Strategy Indira.1

8/10/2019 Strategy Indira.1

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Faculty :

Module :

S.Duttagupta

Business Policy & Strategic Management

1


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Session 1

Strategic Management Concepts

Topics to be covered in this session:


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Session Learning Objectives

At the end of this session you should be able to understand:

1. Strategy, Strategic Management Process, StrategicCompetitiveness, Competitive Advantage, Above AverageReturns,

2. The 21st century competitive landscape, Globalization andTechnological Changes

3. The Input Output model

4. Strategic Intent: Vision, Mission and Value5. Stakeholders and their ability to influence organizations


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A strategy is a long-term view of an organizations commitments and actions to gain competitiveadvantage using core competencies

The Strategic Management Process involves decisionsto achieve strategic competitiveness

Strategic competitiveness depends on a firms abilityto formulate and implement a value creating strategyto earn above-average returns.

Competitive advantage is the ability of a firm to

outperform in cost or quality or productivity over itscompetitors

Above average returns are returns more thancomparable investment at similar risks

Few definitions


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What does Strategy Involve?

It involves knowing where we were, wherewe are and where we want to go & how? IT should be different from competition Should be responsive to true market needs &

have significant impact in the marketplace Should be visionary & yet focused so as to

capture the imagination & commitment of theworkforce and the other stakeholders

It is not tactical steps like TQM, BPR orBenchmarking


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The word strategy has been derived from theGreek word STRATOS (army) and AGEIN to(lead )

Chinese military theorist Sun Tzu( Circa500BC) stated that the supreme art of war isto subdue the army without fighting

In recent times, F.W. Taylor (1900s) separatedplanning from doing while Henry Fayoltalked about administration in 1920s.

Evolution Of Strategy


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The Strategic management process involves:

1. Strategic Inputs- Understanding external andinternal environment and deciding the visionand mission.

2. Strategic Actions- Strategy formulation,

business level strategy, competitive dynamics,corporate level strategy, acquisition andrestructuring strategies, international strategy,strategy implementation, organizational

structure and control, strategic leadership,strategic entrepreneurship3. Strategic outcomes- strategic competitiveness,

above average returns


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The 21 st century competitive landscape

Global Economy-

Asian Tigers- Singapore, Hong Kong, South Korea, Taiwan

Chindia

BRIC- Brazil, Russia, India, China

The European Union

Tripod- USA, Japan, Europe

Toyota, Wal-Mart, McDonalds', GE


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The Input-Output (I/O)model for above-average returns

Inputs Process Output GoodsServices

FeedbackCost + Profit

Man,Money,Material Internal Climate

External Environment(PESTEL)


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Illustrations of I-O model

Study the external environment of the industry usingPESTEL

Study the Internal Climate- Strengths and Weaknesses Identify the inputs and their sources Develop and

acquire skills and assets needed to implement thechosen strategy

The Process : Strategy Implementation and control-Select strategic action and control

After the delivery of goods/ services ; collect andreview feedback from stakeholders to generate betterinputs in next cycle

Plan-Do-Control-Re-plan PDCR superior returns


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Steps to achieve Above- average returns

Resources

Capability

Competitive Advantage

An Attractive Industry

Strategy Implementation

Above Average Returns


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Physical- Factors of production (land, raw

materials, machines, finance)

Human- Employee skills, talented managers

Organizational- Goodwill, patents, processes,

Intellectual property

Resources and capabilities:


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Strategic Intent is the leveraging of a firms internalresources, capabilities and core competencies toaccomplish the firms goals in a competitiveenvironment.

Vision- The passion and big picture of theorganizationExamples-

Strategic Intent

Infosys- "To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered bybest-in-class people."Tata Steel - We aspire to be the global steel industry benchmarkfor Value Creation and Corporate Citizenship.


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Mission : Statement of the firms reason for existence; its

unique purpose and the scope of its operations.Examples-

Definitions, Contd.

Infosys - "To achieve our objectives in an environment of fairness,honesty, and courtesy towards our clients, employees, vendors andsociety at large."

Tata Steel strives to strengthen India's industrial base through theeffective utilization of staff and materials. The means envisaged toachieve this are high technology and productivity, consistent withmodern management practices.

It recognizes that while honesty and integrity are the essentialingredients of a strong and stable enterprise, profitability provides themain spark for economic activity.The Company seeks to scale the heights of excellence in all that it doesin an atmosphere free from fear, and thereby reaffirms its faith indemocratic values.


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Value- statements about how the organization will valuecustomers, suppliers, and the internal community. Value statementsdescribe actions which are the living enactment of the fundamentalvalues held by most individuals within the organization. Theyrepresent an organizations highest priorities and deeply helddriving forces.

Definitions, Contd.

Infosys - We believe that the softest pillow is a clear conscience. Thevalues that drive us underscore our commitment to: Customer Delight: To surpass customer expectations consistently Leadership by Example: To set standards in our business and transactionsand be an exemplar for the industry and ourselves Integrity and Transparency: To be ethical, sincere and open in all ourtransactions Fairness: To be objective and transaction-oriented, and thereby earn trustand respect Pursuit of Excellence: To strive relentlessly, constantly improve ourselves,our teams, our services and products to become the best


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Definitions, Contd.

Tata Steel Our PEOPLE , by fostering team work, nurturing talent, enhancingleadership capability and acting with pace, pride and passion. Our OFFER , by becoming the supplier of choice, deliveringpremium products and services and creating value with ourcustomers. Our INNOVATIVE APPROACH , by developing leading edgesolution in technology, process and products. Our CONDUCT , by providing a safe working place respecting theenvironment, caring for our communities and demonstrating highethical standards.

Value-


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Stakeholders are individuals and groups who canaffect and get affected by the strategic outcomesachieved by the firm; and who have an enforceableclaim on firms performance.

Capital market stakeholders-Suppliers of capital goods

Product Market stakeholders-Suppliers of revenue goods

Organizational stakeholders-employees, managers, non-managers

Stakeholders:


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Strategy Vs Tactics

Strategy focuses essentially on deciding on what theorganization is trying to do, what it is trying tobecome within its business environment. Changingstrategy is difficult and often causes problems.

Tactic is the implementation of the strategy. It is theset of management decisions focused on how toachieve the strategic objectives.

Example: once the organization decides that it wants

to be a car manufacturer, there are many decisionsthat must be made about how to profitablymanufacture cars.


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Nature of Business Policy

They tend to serve as precedents and thus reduce therepetitive rethinking of all the factors of individualdecisions which save time

Policies aid in coordination, if a member ofindividuals are guided by the same policies they canpredict more accurately the actions and decisions ofothers

Policy provides the stability in the organization andreduces frustration of members

Policies clearly specify routes towards the relatedgoals of the organization


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THANK YOU

Strategy Indira.1

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