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

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
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Ansoffs 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 firms success Managements capabilities should be aligned with the environment to optimize the firms success Internal capability variables jointly determine the firms success

Cognitive, Psychological, Political, Anthropological and Sociological

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Ansoffs Strategic Success Paradigm

Known as Strategic Readiness Diagnosis He introduced

Gap Analysis

Where you are today and where you want to be

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
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Concept of Synergy

Mintzberg: Strategy as Craft

Managers 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
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Mintzberg: Strategy as Craft

Types of ideal organizational structures

Simple structure Machine bureaucracy Professional bureaucracy Divisionalized Ad hoc racy

Introduction to Strategic Management

Peter Druckers Contributions

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

Introduction to Strategic Management

Michael Porter: Strategy and Competitive Advantage

Introduced Generic Strategies - to reduce uncertainty

Introduction to Strategic Management

Michael Porter: Strategy and Competitive Advantage

Five force model

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Michael Porter: Strategy and Competitive Advantage

Value chain

Porters 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 Purpose of an organization strives to achieve Strategic ends

The hierarchy of strategic intent

Generic Focused
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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
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Introduction to Strategic Management

The Three Levels of Strategy Planning

Corporate Level Business Level Functional Level

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Steps for Making Strategic Decisions

Formulate the Companys Mission Develop A Company Profile Assessing the Companys External Environment Analyze the Companys Options

Identify Most Desirable Option Develop Annual Objectives and Short-term Strategies
Introduction to Strategic Management

Evaluating the Success of the Strategies

Implement

Strategies

Select a set of Long-term Objectives and Grand Strategies

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Characteristics of Strategic Management Decisions

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

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Developing a Strategic Perspective

Reasons for failure in developing a strategic perspective

Lack of awareness within the top management team about the organizations 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
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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

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