STRATEGIC MANAGEMENT

Strategic management is not a box of tricks or a bundle of techniques. It is analytical thinking & commitment of resources to action. Peter Drucker

The Strategic Management Process

What Is "Strategy" ?
Concept & Definition
Consists of competitive moves & business Management's "game plan" for
Running the Business. Strengthening firm's competitive position. Satisfying Customers. Achieving performance targets.

approaches to produce successful performance.

Thinking Strategically: 3 Big Strategic Questions

1. Where are we now ? 2. Where do we want to go ? Business positions management wants to stake out. FINANCIAL outcomes to achieve. STRATEGIC outcomes to achieve. 3. How will we get there?

5 Tasks of Strategic Management

Developing a strategic vision & business mission. Setting objectives. Crafting a strategy to achieve the objectives. Implementing & executing the strategy. Evaluating performance & initiating corrective adjustments.

1st Task of Strategic Management Developing a Vision & Mission

Begins with thinking strategically
About firm's future makeup & Forming vision of firm's future in 5-10 years.

[Contd]

1st Task of Strategic Management

Developing a Business Vision & Mission.
Task is to
Inject sense of purpose into firm's activities. Provide LONG-TERM DIRECTION. Give firm Strong Identity. Decide "WHO we are, WHAT we do, & WHERE we are headed.

Developing A Vision & Mission

An organisation's MISSION reflects management's vision of what firm seeks to do & what it wants to be.
Provides clear view of what firm is trying to accomplish for its customers. Indicates intent to stake out a particular business position.

Specific Questions That Help Form Strategic Visions

What business are we in now? What business do we want to be in? What will our customers want in future? What are expectations of our stakeholders? [Contd]

Specific Questions That Help Form Strategic Visions

Who will be our future competitors? suppliers? partners? What should our competitive scope be? How will technology impact our industry? What environmental scenarios are possible?

Sample Mission Statements

AVIS RENT-A-CAR
Our business is renting cars. Our mission is total customer satisfaction.

EASTMAN KODAK
To be the world's best in chemicals and electronic imaging.

Sample Mission Statements

McDonald's
Key Market To offer the fast food customer. Contribution Food prepared in the same high-quality manner world-wide, tasty and reasonably priced. Distinction Delivered in a consistent, low-key decor and friendly atmosphere.

2nd Task of Strategic Management

Setting Objectives
Purpose of setting OBJECTIVES is to

Convert mission into performance targets. Create yardsticks to track performance. Establish performance goals requiring stretch. Push firm to be inventive, intentional, focused.
[Contd]

2nd Task of Strategic Management

Setting Objectives
Setting CHALLENGING BUT ACHIEVABLE objectives guards against Complacency. Drift. Internal confusion. Status quo performance. [Contd]

Two Types of Objectives Needed

Financial Objectives
Outcomes that relate to improving firm's financial performance.

Strategic Objectives
Outcomes that will result in greater competitiveness & stronger long-term market position.

3rd Task of Strategic Management

Crafting A Strategy

Strategy-Making concerns HOW to Achieve desired strategic & financial objectives. Out-compete rivals & win a competitive advantage. Respond to changing industry & competitive conditions. Defend against threats to firm's well-being Grow the business.

What Does A Firm's Strategy Consist Of?

How to satisfy customers. How to grow the business. How to respond to changing industry & market conditions. How to best capitalise on new opportunities. How to manage each functional piece of business. How to achieve strategic & financial objectives.

Crafting Strategy Is An Exercise In Entrepreneurship

Strategy-Making is entrepreneurial

Risk-taking & Venturesome. Innovation and business creativity. Keen eye for spotting market opportunities. Choosing among best alternatives.

[Contd]

Crafting Strategy Is An Exercise In Entrepreneurship

Strategy-Making challenge is to keep strategy

Fresh. Timely. Responsive to changing conditions. Opportunistic.

Characteristics of Entrepreneurial Managers

Boldly pursues new strategic opportunities.

Leads the way to improve firm performance.

Willing to be a first-mover & take risks. Responds quickly & opportunistically to new developments.

Why Good Management of Strategy Matters?

Powerful execution of a powerful strategy is a proven recipe for success.

Crafting & implementing strategy are CORE management functions.

[Contd...]

Why Good Management of Strategy Matters?

To qualify as WELL-MANAGED, a firm should

Have an attractive strategy. Demonstrate proficiency in executing strategy.

A great strategy is good enough to overpower rivals & flexible enough to overcome obstacles.

4th Task of Strategic Management

Implementing Strategy
Implementing strategy involves
Creating fits between way things are done & what it takes for effective strategy execution. Executing strategy proficiently & efficiently. Producing excellent results in timely manner.
[Contd...]

4th Task of Strategic Management

Implementing Strategy
Most important FITS are between strategy AND
Organisational capabilities. Reward structure. Internal support systems. Organisational culture.

Strategy Implementation
Strategy implementation is an internal, operations-driven activity involving organising, budgeting, motivating, culture-building, supervising, and leading to "make the strategy work" as intended!

What Does Strategy Implementation Include?

Building a firm capable of carrying out strategy successfully. Allocating ample resources to strategy-critical activities. Establishing strategy-supportive policies. Instituting best practices & programs for continuous improvement. [Contd]

What Does Strategy Implementation Include?

Installing support systems.

Tying reward structure to achievement of results. Creating a strategy-supportive corporate culture.

Exerting strategic leadership.

5th Task of Strategic Management

Evaluating Performance
None of the tasks of strategic management are a one-

time only exercise

Times & conditions change. Events unfold. Better ways to do things become evident. New managers with different ideas take over .

[Contd...]

5th Task of Strategic Management

Evaluating Performance
Managers must constantly evaluate performance. Monitor situation & decide how well things are going. Make necessary adjustments.

Evaluating Performance
Corrective adjustments can entail

Altering firms long-term direction. Raising or lowering performance objectives. Modifying the strategy. Improving strategy execution.

Who Performs The 5 Strategic Management Tasks?

CEO & other senior corporate level executives. Managers of subsidiary business units. Functional area managers within a subsidiary business unit. Managers of major operating departments & geographic units.

Strategic Roles of a Board of Directors

See that 5 strategic management tasks are performed adequately. Review important strategic moves & officially approve strategic plans. Ensure strategic proposals are adequately analyzed & superior to alternatives. Evaluate caliber of top managements strategy-making & implementing skills.

Benefits of Strategic Approach to Managing

Guides entire firm regarding what it is we are trying to do & to achieve. Lowers managements threshold to change. Provides basis for evaluating competing budget requests & steering resources to strategysupportive, results-producing areas. Unites numerous strategy-related decisions of managers at all Organisational levels. Creates a PROACTIVE, rather than REACTIVE, atmosphere. Enhances LONG-RANGE performance.

Conclusion

Good strategy and good strategy execution are the most trustworthy

signs of good management.

Bibliography
Strategic Management Thompson & Strickland Tata McGraw Hill Edition, New Delhi. Strategic Management by M J Ryall & Philip Sadler. Strategic Management An Analytical Introduction by Luffman.

THE END