Strategic Management

An Overview

Strategic Management
Most of the time the management is concerned with managing current operations. There is a need for looking beyond the current operations and think about future course of directions in which enterprise will move. Strategic Management addresses this need.

Need for Strategic Management

Business environmenteconomic, technological, political etc go on changing. Changes in environment can throw opportunities and threats. Business has to meet these changes effectively. The pace of change is accelerating.

Increasing Relevance
Acceleration of technological change Intensification of intra-industry and inter-industry competition Globalisation Increasing share of discretionary spending by consumers Multiple demands on industry

Essence?

Essence
Essence

of Strategic Management exercise is to secure and maintain competitive edge over the close competitor/s.

Three Basic Questions

Where

are we now? do we want to

Where

go?
How

will we get there?

Six tasks of strategic management

Describing business, stating mission and developing vision statement Scouting for opportunities and threats Setting measurable objectives Crafting strategy Implementing and executing strategy Evaluating performance, assessing new developments and initiating required changes.

Importance
Empirical evidence confirms of a positive correlation between corporate performance and quality of its strategic management. Choice not between having or not having strategic management, but between good explicit and bad explicit/implicit strategic management.

SM Concept
Strategic management/ planning is essentially a blue print of whole gamut of broad actions to get from here to there. The focus is to get as efficiently as possible and gain a sustainable edge over competitors.

An illustration
A single unit,leading hotel strong in operating skills but weak on funds. Perceived need/opportunity for growing into a chain of hotels. Strategy acquire, merge, build alliances, with people who have properties/funds. Decided on alliances. Identified possible partners Entered into alliances

Illustration Contd..
Built up people resources in advance taking hit on profits Developed pool of people, architects, contractors, interior decorators, who understood hotel needs and were adept at modifying existing properties. Put in place technology of managing chain. Blossomed into a large countrywide chain in 5 years.

The Broad Frame

Vision and Mission provide the broad frame. Vision is what we would like to become- a dream an ambition. Mission is what we would be doing. Many times these are implicit. They need to be articulated and communicated. Objective , target are more proximate in time.

Strategic Management Process

Understanding the current status (Where are we?) Analysing environment for identifying opportunities and threats (what is going out there?) Deciding objectives (Where Do we want to go?) Analysis of internal Organisation (What do we have?) Formulation of possible strategies (What can be done?) Selection (what shall we do?) Implement (what? when? Who? how?)

SM Process contd..
Selection of strategies (What will we do?) Implementation of strategies (What actions, who will do what, when, how and with what resources?) Monitoring (What is happening? Making midcourse changes (What will be done,by whom when how?)

Revisiting Illustration

The

story was of Taj group of hotels. Their vision was to establish a world class hotel. Their mission was to render unmatched level of service.

SM process contd..

Strategic

management process is broadly but necessarily not strictly sequential. It is interactive It is collaborative A group process

Environmental Analysis

Environment is the sum total factors impacting enterprise. Some of these are Technology Demography Economy Government policy Essentially understanding what is going on out there Relating them to the business Working out implicationsopportunities (O)/threats(T).

Teasers
What

do increasing longevity,and greater social security mean to pharma industry? What opportunities are created by increasing number of working couples and greater commuting?

EA - Illustrations
Demographics Increased longevity Extension of social security Technology Stem-cell research Bt drugs Economic Improvement in living conditions Drug Price control

Enterprise Analysis
Understanding what is the business and what are the critical factors for that business. Comparing the enterprise with competitors to understand the strengths (S) and weaknesses (W) of the enterprise These may relate to the areas of marketing, finance, production, human skills etc.

Strategy Formulation

Strategic planning is a blue print of broad actions of how(strategy) to get there (mission/objectives) from here (current state). Answers the question how do we go from where we are to where we want to?

Some strategies
Expansion Contraction/exit Vertical integration Forward Backward Diversification Related Unrelated.

Monitoring
Monitoring means overseeing the direction and the progress of the events to check whether they are broadly in line with what was planned. If not, the significant deviations be analysed and corrective actions may be taken.

Implementation

Having decided objectives, and strategy the management has to develop specific structure, systems, programmes and policies. It is useful to spell out major assumptions. Working out details in advance saves from many future problems/ hiccups.

An illustration

A leading hotel perceived opportunity for growing into a chain of hotel. Strong in operating skills but weak on funds. Strategy -build alliances with people who have properties. Developed pool of people, architects, contractors, interior decorators, who understood hotel needs. Blossomed into a large countrywide chain in 5 years.

SM ? Not For Me

Corporate strategy

Understanding communicating Implementing Providing feedback Scanning competitive environment

Personal

Making self swot/ client swot Developing personal strategy

Strategic Management

An Overview

Need for Strategic Management

Business environmenteconomic, technological, political,etc go on changing. The pace of change is accelerating. Changes in environment can throw opportunities and threats. Business has to meet these changes effectively.

Strategic Management

Most of the time the management is concerned with managing current operations. There is a need for looking beyond the current operations and think about future course of directions in which enterprise will move.this is what strategic management does.

Increasing Relevance

Acceleration of technological change Intensification of intra-industry and inter-industry competition Globalisation Increasing share of discretionary spending by consumers Multiple demands on industry

Importance

Empirical evidence suggests positive correlation between corporate performance and quality of strategic management. Choice not between having or not having strategic management, but between good explicit and bad implicit strategic management.

SM Concept

Strategic management/ planning is essentially a blue print of whole gamut of broad actions to get from here to there. Answers the question how do we get from where we are to where we want to go. The focus is to get as efficiently as possible a sustainable edge over competitors

Strategic Management Process

Deciding objectives (Where Do we want to go?) Analysis of environment (What is going out there?) Analysis of internal Organisation (What do we have?) Formulation of possible strategies (What can be done?)

SM Process contd..

Selection of strategies (What will we do?) Implementation of strategies (What actions, who will do what, when, how and with what resources?) Monitoring (What is happening?) Making midcourse changes (What will be done, by whom, when, how?)

Environmental Analysis

Environment is the sum total factors impacting enterprise. Some of these are

Technology Demography Economy Government policy

Essentially understanding what is going on out there Relating them to the business Working out implications- opportunities (O)/threats(T).

Teasers

What do increasing longevity,and greater social security mean to pharma industry? What opportunities are created by increasing number of working couples and greater commuting?

Enterprise Analysis

Understanding what is the business and what are the critical factors for that business. Comparing the enterprise with competitors to understand the strengths (S) and weaknesses (W) of the enterprise These may relate to the areas of marketing, finance, production, human skills etc.

Strategy Formulation

Strategic planning is a blue print of broad actions of how(strategy) to get there (mission/objectives) from here (current state). Answers the question how do we go from where we are to where we want to?

Some strategies

Expansion Contraction/exit Vertical integration

Forward Backward

Diversification

Related Unrelated.

Monitoring

Monitoring means overseeing the direction and the progress of the events to check whether they are broadly in line with what was planned. If not, the significant deviations be analysed and corrective actions may be taken.

Implementation

Having decided objectives, and strategy the management has to develop specific structure, systems, programmes and policies. It is useful to spell out major assumptions. Working out details in advance saves from many future problems/ hiccups.