Saturday, November 12, 2016

Chapter # 1

An Overview of
Strategic Management
References
Strategic Management Concepts & Cases, Fred R. David
Strategic Management: Text and Cases, Gregory G. Dess, G. T. Lumpkin
Advanced Strategic Management: A multiple Perspective Approach, Mark
Jenkins, Vronique Ambrosini, Nardine Collier

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Resource Person: Furqan-ul-haq Siddiqui
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In September 2013, Nokia sold what was once the world's largest vendor
of mobile phones to Microsoft as part of an overall deal totaling 5.44
billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and
several other executives joined the new Microsoft Mobile subsidiary of
Microsoft as part of the deal, which closed on 25 April 2014.
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Nokia CEO, Rajeev Suri has confirmed that Nokia will be releasing at
least three Android phones before the close of 2016. It could be just
two for 2016, however, as the third will depend how well testing goes
this latter phone could debut inside Q1 2017, likely at MWC
2017. HMD global Oy is a Finnish
company that develops mobile
devices under the "Nokia" brand
name. It was formed in May 2016 by
purchasing part of the feature phone
business of Microsoft Mobile, the
company founded after Microsoft's
acquisition of Nokia's mobile phone
business in 2014. It is headquartered
in Helsinki and made up of veteran
Nokia staff.
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 Strategy!
A strategy is an integrated
plan of action designed to
achieve a particular goal.
The word strategy has
military connotations,
because it is derives from the
Greek word for army
("leader or commander of
an army, general).
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 Tactic is concerned with the
conduct of an engagement while
strategy is concerned with how
different engagements are linked.
Tactics are the actual means used
to gain an objective, while strategy
is the overall campaign plan,
which may involve complex
operational patterns, activity, and
decision-making.

a method of employing forces in

combat
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Strategic Management
Strategic or Institutional
management is comprehensive and
ongoing management process aimed
at the conduct of drafting,
implementing and evaluating cross-
functional decisions that will enable
an organization to achieve its
objectives

Art and science of formulating, implementing, and

evaluating cross-functional decisions that enable an
organization to achieve its objectives. 8
 Strategic management
Analyses, decisions, and actions an
organization undertakes in order to
create and sustain competitive
advantages.
o Strategic management is the study of why
some firms outperform others
o How to compete in order to create
competitive advantages in the marketplace
o How to create competitive advantages in
the market place.
Strategic Management Achieves
Organizational Success
Process of Integrating:
Marketing
HRM
Finance/Accounting
Production/Operations
R&D
Computer information
systems
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Strategic Management Concepts
A Model of Intended, Deliberate, and
Realized Strategy

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 SM Integrates Intuition & Analysis
Intuition is based on:
Past experiences
Judgment
Feelings

Intuition is useful for decision making in conditions

of:
Great uncertainty
Little precedent
Highly interrelated variables
Several plausible alternatives 13
Strategic-Management Process

Strategy Formulation

Strategy Implementation

Strategy Evaluation
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 Strategic-Management Process
Strategy formulation: the set of processes involved
in creating or determining the strategies of the
organization; it focuses on the content of strategies.
Strategy implementation: the methods by which
strategies are operational or executed within the
organization; it focuses on the processes through
which strategies are achieved.
Strategy evaluation: Process by which strategies
are evaluated & rectified
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Strategy Formulation

Vision & Mission

Opportunities & Threats

Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

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Strategy Implementation

Annual Objectives

Policies

Motivate Employees

Resource Allocation

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Strategy Evaluation

Review
External & Internal

Measure Performance

Corrective Action

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The Strategy Diamond and the Five Elements of
Strategy

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 Importance of Strategic Management
1. Provides a sense of long-term direction for
organisation members.
2. Enhanced awareness of SWOT
3. Understanding of competitors strategies
4. Increased employee productivity & involvement
5. Reduced resistance to change
6. Clear performance-reward relationships
7. Order and discipline to the firm
8. View change as opportunity
9. Proactive vs. Reactive
10. More profitable and successful
11. Formulate better strategies (Systematic, logical, and
rational approach) 22
Adaptation to Change
Organizations must monitor events
On-going process
Internal and external events
Timely changes
Rate and magnitude of changes
Increasing dramatically
E-commerce

Demographics

Technology

Merger-mania

The measure of intelligence is the ability to change. 23

Albert Einstein
 Why Some Firms Do No Strategic Planning
Poor reward structures-
Fire-fighting- Embroiled in crises management
Waste of time-
Too expensive-
Laziness-
Content with success- We are successful so what's need of SM
Fear of failure-
Overconfidence on experience-
Prior bad experience
Self-interest- viewing new plans as threat
Fear of the unknown- uncertainty regarding new plans,
system, new role, new skills
Suspicion- distrust upon management 24
 Strategic Management Terms
Competitive Advantage
Anything that a firm does specially well as compared to rival firms.
A firm can sustain CA for only a certain period due to rival firms
imitating & undermining that advantages.
A competitive advantage exists when the firm is able to deliver the
same benefits as competitors but at a lower cost (cost advantage), or
deliver benefits that exceed those of competing products
(differentiation advantage). Thus, a competitive advantage enables the
firm to create superior value for its customers and superior profits for
itself.
Cost and differentiation advantages are known as positional
advantages since they describe the firm's position in the industry as a
leader in either cost or differentiation.

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Long-Term Objectives
Long-term objectives are results that an organization
seeks over a multiyear period. Common categories for
business long-term objectives include profitability,
employee development, productivity, technology
development, employee relations & competitive position
etc.
Challenging
Measurable

Consistent

Reasonable

Focus coordination

Provide basis for effective management

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 Annual Objectives
Short-term milestones necessary to achieve long-term
objectives.
Represent the basis for allocating resources
Established at corporate, divisional, and functional levels
Stated in terms of accomplishments for:
management
marketing
finance/accounting
production/operations
research and development
information systems accomplishments

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Policies
Important in strategy implementation as the means by
which annual objectives will be achieved

Guide to decision making and address repetitive situations

Established at corporate, divisional, or functional levels

Allow consistency & coordination within and between

organizational departments

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The Fortune 500 is an
annual list compiled
and published by
Fortune magazine that
ranks 500 of the
largest corporations
by total revenue for
their respective fiscal
years. The concept of
the Fortune 500 was
created by Edgar P.
Smith, a Fortune
editor, and the first list
was published in
1955. 30
 Lesson: Thats a lot of churning and creative
destruction, and its probably safe to say that almost all
of todays Fortune 500 companies will be replaced by
new companies in new industries over the next 59
years, and for that we should be thankful. The constant
turnover in the Fortune 500 is a positive sign of the
dynamism and innovation that characterizes a vibrant
consumer-oriented market economy, and that dynamic
turnover is speeding up in todays hyper-competitive
global economy. Steven Denning pointed out a few
years ago in Forbes that fifty years ago, the life
expectancy of a firm in the Fortune 500 was around 75
years. Today, its less than 15 years and declining all
the time.