Strategic Management (MGT 541)

By: Bal Ram Chapagain, M. Phil.

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Course Objectives
To acquire familiarity with the principal concepts and techniques of strategic management. To gain expertise in applying these concepts and techniques in order to: Establish mission and vision of the organization; Analyze external as well as internal environment; Generate and evaluate strategic options; Make best strategic choice at different levels; Recommend the best means of implementing the chosen strategy; and, finally, Evaluate and control strategies in line with changing conditions in order to stay ahead of competitors and achieve business objectives.
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Course Contents Overview

1. Introduction to Strategic Management 2. Strategic Analysis (Internal & external environmental analysis) 3. Strategy Formulation (Strategic options evaluation and choice) 4. Strategy Implementation (Strategy implementation and control)

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Reference Books
1. Pearce II, John A. and Robinson, Richard B., Strategic Management, Tata McGraw-Hill, New Delhi. 2. David, Fred R., Strategic Management: Concepts and Cases, Prentice Hall of India, New Delhi. 3. Thompson, A. A. and Strickland, A. J., Strategic Management, AITBS Publishers & Distributors, Delhi.
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Internal Evaluation Criteria Att., participation, attitude & behavior (individual) 5 Case study analysis (individual) 5 PW and/or presentation (group) 10 Home assignment (individual) 5 Term exam 15 Total = 40 Teaching Methods Lecture, Discussions, Brainstorming, Case Study Discussions & Analyses, Project Work, Presentations, Assignments & Feedback etc. Expectations Sharing
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1918 2002

918 2007

2004

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Strategy Gurus

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1947

Unit I (a)

Introduction to Strategic Management

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balram.chapagain@gmail.com

Background of Strategy Originated from military organization Was synonymous to the approach of military troops to win or stay ahead of rivals. The famous Chinese philosopher Sun Tzu for the first time introduced the concept of strategy through his book The Art of War written in the 6th century B.C. Emerged in business field particularly after the World War II Now, capstone subject in management

Basic Concepts
Strategy? Long term approach of doing business in order to stay ahead of competitors and achieve organizational objectives particularly by satisfying customers Examples: Expansion through acquisitions, cost leadership, differentiation, focus etc.

Basic concepts
Strategic Management? Comprehensive process of analyzing the environment & setting the context, formulating different level strategies, implementing them and, over time, initiating corrective action in goals, strategies, and way of implementation as required. Strategic management is a whole where as strategic planning/formulation is a part of strategic management process.

Strategic Management Defined

Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives. - Fred R. David The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a companys objectives. - Pearce II and Robinson

Strategic Management Process

Set the Context: Establish or review vision, mission and values
External environment analysis Internal environment analysis

Set strategic goals and formulate strategies and devise action plans

Strategy Implementation

Strategy Evaluation and Control 22 April 2013 balram.chapagain@gmail.com

Bal Ram Chapagain

Continuous monitoring, evaluation, learning and changing

Continuous monitoring, evaluation, learning and changing

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Strategic Planning Process

Set the Context: Establish or review vision, mission and values
External environment analysis Internal environment analysis

Set strategic goals/objectives and formulate strategies

Draft action plans

Specify sub-goals, activities, timelines, lead role(s), and resources needed

Review progress and make adjustments 22 April 2013 balram.chapagain@gmail.com

Bal Ram Chapagain

Continuous monitoring, evaluation, learning and changing

Continuous monitoring, evaluation, learning and changing

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Key Characteristics of Strategic Decisions

1. 2. 3. 4. 5. 6. 7. 8. Long-term direction and impact Wider in scope Customer care (along with other stakeholders) Attention to environmental changes Affect subsequent lower level decisions Involves some kind of change and certain degree of risk Seeks to maximize competitive advantage Involvement of senior level managers

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Levels of Strategy
BOD, CEO and top level executives

-------------------------Corporate level strategy

Head SBU-A

Head SBU-B

Head SBU-C

----------------------Business level strategy

Production Manager

Finance Manager

Marketing Manager

Human Resources Manager

---------Functional level strategy

Levels of Strategy
1. Corporate level strategy Organization-wide strategy for a company. Key issues: Direction: Stability?/Expansion?/Retrenchment?/Combination? Portfolio: Industry?; Products?; Markets? Parenting: Resource allocation and coordination among different products/services/businesses

Levels of Strategy
2. SBU level strategy Action plan for managing a single line of business within a diversified company. Key issues: Efforts to build competitive advantage: Lower cost relative to rivals?/ A different or better product offering compared to rivals?/ Speed delivery or superior ability to serve customers? Scope of geographic coverage: local/national/global? Joint ventures or strategic alliances with others?

Levels of Strategy
3. Functional level strategy Plan for managing and nurturing a distinctive competence of a particular functional area of a business Dictated by its parent units strategy For example, differentiation strategy requires use of sophisticated technology (production); attracting and retaining talented people (HR); and pull over push (marketing) ---------------------------------------------------------------------- Note that, different level strategies should be congruent with each other.

Hierarchy of Objectives and Strategies

Strategic Decision Makers Ends
(What is to be achieved)

Means
(How is to be achieved)

Board of Directors

Corporate Managers

Functional SBU Managers Managers

Mission, Vision and Values

Corporate & SBU level strategies

Long-term objectives

Annual objectives

Functional level strategies and policies

Note: indicates a principal responsibility; indicates a secondary responsibility

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Benefits/Importance of Strategic Management

(particularly in the context like Nepal)

In Nepal, we rarely see long-term and proactive approach of managing things, which is the essence of strategic management. Against this backdrop, the importance of SM can be highlighted under the following points. 1. It provides unified purpose and better guidance to
the entire organization. 2. It reduces future uncertainty by forcing managers to look ahead. 3. It reduces overlapping and wasteful activities.
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Benefits/Importance of Strategic Management

(particularly in the context like Nepal)
4. It promotes creativity. 5. It helps to achieve economy in operation. 6. The evaluation and control component helps to keep the organization in continuous transformation process. 7. It helps to maximize competitive advantage and minimize competitive disadvantage by focusing more on core competencies. 8. Strategic management process seeks to satisfy not only customers but also other stakeholders. In countries like Nepal, its extremely important to satisfy all stakeholders for ensuring conducive business environment.
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