STRATEGIC MANAGEMENT

STRATEGY
 Chandler, “Strategy is the determinator of the basic
long term goals of an enterprise and adoption of courses
of action and the allocation of resources necessary for
carrying out these goals”
 Boston Consulting Group “ Strategy is a deliberate
search for a plan of action that will develop a business’s
competitive advantage and compound it. The objective is
to enlarge the scope of your advantage, which can only
happen at someone’s expense”

 Prahalad, “Strategy is more than just Fit and allocation

of resources .It is stretch and leveraging of resources”
STRATEGIC MANAGEMENT

 Strategic planning
 Tactical (intermediate) planning
 Operational planning
 Approaches to Strategy

 The Design Approach (Alfred Chandler)

 The Analytical Approach (Igor Ansoff)
 The Positioning Approach ( Michael Porter)
 The Design Approach
 In early 1960’s Alfred chandler proposed that a
structure follows strategy. Here top managers
formulate strategies after a careful analysis of
opportunities in the environment and the
strengths and weaknesses in the organization
 The Analytical Approach
 Corporate Level- What business should we be
in?
 Business Level- How to function in a business
once selected?
 Functional Level- How to manage internal
operations such as manufacturing, marketing,
finance etc
 Institutional Level- How to manage external
relationships in an ever changing dynamic, political
world
 The Positioning Approach
 Overall cost Leadership
 Differentiation
 Focus
 Resource based View
Business Policy
 Terry “ A business policy is an implied overall guide
setting up boundaries that supply the general limits
and direction, in which managerial action will take
place”
 Newman and Logan “ A business policy represents the
best thinking of the company management as to how
the objectives may be achieved in the prevailing
economic and social conditions”
Pyramid of Business Policies
 Major policies
 Lines of business and code of ethics
 Secondary Policies
 Selection of geographical area

 Identification of major customers and major products

 Functional Policies
 Marketing, Finance etc

 Procedures and standard operating plans

 Handling and processing of orders

 serving customer complaints etc

 Rules
 Salary and wage administration

 Safety and health

 Use of company facilities

STRATEGIC MANAGEMENT

Pearce and Robinson, “It is the set of

decisions and actions resulting in formulation
and implementation of strategies designed to
achieve the objectives of an organization”
Glueck and Jauch , “ It is a stream of decisions
and actions which lead to the development of
an effective strategy or strategies to help
achieve corporate goals”
 Phases in the Strategic Management
Process

Develop strategic Implement and

Set Objectives Craft the strategic plan Evaluate &
Vision and Mission execute strategy correct

Revise as Revise as Improve/ Improve/

Recycle
needed needed change change
Elements of Strategic Management

 Strategic Analysis
 Strategic choice
 Strategy formulation & Implementation
Strategies Vs Tactics
Strategies
 Generally the focus is
on a long term
 The uncertainty level
is quit high; lots of information
to be obtained from sources
 Affect the various parts of
an organization in a significant way
Tactics
The focus is on a short term
The decisions are more certain
and are taken within the
framework of strategies
The reach is limited to only
specific segments of an
organization
 Various types of strategies
 Master strategies or Grand strategies
 The top level activity includes formulation of long term objectives
and these type of strategies cover the entire pattern of an
organization’s objectives, policies and specific resources
deployment. Grand strategies are derived from a careful situational
analysis of the organization and its environment
 Programme strategies
 It is concerned with how the basic organizational objectives will
be achieved
 Sub strategies
 Detailed steps to implement programme strategies
 Tactics
 These are the action plans of specific step by step
methods by which strategies are executed. Tactics are
formulated at the supervisory level and helps in
implementing policy decisions at the top level
The Generic Building Blocks of
Competitive Advantage
The Roots of Competitive Advantage
Strategy, Resources, Capabilities,
and Competencies
 McKinsey 7-S Framework Model
 Strategy
 Structure
 Systems
 Style
 Staff
 Skills
 Superordinate goals (Shared Values)
 Strategy: the plan devised to maintain and build competitive
advantage over the competition

 Structure: the way the organization is structured and who

reports to whom

 Systems: the daily activities and procedures that staff

members engage in to get the job done

 Shared Values: called "superordinate goals" when the model was

first developed, these are the core values of the company that
are vital in the corporate culture and the general work ethic

 Style: the style of leadership adopted

 Staff: the employees and their general capabilities

 Skills: the actual skills and competencies of the employees

working for the company
 The 7S model helps to;

 Improve the performance of a company.

 Examine the likely effects of future changes within a
company.

 Align departments and processes during a merger or

acquisition.

 Determine how best to implement a proposed

strategy.
Values of Evalueserve

 Take a Truly Global Approach

 Attract, Develop and Retain Great Talent by
Creating an Exciting Environment
 Contribute Actively to the Local Communities in
which we operate
Skills – Built into Our Organisation Structure
Employment Contract

Empowered employees are

responsible for company’s
competitiveness and their own
development
Top
managers Top managers support
ensures personal
company’s development
competitiveness and initiatives
and employees’ security and
ensure
employability

Employees implement top

management strategy with
loyalty and obedience

Traditional employment contract New employment contract

General Tools of Analysis

 Decision Trees- Issue Trees

 SWOT Analysis
 PESTLE Matrix
 Political
 Economic
 Social
 Technological
 Legal
 Environment
 Issue Tree Action to be Taken

Redesign & reflect

Is the design Will the consumers
Can product A’s Quality in the
specification too favor a good
Cost be lowered Marketing strategy
expensive quality product

No

Reduce fixed assets

Are the fixed control accounts
Costs too high receivable
and payable

No
Improve purchasing
methods

Are the variable Company making

Costs too high uneconomic purchases
Improve production
Process method
Classification of Technologies
 Basic or Generic Technologies
 Technologies which are widely available, often not protected by
patents and hard to defend as a source of strategic advantage

 Proprietary Technologies
 those that the company owns and may have control over via patents
or other protection. Technologies where the company may have
specialist knowledge or equipment
 Pacing Technologies
 The new set of technologies that are now making the running in
defining the rules of the game in the marketplace
 Emerging Technologies
 Those which are yet to be commercially exploited
 Resource Competence Matrix

Easy to Imitate Difficult to Imitate

R
E
S
O
U Necessary Resources Unique Resources
R
C
E
S

C
O
M
P
E
T
E Threshold Competencies Core Competencies
N
C
I
E
S
Same as competitors Better than competitors
Resource based theory Model

Unique competencies Sustainability

Supported by resources & Lack of substitution & imitation

capabilities owned by the firm by competitors

Competitive Advantage

Appropriability Opportunism & Timing

Retention of value created Offsetting the cost of acquiring

inside the firm resources & capabilities