Introduction to startegic management.pptx

Strategic Management Basics

1. STRATEGIC MAN A GEME N T Session By: Hitesh Sharma & Tanya Singh

2. Hotstar? What’s their strategy?

3. Netflix?

4. Youtube?

5. What do these grand declarations have in common? Only that none of them is a strategy Strategy has become a catchall term used to mean whatever one wants it to mean. Executives now talk about their “service strategy,” their “branding strategy,” their “acquisition strategy,” or whatever kind of strategy that is on their mind at a particular moment. Increasing operational efficiency? Outperforming rivals?

6. What is a Strategy ? Strategy is the creation of a unique and valuable position, involving a different set of activities -- Michael E. Porter Strategy is derived from the Greek strategos, or “ the art of the general .” Strategy is the central integrated, externally oriented concept of how we will achieve our objectives. -- Hambrick & Fredrickson, 2005

7. But where did strategy come from? No two species can co-exist, that make their living in identical ways .

8. The ten schools of strategy formulation

9. What is a good strategy all about? A diagnosis : an explanation of the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as being the critical ones. A guiding policy : an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis. Coherent actions : steps that are coordinated with one another to support the accomplishment of the guiding policy.

10. Process of Strategic management There are four stages of strategic management. They are : Environmental scanning Strategy formulation Strategy implementation Strategy evaluation

11. Environmental Analysis

12. Porter 5 forces analyses Competitive Rivals The number of competitors Industry growth Similarities in what's offered Exit barriers Potential for New Entrants in an Industry Economies of scale - Industries where large-scale production leads to lower costs face less of a threat from new entrants.  Capital requirements -   High startup costs for equipment, facilities, etc., can deter new entrants.  Access to distribution channels -   If existing firms control the distribution channels—retail stores, online platforms, cable infrastructure, etc.—then new entrants would need to find a way to replicate that structure  Regulations - Licenses, safety standards, and other regulatory standards can create barriers Switching costs - If it's costly or difficult for customers to switch from existing firms to new entrants, the threat of entry is lower.

13. Supplier Power The number of suppliers : When few firms can give a company something it needs to stay in business, each has greater negotiating power Uniqueness : If a supplier provides a unique product or it's not easy to find a substitute, it is more dominant Switching costs : If it's costly or time-consuming to switch suppliers, then they have more power Customer Power The number of buyers : The fewer the buyers, the more they have power Switching costs : In industries like telecommunications, where it's easy for consumers to switch providers, they have to offer competitive terms. Price sensitivity : In the fast-fashion industry, where customers are highly price-sensitive, brands must keep their prices low to attract cost-conscious consumers. Informed buyers: In many sectors, the customers are savvy, know the competitive terrain well, and thus can negotiate better prices.

14. Threat of Substitutes Relative price performance : If the cost of a substitute is lower and its performance is comparable or better, customers are likely to switch to the substitute Customer willingness to go elsewhere: The threat is high if buyers find it easy to switch to a substitute

15. Factors influencing external environment

16. Dynamics of Internal Environment Internal environment is a component of the business environment, which is composed of various elements present inside the organization that can affect or can be affected with, the choices, activities and decisions of the organization It encompasses the climate, culture, machines/ equipment, work and work processes, members, management and management practices.

17. Factors influencing Internal environment:

18. The VRIO Framework VRIO is an acronym standing for Valuable, Rare, Inimitable, and Organized . The framework provides a way to analyze your resources and capabilities to uncover a sustainable competitive advantage. What the VRIO framework says is that in order to have a sustainable competitive advantage, one of your resources must be valuable, rare, inimitable, and organized. Examining resources and capabilities in this way is often referred to as a resource-based view (RBV). Resource-based view works on the premise that resources and capabilities are fundamental to superior performance for a firm .

19. WHAT IS STRATEGY FORMULATION? Strategy formulation is the process of using available knowledge to document the intended direction of a business and the actionable steps to reach its goals. This process is used for resource allocation, prioritization, organization-wide alignment, and validation of business goals. A successful strategy can allow your organization to share one clear vision, catch biases by examining the reasoning behind goals, and track performance with measurable key performance indicators (KPIs).

20. Levels of Strategy

21. Corporate level strategy A corporate-level strategy can be instrumental in outlining your company's goal for the following year. You need to break down all steps that make it clear for your employees the path they're supposed to take. The type of corporate-level strategy you select can be an indicator of the company's financial success and the method they take to generate profits.

22. Types of Corporate-level strategy

23. Stability Strategy As the name implies, a stability business strategy seeks to maintain operations and market size and position. This strategy is characteristic of small risk-averse firms or firms operating in a very precarious market that is comfortable with its current position.

24. Expansion Strategy An expansion strategy is synonymous with a growth strategy. A firm seeks to achieve faster growth, compete, achieve higher profits, grow a brand, capitalize on economies of scale, have greater impact, or occupy a larger market share. This may entail acquiring more market share through traditional competitive strategies, entering new markets, targeting new market segments, offering new produce or services, expanding or improving current operations.

25. Retrenchment Strategy A redemption strategy seeks to restructure, sell or otherwise divest a business unit. The purpose is to reduce costs, streamline operations, or stabilize cash flow.

26. Business level strategy: Business level strategies refer to the combined set of moves and actions taken with an aim of offering value to the customers and developing a competitive advantage, by using the firm’s core competencies, in the individual product or service market. It determines the market position of the enterprise, in relation to its rivals. Business-Level Strategies are mainly concerned with the firms having multiple businesses and each business is considered as Strategic Business Unit (SBU).

27. Cost Uniqueness Competitive advantage Amazon, Mc Donald, Coca-Cola etc . Apple, Toyota, etc . South-west airlines, Costco etc. Rolls Royce, Louis Vuitton etc.

28. Functional level strategy Functional strategy is the approach, a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity. It helps managers in focusing company’s major functional areas of activity.

29. Resources, Capabilities and Core-competence

30. Core-competence: A core competency is a concept in management theory introduced by C. K. Prahlad and Gary Hamel. It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" and therefore are the foundation of companies' competitiveness. Resources: Resource refers to all the materials available in the internal or external environment which are technologically accessible, economically feasible and culturally sustainable and helps business to satisfy consumer needs and wants. Capabilities: The word capability has its root in the systems engineering , which is defined as the ability to execute a specified course of action. A capability may or may not be accompanied by an intention. 

31. Resources and Capabilities in relation to competitive advantage The competitive advantage of an organisation arises from the resources and capabilities that are in place within the organisation. Competitive advantage leads to strategic success , and a lack of it leads to a lack of success.

32. Primary Activities

33. Secondary Activities