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STRATEGIC MANAGEMENT


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Module 1

CONCEPT OF STRATEGY:

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Defining strategy, Levels at which strategy operates, Strategic Decision Making and Approaches to Strategic Decision making, Mission and Purpose, Objectives and Goals, Strategic Business Units, Corporate Planning Process

Apple unveils new tablet computer, the iPad 28 January 2010,




SAN FRANSISCO: Apple Inc CEO Steve Jobs took the wraps off the highly anticipated "iPad" tablet and pitched it at a surprisingly low price, aiming to bridge the gap between smartphones and laptops. Jobs, who returned to the helm last year after a much-scrutinized liver transplant, took the stage at a packed theater on Wednesday and showed off a sleek, half-inch thick tablet computer with a 9.7-inch touchscreen. "What once occupied half your living room can now be dropped in a bag," said NPD analyst Ned May. "It's pulling together a variety of needs (in) a universal entertainment device." The iPad will sell from late March for as low as $499 for 16 gigabytes of storage.

"Pricing is very aggressive, so it's pretty positive from a mass adoption perspective. It was about $200 lower than what I was expecting," said Brian Marshall, an analyst with Broadpoint Amtech. Other analysts had speculated that the tablet may cost as much as $1,000. Shares of Apple rose to as high as $210.58 after the pricing news, up 5.5 percent from their session low. Apple announced a data plan with AT&T Inc, which appeared to have beaten out Verizon Wireless for the deal. Shares of AT&T, Apple's carrier partner on the iPhone, rose 1.14 percent while Verizon Communications Inc fell about 1 percent.

iPhone-like anticipation The iPad is Apple's biggest product launch since the iPhone three years ago, and arguably rivals the smartphone as the most anticipated in the company's history. Wednesday's event follows months of feverish speculation on the Web and on Wall Street. Apple hopes to sell consumers on the value of tablets after other technology companies, including Microsoft Corp and Toshiba Corp, have failed in recent years. As iPod sales wane, Apple is looking for another growth engine. Jobs said there was a need for a new type of device that would sit between a smartphone and laptop computer, and that can perform tasks like browse the Web and play games. "If there's going to be a third category of device, it's going to have to be better at these kinds of tasks," said the chief executive, dressed in his trademark black turtleneck and blue jeans. Shares of Amazon took a brief hit but recovered to end 2.7 percent higher at $122.75 on Nasdaq. In an online poll before Wednesday's media event, 37 percent of more than 1,000 respondents said they would pay $500-$699 for the tablet.

STRATEGIC MANAGEMENT
 

Defining strategy, Strategic management can be defined as a set of managerial decisions and actions that determine the long term performance of a company. Strategic planning refers to management process in organizations through which future impact of change is determined and current decisions are taken to reach a designed future The following questions are asked in Strategic planning

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Where you are now? Where do you want to go? How will you get there?

  

Definition of Strategy Originally, the word strategy has been derived from Greek Strategos , which means generalship. The word strategy, therefore, means the art of the general. When the term strategy is used in military sense, it refers to action that can be taken in the light of action taken by opposite party.

Strategic management is a science of choosing the alternatives from the designed and available courses. The managers have to decide on a process that will be most suitable to their conditions and that would enable them to achieve a desired position for their organization.

Main elements of strategic management theory


 

Strategic management involves adapting the organization to its business environment. Strategic management is fluid and complex. Change creates novel combinations of circumstances requiring unstructured non-repetitive responses. Strategic management affects the entire organization by providing direction. Strategic management involves both strategy formation (she called it content) and also strategy implementation (she called it process). Strategic management is partially planned and partially unplanned. Strategic management is done at several levels: overall corporate strategy, and individual business strategies. Strategic management involves both conceptual and analytical thought processes.




RIL plans to acquire Canadian co for $2bn


MUMBAI: Two months after it made an offer to acquire a controlling stake in the bankrupt Lyondell Basell, Indian energy major Reliance Industries is now said to be eyeing privately-held Canadian firm, Value Creations. According to media reports, RIL has submitted an expression of interest of $2 billion for Value Creations. RIL is reviewing a number of global opportunities for growth in its core business. The difficult operating environment of the past year has made available several interesting opportunities, where an investment by a strategic operator of industrial assets can add substantial value,'' an RIL spokesperson told TOI. Alberta-based Value Creations is a private company established in 1998, and deals in oil sands resources. It is part of the Value Creation Group of Companies, which is focused on transforming the oil sands industry by applying its proprietary technology to resource development and to bitumen upgrading. The company's promoters, according to agency reports, are looking to raise funds to settle its dues with lenders.




NTPC issue manages to get subscribed 1.2 times


NEW DELHI: The public offer of the government-run power major NTPC, the first mega public offer of 2010, managed to scrape through today with the issue getting subscribed 1.2 times. The issue, through which the government is divesting 5% of its stake, at a floor price of Rs 201 a share, opened on February 3 and closed today. At the floor price, the follow-on-public offer (FPO) is valued at Rs 8,286 crore. By the second day, the issue could manage only 80 per cent subscription -- 77% on the opening day and just 3% on the second day yesterday. Going by the poor response till yesterday, analysts were warning that the issue could even be under-subscribed. According to the latest data available with the National Stock Exchange, the FPO received bids for 49.36 crore shares as against 41.22 crore shares on offer. At the given floor price, the subscription generated the demand worth Rs 9,922.56 crore. However, NTPC chairman and managing director RS Sharma told reporters here that the offer was well received.




Wipro seeks 50 acres near Bangalore airport for IT park


BANGALORE: Global software major Wipro has applied for 50 acres of land near the Bangalore international airport for setting up an IT park, an official said on Friday. "Wipro has applied for 50 acres of land in the new industrial belt coming up near the new airport. The state high-level committee will consider it soon," state principal industry secretary V.P. Baligar told reporters here.




Toyota sees doubling of sales powered by Etios in India


MUMBAI: Toyota Kirloskar Motors, the Indian unit of Toyota Motor Corp expects to double its sales in the next five to seven years, powered by its Etios cars to be launched at the end of this year, a top company official told Reuters on Saturday. Etios is a compact car, developed by Toyota specifically for the Indian market, and showcased at the Delhi Auto Expo last month. In 2010, the company expects its sales to grow more than 15 percent from 2009, when it had sold 55,497 cars. "For us to become a significant player in the volume market segment, we need at least 10 percent market share and we expect to achieve that in the next five to seven years," managing director Hiroshi Nakagawa said in an interview. Toyota has a 3 percent share of the local automobile market, and sells brands like Innova, Fortuna, Sedan's CorollaAltis and Camry.

Jindal Saw plans Rs 10,000 cr diversification


29 Sep 2008, 0000 hrs IST, Indresh Batra, managing director of Jindal SAW, part of the $10 billion OP Jindal group, talks about the company's recent mega diversification programme. For diversification, the areas the company has selected are coastal and river shipping, sectors many fear to tread. What are the opportunities you found there? India's contiguous coastline and river network is one of the largest in the world, yet fewer than 500 vessels operate here. Increasing energy costs underscore the cost advantages of waterborne transport compared to other modes.

Air India, Indian Airlines merger to stay: Govt


27 Jan 2010, NEW DELHI: The government Wednesday rubbished reports of de-merger of Air India and said its merger with Indian Airlines was well-planned and decided collectively by various agencies. "The merger was a carefully thought-out process and a collective decision of all agencies of the government. We have no move afoot for the Air India-Indian Airlines demerger," the ministry of civil aviation said in a statement. In 2007, Indian Airlines Ltd, the state-owned carrier that flew largely within the country and Air India, which flew international routes, were merged into one company, the National Aviation Co of India Ltd (Nacil) which now operates under a single brand Air India. To prove that Air India was on a growth path, the carrier has further informed that its higher passenger carriage and improved load factor during October-December 2009 has contributed to reduction in its losses by 25 per cent from Rs 1,152.44 crore in OctoberDecember 2008 to Rs 864.33 crore in October-December 2009.

US jet company Eclipse files for liquidation

25 Feb 2009, NEW MEXICO: Struggling jet maker Eclipse Aviation has sustained another setback as senior stakeholders filed a motion in federal court to convert the company's bankruptcy status to liquidation proceedings. Eclipse spokesman Keith Spondike confirmed Tuesday's filing but cautioned the effort remains subject to a judge's approval. The company's new request to proceed under Chapter 7 of the U.S. bankruptcy code would allow it to operate under the direction of a court trustee until the matter is resolved. If Eclipse can settle with creditors, it might not have to be liquidated. Eclipse had sought bankruptcy protection from creditors in November.

 

STRATEGIC MANAGEMENT Strategic management is the process of systematically analyzing various opportunities and threats vis--vis organizational strengths and weaknesses, formulating, and arriving at strategic choices through critical evaluation of alternatives and implementing them to meet the set objectives of the organization

Strategy is the determination of the basic long-term goals and objectives of an enterprise and the adoption of the course of action and the allocation of resources necessary for carrying out these goals. Professors at Harvard

Diff Types Of Strategies




Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "in which businesses should we be in?" and "how does being in these business create synergy and/or add to the competitive advantage of the corporation as a whole?" Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation. According to Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen arenas or industries. Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each department s functional responsibility. Each functional department attempts to do its part in meeting overall corporate objectives, and hence to some extent their strategies are derived from broader corporate strategies.

Historical development of strategic management

 

Birth of strategic management Strategic management as a discipline originated in the 1950s and 60s. Although there were numerous early contributors to the literature, the most influential pioneers were Alfred D. Chandler, Philip Selznick, Igor Ansoff, and Peter Drucker. Alfred Chandler recognized the importance of coordinating the various aspects of management under one all-encompassing strategy. Prior to this time the various functions of management were separate with little overall coordination or strategy. Interactions between functions or between departments were typically handled by a boundary position, that is, there were one or two managers that relayed information back and forth between two departments. Chandler also stressed the importance of taking a long term perspective when looking to the future. In his 1962 groundbreaking work Strategy and Structure, Chandler showed that a long-term coordinated strategy was necessary to give a company structure, direction, and focus. He says it concisely, structure follows strategy

History-contd


In 1957, Philip Selznick introduced the idea of matching the organization's internal factors with external environmental circumstances.[5] This core idea was developed into what we now call SWOT analysis by Learned, Andrews, and others at the Harvard Business School General Management Group. Strengths and weaknesses of the firm are assessed in light of the opportunities and threats from the business environment. Igor Ansoff built on Chandler's work by adding a range of strategic concepts and inventing a whole new vocabulary. He developed a strategy grid that compared market penetration strategies, product development strategies, market development strategies and horizontal and vertical integration and diversification strategies. He felt that management could use these strategies to systematically prepare for future opportunities and challenges. In his 1965 classic Corporate Strategy, he developed the gap analysis still used today in which we must understand the gap between where we are currently and where we would like to be, then develop what he called gap reducing actions .[6]

History-contd


Peter Drucker was a prolific strategy theorist, author of dozens of management books, with a career spanning five decades. His contributions to strategic management were many but two are most important. Firstly, he stressed the importance of objectives. An organization without clear objectives is like a ship without a rudder. As early as 1954 he was developing a theory of management based on objectives.[7] This evolved into his theory of management by objectives (MBO). According to Drucker, the procedure of setting objectives and monitoring your progress towards them should permeate the entire organization, top to bottom. His other seminal contribution was in predicting the importance of what today we would call intellectual capital. He predicted the rise of what he called the knowledge worker and explained the consequences of this for management. He said that knowledge work is non-hierarchical. Work would be carried out in teams with the person most knowledgeable in the task at hand being the temporary leader.

History


In 1985, summarized what she thought were the 1970s

Features of Strategic Planning


    

It is high level It is general It s time span is long range It effects the whole organisation It covers a whide range of activities

Benefits of Strategic Planning


 

It provides the roadmap for the firm It helps the firm utilise its resource in he best possible manner. It allows more effective allocation of time and resources for identifying oppurtunities The firm can respond to environmental changes in a better way It minimises the chances of mistakes and unpleasant surprises It creates a framework for internal communication among personnel

STRATEGIC MANAGEMENT


Module 1 CONCEPT OF STRATEGY: hrs Levels at which strategy operates,

Levels at which strategy operates

Corporate level

Business level

Functional level

Levels of Strategy Strategy may operate at different levels of an organization corporate level, business level, and functional level. Corporate Level Strategy Corporate level strategy occupies the highest level of strategic decision-making and covers actions dealing with the objective of the firm, acquisition and allocation of resources and coordination of strategies of various SBUs for optimal performance. Top management of the organization makes such decisions. The nature of strategic decisions tends to be valueoriented, conceptual and less concrete than decisions at the business or functional level.

       

Business-Level Strategy. Business-level strategy is - applicable in those organizations, which have different businesses-and each business is treated as strategic business unit (SBU). The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. Since each prod-uct/market segment has a distinct environment, a SBU is created for each such segment.

                     

Functional-Level Strategy. Functional strategy, as is suggested by the title, relates to a single functional operation and the activities involved therein. Decisions at this level within the organization are often described as tactical. Such decisions are guided and constrained by some overall strategic considerations. Functional strategy deals with relatively restricted plan providing objectives for specific function, allocation of resources among different operations within that functional area and coordi-nation between them for optimal contribution to the achievement of the SBU and corporate-level objectives. Below the functionallevel strategy, there may be opera-tions-level strategies as each function may be dividend into several sub functions. For example, marketing strategy, a functional strategy, can be subdivided into promo-tion, sales, distribution, pricing strategies with each sub function strategy contribut-ing to functional strategy. Strategies at all the three levels are interlinked in which a higherlevel strategy generates a lower-level strategy and a lower-level strategy contributes to the achievement of the objectives of higher-level strategy. Formulation of Strategy

                   

objectives of the firm and the broad constraints and policies within which a SBU operates. The corporate level will help the SBU define its scope of operations and also limit or enhance the SBUs operations by the resources the corporate level assigns to it. There is a difference between corporate-level and businesslevel strategies. For example, Andrews says that in an organization of any size or diversity, corporate strategy usually applies to the whole enterprise, while business strategy, less comprehensive, defines the choice of product or service and market of individual business within the firm. In other words, business strategy relates to the how and corporate strategy to the what . Corporate strategy defines the business in which a company will compete preferably in a way that focuses resources to convert distinctive competence into competitive advantage. Corporate strategy is not the sum total of business strategies of the corporation but it deals with different subject matter. While the corporation is concerned with and has impact on business strategy, the former is concerned with the shape and balancing of growth and renewal rather than in market execution.

        

Strategy has Four Components First, strategy should include a clear set of long term goals. Second components are that it should define the scope of the firm i.e. the types of products the firm will serve etc. Thirdly, a strategy should have a clear statement of what competitive advantage it will achieve and sustain. Finally, the strategy must represent the firms internal contest that will allow it to achieve a competitive advantage in the environment in which it has chosen to compete

  

    

Phases in strategic management There are four essential phases of strategic management process. In different companies these phases may have different, nomenclatures and the phases may have a different sequences, however, the basic content remains same. The four phases can be listed as below. i Defining the vision, business mission, purpose, and broad Objectives, Environmental scanning ii.. Formulation of strategies. iii. Implementation of strategies. iv. Evaluation of strategies.

STRATEGIC MANAGEMENT


Module 1 CONCEPT OF STRATEGY: hrs Strategic Decision Making and Approaches to Strategic Decision making,

 

 

Strategic Decision Making Strategic decision making is the essence of strategic management Strategic decisions are manly concerned with the selection of the product-mix that the firm intends to produce and the markets in which it will its products. CEO is the principl strategist others being board of directors, corporate planners etc. Charectiresed by risk and uncertainity Varies with the level

Approaches to Strategic Decision making  As per Mintzberg, three approaches are use for strategic management. 1. Entrepreneurial mode 2. Adaptive mode 3. Planning mode

   

Entrepreneurial mode Developed by a strong visionary CE Bold decisions Enjoy absolute power to shape the future of organisation

 

 

Adaptive mode Focus on solving problems of immediate concerns Reactive approach Used in organisations that face a rapidly changing environment Emphasis is on taking small incremental steps aimd at appraising powerful coalitions within organisations

 

 

Planning mode Systematic, comprehensive analysis along with the integration of various decisions and strtegies Understand environment Large organisatons that have enough resources

STRATEGIC MANAGEMENT
   

Mission Orgnisations are formed for a purpose Mission statement A broad declaration of the basic unique purpose and scope of operations that distinguish the organisation from others of its type.

STRATEGIC MANAGEMENT


Module 1 CONCEPT OF STRATEGY: hrs Objectives and Goals,

STRATEGIC MANAGEMENT
 

Strategic Business Units It is a distinct business unit with its own business mission, product line, market share and competitors that can be managed reasonably independently of other businesses within the organisation

      

  

Example : Reliance Industries Limited operates in textile fabrics, yarns, fibers, and a variety of petrochemical products. For each product group, the nature of market in terms of customers, competition, and marketing channel differs. There-fore, it requires different strategies for its different product groups. Thus, where SBU concept is applied,each SBU sets its own strategies to make the best use of its resources (its strategic advantages) given the environment it faces. At such a level, strategy is a comprehensive plan providing objectives for SBUs, allocation of re-sources among functional areas and coordination between them for making optimal contribution to the achievement of corporate-level objectives. Such strategies operate within the overall strategies of the organization. The corporate strategy sets the long-term

STRATEGIC MANAGEMENT


Module 1 CONCEPT OF STRATEGY: hrs Corporate Planning Process

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