Basic Concepts Of Strategy

Understanding basic concepts Conceptual foundations of strategic management involving formulation,

Fortune magazine has declared “ The most valuable product on this planet is not the micro chip, not the automobile, not the television set. What has produced more wealth than any other thing dreamed of by the mind of a man is sugar

How was it made possible?

One word!

Strate gy

It is process of playing with your strengths and covering your weakness to capitalize the opportunities ward off the threats which are available in external environment.

In a more simple language!

“Creating a superior customer value.”

In other words

“ Creating competitive advantage and making sure that it

Financial performance Competitive advantage

Structural Position

Process Execution

Enterprise Synergies

Organizational Capacity

The Architecture of

Owners/Stakeholders Local community Suppli ers

Managers

Governme Employe nt es

Trade Associations Custome rs

The Public at large

Constituents of Strategic Building

Process of Strategic Management Environment al Scanning External Societal Environment General forces Task Environment Industry Analysis

Strategic Formulation

Vision Mission Objectiv es Strategi es

Internal Structure----Chain of command Culture--- Beliefs, Expectation, values Resources----Assets, Skills, Competencies, Knowledge

Strategic

Implementat ion

Program s Budgets Procedur

Evaluation & Control

Performance

Differentiation

Cost leadership

Competitiv e Advantage

Economic Value added

Market Value added

Quick Response

Competitive Advantage: The focal Point of Strategy

Levels of Strategy 3.Corporate Level Strategy 4.Business Level Strategy 5.Functional Level

1 1

12

4

2

8

5

3

7

6

9

1 0

A typical Formal Strategic Planning Process

1 1

Phases of Process

2. Evaluate performance in light of goals and identify gap 3. Relate gaps to environmental conditions. 4. Relate gaps to organizational capabilities. 5. Identify future goals, given understanding of gaps. 6. Describe broad action plans aimed at meeting goals. 7. Identify resources required by each functions to implem plans. 8. Aggregate needs by function into overall needs of business. 9. Allocate resources across multiple business units. 10.Reallocate resources across multiple functions. 11.Deploy resources within functions 12.Monitor use of resources within functions 13.Monitor use of resources across businesses.

The Different Forms of Strategy Deliberate Strategy

Inten d Strat

Unreali zed Strateg

Realiz ed Strate

Emerg ent Strate

Necessar y condition

Stability Simplici ty Industry Maturity

Motivating conditions

Capital intensity Tightly Coupled Operations

Use of Strategic Programming approach to implementation

External Control

Conditions that encourage a strategic programming approach to implementation

A comparison of Mechanistic and Organic Organizations

gy

an

e at r t

Relativ ely unstabl

Dynamism

ts n ge ing r e rn em lea on nal s i io as at h p niz m E rgnad Oy a ng i g e m t ra m st gra e o at pr r e c ib egi l e D trat n s o is and s a ph egy Em trat S

Relatively stable Relativ ely simple

Complex ity

Relativ ely comple

A Continuum of Approaches to strategy implementation