Transcript Strategic Management Framework

TOWARDS A FRAMEWORK FOR
STRATEGIC ANALYSIS
Objectives:
 To assess perspectives of strategy
 To outline the importance of strategy
 To define the concept of strategy
 To understand the strategic management process
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STRATEGIC MANAGEMENT: RELEVANCE
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INDUSTRY, BUSINESS AND ECONOMIC CYCLES ARE HIGHLY
VOLATILE, UNSTABLE, DYNAMIC AND TURBULENT
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THERE HAS BEEN A PARADIGM SIFT FROM
PROGECTIONISM → LIBERALIZED REGIME
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STRATEGIC MANAGEMENT: RELEVANCE
▪ LIBERALISATION/ GLOBALIZATION: CRITICAL COMPONENTS
 Delicensing And Deregulation
 Liberalization Of Trade
 Reduction In Direct And Indirect Tariffs
 PSU Disinvestment And Privatization
 Inflow of FDI/ FII Investments
 THE CONSEQUENCES
 Integration of World Markets
 Free Movement Of Capital, Labour, Goods And Services
 Promotion of Trade and Investments and reduced Entry And
Trade barriers
 Vulnerable To Social, Political, and Economic Shocks
 Aggravate Competition
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STRATEGIC MANAGEMENT: RELEVANCE
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STRATEGIES TO BE “CUSTOMER CENTRIC”
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OPPORTUNITIES TO BE “DISCOVERED AND
EXPLOITED” DESPTE IMMENSE AN DFIERCE
COMPETITION.
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“POTENTIALLY DANGEROUS” TO FULFILL ALL
ASPECTS OF CUSTOMER NEEDS AND EXPECTATIONS
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STRATEGIES → “CREATE AND ADD VALUE”
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STRATEGIC MANAGEMENT: RELEVANCE
PRE LIBERALIZATION
SCENARIO
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POST LIBERALIZATION
SCENARIO
Protected Market
High Restrictions
High Tariffs/ Regulation
Competition Limited
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Liberalized Market
Reduced restrictions
Reduced Tariffs
Low Entry Barriers
Severe Competition
3 Things to Remember:
1. Strategies to Survive
2. Strategies to Grow and Excel
3. Strategies to Sustain
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Morrison and Lee (1989)
Strategy formulation involves knowing:
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The competitive environment
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How to allocate resources
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How to structure organizations
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How to implement plans
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Being able to react to events
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Johnson and Scholes (1999)
Strategy is the direction and scope of an organization over
the long term which achieves advantage for the
organization through its configuration of resources within
a changing environment to meet the needs of markets and
to fulfill stakeholder expectations.
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Thinking strategically – the three big strategic questions
1. Where are we now?
2. Where do we want to go?
3. How will we get there?
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
1. Where are we now?
Involves thinking strategically about the company’s external
market environment and its internal situation & capabilities
2. Where do we want to go?
Involves thinking strategically about what top management
wants the company to be like in 5-10 years (levels of
performance, financial and strategic outcomes)
3. How will we get there?
Involves thinking about what strategy the company should
pursue to perform successfully and get from where it is to
where it wants to go
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MINTZBERG VIEW: THE CRITICAL 5 Ps
1.
PLAN → A consciously intended course of action, a guideline, or set
of guidelines to deal with a situation
2.
PATTERN → A stream of actions, a consistency of behaviour
3.
PLOY → SPECIFIC MOVES TO OUTWIT AND OUTSMART
RIVALS AND COMPETITORS
4.
POSITION → In a market or competitive environment (niche), a
sort of eco-system where some browse off one segment, and others
browse off another
5.
PERSPECTIVE → Reflects a firm’s ingrained way of seeing the
world, as in corporate culture, dominant ideology, individual’s
personality
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Why corporate strategy is important
 Corporate strategy involves the entire organization
 Corporate strategy is likely to concern itself with the survival of the
business as a minimum objective and the creation of value added as a
maximum objectives
 Corporate strategy covers the range and depth of the organization's
activities
 Corporate strategy directs the changing and evolving relationship of the
organization with its environment
 Corporate strategy is central to the development of sustainable
competitive advantage
 Corporate strategy is crucial to adding value
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Levels of strategy (1)
Corporate Level strategic decisions are concerned with:
 Overall purpose and scope
 Adding value to shareholder investment portfolio issues
 Resource allocation between SBUs
 Structure and control of SBUs
 Corporate financial strategy
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Levels of strategy (2)
Business Unit strategy is concerned with:
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Competitive strategy
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Developing market opportunities
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Developing new products/ services
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Resource allocation within the SBU
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Structure and control of the SBU
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STRATEGIC MANAGEMENT: USEFUL APPROACHES
Levels of strategy (3)
Operational Strategies are concerned with:
 The integration of resources, processes, people and skills
 Implementation of strategy
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The Various Levels of Strategic Management Process
Corporate Level Strategy
Top Management Decision by Corporate
Board Members/ conglomerates/ groups
• Mergers/ Acquisitions
SBU Level Strategy
• Expansion & Diversification
• Product Portfolio Mize
• Divestiture
• Alliances & Partnerships
• Collaborative Strategies
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The Various Levels of Strategic Management Process
Decision of Business Heads/ Unit Managers
Comprising the following
SBU Level Strategy
• Increase in MKT Share (%)
• Change in Product Portfolio
• Improve Financial Performance
• Positioning Strategy
All Business functions to BE Interrelated
Functional Level Strategy
• HR Strategy
• Marketing Strategy
• IT & communication
• Financial Strategy
Operational Level Strategy
Supervision and Control of
• Business functions
• Business Processes
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STRATEGIC MANAGEMENT: PROCESS
ETOP
LINK WITH
OBJECTIVES.
GOALS/ PURPOSE
INTERNAL
RESOURCES/
CAPABILITY
STRATEGY
ACTION PLANS
ORGANIZATIONS TO POSSSESS DUAL CAPABILITY
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STRATEGIC MANAGEMENT: PROCESS
ORGANIZATIONS TO POSSSESS DUAL CAPABILITY
1. Build and sustain competitive advantage
2. Earn above average profits
MISSION
VISION
OBJECTIVES
CSO (Common Shared
Objectives)
STRATEGIC INTENT
FORMULATION OF
ACTION PLANS
IMPLEMENTATION OF
ACTION PLANS
AUDIT REVIEW
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THE STRATEGIC MANAGEMENT PROCESS
A → ANALYSIS
D → DESIGN
I → IMPLEMENTATION
A → AUDIT
Suitable Framework for
formulation
implementation and
control on strategy
A → ANALYSIS
 Analyze and Define External Conditions
 The PEST ENVIRONMENTAL SCAN
 COMPETITOR ANALYSIS
 Identifying Competitive Conditions
 Assessing Degree and Structure of Conditions and Competition
 PORTERS FIVE FORCES MODEL → INDUSTRY COMPETITIVENESS
 VALUE CHAIN ANALYSIS
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THE STRATEGIC MANAGEMENT PROCESS
INTERNAL SCANNING
 Allocation of Resources
 Capability and Competency Mapping
 Strategic Group Mapping/ GIA
 Performance Bench Marking
 SWOT Analysis
 CSFs
 Core Vs Distinctive Competency
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THE STRATEGIC MANAGEMENT PROCESS
D DESIGN/ FORMATION OF STRATEGY
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Design Strategic Action Plans based on external environmental
conditions and internal resource mapping
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PORTER’S → Generic Strategies
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Integrated Strategic Approach
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Hyper competition in Fast Cycle Sectors
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Early Mover Advantage Sustain Ability
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Traditional Grand Strategies
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Expansion
Market Diversity
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Diversification
Product Diversity
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THE STRATEGIC MANAGEMENT PROCESS
 BCG Growth Share Matrix and ILC Model
 Strategic Options Under Various Industry Settings
 International Level Strategy
 Turn Around Strategy
 Consolidation and Restructuring Options
 Mergers/ Acquisition Synergies and Value Addition
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THE STRATEGIC MANAGEMENT PROCESS
I → IMPLEMENTATION/ EXECUTION
 Corporate Governance and Ethics
 Strategic Leadership
 Change Management
 Organization Structure and controls
 HRM Initiatives
 Revamp of Process, Systems, Resources and Facilitating
Strategic Change (Critical 7 S’s MODEL)
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THE STRATEGIC MANAGEMENT PROCESS
A → AUDIT
 Performance Measurement and Audit
 Periodic Monitoring and Evaluation
 Classify Yardsticks and Measure for Corporate Success
 Identify Critical Gaps/ Issues
 Introduce Course Corrective Actions
 Continuous Cyclical Process
 The Balanced Scorecard Model
 NGOs/ VOs →
Corporate Social Responsibility
Evaluation → Schemes/ Programs
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