Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management

This Module covers Definition,Relevance , Characteristics , Level, Approach of Strategic Management along with Strategic Management Model, Strategist and Pitfall in Strategic Management

1. Strategic Management Prepared By Prof. Jitendra Patel Assistant Professor Prestige Institute of Management and Research. Indore.

2. Module I General Introduction 5 P’s of Strategies 1.1Definition 1.2Relevance of Strategic Management 1.3Characteristics of Strategic Management 1.4Strategic Management Model Explained 1.5Level of Strategies 1.6Four Approaches to Strategic Management 1.7Strategist and their role in Strategic Management 1.8Type of Strategist 1.9 Pitfalls in Strategic Management 06/01/2020 2 Jitendra Patel, Assistant Professor, PIMR, Indore

3. Management Strategies Strategy”, narrowly defined, means “the art of the general” (the Greek stratos, meaning ‘field, spread out as in ‘structure’; and agos, meaning ‘leader’). 5 P’s of strategy A plan , a “how do I get there” A pattern , in consistent actions over time A position that is, it reflects the decision of the firm to offer particular products or services in particular markets. A ploy , a maneuver intended to outwit a competitor A perspective that is, a vision and direction, a view of what the company or organization is to become. 06/01/2020 3 Jitendra Patel, Assistant Professor, PIMR, Indore

4. Definition Chandler(1962) Strategy is the determinator of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Mintzberg (1979) Strategy is a mediating force between the organization and its environment: consistent patterns in streams of organizational decisions to deal with the environment. Prahlad (1993) Strategy is more then just fit and allocation of resources. It is stretch and leveraging of resources. Porter (1996) Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value . 06/01/2020 4 Jitendra Patel, Assistant Professor, PIMR, Indore

5. Definition The systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. The strategic management process means defining the organization’s strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance. 06/01/2020 5 Jitendra Patel, Assistant Professor, PIMR, Indore

6. Relevance of Strategic Management Strategic management seeks to coordinate and integrate the activities of the various functional areas of a business in order to achieve long-term organizational objectives. The initial task in strategic management is typically the compilation and dissemination of the vision and the mission statement. This outlines, in essence, the purpose of an organization. Strategies are usually derived by the top executives of the company and presented to the board of directors in order to ensure they are in line with the expectations of the stakeholders. The implications of the selected strategy are highly important. These are illustrated through achieving high levels of strategic alignment and consistency relative to both the external and internal environment. All strategic planning deals with at least one of three key questions: " What do we do? " " For whom do we do it? " and " How do we excel? " In business strategic planning, the third question refers more to beating or avoiding competition. 06/01/2020 6 Jitendra Patel, Assistant Professor, PIMR, Indore

7. Relevance of Strategic Management Formulate the company’s mission, including broad statements about its purpose, philosophy, and goals. Conduct an analysis that reflects the company’s internal conditions and capabilities. Assess the company’s external environment, including both the competitive and general contextual factors. Analyze the company’s options by matching its resources with the external environment. Identify the most desirable options by evaluating each option in light of the company’s mission.  Select a set of long-term objectives and grand strategies that will achieve the most desirable options. Develop annual objectives and short-term strategies that are compatible with the selected set of long-term objectives and grand strategies. Implement the strategic choices by means of budgeted resource allocations in which the matching of tasks, people, structures, technologies, and reward systems is emphasized. Evaluate the success of the strategic process as an input for future decision-making. 06/01/2020 7 Jitendra Patel, Assistant Professor, PIMR, Indore

8. Characteristics of Strategic Management Uncertain  :Strategic management deals with future-oriented non-routine situation. They create uncertainly. Managers are unaware about the consequences of their decisions. Complex :Uncertainly brings complexity for strategic management. Managers face environment which is difficult to comprehend. External and internal environment is analyzed. Organization wide : Strategic management has organization wide implication. It is not operation specific. It is a systems approach. It involves strategic choice. Fundamental :Strategic management is fundamental for improving the long-term performance of the organization. Long-term implication :Strategic management is not concerned with day-to-day operation. It has long-term implications. It deal with vision, mission and objective. Implication :Strategic management ensure that strategic is put into action, implementation is done through action plans.  06/01/2020 8 Jitendra Patel, Assistant Professor, PIMR, Indore

9. Characteristics of Strategic Management Universal Strategy refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provides general guidance for specific actions in pursuit of particular ends. Nations have, in the management of their national policies, found it necessary to evolve strategies that adjust and correlate political, economic, technological, and psychological factors, along with military elements. 06/01/2020 9 Jitendra Patel, Assistant Professor, PIMR, Indore

10. Characteristics of Strategic Management 8. Keeping Pace With Changing Environment The present day environment is so dynamic and fast changing thus making it very difficult for any modern business enterprise to operate. Because of uncertainties, threats and constraints. Under such circumstances, the only last resort is to make the best use of strategic management which can help the corporate management to explore the possible opportunities and at the same time to achieve an optimum level of efficiency by minimizing the expected threats. 06/01/2020 10 Jitendra Patel, Assistant Professor, PIMR, Indore

11. Strategic Management Model Basic Model Environmental Scanning Strategy Formulation Evaluation and Control Strategy Implementation 06/01/2020 11 Jitendra Patel, Assistant Professor, PIMR, Indore

12. Strategic Management Model Environment External Societal Environment General Forces Task Environment Industry Analysis Internal Structure Chain of command Culture Belief, Expectations values Resources Assets, Skills, Competencies Knowledge Strategy Formulation Mission Reason For Existence Objectives What Result To be Achieved Strategies Policies Strategic plans to policies broad guidelines for decision-making Strategy Implementation Program Programs Activities Needs Budget Budgets Procedure Sequence of Steps Evaluation and Control Performance 06/01/2020 12 Jitendra Patel, Assistant Professor, PIMR, Indore

13. Strategic Model Explained Environmental Scanning Environmental Scanning is the monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation. Its purpose is to identity strategic factors – those external and internal elements that will determine the future of the corporation. The external environment consists of variables (Opportunities and Threats) that are outside the organization and not typically within the short-run control of top management. These variables form the context within which the corporation exists. 06/01/2020 13 Jitendra Patel, Assistant Professor, PIMR, Indore

14. Strategic Model Explained The internal environment of a corporation consist of variables (Strengths and Weakness) that are within the organization itself and are not usually within the short run control of top management. These variables form the context in which work is done. They include the corporation’s structure, culture, and resources. The internal environment of a corporation consist of variables(Strengths and Weakness) that are within the organization itself and are not usually within the short run control of top management. These variables form the context in which work is done. They include the corporation's structure, culture, and resources. The simplest way to conduct environmental scanning is through SWOT analysis . SWOT is an acronym used to describe those particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. 06/01/2020 14 Jitendra Patel, Assistant Professor, PIMR, Indore

15. Strategic Model Explained The simplest way to conduct environmental scanning is through SWOT analysis . SWOT is an acronym used to describe those particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. 06/01/2020 15 Jitendra Patel, Assistant Professor, PIMR, Indore

16. Strategic Model Explained Strategy formulation is the development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies and setting policy guidelines. 06/01/2020 16 Jitendra Patel, Assistant Professor, PIMR, Indore

17. Strategic Model Explained Strategy Implementation is the process by which strategies and polices are put into action through the development of programs, budgets and procedures. This process might involve changes within the overall culture, structure, and/or management system of the entire organization. Most of the times strategy implementation is carried out by middle and lower level managers with top management’s review. Some times refereed to as operational planning, strategy implementation often involves day-to-day decisions in resource allocation. It includes programs, budgets and procedures. 06/01/2020 17 Jitendra Patel, Assistant Professor, PIMR, Indore

18. Strategic Model Explained Evaluation and Control is the process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance. Managers at all levels use the resulting information to take corrective action and resolve problems. Although evaluation and control is the final major element of strategic management, it also can pinpoint weaknesses in previously implemented strategic plans and thus stimulate the entire process to begin again. 06/01/2020 18 Jitendra Patel, Assistant Professor, PIMR, Indore

19. Responsibility of plant managers, geographic unit managers, and lower-level supervisors Responsibility of heads of major functional activities within a business unit or division Responsibility of business –level general managers Responsibility of corporate-level managers Level of Strategies 06/01/2020 19 Jitendra Patel, Assistant Professor, PIMR, Indore

20. Four Approaches to strategic decision making process The Chief Architect approach : A single person – the owner or CEO –assumes the role of chief strategist and chief entrepreneur, singlehandedly shaping most or all of the major pieces of strategy. The Delegation Approach : Here the manager in charge delegates big chunks of the strategy-making task to trusted subordinates, down the-line managers in charge of key business units and departments, a high-level task force of knowledgeable and talented people from many parts of the company, self-directed work teams with authority over a particular process or function, or, more rarely, a team of consultants brought in specifically to help develop new strategic initiatives. 06/01/2020 20 Jitendra Patel, Assistant Professor, PIMR, Indore

21. Four Approaches to strategic decision making process The Collaborative or Team Approach : This is a middle approach when by a manager with strategy-making responsibility enlists the assistance and advice of key peers and subordinates in hammering out a consensus strategy. The Corporate Entrepreneur Approach : In the corporate entrepreneur approach, top management encourages individuals and teams to develop and champion proposals for new product lines and new business ventures. 06/01/2020 21 Jitendra Patel, Assistant Professor, PIMR, Indore

22. Strategist and Their Role Who are strategists? Strategists are individuals or groups who are primarily involved in the formulation, implementation, and evaluation of strategy. In a limited sense, all managers are strategists. They can be internal, as well as external 06/01/2020 22 Jitendra Patel, Assistant Professor, PIMR, Indore

23. List of Strategists Board of directors CEOs Entrepreneurs Senior Management SBU- Level Executives Corporate Planning Staff Consultants Middle Level Managers Executive Assistants 06/01/2020 23 Jitendra Patel, Assistant Professor, PIMR, Indore

24. 1. Board of Directors Who are they? Who appoints them? What are they supposed to do? What binds them? 06/01/2020 24 Jitendra Patel, Assistant Professor, PIMR, Indore

25. Board of Directors Variation in the boards of companies across sectors Directions to managers + Operational matters of significance Formal and informal functions Vital link between the company and the environment 06/01/2020 25 Jitendra Patel, Assistant Professor, PIMR, Indore

26. BoD as STRATEGISTS Guidance for objectives, review and appointment Strategic direction to the organization Exact role of board dependent on relative strength 06/01/2020 26 Jitendra Patel, Assistant Professor, PIMR, Indore

27. 2. Chief Executive Officer Who is a CEO? What else is he/she known as? How important is the CEO to the organization? 06/01/2020 27 Jitendra Patel, Assistant Professor, PIMR, Indore

28. Chief Executive Officer Defining Roles Theoretically: The Role Modeling Approaches Chief architect of organizational purpose, strategist or planner Organizational leader, organizer, or organizational builder Chief administrator, implementer, or coordinator Communicator of organizational purpose, motivator, personal leader or mentor 06/01/2020 28 Jitendra Patel, Assistant Professor, PIMR, Indore

29. Chief Executive Officer The other approaches: On parameters like: How time is spent Qualities & personalities Communication styles Demographic characteristics Managerial values Environment Managerial styles 06/01/2020 29 Jitendra Patel, Assistant Professor, PIMR, Indore

30. Example: Indira Nooyi (Pepsi co) Extremely important strategies for the company, for e.g., Acquisition of Tropicana Merger with Quaker Oats 06/01/2020 30 Jitendra Patel, Assistant Professor, PIMR, Indore

31. 3. Entrepreneurs The entrepreneur always searches for change, responds to it and exploits it is an opportunity. 06/01/2020 31 Jitendra Patel, Assistant Professor, PIMR, Indore

32. Example Kiran Mazumdar , a young entrepreneur, set up an export-oriented unit manufacturing a range of enzymes. She was actively involved in all aspects of policy formulation and implementation for her companies. 06/01/2020 32 Jitendra Patel, Assistant Professor, PIMR, Indore

33. 4. Consultants They can be individuals, academia, or consulting companies specializing in strategic management. 06/01/2020 33 Jitendra Patel, Assistant Professor, PIMR, Indore

34. McKinsey and Company, specializes in offering consultancy in the areas of fundamental change management and strategic visioning; Anderson Consulting, is in business restructuring, and info tech and systems; Boston Consulting helps in building competitive advantage; and KPMG Peat Marwick is in strategic financial management and feasibility studies for strategy implementation. 06/01/2020 34 Jitendra Patel, Assistant Professor, PIMR, Indore

35. 5. Corporate Planning Staff They support and assist the management, prepare & communicate strategic plans and conduct special studies & researches. 06/01/2020 35 Jitendra Patel, Assistant Professor, PIMR, Indore

36. 6. SBU- Level Executives The executive head of each SBU is responsible for the framing of strategies for that SBU and for the coordination with the other SBUs in the organization. 06/01/2020 36 Jitendra Patel, Assistant Professor, PIMR, Indore

37. Pitfalls in Strategic Planning Using Strategic Planning for gaining control over decisions and resources Doing strategic Planning only to satisfy accreditation and regulatory requirement Too hastily moving from mission development to strategy formulation Failing to communicate the plan to employees, who continue to work in dark. Top managers making many intuitive decisions that conflict with formal plan top management not actively supporting strategic – planning process. 06/01/2020 37 Jitendra Patel, Assistant Professor, PIMR, Indore

38. Pitfalls in Strategic Management Failing to use plan as a standard for measuring performance Delegating planning to a “ planner” rather than involving all managers Failing to involve key employees in all phases of planning Failing to create a collaborative environment supportive of change Viewing planning as unnecessary or unimportant process. Becoming so engrossed in current problems that insufficient or no planning is done Being so formal in planning that flexibility and creativity are stifled. 06/01/2020 38 Jitendra Patel, Assistant Professor, PIMR, Indore

39. References   David, F.D. ( 2011), “Strategic Management Concept And Cases”, Thirteenth Edition, Prentice Hall, South Carolina, USA . Dess , G.G., Lumpkin, G.T. and Marilyn, L. T. (2005), “Strategic Management”. 2 ed. New York: McGraw-Hill Irwin. Kazmi , A. ( 2008), “Strategic Management & Business Policy, Tata McGraw-Hill Publishing Company Limited, New Delhi. Nedelea , S. and Păun , L.A. (2009) “The Importance of the Strategic Management Process in the Knowledge-Based Economy ” , Review of International Comparative Management , 10(1), 95-105. Olsen, E (2009), “Strategic Planning Kit For Dummies”, 2nd Edition, Willey Publication. Role Of Strategists, retrieved from https://www.slideshare.net/07Deeps/role-of-strategists . Last assessed on 06 January 2020.