Strategic Management, Strategy: Concept, Mintzberg Models of Strategy, Strategic Management: Models, Levels, Process, Benefits, Guidelines for Effective Strategic Management. Strategic Management V/s Operational Management, and Strategic Role of Board of Directors and Top Management.

1. Strategic Management

2. Unit 1
An Overview of strategic management
Megharaja E N

3. What is strategy?

4. Strategy and strategic management
• Strategy is a tactical course of action which is designed to achieve
long term objectives. It is an art and science of planning and most
efficient and effective use in a changing environment.
• Strategy of a business enterprise consists of what management
decides about the future direction and scope of the business. It consists
managerial choice among alternative action programmers, competitive
moves and different business approaches to achieve enterprise
objectives.
• Strategy once formulated has long term implications. It is framed by
top management in an organization. In short, it may be called as the
Game plan of management.

5. Continued….
• Strategic management is the set of managerial decision and action that
determines the long term performance of a corporation it includes
environment scanning (both external and internal), strategy formulation
(strategy or long range planning), strategy implementation, evaluation
and control. The study of strategic management therefore emphasizes the
monitoring and evaluating of external opportunities and threats in lights
of a corporation’s strength and weaknesses.
• Strategic management is the ongoing planning, monitoring, analysis and
assessment of all necessities an organization needs to meet its goals and
objectives. Changes in business environments will require organizations
to constantly assess their strategies for success

6. Definition of Strategy
As per Glueck
Strategy is unified, comprehensive and integrated plan relating the
strategic advantage of the firm to the challenges of the environment. It is
designed to ensure that the basic objectives of the enterprise are
achieved
As per Alfred D Chandler,
Strategy is “Determination of basic long term goals and objectives of an
enterprise and the allocation of resources necessary for carrying out
these goals”

7. Features of Strategy
• Top Management responsibilities
• Allocation of large amount of resources
• Impact on long term prosperity of the firm
• Future oriented
• Multifunctional or multi business consequences
• Consideration of factors in the external environment

8. Mintzberg Model of Strategy
• In 1987, Mintzberg published his first article
on the 5 P's of Strategy. Each of the five P's
represents a distinct approach to strategy.
This includes Plan, Ploy, Pattern, Position
and Perspective. These five elements enable
a company to develop a more successful
strategy

9. Strategy as Plan
In this case, the entire strategy and its planning are done in much in
advance with the long-term and a futuristic approach in mind. Aftermath,
the process is followed by the actual implementation and development of
the strategy.
Strategy as Ploy
Here, the strategy is planned and executed with a specific intention to beat
and outperform the competition in the market gaining the competitive
edge and advantage

10. Strategy as Pattern
In this case, the overall strategy is emerged as a pattern considering the various
internal and external situations rather than being pre-planned in nature.
Strategy as Position
Here, the organizations formulated the strategy to carve a distinctive niche or an
identity in the market through exclusive products or services gaining a
competitive edge in the market and in the minds of the consumers.
Strategy as Perspective
In this case, the strategy is formulated as per the organizational culture and the
way organization views itself.

11. Example of 5 P’s of Strategy
Apple
• Plan: The technology giant continues to plan and come up with the consumer electronics that
offer operational excellence and are easy to use. They also plan and come up with the various
software updates expanding their ecosystem.
• Ploy: The Company is highly renowned for offering the products that are innovative, unique,
and outlandish in nature that gives them a competitive edge in the market. They threaten to
sue their competitors that copy their technology or features of the company’s products.
• Pattern: Apple uses the previous innovations that have been quite successful in the past and
follows the same pattern to challenge the competition in the market.
• Position: Apple has successfully carved a niche for itself in the market and in the consumers’
minds as a niche and premium brand that offers only high-end products that are difficult to
compete against in terms of both hardware and software capabilities.
• Perspective: The core values of Apple are innovation and to think differently and they work
as an integral part of their company culture. And their product offerings to stand as a
testimony to the same.

12. Components and elements of strategic management

13. Balanced Scorecard
Strategic group mapping
SWOT Analysis
PEST model
GAP planning
Porter’s five force models
VRIO framework
Value chain analysis
Bench marking
7’s models
Ansoff matrix etc.
Strategic Management: Models

14. Balanced scorecard
The Balanced Scorecard is a strategy management framework created
by Drs. Robert Kaplan and David Norton.
• Objectives, which are high-level organizational goals.
• Measures, which help you understand if you’re accomplishing your objective
strategically.
• Initiatives, which are key action programs that help you achieve your
objectives.

15. Strategic group mapping
• Strategic group mapping is a method to
display the position that rival
organizations hold in a competitive
industry. In a strategic group mapping
example, variables such as price,
product-line breadth or area of
operations are represented. Strategic
group maps are visual representations
of the industry that aid in decision
making.

16. SWOT Analysis
• A SWOT analysis (or SWOT matrix) is a high-level model used at the
beginning of an organization’s strategic planning. It is an acronym for
“strengths, weaknesses, opportunities, and threats.” Strengths and
weaknesses are considered internal factors, and opportunities and
threats are considered external factors.

17. PEST model
• PEST is also an acronym—it stands for “political, economic,
sociocultural, and technological.” Each of these factors is used to look
at an industry or business environment, and determine what could
affect an organization’s health

18. Porter’s five force models
1.The threat of entry. Could other companies enter the
marketplace easily, or are there numerous entry barriers they
would have to overcome?
2.The threat of substitute products or services. Can buyers easily
replace your product with another?
3.The bargaining power of customers. Could individual buyers
put pressure on your organization to, say, lower costs?
4.The bargaining power of suppliers. Could large retailers put
pressure on your organization to drive down the cost?
5.The competitive rivalry among existing firms. Are your current
competitors poised for major growth? If one launches a new
product or files a new patent—could that impact your company?

19. VRIO framework
The VRIO framework is an acronym for
“value, rarity, imitability, organization.” This strategic planning process
relates more to your vision statement than your overall strategy. The ultimate
goal in implementing the VRIO model is that it will result in a competitive
advantage in the marketplace.
Here’s how to think of each of the four VRIO components:
• Value: Are you able to exploit an opportunity or neutralize an outside threat using a
particular resource?
• Rarity: Is there a great deal of competition in your market, or do only a few
companies control the resource referred to above?
• Imitability: Is your organization’s product or service easily imitated, or would it be
difficult for another organization to do so?
• Organization: Is your company organized enough to be able to exploit your
product or resource?

20. Value chain analysis

21. Bench marking
• Benchmarking compares the business processes of one department or
organization with the business processes of another department or
industry competitor. It helps you understand what is normal for successful
companies and the steps you need to take to improve performance.

22. Developed by McKinsey consultants, this strategic business
planning model emphasizes the importance of aligning an
organization’s key internal elements to achieve strategy. Those
key elements are:
• Structure: The organizational chart or chain of command
• Strategy: The future plan of action, supported by an organization’s
mission and vision
• System: The technical infrastructure that enables daily workflows
• Skill: The capabilities of team members
• Style: The management style of leaders
• Staff: Employees and how they are recruited, trained, and
motivated
• Shared value: The norms, values, and beliefs that guide actions and
decisions
7’s models

23. • The Ansoff Matrix was developed to help organizations plan their
strategies for growth. It is a 2x2 matrix with product on one axis and
markets on the other axis. Depending on the box you are in, you may
choose a different strategy for growth:
• Market penetration: Expand sales of an existing product in an existing
market
• Product development: Introduce a new product into an existing market
• Market development: Introduce an existing product into an entirely new
market
• Diversification: Introduce a new product into a new market
Ansoff matrix

24. Levels of Strategy
Functional strategy
Business Strategy
Corporate
strategy

25. Corporate Level Strategy
• At this level, strategic decision relate to organisation-wide policies and are
taken care by top level management (BOD) with a vision of determining
where the company wants to be?
• It has two main aspect formulation of strategy (strategic planning) and
strategy implementation
• The nature of strategy at this level tend to be value oriented, conceptual than
other levels
• There is also greater risk, cost and profit potential as well as greater need of
flexibility associated with this level
• Major financial policy decision involving acquisition, diversification and
structural Redesigning belong to this level

26. Business Level Strategy
• Business level strategy is more likely related to a unit within the whole. It is
concerned with the competition in a market.
• The concern are about what products or services should be developed and
offered to which markets in order to meet customer needs and Organisation
objectives
• At this level, multi functional strategies developed at corporate level are
formulated and implemented for specific product market in which the business
operates. Thus, managers at this level translate general directions and intent
into concrete functional objectives
• Decision at this level includes policies involving new product development,
marketing mix, research and development, personnel etc.

27. Functional/ Operational Level Strategy
• Functional Strategy involves decision making with respect to specific functional
areas- production, marketing, personnel, finance etc.
• While corporate and business levels strategies are concerned with Doing the right
things.
• Operating level strategy is concerned with strategistrategic approachapproaches for
managing Frontline operating units (like sales). And for handling day to day tasks
of Strategic significance (like advertising campaign, purchasing materials,
inventory control, maintenance etc.) Thus, it focuses on how the different functions
of the enterprise contribute to the other level of strategy.
• Thus, functional level strategy management is the management of relatively narrow
areas of activities, which are of vital, pervasiveness continuing importance to the
total organization

28. Process of Strategic Management

29. Environmental Scanning-
Environmental scanning refers to a process of collecting, scrutinizing and
providing information for strategic purposes.
It helps in analysing the internal and external factors influencing an
organization.
After executing the environmental analysis process, management should
evaluate it on a continuous basis and strive to improve it.

30. Strategy Formulation-
Strategy formulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose.
After conducting environment scanning, managers formulate corporate, business and
functional strategies.
Strategy Implementation-
Strategy implementation implies making the strategy work as intended or putting the
organization’s chosen strategy into action.
Strategy implementation includes designing the organization’s structure, distributing
resources, developing decision making process, and managing human resources.

31. Strategy Evaluation-
Strategy evaluation is the final step of strategy management process.
The key strategy evaluation activities are: appraising internal and
external factors that are the root of present strategies, measuring
performance, and taking remedial/corrective actions.

34. Benefits of Strategic Management
• Profitability Management
• Solvency Planning
• Liquidity Monitoring
• Improved Revenue Generation
• Prevents Legal Risks
• Revitalize Human Resources
• Identify Problems
• Better Decision Making
• Improved Understanding of Competitors’ Strategies
• Higher Stability
• Improved Decision-Making
• Increased Organizational Performance

35. Guidelines for Effective Strategic Management
• Keep the process simple and easily understandable
• Eliminate vague planning jargon
• Keep the process nonroutine; vary assignments, team membership,
meeting formats, settings and even the planning calender
• Do not allow technicians to monopolize the planning process
• To the extent possible, involve managers from all areas of the firm
• It should not be rigid
• It should be realistic in nature

36. Strategic Management V/s Operational Management
Operational management Strategic Management
level Operational management is concerned with
functional management
Strategic management is mainly concerned
with top management
Time horizon Short term long term
Orientation Return on investment of existing business
processes
Potential of success
Dimensions Payment and Receipts, Income and
expenditure, Cost and Revenues
Chances and Risks, strengths and weaknesses
Functional areas Operative management is done by functional
or departmental heads
Strategic management formulates policies for
the whole organization
Activities
performed
It deals with normal situations and hence less
tension in this levels
Strategic management can take strategic
decisions such as adding product, expansion
program etc.

37. Strategic Role of Board of Directors and Top
Management

38. Board of Directors
 A board of directors is the governing body of a company,
elected by shareholders in the case of public companies to set
strategy and oversee management. The board typically meets at
regular intervals. Every public company must have a board of
directors. Some private companies and nonprofit organizations
also have a board of directors.

39. Role of Board of Directors
Degree of involvement is dependent on extent to which it
perform the three tasks:
Monitoring (Low level of involvement)
Evaluating and influencing (Medium level of
involvement)
Initiating and determining (High level of involvement)

40.  Responsibilities:
 Setting corporate strategy, overall direction, mission and vision
 Succession: Hiring, compensating and controlling top level
management
 Control: monitoring, evaluating and supervising top
management
 Reviewing and approving the use of organizational resources
 Caring of stock holders interest
 In legal terms, BOD’s are required to direct the affairs of the
corporation but not to manage them
Continued…

41.  Role of Directors in the strategic management process
 Monitor:
oTake care of developments in both outside and inside the
company
oBring management’s attention in company developments
 Evaluate and influence:
oExamine management’s proposals, decisions and actions
oProvide directions to management decisions , advices, offers and
suggestions
 Initiate and determine:
oFocus on company mission and visions and specify strategic
options to management
Continued…

42. Top level management
• Top level management consists of board of directors, chief executive
or managing director.
• The top management is the ultimate source of authority and it manages
goals and policies for an enterprise. It devotes more time on planning
and coordinating functions.

43. Role of top management
The whole top management’s strategic leadership responsibilities
involves
 Determining the firm’s mission, vision and objectives
 Exploiting and maintaining the firm’s resources , core competencies and
capabilities
 Creating and sustaining a strong organizational culture
 Emphasizing ethical decision practices
 Establishing appropriately balance organizational control

44. Role of top management
Strategic Framework:
The top-level management frame and design the organisation policy
mission vision, goals objectives etc. They need to frame all these things
strategically aligned with the business to run a successful enterprise.
Strategic Direction:
The top-level management must give a proper direction in the
operations of the business are triggered towards. It should keep in mind
all the strategies aligned with e mission and vision of the business.

45. Developing strategies:
All the strategies to be adopted by the business must be developed with utmost
care by the top-level management. The top-level management must consider all
the dynamics of the market related to the business before developing a strategy.
Proper strategy must be developed for all functional areas of a business.
Strategic staffing:
The staffing of key positions in the organisation must be done by the top-level
management. The staffing must be done strategically by analysing the KSA
(Knowledge, Skills and Attitude) of an employee. They must also analyse whether
the KRA (Key result area ) of the given position matches the KSA.
Strategic Decision Making:
All the major decisions are taken by the top-level management. It is always
advisable that the decisions must be taken strategically to effectively utilize the
available resources and bring the desired outcome.