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8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Amity International Business SchoolIMBA Semester III
International Strategic Management(Session 2)
CONCEPT OF STRATEGY AND STRATEGICMANAGEMENT
EVOLUTION OF STRATEGIC MANAGEMENT
Cmde R Bhandari (retd)
Tanvir Kaur
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionWH AT IS STRATEGY?
A strategy is a fundamental pattern of present and plannedobjectives, resource deployments, and interactions of anorganization with markets, competitors, and other environmentalfactors, to attain defined goals.
STRATEGY SHOULD SPECIFY :1.What (objectives / goals), and by When
2.Where (which industries/products/markets?),
3.How (allocation of resources and activities to gain competitiveadvantage).
Strategic Management ProcessThe process by which managers choose a set of strategies that willenable their company to achieve superior performance.
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionINTEGRATED VIEW OFSTRATGEY
FIT STRATEGY
STRETCH STRATEGY FACTORS
1. Marketing
2. Finance
3. Operations
4. R&D
5. Technology
ENVIRONMENT
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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STRATEGIC MANAGEMENT MODEL
Company Mission And
Social ResponsibilityExternal environment
RemoteIndustry (global & domestic)operating
Internal analysis
Strategic analysis and choice
Long term objectives Generic & grand strategies
Short-term objectives;
reward systemFunctional tactics
Policies that
empower action
Restructuring, reengineering,and refocusing the organization
Strategic control andcontinuous improvement
Possible?
Desired?
Minor impact
Major impact
FE
EDBACK
FE
EDBAC
K
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionCOMPONENTS OF STRATEGICMANAGEMENT
A GOOD STRATEGY CONTAINS
1.SCOPE: Should reflect the firm s purpose or mission.
2 .GOALS AND OBJECTIVES:Desired levels of accomplishment on one or more dimensionsof performance i.e volume growth, profitability, ROI, market share etc over specifiedtime periods; for each business/product and for the organization.
3.RESOURCE DEPLOYMENT:How the resources are to be obtained and allocated, acrossbusinesses, product-markets, functional departments, and activities within each business orproduct- market.
4.SUSTAINABLE COMPETITIVE ADVANTAGE:Market opportunities in each business andproduct-market and the company s distinct competencies or strengths relative to itscompetitors.
5.SYNERGY: The total performance of the related businesses to be greater than it wouldotherwise be: The whole becomes greater than the sum of its parts.
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionTH E STRATEGIC POSITIONTH E STRATEGIC POSITION :The impact on strategy of the external environment, internal
resources and competences, and the expectations and influences of stakeholders.
THE STRATEGICPOSITION
STRATEGICCHOICES
STRATEGYIN ACTION
Resources &Competences
Expectations& Purpose
TheEnvironment
Corporate ±level
strategies
Developmentdirections &
methods
Business-level
strategies
Organising
Enabling
Managingchange
IMPACT ON STAKEH OLDERS
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STRATEGIC DECISIONMAKING
Strategic Decision Making Requires:
1. Setting goals : Challenging but achievable. Stretch or fit alternatives!2 . Rationality : Exercising best choice among alternatives3. Creativity: Creative and original decisions through brainstorming4. Variability/ flexibility : Every situation is unique, no standard solutions5. Demographic factors : Age. Education, Intelligence, Values Cognition. Risk taking and
creativity of market and work force6. Group decision making : Participative approach and buy in
Dimensions Of Strategic Decisions
1 . Require top management decisions and commitment.2. Require large amount of firm s resources3. Affect the firm s long tem prosperity.4. Are future oriented .5. Usually have Multifunctional or Multibusiness consequences .6. Consider the firm s external environment.
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Name of InstitutionTH E LEADING EDGE OFSTRATEGY
ASPECT OF STRATEGY ENVIRONMENT - LEDFIT
RESOURCE - LED STRETCH
Underlying basis of strategy
Strategic fit betweenmarket opportunitiesand organisation sresources
Leverage of resources toimprove value formoney
Competitive advantagethrough
Correct positioningDifferentiation directedby market
Differentiation based oncompetencies suited toor creating market need
How small playerssurvive
Find and defend a niche Portfolio of competences
Risk- reduction Portfolio of products-businesses
Portfolio of competences
Corporate centre invests
in
Strategies of business
units or subsidiaries
Core competences
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Name of InstitutionBENEFITS/RISKS OFSTRATEGIC MANAGEMENT
Benefits1 . Enhance problem solving abilities.2. Group-think results in best choice
among alternatives.
3. Employee involvement informulation improvesunderstanding of productivity-reward relationship and heightenstheir motivation.
4. Gaps and overlaps among
individuals and groups are reducedas participation in strategyformulation clarifies roles inimplementation
5. Reduces resistance to change
Risks1 . Time spent on thinking through and
deploying strategy may affect theoperational focus of linemanagement.
2. If the formulators of strategy arenot involved in implementation,they may shirk responsibility for thedecisions.
3. Strategic managers must be trainedto anticipate and respond to thedisappointment of participatingsubordinates over unattainedexpectations.
4. Risk anticipation, mitigation andresidual impact may curb boldnessamong line managers
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EVOLUTION OF STRATEGY
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STAGE I:BASIC FINANCIAL PLANNING: Better operational control bytrying to meet budget
STAGE II :FORECAST BASED PLANNING: Improving planning for growthby trying to predict the future beyond next year.
STAGE III :EXTERNALLY ORIENTED PLANNING( STRATEGIC PLANNING ) :improving responsiveness to markets and competition by trying to thinkstrategically.
STAGE IV :STRATEGIC MANAGEMENT: Seeking a competitive advantageby also considering implementation and evaluation and control when
formulating strategy.STAGE V : INTERNATIONAL / GLOBAL STRATEGIC MANAGEMENT:Managing a worldwide competitive advantage
STRATEGIC PLANNING PROCESSH AS EVOLVEDTH ROUGH VARIOUS STAGES
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Name of InstitutionSTRATEGIC DECISION MAKING
Cognitive Biases as Obstacles
1 .Fall back on rule of thumb2.Prior Hypothesis bias --- Decisions based on beliefs rather than facts!3. Escalating Commitment --- pump in more resources to achieve success, evenif failure is evident.4. Reasoning by Analogy --- using simple analogies which may not be valid in thenew context.5.Representativeness adopting generalization from a small sample or even asingle incident --- eg all dotcoms will succeed like Amazon or Yahoo.
6.Availability Error Estimating the probability of error or success based on easeof visualising outcome.
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionCURRENT APPROACH
Strategy must bear in mind:
1 .Ideas and innovations..2.Encourage analytical thinking,3. Older Hands tend to over emphasize the risks of social, political and culturalconstraints.4.Analytic and evaluative techniques to establish direction and planimplementation, eg:
Devils advocacy --- review of both the plan and a critical analysis of theplan
Dialectic Enquiry --- generation of plan (thesis) and counterplan (antithesis)with debate over same.
8/9/2019 1737bconcept of Strategy Strategic Management Session 2 Ver2
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Name of InstitutionREFERENCES
1 . Johnson & Scholes, 2004, Exploring Corporate Strategy,Pearson Higher Education Ch 1 p 3 - 36
2. Pearce John A & Robinson Richard B, Strategic Management:Formulation, Implementation and Control, McGraw Hill, 2005Ch 1 p 2 22
3. Fred R David, Strategic management, Concepts and Cases,Prentice Hall, 2005 Ch 1p 2 - 47
4. www.quickmba.com5. http://papers.ssrn.com/sol3/results.cfm6. http://www.qdistrategies.com/growth.php7. Opening Case study IKEA, Kamel Mellahi & J George Frynas,
Global Strategic Management, Oxford University Press p 4 -58. Current articles from McKinsey and others as downloaded
prior to the sessions