Vision, Mission & Goals/objts Comptitive Adv Strngths/Wknss Strategic Choice The External Env) (Oppr & Threats

Functional Level Strategy Business Level Strategy

Global Strategies Corporate Level Strategy

Strategic Management

Designing Orgl Structure

Implementing Strategy Matching Strcture & Cntrl to Strategy

Designing Stratgic Control Systems

Feedback

What is Strategy?
Strategy being a derivative of the Greek word Strategia which means generalship,_ the actual direction of military force , means literally the art of the general. This word entered the English vocabulary in 1688 as strategie. According to James, 1810 Military Dictionary, it differs from tactics of an enemy. Strategy concerns something done out of sight of an enemy. Its origin can be traced back to Sun Tzus The Art of War from 500 BC.

 The oldest military treatise in the world is the Art of War written by Sun Tzu, a Chinese military writer, around 500- BC. This treatise illustrates that Strategy, Planning, Leadership & the effective mgt of people were all basic areas of interest to early military leaders. Commenting on two of these areas, Sun Tzu wrote: On Planning: The General who wins a battle makes many calculations in his temple were the battle is fought. The General who loses a battle makes few calculations beforehand. It is by attention to this point that I can see who is likely to win or lose (Thomas P Philips, 1955).

 On Directing:
If the words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders are clear, and the soldiers nevertheless disobey, then it is the fault of their officers (Thomas P Philips, 1955). These basic guidelines are of value to military leaders even today when to strategise the things.

Igor Ansof
Prof of Strategic Mgnt , US International University, San Diego, published a book in 1965, on Corporate Strategy which represented a

crescendo in the development of Strategic Planning Theory rather propelled consideration of strategy into a new dimension. The end product of Strategic decision is deceptively simple; a combination of products and markets is selected for the firm. This combination is arrived at by addition of new product-markets, divestment from some old ones, & expansion of the present position. writes Ansof

 Before Ansof the key to unlocking strategy was in Gap Analysis ( the gap between where you are & where u want to be). The book also got Synergy to a wide audience & the word is overused today which he summed up as 2+2= 5 or it could be 2+2=3. (Dysergy) He further refined his definition of synergy to any
effect which can produce a combined return on the firms resources greater than the sum of its parts.

Ansoffs Strategic Success Paradigm

The following is the Strategic SP formulated by Ansoff specifying 5 conditions which optimises a firms profitability: 1. There is no universal success formula for all firms. 2. The driving variable which dictates the strategy required for success of a firm is the level of turbulence in its environment. 3. A firms success cannot be optimized unless the aggressiveness of its strategy is aligned with the turbulence in the environment. 4. A firms success cannot be optimized unless management capability is also aligned with the environment. 5. The key internal capability variables which jointly determine a firms success. .

 In ascertaining SSP, it took him 11yrs & was tested to

over 500 firms in the US, Japan, Indonesia, Algeria, Abu Dhabi, Australia & Ethiopia. Statistical results were strongly favourable to the paradigm.

His contribution includes:

a) Corporate Strategy, McGraw Hill, NY, 1965 b) Strategic Management, Macmillan, London, 1979 c) Implanting Strategic Management, (2nd Edn) Prentice Hall, London, 1990.

Paralysis by Analysis
Ansoff argued vehemently, that effective analysis does not guarantee effective, or even appropriate, implementation. IBM had all the data about its markets, yet reached the wrong conclusions. Harold Macmillan, British PM, was once asked what was the most difficult thing about his job. Events, my dear boy Events, So, analysis for all its usefulness, does not dictate events. This may add up but they dont necessarily work. So, Ansoff himself labeled paralysis by analysis, i.e. repeatedly making strategic plans which remained unimplemented. This was later on dealt with by Henry Mintzberg by doing away with the dogma strategy is concerned with making predictions based on analysis.

 Research by the American Planning Forum found that a mere 25% of companies consider their planning process to be effective. The skeptics argue that it is all well & good to come up with a brilliantly formulated strategy, but quite another to implement it. By the time implementation begins, the business environ is liable to have changed & be in the process of changing even further.

Henry Mintzberg
Mintzberg in his book, The Rise & Fall of Strategic Planning, takes on the full might of conventional planning orthodoxy. Too much analysis gets in our way. The failure of strategic planning is the failure of formalization, says Mintzberg, identifying formalization as the fatal flaw of modern management.

 Mintzberg argues the case for what he labels strategic programming His view is that strategy has for too long been housed in ivory towers built from corporate data and analysis. It has become distant from reality, which otherwise needs to be completely immersed in reality.

 Mintzberg has famously coined the term crafting strategywhereby strategy is created deliberately, delicately & dangerously as a potter making the pot. To Mintzberg Strategy is more likely to emerge, than be produced by a group of strategists sitting round a table believing they can predict the future. He argues that strategy is not the consequence of planning but the unforeseen consequences,.

The Traditional Approach

The planning theme remains important component of most management definitions of strategy as is reflective from the Harvards Alfred Chandler definition of strategy the determination of the basic long-term goals and objectives of an enterprise, & the adoption of courses of action & the allocation of resources necessary for carrying out these goals. Implicit in Chandlers definition is the idea that strategy involves
rational planning . The scenario based planning is designed to educate general managers

about the complex & dynamic nature of the companys environment . E.g. during early 1980s Shells oil price crash anticipation subsequently occurred in 1986 & remained profitable after the oil prices crashed & the rivals operated under illusion.

Criticism evoked against Planningbased Strategy

Modern Approach: Henry Mintzberg of McGill University has pointed out against Planning-based strategy,
the planning approach incorrectly assumes that an organizations strategy is always the outcome of rational planning. According to Mintzberg, definitions of strategy that stress the role of planning ignore the fact that strategies can emerge from within an organization without any formal plan.

 Mintzberg meant to say that even in the absence of intent, strategies can emerge from the grassroots of an organization. Indeed, strategies are often the emergent
response to unforeseen circumstances. Mintzbergs point is that strategy is more than what a company intends or plans to do, it is also what it actually does. His argument is that emergent strategies are often successful & may be more appropriate than intended strategies. Richard Pascale presents the case of Honda Motor Co, when intended to focus on selling 250/350 cc machines instead of 50ccHonda cubs while entering into the US motor cycle market in 1959.

Emergent and Deliberate Strategies

Source:Strategy Formation in an Adhocracy. by Henry
Mintzberg & Alexandera McHugh
Intended Strategy

Deliberate strategy

Realized Strategy

Unrealized Strategy

Emergent Strategy

James B Quinn of Dartmouth College has defined strategy as the pattern or plan that integrates an
orgnisations major goals, policies, & action sequences into a cohesive whole. Along the same lines, William F Glueck defined strategy as a unified, comprehensive, & integrated plan designed to ensure that the basic objectives of the enterprise are achieved.

 Strategy is defined as:

Large-scale, future-oriented plans for interacting with the competitive environment to achieve company objectives.
A companys strategy is managements game plan for growing the business , staking out a market position, attracting and pleasing customers, competing successfully, conducting operations & achieving targeted objectives.

SM Defined:
Glueck (1984) defines strategic management as a stream of decisions and actions which lead to the development of an effective strategy or strategies to help achieve corporate objectives. The end result of strategic management is a strategy or a set of strategies for the organization.

Hofer and others (1984) consider strategic management as the process which deals with the fundamental organization renewal and growth with the development and with the organizational systems needed to efficiently manage the strategy formulation and implementation

 Ansoff (1984) states that strategic management is a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way that will assure its continued success and make it secure from the surprises.

 Sharplin (1985) defines strategic management as the formulation and implementation of plans and carrying out of activities relating to the matters which are a vital pervasive or continuing importance to total organization. Harrison and St. John (1998) define strategic management as the process through which organizations analyse and learn from there internal and external environments establish strategic directions, create strategies that are intended to help achieve established goals, and execute these strategies, all in an effort to satisfy key organizational stake-holders

 Kenichi Ohmac, world renowned mgnt expert & author observes in his well known The mind
of the Strategist

what business strategy is all about- what distinguishes it from all other kinds of business planning- is in a word, sustainable competitive advantage as without competitors there would be no need for strategy.

Gaining competitive advantage:

According to Porter, the crux of strategy is choosing
to perform activities differently than rivals do.

In Competitive Advantage (1985) Michael Porter contends that there are three ways to gain CA: I) Becoming lowest cost leader in a given mrket II) By being the producer of differential product III) By being focused producer As per Alex Miller CA is= Cost leadership, Product differential and Quick Response.

Four Strategic Approaches for achieving sustainable competitive Adv.

A Co attains sustainable Competitive advantage when an attractive number of buyers prefer its products or services over the offerings of competitors/rivals & when the basis for this preference is durable. Four approaches of SCA are: Being the industrys low-cost provider. ( Wal-Mart, & Southwest Airlines) Outcompeting rivals based on such differentiating features as high quality, wider product selection, added performance, better service, more attractive styling, technological superiority or usually good value for the money. (Johnson & Johnson in baby products, Mercedes & BMW engineering design & performance).

 Focusing on a narrow market niche ( by serving special needs & tastes of niche buyers) like, McAfee in virus protection software, Starbucks in premium coffees & coffee drinks , Krispy Kreme in doughnuts. Developing expertise & resources strengths that give the Co competitive capabilities that rivals cant easily imitate or trump with capabilities of their own. ( For example, like Canon, McDonald).

Five Indian firms among world's most innovative

Washington, Sep 7 (IANS) Five Indian companies including Larsen & Toubro, Hindustan Unilever and Infosys are ranked on Forbes magazine's list of "The World's Most Innovative Companies" topped by four US companies. Larsen & Toubro with an annual sales growth of 19 percent is ranked ninth in the world followed by Hindustan Unilever (12) with 11.4 percent. Infosys (19) comes third with 12.7 percent growth thanks to what the US business magazine called a lower "innovation premium."

 This measures the difference between the value of the company's existing businesses and its expected future innovations. Companies must also have $10 billion in market capitalization and spend at least one percent of their asset base on research and development. Tata Consultancy Services (29) with 19.5 percent was fourth among Indian companies with Sun Pharmaceutical Industries (38) with a 14.6 growth bringing up the rear.

 Four US companies- Cloud computing king Salesforce.com, drug major Alexion Pharmaceuticals, internet retail giant Amazon.com and open source software leader Red Hat took the top four places. Forbes analysis show at least three key things that the innovative companies do to create and sustain an innovation premium. These were: How well companies leverage people, process, and philosophies, differentiates the best in class from the next in class when it comes to keeping innovation alive and delivering an innovation premium year after year.

 Forbes also featured S.D. Shibulal, cofounder and CEO of Infosys calling him "both observer and experimenter." In his 30 years at Infosys Shibulal says "there is nothing that I have not done." He was the first sales person, has done account management, launched its internet consulting practice, is a network expert, helped design and launch its first ecommerce application, and has been the head of both delivery and sales, the magazine noted.

 To get a new perspective, Shibulal took a five year sabbatical to work for another firm, Sun Microsystems, Forbes said. He's also known as an experimenter and "gadget freak" and revered as a "gizmo guru." Forbes said it had found that successful leaders personally understand how innovation happens and they try to imprint their behaviours as processes and philosophies within their organization.

Why to have a Strategy?

a good strategy is the commercial logic of a business, that defines why a firm can have a competitive advantage & a place in the sun. To be complete, a strategy must include a definition of the domain- the lines of business, types of customers, geographical reach- in which the firm competes. It must also include a definition of the firms distinctive competencies & the competitive advantage that gives the firm a special hold on the chosen business domain. Strategy also means what a co does, how it actually positions itself commercially & conducts the competitive battle not what it says or what its strategy documents propound.

Strategic Management
Strategic Management is defined as:

the set of decisions & actions that result in the formulation & implementation of plans designed to achieve a companys objectives

Strategy Management
Strategic Management involves around Formulation of strategic intent. Conducting analysis into the cos internal conditions & capabilities. Assessment into the cos external environmnt. Finding an appropriate strategic fit. Developing annual objectives & short term strategies that are compatible with the selected set of long term objectives & grand strategies.

 Fred RD, defined Strategic Management as: the art & science of formulating , implementing & evaluating cross-functional decisions that enables an organisation to achieve its objectives.
Most Cos dont themselves prepare for future competitive advantage because they are run by managers not by leaders. By maintenance engineers not by architects. Hamel & Prahlad

 Strategic Management is indeed Managing for Future or Competing for Future. As Peter Drucker warns, mgnt has no choice but to anticipate the future, to attempt to mould it, and to balance short-range & long range goals. It requires decision-now, It imposes risk now It requires action now, It demands allocation of resources now It requires work now.

Drucker further argues that the real task of SM includes the following: Identifying the new & different businesses, Technologies & Markets. He further argues that the work starts with the question, like: What is our present business? Which of our present businesses should we abandon? Which should we play down? Which should we push & supply new resources to?

What purpose does a Strategy serve? Without a strategy, an organisation is like a ship without a rudder, going around in circles. It is like a tramp; it has no place to go.
Joel Ross & Michael Kamy

What is Peculiar in SM?

SM Integrates various functions- central to capitalizing on functional expertise. It is oriented towards achieving organizationwide- to avert achieving a local maximum while missing the global optimum. It considers a broad range of Stakeholders It concerns with efficiency & effectiveness. Competitive Advantage being its focal point.

Time horizon is a big consideration. It seeks an appropriate strategic fit It is no longer a planning but beyond that. It is comprehensive, integrated & unified. It more believes in synergistic effect. It enables firm to out-form the rivals through CA. It provides a clearer sense of strategic vision for the firm.

 It sharpens focus on what is strategically important. It improves understanding of a rapidly changing environment. It serves as a road map for the firms future direction by embarking upon: i) Where we are? ii) Where we want to go? iii) How to get there?

Researches Reflected:
Orgs that engage in SM generally outperform those that do not. (T.I. Anderson:2000) The attainment of an appropriate fit or match between an orgnisations environment & its strategy, structure & processes has +V effects on the performance of organization. (EJ. Zojac, 2000)

Different Levels of Strategy

Corporate Level Strategy. (Policy formulation at the
apex body of the organization as a whole) Business Level Strategy. (strategies to various business processes/units respectively) Functional Level Strategy (Strategies regarding various functional areas like marketing, finance, personnel etc) Global Level Strategies. ( Strategies regarding the entry mode, diversification etc while entering the foreign markets).

Strategic Planning Process Model

It includes 5 major steps: 1. Selecting the Corporate Vision, Mission and Goals. 2. Analysing the Orgns external environment in order to guage the weaknesses & strengths of the organisation. 3. Analyzing the Orgns internal operating environmnet to identify its strengths & weaknesses. 4. Selecting strategies built on the Orgns strengths & correct its weaknesses in order to take advtg of external opportunities & counter external threats. 5. Implement the strategies.

When Strategy undergo a Change?

According to Mintzberg, strategy making is not typically a regular, continuous process.
it is most often an irregular, discontinuous process, proceeding in fits & starts. There are periods of stability in strategy development, but also there are periods of flux, of groping, of piecemeal change, and of global change. What is that which brings about this strategic drift? But there are situations when mgnt believes that it requires a mere fine tuning esp the orgs which have a particular strategic orientation for about 10-20 years before making a substantial change in its present strategies/direction.

Reasons for Strategic Change

Triggering Events that lead to Change are: New CEO,s mindset aiming at questioning the very reason of organizations existence. External Intervention indifferent attitude of financers of the project. Firms Ownership to be at stake. Strategic inflection Point coined by Andy Grove is a substantial environmental change, introducing new technologies, a different regulatory environment, change in customers value set or preferences.

Strategic Decision-making
A strategic decision making simply allows the orgs to grow larger & more complex with more uncertain conditions & are long-run future of the entire org with 3 features as:
Distinguishing the Strategic Decisions: Rare: Have no precedent to follow. Consequential: commits substantial resources & demand a great deal of commitment from people at all levels. Directive: Set precedents for lesser decisions & future actions throughout the organization.

Modes of Strategic Decision Making

Some decisions are the result of brilliance and power of the people who are independent of any resource constraint or counseling but some are still who develop the knack out of a series of small incremental choices . As per Henry Mintzberg, the three most typical approaches or modes of SD making are : 1. Entrepreneurial Mode. 2. Adaptive Mode, & 3. Planning Mode. ( However, 4th mode, was added by Quinn later as under: 4. Logical Incrementalism

Dimensions of Strategic Decisions

Typically the strategic issues have the following dimensions: Strategic issues Require Top-Management Decisions. Require large amounts of the Firms resources Often affect the Firms long term prosperity. Are Future Oriented. Usually have multifunctional or Multibusiness consequences. Require Considering the Firms External Environment.

Strategist & Role of a Strategist