INTRO TO STRATEGIC MANAGEMENT MOD 1 UNIT 1_M.COM SEM I.pptx

MODULE 1
Unit 1
Introduction to Strategic Management
Concept and process of Strategic
Management, Benefits and Risks of
Strategic Management, Vision and
Mission,
Functional Strategies: Human Resource
Strategy, Marketing Strategy, Financial
Strategy, Levels of Strategies: Corporate,
Business and Operational Level Strategy
M.COM I SEM I STRATEGIC MANAGEMENT
DR VIJAY VISHWAKARMA
1

• Strategic management is the concept of
identification, implementation, and
management of the strategies that
managers carry out to achieve the goals
and objectives of their organization.
• It can also be defined as a bundle of
decisions that a manager has to
undertake which directly contributes to
the firm’s performance.
• The manager responsible for Strategic
management must have a thorough
knowledge of the internal and external
organizational environment to make the
right decisions.
2

• The basic concept of strategic
management consists of a continuous
process of planning, monitoring,
analysing and assessing everything
that is necessary for an organization to
meet its goals and objectives.
• In simple words, it is a management
technique used to prepare the
organization for the unforeseeable
future.
• Strategy management helps create a
vision for an organization that helps to
identify both predictable as well as
unpredictable contingencies.
• It involves formulating and
implementing appropriate strategies so
the organization can attain sustainable
competitive advantage.
3

Components of
Strategy
Management
• Strategic Intent
• Strategic Intent of an organization clarifies the
purpose of its existence and why it will
continue to exist. It helps paint a picture of
what an organization should immediately do
to achieve the company’s vision.
• Mission
• Mission component of strategy management
states the role by which an organization
intends to serve its stakeholders. It describes
why an organization is operating that helps
provide a framework within which the
strategies to achieve its goals are formulated.
4

• Vision
• The visual component of
strategy management helps
identify where the organization
intends to be in the future. It
describes the stakeholder
dreams and aspirations for the
organization.
• Goals and Objectives
• Goals help specify in particular
what must be done in order to
attain an organization’s mission
or vision. Goals make the
mission component of strategy
management more prominent.
5

Process of Strategy
Management
• Setting the Goal – The first and foremost
stage in the process of strategic
management requires the organization to
set the short term and long-term goals it
wants to achieve.
• Initial Assessment – The second stages
says to gathers as much data and
information as possible to help state the
mission and vision of the organization.
• Situation Analysis – It refers to the
process of collecting, scrutinizing and
providing information for strategic
purposes. It helps in analyzing the
internal and external environment that is
influencing an organization.
6

• Strategy Formulation – Strategy
formulation is the process of deciding the
best course of action to be taken to achieve
the goals and objectives of the organization.
• Strategy Implementation – Executing the
formulated strategy in such a way that it
successfully creates a competitive
advantage for the company. In simple words,
putting the chosen plan into action.
• Strategy Monitoring – Strategy Monitoring
involves the key evaluation strategies like
considering the internal and external factors
that are the root of the present strategies
and measuring the team performance.
• SWOT Analysis – It helps in determining
the Strengths, Weaknesses, Opportunities
and Threats (SWOT) of an organization and
taking remedial/corrective courses of actions
to fight these weaknesses and threats.
7

BENEFITS OF STRATEGIC
MANAGEMENT
1.Improved decision-making: Strategic
management provides a framework for better
decision-making by allowing leadership to
assess the potential impact of their decisions on
the overall strategic objectives of the
organization.
2.Enhanced collaboration: Strategy
management encourages collaboration
between departments and functions ensuring
that everyone is working toward the same goals
and objectives.
3.Better organizational performance: Strategy
management also helps organizations to focus
on the areas that need improvement, identify
the best ways to achieve their goals and
objectives, and measure progress.
•
8

Effective resource
allocation: Strategic
management encourages
organizations to utilise their
resources more efficiently by
ensuring that resources are
allocated to the most important
areas.
Increased customer
satisfaction: Strategy
management helps organizations
to better understand their
customers and develop strategies
to meet their needs.
9

Financial
Benefits of
Strategic
Managemen
t
Financial Liquidity Monitoring
Strategic management enables businesses to keep an eye on cash flow
and make sure that the money they have available is aligned with long-
term objectives. Also, it enables business leaders to raise money when
necessary for ongoing operations.
Better Revenue Generation
Senior executives might modify their strategic vision to consider local
reality by soliciting candid, diverse viewpoints from business-unit chiefs.
This cooperative, back-and-forth method aids a business in understanding
its clientele and ultimately increases sales, thus making revenue
generation one of the biggest benefits of strategic management.
Increasing market share and profitability
This is one of the important benefits of strategic management. One can
approach the proper target market with the aid of strategic management
skills. All industries can investigate better consumer segments, products,
and services, as well as comprehend the market circumstances of the
sector in which they are engaged, if they have a highly concentrated plan
and strategic thinking.
Prevents Legal Risks
One of the major benefits of strategic management is that it enables
businesses to include employee policies. Additionally, it enables the
organisation to develop internal procedures and checks to address board
member and shareholder conflicts of interest.
10

Non-Financial
Benefits of
Strategic
Management
Discharges Board Responsibility
The primary justification given by most organisations for having a
strategic management process is that it relieves the Board of
Directors of responsibilities.
Forces An Objective Assessment
The discipline of strategic management gives the board and senior
management the ability to truly stand back from day-to-day
operations and consider the organization's future.
Make Better business decisions
One of the key benefits of strategic management is that it makes a
framework Every member of the workforce within which they can
make daily operational decisions from business perspective and
know that they are all leading the company in the same direction.
Supports Understanding & Buy-In
The board and employees can better comprehend the direction, the
rationale behind it, and the advantages it brings if they are allowed
to participate in the strategic conversation. While some people only
need to know, many people need to comprehend in order to have
their complete support.
11

Enables Measurement of Progress
Enabling measurement of progress is one of the many
benefits of strategic management. An organisation must
create goals and success criteria as part of a strategic
management process. In order to develop targets and keep
these crucial metrics in front of the board and senior
management, the business must first identify the factors that
are essential to its continued success.
Rejuvenate human resources
One of the benefits of strategic management is to make
strategic decisions on developing a hiring strategy based on
comprehensive feedback which attracts the most capable
professionals to ensure the company
Provides an Organizational Perspective
Handling operational challenges rarely takes into account the
interdependence of the organization's many parts as a
whole. In order to create a strategy that is best for the entire
company, not just a single component, strategic
management adopts an organisational viewpoint and
examines all the components and their interactions.
Creating a better future
The effectiveness of your organisation is increased when
strategic decisions are put into practise, which is one of their
most outstanding advantages. Setting the tone for the entire
organisation begins with the decisions you make today. A
proactive strategy reduces potential dangers.
12

Risks of
Strategic
Management
1.Limitation of Assumption
2.Problem in Analyzing Environment
3.Unrealistic Mission and Objectives
4.Problem of Setting Target
5.Lack of Commitment of Lower Level
6.Problem of Resistance
7.More theoretical in Nature
8.Problem of Internal Politics
9.Problem of Traditional Management
13

Risks involved in Strategic
Management
• Strategic management is an intricate and
complex process that takes an organisation into
unchartered territory.
• It does not provide a ready-to-use prescription
for success. Instead, it takes the organisation
through a journey and offers a framework for
addressing questions and solving problems.
• Strategic management is not, therefore, a
guarantee for success; it can be dysfunctional if
conducted haphazardly
14

• It is a costly exercise in terms of the time that
needs to be devoted to it by managers.
• The negative effect of managers spending
time away from their normal tasks may be
quite serious.
• A negative effect may arise due to the non-
fulfilment of the expectations of the
participating managers, leading to frustration
and disappointment.
• Another negative effect of strategic
management may arise if those associated
with the formulation of strategy are not
intimately involved in the implementation of
strategies.
15

VISION
“Good business leaders
create a vision, articulate
the vision, passionately
own the vision, and
relentlessly drive it to
completion.”
–Jack Welch, former CEO
of General Electric
16

17

• Many skills and abilities separate effective
strategic leaders like Howard Schultz from
poor strategic leaders.
• One of them is the ability to inspire
employees to work hard to improve their
organization’s performance.
• Effective strategic leaders can convince
employees to embrace lofty ambitions and
move the organization forward.
• In contrast, poor strategic leaders struggle
to rally their people and channel their
collective energy in a positive direction.
• An organization’s vision describes what
the organization hopes to become in the
future.
• Well-constructed visions clearly articulate
an organization’s aspirations.
18

Company Vision
Alcoa
To be the best company in the world–in the eyes of our
customers, shareholders, communities and people.
Avon
To be the company that best understands and satisfies
the product, service and self-fulfillment needs women–
globally.
Chevron
To be the global energy company most admired for its
people, partnership and performance.
Google To develop a perfect search engine.
Kraft Foods Helping people around the world eat and live better.
Proctor and Gamble
Be, and be recognized as, the best consumer products
and services company in the world.
19

•FIND OUT VISION STATEMENTS OF
ANY 5 COMPANIES……..
20

MISSION
21

• In working to turnaround Starbucks, Howard Schultz sought to renew
Starbucks’s commitment to its mission statement: “to inspire and
nurture the human spirit—one person, one cup and one neighborhood
at a time.”
• A mission such as Starbucks’s states the reasons for an organization’s
existence.
• Well-written mission statements effectively capture an organization’s
identity and provide answers to the fundamental question “Who are
we?” While a vision looks to the future, a mission captures the key
elements of the organization’s past and present
22

Ranboxy Petrochemicals: To become a research based global company.
Reliance Industries: To become a major player in the global chemicals business and
simultaneously grow in other growth industries like infrastructure.
ONGC: To stimulate, continue and accelerate efforts to develop and maximize the
contribution of the energy sector to the economy of the country.
Cadbury India: To attain leadership position in the confectionery market and
achieve a strong national presence in the food drinks sector.
Hindustan Lever: Our purpose is to meet everyday needs of people everywhere – to
anticipate the aspirations of our consumers and customers, and to respond
creatively and competitively with branded products and services which raise the
quality of life.
McDonald: To offer the customer fast food prepared in the same high quality
worldwide, tasty and reasonably priced, delivered in a consistent low key décor and
friendly manner.
23

• It helps to ensure unanimity of purpose within the organisation.
• It provides a basis or standard for allocating organisational resources.
• It establishes a general tone or organisational climate.
• It serves as a focal point for individuals to identify with the organisation’s
purpose and direction.
• It facilitates the translation of objectives into tasks assigned to responsible
people within the organisation.
• It specifies organisational purpose and then helps to translate this purpose
into objectives in such a way that cost, time and performance parameters
can be assessed and controlled
24

•FIND OUT MISSION STATEMENTS OF
ANY 5 COMPANIES……..
25

Functional Strategy
According to Gareth R. Jones,
“Functional strategy is a plan of
action to strengthen an
organization’s Functional and
organizational resources, as well
as its coordination abilities, in
order to create core
competencies.”
Corporate and Business
strategies give birth to
functional strategies, which
are implemented in the
organization through
functional and operational
implementation.
26

• According to Thompson and Strickland, “The
term functional strategy refers to the managerial game
plan for a particular functional activity, business
process, or key department within a business.
• A company’s marketing strategy, for example,
represents the managerial game plan for running the
marketing part of the business.
• A company’s new product development strategy
represents the managerial game plan for keeping the
company’s product lineup fresh and in tune with what
buyers are looking for.”
27

• Each functional department carries out its own functional
responsibility by executing short- and medium-term
plans to play its role in meeting overall corporate
objectives.
• For example, in marketing strategy; the process may
focus on selecting the target market, developing a market
plan that may satisfy the overall needs of the target
customers.
• In human resource strategy, the functions may deal with
recruitment and selection of the employees, their
retention, training and development, evaluation, and
remuneration part.
• Financial strategy may go with issues of funding, shares,
debt financing, depreciation etc.
28

• The functional strategies relate to the
operating divisions and thus connect to
business processes and value chain.
• Higher-level strategies depend upon
these strategies as they provide input to
the business level and corporate level
strategies.
• Once the higher-level strategies are
formulated, the functional units
translate them into the course of action
plan, which each department is
supposed to complete within a due
course of time for the success of the
strategy.
29

An organization with multi-units
dealing in several businesses at a
same time, create a business
strategy for each business and each
business with separate sets of
departments constitute their own
functional strategies for each
department.
For example, if an
organization decides to go
for differentiation strategy,
all the activities of each
department, must be
focused on fulfilling that
purpose only.
30

FEATURES OF FUNCTIONAL STRATEGY
31

• It acts to achieve corporate and business unit
objectives by maximizing resource productivity.
• It is the game plan to manage a principal
subordinate activity within a business.
• Functional strategy is concerned with
developing and nurturing a distinctive
competence to provide a company or business
unit with a competitive advantage.
• The orientation of the functional strategy is
dictated by its parent business unit’s strategy.
• Functional strategy is narrower in scope than
business strategy. It contains relevant details of
the overall business game plan by setting out
the actions, approaches and practices which are
to be employed in managing a particular
function.
32

Functional Strategies
• Human Resource Strategy
• Marketing Strategy
• Financial Strategy
33

Marketing Strategy
• A marketing strategy for a service-
oriented organization would be to
create a lasting, long-term link between
the organization and the customers.
Their functional strategy will include
social media marketing, lead
generations and SWOT (Strength,
Weakness, Opportunity & Threats)
Analysis to study the competition.
• These strategies focus on identifying
target audiences, understanding
market dynamics, creating value
propositions, and developing marketing
campaigns to reach customers
effectively.
34

• Apple has a clear marketing
strategy focusing on creating a
powerful brand image associated
with innovation, quality, and
luxury.
• This is done through high-impact
product launches, minimalist and
creative advertising, and
cultivating a sense of exclusivity
around its products.
• They also meticulously control
their retail environments (both
physical and online) to ensure
the buying experience is aligned
with their brand image.
• Marketing & Advertising Strategy of Apple: A critical
lens
35

• A company like Coca-Cola might
have a marketing strategy to
strengthen its brand image by
associating it with happiness and
fun.
• This could involve launching a
global advertising campaign
focusing on these themes, local
events, and experiences that
resonate with this message.
36

Finance Strategy
• When you have your corporate
strategies down pat, you must
raise the required finances. For a
startup, it can be seed funding,
investor money or bank financing.
Other financial strategies include
capital budgeting and dividend
strategies for equity shareholders.
• This strategy involves financial
planning and management, such
as budgeting, cost control, cash
flow management, capital
structure, risk management, and
investment decisions.
37

• Apple maintains a very large cash
reserve, which gives them significant
flexibility in strategic investments,
acquisitions, and R&D.
• Despite their cash holdings, they also
use debt financing strategically, taking
advantage of low-interest rates.
• A startup might have a financial strategy
of securing additional capital to fuel its
rapid growth.
• This could involve pursuing venture
capital funding, maintaining a lean
operational budget to extend their
financial runway, and planning for a
future initial public offering (IPO).
38

Human
Resource
Strategy:
•HR strategies include
decisions about
recruitment, selection,
training, performance
management,
compensation, and
employee retention.
•The aim is to attract,
develop, and retain a
workforce that can
effectively execute
business strategies.
39

• Apple works hard to attract and retain top
talent, offering competitive compensation
packages, opportunities for career
development, and a work environment
that is both challenging and rewarding.
• They also foster a culture of secrecy and
urgency around their product
development, which helps drive
innovation.
• Google has a human resource strategy of
attracting and retaining the best talent in
the industry.
• They do this by providing a great work
environment, excellent compensation
packages, opportunities for career
growth, and other perks like free meals
and employee wellness programs.
• Talent Management Strategy & Practices
40

Three levels of strategy are the
different levels of strategic
management that run across the
organization from the highest
corporate level to the bottom
functional level.
The three levels of strategy include
the
• Corporate-level Strategy,
• Business-level Strategy, and
• Functional-level Strategy.
41

42

• The difference between the three
levels of strategy is who to
implement the strategy. Since
they are affecting in the different
levels;
• Corporate level strategy involves
top-level management.
• Business level strategy involves
the ability to compete of each
business unit.
• Functional level strategy involves
every single function in every
business unit.
43

Corporate Level Strategy
• Corporate level strategy is the
highest level of all three levels of
strategy.
• The corporate level strategies are
used to define and guideline the
direction for the company in the
big picture.
• To put it simply, the corporate
strategy is the main theme of all
strategies within an organization.
44

• There are three main themes of the
corporate level strategy includes growth
strategy, stability strategy, and retrenchment
strategy.
• Growth strategy is a strategy that focused on
expanding the business to increase the
revenue in various ways: find new
customers, selling existing products to the
new market, merger, acquisition, and
diversification. The growth strategies are
simply found in the Ansoff Product-market
matrix.
• Stability strategy is a strategy that focused
on stable the business (as its name) to
improve the current business without
investment or divestment.
• Retrenchment strategy is a strategy that
focused on stable the company’s financial
position by stop unprofitable operations to
cut the company’s expenses. M.COM I SEM I STRATEGIC MANAGEMENT
45

Business Level
Strategy
• Business level strategy is how the company
competes with others in the market with its
products or services.
• For the business level strategy, the company
needs to determine what is the competitive
advantage for each business unit.
46

• There are 4 types of competitive
advantages for the business level
strategy following the Porter’s
generic model: cost leadership,
differentiation, cost focus, and
focus differentiation.
• Cost leadership is a strategy that
the company produce products in
huge amounts or with low-cost
labor to compete.
• Differentiation is a strategy that
seeks advantage from the different
by developing brands that stand out
from the competitor.
• Cost focus is like the cost
leadership strategy but focused on
the niche market instead of the
mass market.
• Focus differentiation is like
differentiation strategy but focused
on the niche market instead of the
mass market.
47

Functional Level Strategy
• The functional level strategy is a strategy that
is implemented by each function in a
business to support the business-level
strategy. Functional level strategies typically
are developed by functional area executives.
• A business’s functional are include
accounting, finance, production, marketing,
procurement, service, research and
development (R&D), human resources, and
logistics.
• To put it simply, the functional level strategy is
a strategy that uses in each department of a
single business unit.
• Additionally, if you ever heard about the Value
Chain (by Michael E. Porter), the functional
level strategy is strategies that are
implemented in each element of the Value
Chain.
48

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