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Why do some
organization
succeed while
others fail?
 Dell Computers, performing better when it compares with
other players in personal computer industry
 South West Airline Manages to get profits in good and bad
times
 In Retail Industry Kmart is out performed by Wal-Mart
 In Software market, Microsoft still maintains strong market
position
These organizations have taken ”Actions” to achieve superior Performance relative to rivals
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Actions /
Decisions ?
 Low-cost Production
 Increasing quality
 Increase their distribution
 Wider product line
 Enhance performance of their product / service
 Through value added services
 Styling their product / service to increase their attraction
 Offers value for money
 Focusing on narrow market niche
 …….Many more
Prof. Vijay K S, MBA Programme`-BIET, Davangere
What do we
call these
Actions as?
Strategy ….
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Strategy….
Preserve the Core
Stimulate Progress
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Think
Strategically
means
There are three Big Strategic Questions
- Where are we now?
- Where do we want to go?
- How will we get there?
A Company’s answer to “How will we get there?” - Is its
strategy
Prof. Vijay K S, MBA Programme`-BIET, Davangere
The strategy
is how to ….
 How to please customer?
 How to respond to changing market conditions
 How to out compete rivals
 How to grow the business
 How to manage each functional piece of the
business and develop needed organizational
capabilities
 How to achieve strategic and financial objectives
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Strategy?
………the Action that managers take
 To attain one or more of the organizational goals
 To achieve superior performance relative to rivals
 By having superior performance, said to have Competitive position
It is Unified, Comprehensive, and Integrated long term plan that
relates to the strategic advantages of the firm to the challenges of the
environment.
In essence, the strategic plan is a company’s game plan
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Strategic
Management?
“…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”
Art & science of formulating, implementing, and evaluating,
cross-functional decisions that enable an organization to
achieve its objectives
Prof. Vijay K S, MBA Programme`-BIET, Davangere
“…is about identifying and describing the strategies that
managers can pursue to attain superior performance and a
competitive advantage for their organizations”
- Profitability - return that it makes on the capital
invested. The more efficient a company is, higher are its profitability.
- profitability is greater than the
average profitability of all firms in its industry.
– When the firm maintains
above-average profitability for a number of years.
Superior Performance
Competitive Advantage
Sustained Competitive Advantage
Strategic
Management?
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Competitiveness
Competitive
Advantage – The
Focal Point of
Strategy
Differentiation
Cost Leadership
Quick Response
Competitive
Advantage
Economic
Value
Added
Market
Value
Added
Value Created for Customers
Financial Performance
Value Captured for Investors
Prof. Vijay K S, MBA Programme`-BIET, Davangere
At the basic
level….
Strategy is concerned with understanding the relationship
between Prices, Customer demand and Cost structure and
manipulating these variables in a way that lead to higher
profitability
Cost
Structure
Customer
Demand
Price
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Meaning of
Strategic
Management
Strategic Management is a set of managerial decisions and actions
that determines the long-run performance of a corporation. It
includes environmental scanning (both external and internal),
strategy formulation (Strategic and long-range planning), strategy
implementation and evaluation and control.
It emphasizes the monitoring and evaluating of external
opportunities and threats in light of a corporation’s strengths
and weaknesses
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Nature of
Strategic
Management
 Strategic management is
 Strategic management is both an of
 SM allows to take that facilitate an
organization to accomplish its objectives.
 it demands awareness to the
"big picture" and a rational assessment of the future options.
well-organized approach
Art and Science
formulating, implementing, and evaluating
cross-functional decisions
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Nature of
Strategic
Management
 SM offers
 a strategic direction endorsed by the team and stakeholders
 a clear business strategy and vision for the future
 a structure for governance at the different levels
 a logical framework to handle risk in order to guarantee
business continuity
 the capability to exploit opportunities
 react to external change by taking ongoing strategic
decisions.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Importance of
Strategic
Management
 Identification, prioritization, and exploitation of opportunities.
 Objective view of management problems.
 It represents a framework for improved coordination and
control of activities.
 It minimizes the effects of adverse conditions and changes.
 It allows major decisions to better support established
objectives.
 It allows more effective allocation of time and resources to
identified opportunities.
 It allows fewer resources and less time to be devoted to
correcting erroneous or ad hoc decisions.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Importance of
Strategic
Management
 It creates a framework for internal communication among
personnel.
 It helps to integrate the behavior of individuals into a total
effort.
 It provides a basic for the clarification of individual
responsibilities.
 It gives encouragement to forward thinking.
 It provides a cooperative, integrated, and enthusiastic
approach to tackling problems and opportunities.
 It encourages a favourable attitude towards change.
 It gives a degree of discipline and formality to the management
of a business.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Characteristic
s ofStrategic
Management
 Has support of organization’s executive officer.
 Long Term Process
 Is fresh and continuous, not static and stale.
 Is participatory, not left to planners.
 Is flexible.
 Leads to resources decisions. Resource Mobilization and
Application
 Integrated System
 Hierarchical Strategy
 Proactive and not a quick fix
 Management by Process
 Analytical tools are used every time
 BCG, Five Force Model
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Relevance of
Strategic
Management
Companies are operating in age of discontinuing change - an age of creative &
constructive destruction.
Business, technology and product life is shrinking.
Demographic shift in terms of consumer preference and requirements.
A direct promotion from Agricultural economy to service or Hi-tech economy
in the new growth economy.
Shift from controlled economy to market driven economy.
Rich countries adopt deindustrialization.
Emergence of new Global Socio – economic system and world orders.
Knowledge is replacing Infrastructure
Self-leadership is in, command and control out
Networks are replacing hierarchies
Wanted - employees with Emotional Intelligence.
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Strategic
Management
Process?
“…is the process by which managers choose a set of strategies
for a company that will allow it to achieve Superior
performance and to have Competitive Advantage”
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Feedback and Control
Strategic Management Process / Model
Environmental Scanning
Or Analysis
Strategy Formulations Implementation of Strategy Evaluate & Control
External Opportunities
and Threats
Natural Environment
Resources and Climate
Social Environment
General force
Task Environment
Industry Analysis
Internal Strengths &
Weaknesses
Structure:
Chain of Command
Culture:
Belief, expectations,
values
Resources:
Assets, Skills,
Competencies, knowledge
Mission
Objectives
Strategies
Policies
Programs
Performance
Procedures
Budgets
Reason
for existence
What results
to accomplish
by when Plan to achieve
mission and
Objectives Broad
guidelines
for decision
making
Activities
Needed to
accomplish a
plan
Cost of the
programs
Sequence
of steps
needed to
do the job
Actual
Results
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Relationship
between
Companies
Strategy and
Its Business
Model
 Business Model is usually composed of five elements
 Who it serves?
 What it provides?
 How it makes money?
 How it differentiates and sustains competitive advantage?
 How it provides its product/service?
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Relationship
between
Companies
Strategy and
Its Business
Model
 Business Model in context of Stretegy
 A Company’s business model is management’s story line for how the
strategy will be a Money Maker
 Is strategy is capable of earning profit?
 How will business generates revenue?
 Is revenue enough to cover cost?
 Value to customer @ Profitable price?
The Business Model is more narrowly focused than the concept of Strategy
Companies Strategy is relates broadly to its competitive initiatives and action plans
The bottom Line result of Strategy is “Business Model” i.e. Making Profit
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Relationship
between
Companies
Strategy and
Its Business
Model
 Business Model is a outcome or result of your strategy, but
not itself, a strategy.
 Strategy is a firm’s contingent plan as to the business model
it will use
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Relationship
between
Companies
Strategy and
Its Business
Model
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Feedback and Control
Strategic Management Process / Model
Environmental
Scanning
Or Analysis
Strategy Formulations
Implementation of
Strategy
Evaluate &
Control
External Opportunities
and Threats
Natural Environment
Resources and Climate
Social Environment
General force
Task Environment
Industry Analysis
Internal Strengths &
Weaknesses
Structure:
Chain of Command
Culture:
Belief, expectations,
values
Resources:
Assets, Skills,
Competencies, knowledge
Mission
Objectives
Strategies
Policies
Programs
Performance
Procedures
Budgets
Reason
for existence
What results
to accomplish
by when Plan to achieve
mission and
Objectives Broad
guidelines
for decision
making
Activities
Needed to
accomplish a
plan
Cost of the
programs
Sequence
of steps
needed to
do the job
Actual
Results
Prof. Vijay K S, MBA Programme`-BIET, Davangere
Strategic
Management
Model /
Process
Scanning
 Where are we now?
Strategy Formulation
 Where do we want to be?
Strategy Implementation
 How do we get there?
Evaluation / Control
 How do we measure our progress?
Prof. Vijay K S, MBA Programme`-BIET, Davangere

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Introduction to strategic management

  • 1. Why do some organization succeed while others fail?  Dell Computers, performing better when it compares with other players in personal computer industry  South West Airline Manages to get profits in good and bad times  In Retail Industry Kmart is out performed by Wal-Mart  In Software market, Microsoft still maintains strong market position These organizations have taken ”Actions” to achieve superior Performance relative to rivals Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 2. Actions / Decisions ?  Low-cost Production  Increasing quality  Increase their distribution  Wider product line  Enhance performance of their product / service  Through value added services  Styling their product / service to increase their attraction  Offers value for money  Focusing on narrow market niche  …….Many more Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 3. What do we call these Actions as? Strategy …. Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 4. Strategy…. Preserve the Core Stimulate Progress Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 5. Think Strategically means There are three Big Strategic Questions - Where are we now? - Where do we want to go? - How will we get there? A Company’s answer to “How will we get there?” - Is its strategy Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 6. The strategy is how to ….  How to please customer?  How to respond to changing market conditions  How to out compete rivals  How to grow the business  How to manage each functional piece of the business and develop needed organizational capabilities  How to achieve strategic and financial objectives Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 7. Strategy? ………the Action that managers take  To attain one or more of the organizational goals  To achieve superior performance relative to rivals  By having superior performance, said to have Competitive position It is Unified, Comprehensive, and Integrated long term plan that relates to the strategic advantages of the firm to the challenges of the environment. In essence, the strategic plan is a company’s game plan Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 8. Strategic Management? “…is about identifying and describing the strategies that managers can pursue to attain superior performance and a competitive advantage for their organizations” Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 9. “…is about identifying and describing the strategies that managers can pursue to attain superior performance and a competitive advantage for their organizations” - Profitability - return that it makes on the capital invested. The more efficient a company is, higher are its profitability. - profitability is greater than the average profitability of all firms in its industry. – When the firm maintains above-average profitability for a number of years. Superior Performance Competitive Advantage Sustained Competitive Advantage Strategic Management? Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 10. Competitiveness Competitive Advantage – The Focal Point of Strategy Differentiation Cost Leadership Quick Response Competitive Advantage Economic Value Added Market Value Added Value Created for Customers Financial Performance Value Captured for Investors Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 11. At the basic level…. Strategy is concerned with understanding the relationship between Prices, Customer demand and Cost structure and manipulating these variables in a way that lead to higher profitability Cost Structure Customer Demand Price Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 12. Meaning of Strategic Management Strategic Management is a set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (Strategic and long-range planning), strategy implementation and evaluation and control. It emphasizes the monitoring and evaluating of external opportunities and threats in light of a corporation’s strengths and weaknesses Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 13. Nature of Strategic Management  Strategic management is  Strategic management is both an of  SM allows to take that facilitate an organization to accomplish its objectives.  it demands awareness to the "big picture" and a rational assessment of the future options. well-organized approach Art and Science formulating, implementing, and evaluating cross-functional decisions Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 14. Nature of Strategic Management  SM offers  a strategic direction endorsed by the team and stakeholders  a clear business strategy and vision for the future  a structure for governance at the different levels  a logical framework to handle risk in order to guarantee business continuity  the capability to exploit opportunities  react to external change by taking ongoing strategic decisions. Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 15. Importance of Strategic Management  Identification, prioritization, and exploitation of opportunities.  Objective view of management problems.  It represents a framework for improved coordination and control of activities.  It minimizes the effects of adverse conditions and changes.  It allows major decisions to better support established objectives.  It allows more effective allocation of time and resources to identified opportunities.  It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions. Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 16. Importance of Strategic Management  It creates a framework for internal communication among personnel.  It helps to integrate the behavior of individuals into a total effort.  It provides a basic for the clarification of individual responsibilities.  It gives encouragement to forward thinking.  It provides a cooperative, integrated, and enthusiastic approach to tackling problems and opportunities.  It encourages a favourable attitude towards change.  It gives a degree of discipline and formality to the management of a business. Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 17. Characteristic s ofStrategic Management  Has support of organization’s executive officer.  Long Term Process  Is fresh and continuous, not static and stale.  Is participatory, not left to planners.  Is flexible.  Leads to resources decisions. Resource Mobilization and Application  Integrated System  Hierarchical Strategy  Proactive and not a quick fix  Management by Process  Analytical tools are used every time  BCG, Five Force Model Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 18. Relevance of Strategic Management Companies are operating in age of discontinuing change - an age of creative & constructive destruction. Business, technology and product life is shrinking. Demographic shift in terms of consumer preference and requirements. A direct promotion from Agricultural economy to service or Hi-tech economy in the new growth economy. Shift from controlled economy to market driven economy. Rich countries adopt deindustrialization. Emergence of new Global Socio – economic system and world orders. Knowledge is replacing Infrastructure Self-leadership is in, command and control out Networks are replacing hierarchies Wanted - employees with Emotional Intelligence. Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 19. Strategic Management Process? “…is the process by which managers choose a set of strategies for a company that will allow it to achieve Superior performance and to have Competitive Advantage” Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 20. Feedback and Control Strategic Management Process / Model Environmental Scanning Or Analysis Strategy Formulations Implementation of Strategy Evaluate & Control External Opportunities and Threats Natural Environment Resources and Climate Social Environment General force Task Environment Industry Analysis Internal Strengths & Weaknesses Structure: Chain of Command Culture: Belief, expectations, values Resources: Assets, Skills, Competencies, knowledge Mission Objectives Strategies Policies Programs Performance Procedures Budgets Reason for existence What results to accomplish by when Plan to achieve mission and Objectives Broad guidelines for decision making Activities Needed to accomplish a plan Cost of the programs Sequence of steps needed to do the job Actual Results Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 21. Relationship between Companies Strategy and Its Business Model  Business Model is usually composed of five elements  Who it serves?  What it provides?  How it makes money?  How it differentiates and sustains competitive advantage?  How it provides its product/service? Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 22. Relationship between Companies Strategy and Its Business Model  Business Model in context of Stretegy  A Company’s business model is management’s story line for how the strategy will be a Money Maker  Is strategy is capable of earning profit?  How will business generates revenue?  Is revenue enough to cover cost?  Value to customer @ Profitable price? The Business Model is more narrowly focused than the concept of Strategy Companies Strategy is relates broadly to its competitive initiatives and action plans The bottom Line result of Strategy is “Business Model” i.e. Making Profit Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 23. Relationship between Companies Strategy and Its Business Model  Business Model is a outcome or result of your strategy, but not itself, a strategy.  Strategy is a firm’s contingent plan as to the business model it will use Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 24. Relationship between Companies Strategy and Its Business Model Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 25. Feedback and Control Strategic Management Process / Model Environmental Scanning Or Analysis Strategy Formulations Implementation of Strategy Evaluate & Control External Opportunities and Threats Natural Environment Resources and Climate Social Environment General force Task Environment Industry Analysis Internal Strengths & Weaknesses Structure: Chain of Command Culture: Belief, expectations, values Resources: Assets, Skills, Competencies, knowledge Mission Objectives Strategies Policies Programs Performance Procedures Budgets Reason for existence What results to accomplish by when Plan to achieve mission and Objectives Broad guidelines for decision making Activities Needed to accomplish a plan Cost of the programs Sequence of steps needed to do the job Actual Results Prof. Vijay K S, MBA Programme`-BIET, Davangere
  • 26. Strategic Management Model / Process Scanning  Where are we now? Strategy Formulation  Where do we want to be? Strategy Implementation  How do we get there? Evaluation / Control  How do we measure our progress? Prof. Vijay K S, MBA Programme`-BIET, Davangere