2. Strategy
◦ The word “strategy” is derived from the Greek word “Strategia” which means generalship.
◦ Strategy work as a blue print of an Organization
◦ Defines its Vision , Mission, future course of Action
3. Definition
◦George A. Steiner “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 achieves its objectives
4. According to Alfred D. Chandler :
"Strategy is the determination of the basic long term purpose and objective of an enterprise and the
adopting of course of action and allocation of resources necessary for carrying out these goals".
5. Nature of Strategy
1. Set of Actions
2. Relates an Organization with the Environment
3. Provide Structure
4. Future Oriented
5. Integrated Approach
6. Involves Contradictory Actions
7. Combination of Internal and External Factors
8. System Oriented
6. Importance of Strategy
◦ Ensures Proper Allocation of Resources
◦ Provide Direction
◦ Synchronizes Activities
◦ Facilitates Decision Making
◦ Help Accomplishing Goals
◦ Improve Communication and Commitments
◦ Enables Comparison of Alternative Actions
9. Strategy Formulation Process
◦ Strategy Formulation is an analytical process of selection of the
best suitable course of action to meet the organizational
objectives and vision. It is one of the steps of the strategic
management process. The strategic plan allows an organization to
examine its resources, provides a financial plan and establishes the
most appropriate action plan for increasing profits.
10. Strategy Formulation Process
◦ Organizational Mission and Objectives
◦ Environmental Analysis
◦ Corporate Analysis (SWOT)
◦ Identification of Strategy alternatives
◦ Selection of Best Alternatives
◦ Choice of Strategy
11. Historical Perspective of Strategic
Management
◦Early Period: 400 B.C.
◦Between 1750 and 1850
◦Between 1965 and 1985
◦Present Scenario
16. ◦ Mission and vision statements play three critical roles:
◦ (1) communicate the purpose of the organization to stakeholders,
◦ (2) inform strategy development and
◦ (3) develop the measurable goals and objectives by which to gauge the success of the
organization’s strategy.
17.
18. ◦ Mission
◦The overriding goal of Business.
◦Reason for its existence.
◦Strategic Perspective
◦Vision for the Future.
19. ◦ Objectives of Business
◦Earn Profit
◦Growth and Development.
◦Provide quality goods for growth and protect environment.
25. Globalization and Industry Structure
◦ Globalization has made available a variety of opportunities for developing Nations
◦ Globalized Market ,it is very important to develop an international business strategy
◦ Proposed by YOFFIE which are used for evaluating the structure of any industry.
◦ First Proposition:
Trade Pattern and International advantages of domestically headquartered organization
for domestic environment.
• Second Proposition:
Nature of the global oligopolistic rivalry will decide the strategic decisions made by
multinational firms including location , export.
26. ◦ Third Proposition :
The value of the global value strategy options are directly impacted by these variations
public policy, employment and other non-profit concerns motivate more to the state –owned
enterprises.
◦ Fourth Proposition :
Industries having major economics of scale effects or other market limitations are greatly
affected by the government
Fifth Proposition :
Trade Patterns more likely to be “Sticky” in the Industries where companies have long-
term commitments.
27. Resources
◦ The resources of an organization or person are the materials, money, and other things that they have and
can use in order to function properly.
◦ Tangible Resources are usually physical objects (like equipment and inventory) while intangible
Resources are valuable assets that can't be touched (such as trademarks).
◦ Both tangible and intangible assets have value and can be bought and sold.
◦ It is easier to establish the value of a tangible asset than an intangible asset.
28. Capabilities
◦ Capabilities can be defined as the ability and capacity to utilize the Organizational
Resources in an efficient manner.
Types of Capabilities :
1. Marketing Capabilities
2. Financial Capability
3. Operational Capability
4. HR Capability
5. General Management Capability
6. Information Management Capability
29. Core Competencies
◦ Core competencies are the resources and capabilities that comprise the strategic advantages of a business.
A modern management theory argues that a business must define, cultivate, and exploit its core
competencies in order to succeed against the competition.
◦ Two Tools which help an Organization in Identify and Building its Core Competencies
1. Sustainable Competitive advantages
2. Value Chain Analysis
30. VALUE CHAIN
◦ The term value chain refers to the various business activities and processes involved in creating a product
or performing a service. A value chain can consist of multiple stages of a product or service’s lifecycle,
including research and development, sales, and everything in between.
31. COMPONENTS OF A VALUE CHAIN
◦ According to Porter’s definition, all of the activities that make up a firm's value chain can be split into
two categories that contribute to its margin: primary activities and support activities.
33. ◦ Primary activities are those that go directly into the creation of a product or the execution of a service,
including:
◦ Inbound logistics: Activities related to receiving, warehousing, and inventory management of source
materials and components
◦ Operations: Activities related to turning raw materials and components into a finished product
◦ Outbound logistics: Activities related to distribution, including packaging, sorting, and shipping
◦ Marketing and sales: Activities related to the marketing and sale of a product or service, including
promotion, advertising, and pricing strategy
◦ After-sales services: Activities that take place after a sale has been finalized, including installation,
training, quality assurance, repair, and customer service
34. ◦ Secondary activities help primary activities become more efficient—effectively creating a competitive
advantage—and are broken down into:
◦ Procurement: Activities related to the sourcing of raw materials, components, equipment, and services
◦ Technological development: Activities related to research and development, including product design,
market research, and process development
◦ Human resources management: Activities related to the recruitment, hiring, training, development,
retention, and compensation of employees
◦ Infrastructure: Activities related to the company’s overhead and management, including financing and
planning
35. Value Chain Analysis
◦ Value chain analysis is a means of evaluating each of the activities in a company’s value chain to
understand where opportunities for improvement lie.
◦ Conducting a value chain analysis prompts you to consider how each step adds or subtracts value from
your final product or service. This, in turn, can help you realize some form
1. Cost reduction, by making each activity in the value chain more efficient and, therefore, less
expensive
2. Product differentiation, by investing more time and resources into activities like research and
development, design, or marketing that can help your product stand out of competitive advantage, such as:
36. CONDUCT A VALUE CHAIN ANALYSIS
◦ 1. Identify Value Chain Activities
◦ 2. Determine the Cost and Value of Activities
◦ 3. Identify Opportunities for Competitive Advantage
37. Generic Building Blocks of Competitive
advantage
◦ Increasing Efficiency
◦ Increasing Quality
◦ Increasing Speed, Flexibility and Innovation
◦ Superior Innovation
◦ Increasing Responsiveness to Customers
38. Avoiding Failures and Sustaining
Competitive Advantage
◦ The organisations can be regarded as failure if they stand below average and earn negligible gains or
generally losses. Following are the three major reasons of failure:
◦ Inertia
◦ Changing Organisational Resources
◦ Icarus Paradox
39. Guidelines to Avoid Failure
◦ For the purpose of sustaining the competitive ,advantage, the companies need to emphasize on the four
basic building blocks of the competitive advantage, i.e., efficiency, quality, innovation and customer
responsiveness.
◦ The companies should implement different strategies for developing unique competencies for ensuring
better performance.
40. Distinctive Competence
◦ Distinctive competence refers to a superior characteristic, strength, or quality that distinguishes a
company from its competitors. This distinctive quality can be just about anything—innovation, a skill,
design, technology, name recognition, marketing, workforce, customer satisfaction, or even being first to
market.
◦ Distinctive competence isn’t set in stone, however. Changes and trends in the market will inevitably
impact competencies. As a result, companies that build and reconfigure distinctive competencies are
poised for long-term success in an ever-changing marketplace and world.
41. ◦ Examples of distinctive competence
◦ let’s look at two highly recognizable examples of distinctive competence: amazon and google.
◦ name recognition is an obvious distinctive competence for both companies.
◦ to realize its mission of being “earth’s most customer-centric company,” amazon cultivates distinctive
competencies that create excellent customer experiences, such as fast delivery and superior customer
service. in addition, the company’s distribution and workforce are also distinctive competencies.
◦ in addition to name recognition, google’s status as the most widely recognizable search engine serves as a
distinctive competency. its wide recognition and acceptance with users have, in fact, turned the company
name into a verb (a process called anthimeria).
