Introduction to Strategic Management

Course Objectives• Explain What is Strategic Management• Explain What is a Strategy• Describe the Strategy Statement and its Components• Explain the Steps of Strategic Management Process• Describe the Components of Strategic Management Process• Differentiate between Strategy Formulation and Strategy Implementation• Differentiate between Strategic, Administrative and Operational Decisions• Describe the Qualities of a Strategic Leader• Explain What is a Business Policy• Describe the Structure of BCG Matrix• Describe the Factors of SWOT Analysis• Explain Porter’s Five Forces Model of Competition• Explain What is Corporate Governance• Explain What is Business Ethics• Describe the Core Competency Theory of Strategy

Introduction

• Helium Inc. is a leading manufacturer of electrical safety equipments such as Miniature Circuit Breakers (MCBs), Molded Case Circuit Breaker (MCCBs) etc. for the past six decades.

• It has carved a niche for itself in this area and captures the largest market share in its industry and segment.

Introduction

• However, now Helium wants to venture into the mobile and Smartphone market.

• It has decided to launch a range of mobiles and Smartphone that will cater to the various segments of the society.

Introduction

• What do you think Helium should do to become successful in its venture?

• Yes, a careful strategy planning will help Helium recognize its position in the market, its competitors, and challenges etc. to help it become successful in its new venture.

Let us look at each in detail.

Strategy Statement and its Components

Mission

Strategic Intent

Statement of MissionVision

Statement

Goals

and

Objec

tives

Goals and Objectives

Mission

Goals

and

Objec

tives

Goals:A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain its mission or vision. Goals make mission more prominent and concrete. They co-ordinate and integrate various functional and departmental areas in an organization.

Objectives:Objectives are defined as goals that organization wants to achieve over a period of time. These are the foundation of planning. Policies are developed in an organization so as to achieve these objectives. Formulation of objectives is the task of top level management.

The following are the features of well defined goals:

• They are precise and measurable.

• They look after critical and significant issues.

• They are realistic and challenging.

• They must be achieved within a specific time frame.

• They include both financial as well as non-financial components.

Real Life Example

Vision

Vision:

“To create exciting new digital entertainment experiences for consumers by bringing together cutting-edge products with latest generation content and services.”

VisionVision

Real Life Example

Mission

Mission:

“Sony is committed to developing a wide range of innovative products and multimedia services that challenge the way consumers’ access and enjoy digital entertainment. By ensuring synergy between businesses within the organization, Sony is constantly striving to create exciting new worlds of entertainment that can be experienced on a variety of different products.”

Components of Strategic Management ProcessThe image given below shows the components of the Strategic Management Process.

Environmental

ScanningStrategy

Formulation

Strategy

ImplementationStrategy

Evaluation

Let us look at each component in detail.

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Real Life Example

Globus Inc. is a leading manufacturer of economy class cars.

It has recently decided to launch

a new car ‘Flash’ which will be a

low-priced car catering to the

low-budget consumers.

However, monitoring and

analysis of the external

environment indicates that

original forecasts of the

prices of the raw materials

that are involved in making

the car are no more credible.

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Real Life Example

The prices of many of the raw materials are likely to go up by at least 15%.

How do you think these changes

affect the launch of ‘Flash’ by

Globus?

Such analysis of the external

environment helps Globus

carry out a more focused

scanning, forecasting and

analysis to create a more

trustworthy prediction about

the input costs.

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Real Life Example

Then, based on the input costs depicted, Globus can decide to either to raise the cost price of the car or to make any alterations in the design or features offered to keep the price same.

Thus, you can see that analysis

of the environment plays a key

role in formulating strategies

that help make an organization

successful.

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Strategy Formulation Process

The following are the six steps of strategy formulation process:

Let’s look at each in detail.

Setti

ng

Org

aniz

ation

s’

obje

ctive

s

Eval

uatin

g th

e O

rgan

izati

onal

En

viro

nmen

t

Setti

ng

Qua

ntita

tive

Targ

ets

Aim

ing

in

cont

ext w

ith th

e di

visi

onal

pla

ns

Perf

orm

ance

An

alys

is

Choi

ce o

f St

rate

gy

Did You Know?

People learn more from their failures than from their success. Hence, one of the best approaches to avoid copying best practices is to create a process involving frank discussion about worst practices. This will help create very effective strategies because people debate on the merits of different examples of good practice, scout the organizations for promising practices that may already be bubbling up and then develop a view of what next practice should be.

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