SM Hill & Jones Chap I

STRATEGIC MANAGEMENT
SESSION I
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BBA LLB SEMESTER VIII : PAPER – 1
STRATEGIC MANAGEMENT
 Objective: The objective of this course is to make the students familiar
with the holistic perceptive of enterprises.
 1. Introduction to Business Policy:

Evolution of Business Policy - Nature Importance - purpose - objectives
of Business Policy - Industrial policy and Business Policy - Defining &
explaining strategy - Different levels of strategy - Strategic decision
making - Strategic management process.
 2. Strategic Indent :
Introduction - vision - Mission - goals & objectives - Environmental
appraisal - concept of environment, Environmental sectors -
Environmental scanning - Appraising the environment - Organisational
Appraisal - Corporate level strategies: grand strategies, Stability
strategies, Expansion strategies, Retrenchment-strategies, Combination
strategies - Business - level strategies : Generic business strategies,
Tactics for business strategies - Strategic Analysis & choice - Corporate
level Strategic Analysis - Business level strategic analysis.

 3. Corporate Strategic Planning Strategy Implementation:
Aspects of strategy implementation - Project Implementation - Procedural
implementation - Resource allocation - Structural implementation - Structures
for strategies - organisation design & change - organisational systems -
Functional strategies:- functional plans & Polices, financial, marketing,
operations, personnel .Information management plans & policies - Integration
of functional plans & policies.
 4. Strategy Evaluation:
An overview of strategic evaluation & control - operational control -
Techniques of strategic evaluation & control - Role of organisational systems
in evaluation.
 5. Globalization: -
Stages of globalization - conditions for globalization - competitive
advantages for nations - Threats and challenges -corporate strategies- joint
venture, sell offs - divestiture-spin offs, corporate control, changes in
ownership structure - exchange offers, share re-purchase, management
buyouts, financial restricting - corporate restricting in India.

Books Recommended
 1. Business policy and Strategic Management: Azhar Kazmi

 2. Business policy and Strategic Management: L M Prasad
 3. Strategic Management: Francis Cherunillam
 4. Strategic Management Theory: Hill & Jones

STRATEGY
Strategy- strategia(Greek)- Generalship
in military services
It is a plan of action used in the
corporate field
Definitions :
Strategy is a unified, comprehensive &
integrated plan designed to assure that
the basic objectives are achieved-
William F. Glueck

Strategy means deciding the basic
mission of a company, the objectives
which it seeks to achieve and the
policies governing the use of resources
at the disposal of the firm to achieve its
objectives.
George A. Steiner

Strategy is the determination of the
basic long term purpose and objectives
of an enterprise and the adoption of
courses of action and allocation of
resources necessary for carrying out
these goals.
Alfred D. Chandler

Nature of strategy
1. Provides structure
2. Integrated approach
3. Relates an organisation with the envt.
4. Set of actions
5. Future oriented
6. Combination of internal & external
factors
7. System oriented
8. Involves contradictory actions
Importance of strategy
1. Provides direction
2. Facilitates decision making
3. Ensures proper allocation of resources
4. Synchronises activities
5. Improves communication &
commitment
6. Enable comparison of alternative
actions
7. Helps accomplishing goals

Strategy formation Process
1. Organisational mission & objectives
2. Environmental analysis
3. Corporate analysis
4. Identification of strategic alternatives
5. Selection of best alternative
6. Choice of strategy
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APPROACHES TO STRATEGY MAKING
1. Autocratic approach
2. Transformational approach
3. Rational approach
4. Learning approach
5. Political approach

STRATEGIC MANAGEMENT(SM)
SM is a stream of decisions and actions,
which leads to the development of an
effective strategy/strategiesto help
achieve corporate objectives.
- Glueck

Characteristics of Strategic
Management
 SM is a decision-making process that is depicted by
following features:
1. Long-term issues
2. Competitive advantage
3. Impact on operations
4. Uncertain and future-oriented
5. Complex
6. Organisation wide
7. Long-term implications
8. Facilitates strategy implementation

SM MODEL- WHEELEN &
HUNGER
STRATEGY EVALUATIO
ENVIRONME STRATEGY
NTAL FORMULATI N&
IMPLEMEN CONTROL
SCANNING ON
TATION

SM PROCESS
STEPS IN SM PROCESS:
 ENVIRONMENTAL SCANNING
 STRATEGY FORMULATION
 STRATEGY IMPLEMENTATION
 EVALUATION & CONTROL

1. ENVIRONMENTAL SCANNING
It is the monitoring, evaluating and
disseminating of the information from
the external and internal environments
to key people within the corporation. Its
purpose is to identify strategic factors –
those external & internal elements that
will determine the future of the
corporation. The simplest way of doing
this is through SWOT analysis.

I. External environment:
It consists of opportunities and threats that lie outside
the organisation. These are not within the control of the
organisation
II. Internal environment:
Strengths and weaknesses that are within the control of
the organisation form the internal environment and it is
under the control of the firm. They include the firm’s
structure, culture and resources. Key strengths form a
set of core competencies that the corporation can use to
gain competitive advantage.

2. Strategy Formulation
This involves forming long term organisational plans that
would assist in carrying out organisational activities in the
best possible way.
This involves developing corporate vision, mission, setting
realistic objectives, formulating strategies and establishing
policy guidelines, etc.

3.Strategy implementation
Ensure effective implementation of
strategies formulated.
They are implemented with the help of
budgets, programmes and procedures.
It may also result in modifying
organisation’s culture, structure or
management system.

4. Strategy evaluation & control
Strategy has to be evaluated on a
regular basis. Whole procedure has to
be monitored. Performance measures
are used as a base for evaluation.
Control should be imposed in a manner
that it produces the intended remedial
action.
Successful evaluation of the strategy is
based on a suitable and prompt
feedback.

Chapter:
Strategic
Leadership:
Managing the
Strategy-
Making
Process for
Competitive
Advantage
Why do some organizations
succeed while others fail?
Strategy is a set of related actions that managers
take to increase their company’s performance.
 Strategic Leadership
• Task of most effectively managing a
company’s strategy-making process
 Strategy Formulation
• Task of determining and selecting strategies
 Strategy Implementation
• Task of putting strategies into action to improve a
company’s efficiency and effectiveness
Competitive Advantage
Results when a company’s strategies lead to
superior performance compared to competitors
Company’s Business Model
Management’s model of how strategy will allow
the company to gain competitive advantage
and achieve superior profitability
A business model encompasses how the company will:
• Select its customers • Deliver those goods and
• Define and differentiate services to the market
its product offerings • Organize activities within
• Create value for its the company
customers • Configure its resources
• Acquire and keep • Achieve and sustain a
customers high level of profitability
• Produce goods or • Grow the business over
services time
Performance in Nonprofit
Enterprises
Nonprofit entities such as government
agencies, universities, and charities:
• Are not in business to make a profit
• Should use their resources efficiently
and effectively
• Set performance goals unique to the
organization
• Set strategies to achieve goals and compete
with other nonprofits for scarce resources
A successful strategy gives potential
donors a compelling message as to
why they should contribute.
The Five Steps of the
Strategy Making Process
 Select the corporate vision, mission, and values and the
major corporate goals and objectives.
 Analyze the external competitive environment to identify
opportunities and threats.
 Analyze the organization’s internal environment to identify
its strengths and weaknesses.
 Select strategies that:
• Build on the organization’s strengths and correct its weaknesses – in
order to take advantage of external opportunities and counter external
threats
• Are consistent with organization’s vision, mission, and values and major
goals and objectives
• Are congruent and constitute a viable business model
 Implement the strategies.
strat

Strategic Managers
 Corporate Level Managers
• Oversee the development of strategies for the
whole organization
• The CEO is the principle general manager who
consults with other senior executives
 General Managers
• Responsible for overall company, business
unit, or divisional performance
 Functional Managers
• Responsible for supervising a particular task
or operation
e.g. marketing, operations, accounting, human resources
Levels of Strategic Management
Figure 1.3

 Crafting the Organization’s
Mission Statement
Provides a framework or context within
which strategies are formulated, including:
 Mission –
The reason for existence – what an organization does
 Vision –
A statement of some desired future state
 Values –
A statement of key values that an organization is
committed to
 Major Goals –
The measurable desired future state that an
organization attempts to realize
The Mission
The mission is a statement of a company’s
raison d’etre, its reason for existence today.
 What is it that the company does?
 What is the companies business?
• Who is being satisfied
(what customer groups)?
• What is being satisfied
(what customer needs)?
• How customer needs are being satisfied
(by what skills, knowledge, or distinctive competencies)?
A company’s mission is best approached from
a customer-oriented business definition.
The Mission
Customer-Oriented Examples
The mission of Kodak is to provide “customers
with the solutions they need to capture, store,
process, output, and communicate images –
anywhere, anytime.”
Ford Motor Company describes itself as a

company that is “passionately committed to
providing personal mobility for people around
the world….We anticipate consumer need and
deliver outstanding produces and services that
improve people’s lives.”
Abell’s Framework
for Defining the Business
Figure 1.5
Source: D. F. Abell, Defining the Business: The Starting Point of

Strategic Planning (Englewood Cliffs, Prentice Hall, 1980), p. 7.

The Vision
What would the company like to achieve?
A good vision is meant to stretch a company by
articulating an ambitious but attainable future state.
The vision of Ford is “to become the world’s

leading consumer company for automotive
products and services.”
Nokia is the world’s largest manufacturer of

mobile phones and operates with a simple but
powerful vision: “If it can go mobile, it will!”
Values
The values of a company should state:
 How managers and employees should
conduct themselves
 How they should do business
 What kind of organization they need to build
to help achieve the company’s mission
 Organizational culture
• The set of values, norms, and standards that control how
employees work to achieve an organization’s mission and
goals
• Often seen as an important source of competitive advantage
In high-performance organizations, values

respect the interests of key stakeholders.
Values at Nucor
 “Management is obligated to manage Nucor in such a

way that employees will have the opportunity to earn
according to their productivity.”
 “Employees should be able to feel confident that if
they do their jobs properly, they will have a job
tomorrow.”
 “Employees have the right to be treated fairly and
must believe that they will be.”
 “Employees must have an avenue of appeal when
they believe they are being treated unfairly.”
At Nucor, values emphasizing pay for performance, job
security, and fair treatment for employees help to create
an atmosphere that leads to high employee productivity.
 External Analysis
Purpose is to identify the strategic opportunities and
threats in the organization’s operating environment
that will affect how it pursues its mission.
External Analysis requires an assessment of:
 Industry environment in which company operates
• Competitive structure of industry
• Competitive position of the company
• Competitiveness and position of major rivals
 The country or national environments
in which company competes
 The wider socioeconomic or macroenvironment
that may affect the company and its industry
• Social • Legal • Technological
• Government • International
 Internal Analysis
Purpose is to pinpoint the strengths and weaknesses
of the organization. Strengths lead to superior
performance and weaknesses to inferior performance.
Internal analysis includes an assessment of:
 Quantity and quality of a
company’s resources and
capabilities
 Ways of building unique
skills and company-specific
or distinctive competencies
Building & sustaining a competitive advantage
requires a company to achieve superior:
• Efficiency • Innovations
• Quality • Responsiveness to customers
 Selecting Strategies: SWOT
Analysis and Business Model
 SWOT analyses help to identify strategies that align
a company’s resources and capabilities to its
environment – in order to create and sustain a
competitive advantage.
 Functional strategies should be consistent with and
support the company’s business level and global
strategies.
• Functional-level strategy – directed at operational effectiveness
• Business-level strategy – businesses’ overall competitive themes
• Global strategy – expand, grow and prosper at a global level
• Corporate-level strategy – to maximize profitability and profit growth
When taken together, the various strategies

pursued by a company must lead to a
viable business model.
 Strategy Implementation
 After choosing a set of congruent strategies to
achieve competitive advantage, managers must
put those strategies into action:
• Implementation and execution of the strategic plans
• Design of the best organization structure
• Consistency of strategy with company culture
• Control systems to measure and monitor progress
• Governance systems for legal and ethical compliance
• Consistency with maximizing profit and profit growth
 The feedback loop – strategic planning is ongoing
• Managers must monitor strategy execution:
» To determine if strategic goals and objectives are being achieved
» To evaluate to what extent competitive advantage is being
created and sustained
• Managers must monitor and reevaluate for the next round of
strategy formulation and implementation
Planned, Deliberate, Emergent
and Realized Strategies
Figure 1.6
Source: Adapted from H. Mintzberg and

A. McGugh, Administrative Science
Quarterly, Vol. 30. No. 2, June 1985.
Intended and Emergent Strategies
 Intended or Planned Strategies
• Strategies an organization plans to put into action
• Typically the result of a formal planning process
• Unrealized strategies are the result of unprecedented
changes and unplanned events after the formal planning is
completed
 Emergent Strategies
• Unplanned responses to unforeseen circumstances
• Serendipitous discoveries and events may emerge that can
open up new unplanned opportunities
• Must assess whether the emergent strategy fits the
company’s needs and capabilities
 Realized Strategies
• The product of whatever intended strategies are actually put
into action and of any emergent strategies that evolve
Strategic Planning in Practice
Recent studies suggest that formal planning does have a
positive impact on company performance – and should
include the current and future competitive environments.
 Scenario Planning
• Recognizes that the future is inherently unpredictable
• Develops strategies for possible future scenarios
 Decentralized Planning
• Involves the functional managers
• Avoids the ivory tower approach
• Perceives procedural justice in the decision making
 Strategic Intent
• Avoids the strategic fit model, which focuses too much on the
current state
• Sets ambitious vision and goals that stretch a company and then
finds ways to build to attain those goals

Strategic Leadership
Good leaders of the strategy-making process
have a number of key attributes:
 Vision, eloquence, and consistency
 Commitment
 Being well informed
 Willingness to delegate and empower
 The astute use of power
 Emotional intelligence
• Self-awareness
• Self-regulation
• Motivation
• Empathy
• Social skills

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 1. Introduction to Business Policy:

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 1. Business policy and Strategic Management: Azhar Kazmi

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Ford Motor Company describes itself as a

Source: D. F. Abell, Defining the Business: The Starting Point of

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The vision of Ford is “to become the world’s

Nokia is the world’s largest manufacturer of

In high-performance organizations, values

 “Management is obligated to manage Nucor in such a

When taken together, the various strategies

Source: Adapted from H. Mintzberg and

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