerned with tracking a strategy when it is being implemented, detecting problems or
changes.
Types of strategic control
1. Premise control Build around certain assumptions about environmental and
organisaitonal factors. No longer valid, we should change the strategy.
2. Implementation control Milestone review in which all the key activities are reviewed
3. Strategic Surveillance A broad range of events inside and outside the company that are
likely to threnten the course of firm strategy.
4. Special Alert Control reconsideration of strategy because of sudden, unexpected events.
Operational Control:
VRIO Framework Value (Exploit Opportunity or neutralise an external threat), Rarity
(resources / capabilities relatively few), Imitability, Organisation (Organised, ready, able to
exploit capabilities)
Value chain analysis
PEST Analysis Political, economic, social and technological factors
Gap analysis
SWOT Analysis
Benchmarking (How other firms do exceptionally high quality things)
Balance scorecard
Strategic Change, Power, Politics and Conflict
Strategic Change: The adaptation of new idea or behaviour by an organisation. Alternation
of people, process, structure and technology
Type of changes:
Evolutionary change usually piecemeal. Takeplace one-by-one. Very slow, organisation may
fall behind requirements.
Revolutionary changes
Proactive vs Reactive changes Desirable Vs Necessary
Planned changes planned alternation in the existing organisational system.

Strategic Change process:

Unfreeze Making the need for change so obvious that the individual group or org can readily
see and accept the change. Physical removal of individuals, Demeaning and humiliating
experience, linking reward with willingness to change.
Changing New learning occurs. Compliance or force reward or punishment. Internalisation
forced to change, call for new behaviour, Identificaiton choose one among various models.
Refreezing New beliefs, feelings learned in the changing phase.
Forces for change:
Internal Force Increased Size, Performance Gaps, Employees needs and Values, Change in
chief executives.
External Force Technology, Competition, Social and Political Changes
Resistance to Change:
Economic Reasons:
Fear of Economic Loss (technological unemployment, reduced work hours, reduced
wages)
Obsolescence of Skills
Personal Reasons: Unknown change, status quo, self-interest and Ego-defensiveness.
Social Reasons:
Social Dispacement, Peer pressure,
Organisational Issues: Threats to power and Influence, Organisational structure, Resource
constraint, Sunk cost
Overcoming Resistance:
Education and communication (What the change is, When, How, why What, How it will help)
Participation and involvement,Facilitation and Support, Negotiation and Agreement,
Manipulation and co-optatoin, Coercion (Force), Group Dynamics.
Management of Change:
Indentify the need for the cange, Diagnose the problem, Plan the change, Implement the
change, follow-up and feedback.
Power and Authority:
Power Ability to influence others. Authority Formal Power.
Control The ultimate form of influence wherein acceptable behaviour Is specified and
individual or groups are prevented from behaving otherwise.
Sources of Power: Expert Power, Charismatic Power (Referent Power),Reward power,
Infromation power, Legitimate power, Coercive power.
Politics: Refers to those activites that are not required as part of ones formal role in the
organistion.
Political Behaviours A general way of getting and using power for personal gain.
Reason for Political Behaviour:
Organisational Factors: Scarce Resources, Limited Opportunites, Lack of trust, Role ambiguity,
Performance Evaluation, Delay in feedback, Pressure to perform well,Employees participation
in decision-making, Individual factor.
Political Strategies and Tactics to acquire power:
Forming Alliances, Selective use of information, scapegoating, Image building, Networking
(prise people, avoid critical negative remarks), compromise, Rule Manipulation, Fabianism,
One step at a time, Persuasion.

Managing Political Behaviour:

Logical thinking and systematic handling, Define job deuties clearly, Design job properly,
Demonstrate proper behaviour, Promote understanding, Allocate resource judiciously.
Conflict: Perceived difference between tow or more parties that result in mutual opposition.

Features of conflict: Incompatiblity, Perception, Blocking, Scarcity, Latent or Overt, Verbal or

Non-verbal, Active or passive
Ways to Resolve Conflict:
Separate the warring factions, create a procedure of appeal, appoint an Integrator, Rotate
memberes, Reduce Interdependence, Emphasise overall goal, Ignore the conflict, Bargain with
both the group.
Conflict Resoultion Style: Competing (Dominance, High on assertiveness and low on
cooperation), Avoiding (Withdrawal), Accommodating (Smoothing, low on assertiveness, high
on cooperation), Compromise (Lose-Lose), Problem solving or confrontation or collaboration
(Win-Win)
Managing Technology and Innovation
Managing Technology:
Technology Methods, process, systems and skills used to transform inputs into outputs.
Technology brings competitive advantage Computer aided design, Computer and High speed
internet, groupware(enables group of people on a network to collaborate over long distances),
Internet, E-Commerce (electornic commerce), M-Commerce (Mobile commerce)
Designing Technology strategy:
Concerned with choices between alternative new technologies, the manner in which they are
implemented into new products and processes.
It is important and often ignored link in strategy formulation.
Process Selection, Embodiment (How to use new technologies), Technology sources (Internal
development or external), Competitive timing, Level of R& D investment, Organisation and
Policy for R&D, Competence levels.
Technology Lifecycle:
innovation, Inception, development, market saturation and replacement.
Technology Development Embryonic stage (companys overall strategy, companys
production and marketing skills, return on investment)
Technology application apply to new or existing product. Heavy initial cost. Through
licencing or JV
Application launch Sale of technology,
Application growth - sales maximisation. (Market size, technological leadership,
standardisation)
Technology maturity Awareness, active participation, successful implementation of process.
Degraded Technology licensing arragements will expires
Technology forecasting- Use current knowledge to build future, Specific scientific Refinement,
Promises to serve some useful function.
Technology forecasting techniques Trend projectios, Intutive method, Scenario Mehods,
Econometric models, Monetoring methods,
Barriers to Technology Planning and Management:
Lack of training, Lack of Knowledge, Lack of appropriate framework, Lack of long range focus,
Lack of initiative to track risk.
Innovation process:
Inventing,Developing,Diffusing,Integrating.

Strategic Issues
Strategic Issue:

Issue should be described succinctly, preferabley in a single para, the organisation can do
something about that.
Factors should be listed.
Social Audit: A Systematic assessment of a companys activities in terms of their social
impact.
Environmental Audit:
Energy Audit:
Strategies for Non-Profit Organisation:
Strategic Piggybacking New activity to generate fund for primary activity
Mergers
Strategic Alliances
New Business Model and Strategic for Internet Economy
Business Model:
Value Proposition
Market Segment
Value Chain Structure
Sum total of benefits to Cost
Looking at business as a
Paid
chain of activities that
transforms input to output,
that creates value
Revenue Model
Competitive Strategy
Growth Strategy
How revenue is generated
Porters five forces
Strategies for Internet Economy:
B2B,B2C,C2C,C2B.
Internet Add Value: Search activites, Evaluation activities, Problem-solving activities,
Transaction activities, e-commerce, Improved selling process, Improved Buying Experience,
Improved users experience, e-procurement, e-ventures, e-operations, e-learning.