STRATEGIC

MANAGEMENT

BY
MUSHTAQ AHMED
MBA,MHRM,M.PHIL,(Ph.D)
STRATEGY - ORIGIN

The word strategy has its origin from the Greek

word strategia meaning Military Commander. In
the ancient days battles were fought over land.
In contrast, today's battles are fought over
markets.
 In the ancient days battles were won not by
virtue of size, efficiency, adaptive ability; but
by virtue of their strategies.
 Even in today’s markets, battles fought on
the market front are won by companies by
virtue of their strategies, which has its origin
in the battles fought in the ancient days.
Compiled By Mushtaq Ahmed
STRATEGY - DEFINITION

Strategy is all about making trade-offs between what to

do and more importantly what not to do; consciously
choosing to differentiate. It reflects a congruence between
external opportunities and internal capabilities. Types of
strategies -
 Corporate Strategies – It is all about making choices
across various businesses and allocating resources
among them.
 Business Strategies – It is all about developing and
leveraging competitive advantage.
 Functional Strategies – It is all about doing things
differently, rather than doing different things.

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EVOLUTION OF MANAGEMENT

As Peter Drucker refers to it, a radical change in the

business environment brings about discontinuity. The
things happening around the firm are totally
disconnected from the past. It leads to a paradigm shift.
The first major discontinuity in the history of global
business environment – Industrial Revolution.
 Mass Production
 Complicated Processes Organisation Size
 Complex Structures
Evolving of an emerging paradigm – Survival of the fittest
(Fayol & Taylor, 1907).

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EVOLUTION OF STRATEGIC MANAGEMENT

The second major discontinuity in the history of global

economic environment – World War II.
 Global market place.
 Affluence of the new customer.
 Homogeneous to heterogeneous products.
 Changes in the technology fore-front.
From uniform performance, performance across firms
became differentiated. The question of outperforming the
benchmark became the new buzzword.
Survival of the most adaptable becomes a new management
paradigm (Ansoff, 1960).

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STRATEGIC MANAGEMENT - FRAMEWORK

Economic
al
Fit Strategic Fit

Technological
Management
Finance
Productio

Fit
Strategic
Political

HR
PoliticalIntent
Strategic Fit
Political
Marketin
n

g
Fit Manageme Fit
nt
Social &
Cultural
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 STRATEGIC INTENT - HIERARCHY

Visio
Integrativ n Single
e Mission
Dominant
Objective
Do

s
m

g ic
in

Goal Man
an

Specifi

Lo
s y
t

c
Plans

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SOME PARALLELS

Japan’s attack on Pearl Harbour

 Strategy: Attack where it hurts the most.
 Toyota’s entry in the US challenging GM and Ford.

US attack of Morocco to capture Germany

 Strategy: Pin-hole strategy
 Wal-Mart challenging Sears by first entering small
towns.
Battle of Moses and Ramases II
 Strategy: Survival of the fittest
 Jack Welch’s ruthless downsizing of GE.

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SOME MORE PARALLELS …………

Caesar, Genghis Khan, Alexander

 Strategy: Concentration of resources.
 Nokia challenging Motorola.
Allied Forces Vs Germany (World War II)
 Strategy: Forging alliances.
 Yahoo and Microsoft challenging Google.
Napoleon’s attack on Russia
 Strategy: Waiting for the right time.
 Reliance’s entry into telecom.
Cold War: US Vs USSR
 Strategy: Containment.
 Tata’s during the 80’s vis-à-vis Reliance.

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Strategy Concept
Levels
Where to
compete? C o rp o ra te
S tra te g y

How to B u s in e s s
S tra te g y

compete?
F u n c t io n a l
S tra te g y

How to C h o ic e o f P r o d u c ts
C h o ic e o f M a r k e ts
contribute? C h o ic e o f C o m p e tito rs

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Strategy Concept
Sources
M IS S IO N

V IS IO N G O A LS

O B J E C T IV E S

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Strategy Concept
Components
Provide broad direction
Respond to needs of stakeholders
Deal with long term

Define intended strategies

Developed through planning
Derive from formal analysis

Indicate realized strategies

Result of planning & adaptation
Reflect incremental moves

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VISION

It is a dream (not a forecast) about, what the company

wants to become in the foreseeable future. It is a
combination of three basic elements –
 An organisations fundamental reason for existence;
beyond just making money.
 It stands for the unchanging core values of the
company.
 It represents the company’s aspirations. It should be
audacious, but achievable.

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VISION - CHARACTERISTICS

Reliance – Where growth is a way of life.

 Clarity – Vividly descriptive image of what the company
wants to be known for in the future.
 Reachable – It should be within a reasonable target in the
known future.
 Brevity – It should be short, clear, and preferably
memorisable.
 Empathy – It should reflect the company’s beliefs to which
it is sensitive.
 Sharing – The company across all hierarchies should have
faith in it.
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VISION - ADVANTAGES

To stay focused on the right track.

To prevent the fall in a activity trap.
It gives enlightment.
It gives the impression of a forward-looking organisation.
It provides a holistic picture.
It gives a shared platform.
It fosters risk taking and experimentation.
It lends integrity and genuineness.

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MISSION

It is a broad and enduring statement that distinguishes it from

another organisation. It helps identify the scope of the
organisation in terms of its products and markets. It also
serves as a road–map to reach the vision; its reason for
existence.
 What business are we in?
 It reflects the organisations image and identity.
 Its objective should be broad and enduring.
 It should reflect current realities.
 It should be flexible an dynamic.
 It is a philosophy.

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MISSION – SOME IDEAS

Reliance – We are in the business of integration.

 We do not offer clothes,
…………………. We offer comfort.
 We do not offer engine oils,
…………………. We offer liquid engineering.
 We do not offer software's,
…………………. We offer solutions.
 We do not offer insurance,
…………………. We offer security.
 We do not offer steel,
…………………. We offer strength.

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GOALS & OBJECTIVES

Reliance – We want to become a Rs.1,00,000 crore

company by the year 2010. It reflects the result that an
organisation expects to achieve in the distant future.
 It adds legitimacy to the mission.
 It lends direction – time frame.
 It provides a benchmark for evaluation.
 It involves all the SBU’s.
 It motivates the top management to identify the –
key success factors.

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PLANS

Reliance – Desire to invest Rs.25000 crore in telecom business (circa

1999). It is the process of garnering necessary inputs, coordinating
appropriate technologies, and gaining access to desired markets in the near
future.
 Backward integrate process technologies.
 Compress project times.
 Leverage economies of size and scale.
 Use price-elasticity to break market barriers.
 Acquire a market share of indomitable position.

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STRATEGIC DRIFT

Historical studies have shown that most organisations

tend to continue with their existing strategies. Therefore,
past strategies tend to have a bearing on future strategies.
This tendency to restore continuity is known as inertia
(resistance to change).
When changes in the environment is incremental,
equilibrium is maintained. However, radical change may
lead to disequilibrium. This state of affairs is known as
strategic drift.
In such a context strategies lose touch with emerging
environment.

Compiled By Mushtaq Ahmed