1737bconcept of strategy strategic management session 2 ver2

8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2

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Name of Institution

Amity International Business SchoolIMBA Semester III

International Strategic Management(Session 2)

CONCEPT OF STRATEGY AND STRATEGICMANAGEMENT

EVOLUTION OF STRATEGIC MANAGEMENT

Cmde R Bhandari (retd)

Tanvir Kaur



Name of InstitutionWH AT IS STRATEGY?

A strategy is a fundamental pattern of present and plannedobjectives, resource deployments, and interactions of anorganization with markets, competitors, and other environmentalfactors, to attain defined goals.

STRATEGY SHOULD SPECIFY :1.What (objectives / goals), and by When

2.Where (which industries/products/markets?),

3.How (allocation of resources and activities to gain competitiveadvantage).

Strategic Management ProcessThe process by which managers choose a set of strategies that willenable their company to achieve superior performance.



Name of InstitutionINTEGRATED VIEW OFSTRATGEY

FIT STRATEGY

STRETCH STRATEGY FACTORS

1. Marketing

2. Finance

3. Operations

4. R&D

5. Technology

ENVIRONMENT



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STRATEGIC MANAGEMENT MODEL

Company Mission And

Social ResponsibilityExternal environment

RemoteIndustry (global & domestic)operating

Internal analysis

Strategic analysis and choice

Long term objectives Generic & grand strategies

Short-term objectives;

reward systemFunctional tactics

Policies that

empower action

Restructuring, reengineering,and refocusing the organization

Strategic control andcontinuous improvement

Possible?

Desired?

Minor impact

Major impact

FE

EDBACK

FE

EDBAC

K



Name of InstitutionCOMPONENTS OF STRATEGICMANAGEMENT

A GOOD STRATEGY CONTAINS

1.SCOPE: Should reflect the firm s purpose or mission.

2 .GOALS AND OBJECTIVES:Desired levels of accomplishment on one or more dimensionsof performance i.e volume growth, profitability, ROI, market share etc over specifiedtime periods; for each business/product and for the organization.

3.RESOURCE DEPLOYMENT:How the resources are to be obtained and allocated, acrossbusinesses, product-markets, functional departments, and activities within each business orproduct- market.

4.SUSTAINABLE COMPETITIVE ADVANTAGE:Market opportunities in each business andproduct-market and the company s distinct competencies or strengths relative to itscompetitors.

5.SYNERGY: The total performance of the related businesses to be greater than it wouldotherwise be: The whole becomes greater than the sum of its parts.



Name of InstitutionTH E STRATEGIC POSITIONTH E STRATEGIC POSITION :The impact on strategy of the external environment, internal

resources and competences, and the expectations and influences of stakeholders.

THE STRATEGICPOSITION

STRATEGICCHOICES

STRATEGYIN ACTION

Resources &Competences

Expectations& Purpose

TheEnvironment

Corporate ±level

strategies

Developmentdirections &

methods

Business-level

strategies

Organising

Enabling

Managingchange

IMPACT ON STAKEH OLDERS



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STRATEGIC DECISIONMAKING

Strategic Decision Making Requires:

1. Setting goals : Challenging but achievable. Stretch or fit alternatives!2 . Rationality : Exercising best choice among alternatives3. Creativity: Creative and original decisions through brainstorming4. Variability/ flexibility : Every situation is unique, no standard solutions5. Demographic factors : Age. Education, Intelligence, Values Cognition. Risk taking and

creativity of market and work force6. Group decision making : Participative approach and buy in

Dimensions Of Strategic Decisions

1 . Require top management decisions and commitment.2. Require large amount of firm s resources3. Affect the firm s long tem prosperity.4. Are future oriented .5. Usually have Multifunctional or Multibusiness consequences .6. Consider the firm s external environment.



Name of InstitutionTH E LEADING EDGE OFSTRATEGY

ASPECT OF STRATEGY ENVIRONMENT - LEDFIT

RESOURCE - LED STRETCH

Underlying basis of strategy

Strategic fit betweenmarket opportunitiesand organisation sresources

Leverage of resources toimprove value formoney

Competitive advantagethrough

Correct positioningDifferentiation directedby market

Differentiation based oncompetencies suited toor creating market need

How small playerssurvive

Find and defend a niche Portfolio of competences

Risk- reduction Portfolio of products-businesses

Portfolio of competences

Corporate centre invests

in

Strategies of business

units or subsidiaries

Core competences



Name of InstitutionBENEFITS/RISKS OFSTRATEGIC MANAGEMENT

Benefits1 . Enhance problem solving abilities.2. Group-think results in best choice

among alternatives.

3. Employee involvement informulation improvesunderstanding of productivity-reward relationship and heightenstheir motivation.

4. Gaps and overlaps among

individuals and groups are reducedas participation in strategyformulation clarifies roles inimplementation

5. Reduces resistance to change

Risks1 . Time spent on thinking through and

deploying strategy may affect theoperational focus of linemanagement.

2. If the formulators of strategy arenot involved in implementation,they may shirk responsibility for thedecisions.

3. Strategic managers must be trainedto anticipate and respond to thedisappointment of participatingsubordinates over unattainedexpectations.

4. Risk anticipation, mitigation andresidual impact may curb boldnessamong line managers



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EVOLUTION OF STRATEGY



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STAGE I:BASIC FINANCIAL PLANNING: Better operational control bytrying to meet budget

STAGE II :FORECAST BASED PLANNING: Improving planning for growthby trying to predict the future beyond next year.

STAGE III :EXTERNALLY ORIENTED PLANNING( STRATEGIC PLANNING ) :improving responsiveness to markets and competition by trying to thinkstrategically.

STAGE IV :STRATEGIC MANAGEMENT: Seeking a competitive advantageby also considering implementation and evaluation and control when

formulating strategy.STAGE V : INTERNATIONAL / GLOBAL STRATEGIC MANAGEMENT:Managing a worldwide competitive advantage

STRATEGIC PLANNING PROCESSH AS EVOLVEDTH ROUGH VARIOUS STAGES



Name of InstitutionSTRATEGIC DECISION MAKING

Cognitive Biases as Obstacles

1 .Fall back on rule of thumb2.Prior Hypothesis bias --- Decisions based on beliefs rather than facts!3. Escalating Commitment --- pump in more resources to achieve success, evenif failure is evident.4. Reasoning by Analogy --- using simple analogies which may not be valid in thenew context.5.Representativeness adopting generalization from a small sample or even asingle incident --- eg all dotcoms will succeed like Amazon or Yahoo.

6.Availability Error Estimating the probability of error or success based on easeof visualising outcome.



Name of InstitutionCURRENT APPROACH

Strategy must bear in mind:

1 .Ideas and innovations..2.Encourage analytical thinking,3. Older Hands tend to over emphasize the risks of social, political and culturalconstraints.4.Analytic and evaluative techniques to establish direction and planimplementation, eg:

Devils advocacy --- review of both the plan and a critical analysis of theplan

Dialectic Enquiry --- generation of plan (thesis) and counterplan (antithesis)with debate over same.



Name of InstitutionREFERENCES

1 . Johnson & Scholes, 2004, Exploring Corporate Strategy,Pearson Higher Education Ch 1 p 3 - 36

2. Pearce John A & Robinson Richard B, Strategic Management:Formulation, Implementation and Control, McGraw Hill, 2005Ch 1 p 2 22

3. Fred R David, Strategic management, Concepts and Cases,Prentice Hall, 2005 Ch 1p 2 - 47

4. www.quickmba.com5. http://papers.ssrn.com/sol3/results.cfm6. http://www.qdistrategies.com/growth.php7. Opening Case study IKEA, Kamel Mellahi & J George Frynas,

Global Strategic Management, Oxford University Press p 4 -58. Current articles from McKinsey and others as downloaded

prior to the sessions

1737bconcept of strategy strategic management session 2 ver2

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