Introduction To Strategic Management

Chapter 01 Introduction to Strategic Management

Objectives 

   

Evolution of the Concept of Strategic Management Importance of Strategic Management Components of Strategic Management The Three Levels of Strategy Planning Making Strategic Decisions

Introduction to Strategic Management

2

Evolution of the Concept of Strategic Management  

The word ‘Strategy’ originated from the Greek word ‘Strategia’, means a General or Military Commander Contribution of war on business strategy         

‘Attack Strength’ strategy ‘Attack Weakness’ strategy Bringing change to failing company Concentration of forces Forging a strategic alliance Patience and time Control the choke-point Containment is good enough A combat-ready company Introduction to Strategic Management

3

Ansoff’s Strategic Success Paradigm   

Igor Ansoff pioneered the concept of strategy The strategic success paradigm identifies the conditions that optimize profitability Key elements of paradigm     

No universal success formula Level of turbulence in the environment determines the strategy required for the success Aggressiveness of strategy should be aligned with the turbulence in the environment to optimize the firm’s success Management’s capabilities should be aligned with the environment to optimize the firm’s success Internal capability variables jointly determine the firm’s success 

Cognitive, Psychological, Political, Anthropological and Sociological Introduction to Strategic Management

4

Ansoff’s Strategic Success Paradigm  

Known as ‘Strategic Readiness Diagnosis’ He introduced 

Gap Analysis 



Where you are today and where you want to be

Concept of Synergy 

The whole is greater than the mere sum of the parts, and it requires an examination of how opportunities fit the core capabilities of the organization Introduction to Strategic Management

5

Mintzberg: Strategy as Craft 

 

Manager’s personal side affects the strategic management Intuitive view of strategic management Crafting Strategy 



More human approach to strategy formulation and implementation Strategy formulation is a deliberate, delicate and dangerous process Introduction to Strategic Management

6

Mintzberg: Strategy as Craft 

Types of ‘ideal’ organizational structures     

Simple structure Machine bureaucracy Professional bureaucracy Divisionalized ‘Ad hoc’ racy

Introduction to Strategic Management

7

Peter Drucker’s Contributions  

Strategic management means - Taking action to make the desired results come to pass Management by Objectives

Introduction to Strategic Management

8

Michael Porter: Strategy and Competitive Advantage 

Introduced Generic Strategies - to reduce uncertainty

Introduction to Strategic Management

9

Michael Porter: Strategy and Competitive Advantage 

Five force model

Introduction to Strategic Management

10

Michael Porter: Strategy and Competitive Advantage 



Value chain

Porter’s work can be summarized as ‘Vigorous Domestic Rivalry’ Introduction to Strategic Management

11

Importance of Strategic Management 

Strategy   



The plans made and actions taken to enable an organization fulfill its intended objectives Intended strategy Realized strategy

The hierarchy of strategic intent  

Purpose of an organization strives to achieve Strategic ends  

Generic Focused Introduction to Strategic Management

12

Components of Strategic Management     



Vision Company Mission Company Profile External Environment Strategic analysis and choice Long-term objectives

  

 



Annual objectives Grand Strategy Functional and Operational Strategies Policies Institutionalizing the strategy Control and evaluation

Introduction to Strategic Management

13

The Three Levels of Strategy Planning Corporate Level Business Level Functional Level

Introduction to Strategic Management

14

Steps for Making Strategic Decisions Formulate the Company’s Mission

Develop A Company Profile

Assessing the Company’s External Environment

Analyze the Company’s Options

Identify Most Desirable Option

Evaluating the Success of the Strategies

Implement Strategies

Develop Annual Objectives and Short-term Strategies Introduction to Strategic Management

Select a set of Long-term Objectives and Grand Strategies 15

Characteristics of Strategic Management Decisions    

Integrates various functions Considers a broad range of stakeholders Entails multiple time horizons Concerned with both efficiency and effectiveness

Introduction to Strategic Management

16

Developing a Strategic Perspective 

Reasons for failure in developing a strategic perspective       

Lack of awareness within the top management team about the organization’s real operating situations ‘Kidding themselves’ Syndrome Vested interests of the managers Excessive involvement in everyday operational problems Getting complacent after some initial success A change in direction is often misinterpreted Failure to locate its competitive edge Introduction to Strategic Management

17

Summary 

   

Evolution of the Concept of Strategic Management Importance of Strategic Management Components of Strategic Management The Three Levels of Strategy Planning Making Strategic Decisions

Introduction to Strategic Management

18