Strategic management

An introduction
Without a strategy, a company is
like a ship without a rudder,
going around in circles. Its like a
tramp; it has no place to go.

-Hoel Ross and Michael Kami

 Strategy origin & definition
Originally, the word strategy has been derived from Greek
Strategos, which means generalship. The word strategy,
therefore, means the art of the general. Another variation is
the Greek word strategtia which was used first around 400
B.C. This connotes the art and science of directing military
forces.

When the term strategy is used in military sense, it refers to

action that can be taken in the light of action taken by
opposite party.

According to Oxford Dictionary, military strategy is the art of

so moving or disposing the instruments of warfare (troops,
ships, aircrafts, missiles, etc.) as to impose upon the enemy,
the place, time and conditions for fighting. Strategy ends, or
yields to tactics when actual contact with enemy is made.
In a generic sense Strategy is about
deployment of resources for the purpose of
out maneuvering the adversary in a
competitive terrain to achieve territorial
gains.
Strategy in context of Business
In business parlance, there is no definite
meaning assigned to strategy. Following
few definitions may clarify the concept of
corporate strategy:
KENNETH ANDREWS defined strategy as The pattern
of objectives, purpose, goals and the major policies and
plans for achieving these goals stated in such a way so
as to define what business the company is in or is to be
and the kind of company it is or is to be

IGOR ANSOFF explained the concept of strategy as

the common thread among the organizations, activities
and product markets, that defines the essential nature
of business that the organization was or planned to be
in future.
Alfred Chandler defines strategy as the determination of the
long-run goals and objectives of an enterprise, and the
adoption of courses of action and the allocation of resources
necessary for carrying out these goals.

William Glueck defines the term strategy as the unified,

comprehensive and integrated plan that relates the strategic
advantage of the firm to the challenges of the environment
and is designed to ensure that basic objectives of the
enterprise are achieved through implementation process
KENICHI OHMAE defines strategy as What business
strategy is all about is, in a word, competitive advantage. The
sole purpose of strategic planning is to enable a company to
gain , as efficiently, a sustainable edge over its competitors.
Corporate strategy thus implies an attempt to alter a
companys strength relative to that of its competitors in the
most efficient way.
 Theme of Strategy Common Thread*
(Common across all definitions of strategy despite semantic
differences - vital components of a strategy)

Objective orientation
Vector
Product Market Scope
Synergy
Competitive Advantage

(* Source: Corporate Strategy by Igor Ansoff 1965)

 Strategy Simplified
Consists of the combination of competitive
moves and business approaches used by
managers to run the company
Managements game plan to
Attract and please customers
Stake out a market position
Compete successfully
Grow the business
Achieve targeted objectives
 The Hows That Define a Firm's Strategy

How to please customers

How to respond to changing

market conditions Strategy
is HOW
How to outcompete rivals to . . .
How to grow the business

How to manage each functional piece of the business

and develop needed organizational capabilities

How to achieve strategic and financial objectives

 Benefits of strategic management
Clear sense of strategic vision for the firm
Sharper focus on what is strategically
important
Improved understanding of a rapidly
changing environment.
Phases in the evolution of strategy-
shifts in planning paradigm
1950s. Budgetary planning & control. Financial
control through operational and capital
budgeting. Investment planning through project
appraisal ,ROI, DCF. Financial planning was the
key.

1960s. Corporate planning. Preparation of short,

medium and long term plans. business
forecasting and investment planning models.
Rise of corporate planning departments.
1970s. Corporate strategy, diversification, and
portfolio planning matrices. multidivisional
structure. Quest for global market share.
Late 70s & early 80s.Analysis of industry and
competition. Choice of industries, markets, and
segments and positioning with in them. Competitor
analysis, market selectivity ,corporate restructuring
.active asset management.
 ( contd.)
Late 80s & early 90s. The quest for competitive advantage
Sources of competitive advantage with in the firm.
Resource analysis of core competencies. corporate
restructuring and business process reengineering.
Refocusing and outsourcing. (Internally/Implementation
Oriented )

Late 90s & early 2000. strategic innovation and the new
economy. Competitive advantage through strategic
innovation. Competing on knowledge adopting to the
new digital networked economy. Organisational flexibility
and speed of response. Knowledge management and
organisational learning. The virtual organisation.
Alliances and networks.
 Levels of strategy
Corporate
Business
Functional
Operational/Tactical
 Initiation of strategy: triggering
events
Act as stimulus for adopting strategic
paradigm or change in strategic posture
1. Change in leadership
2. External intervention
3. Threat of a takeover
4. Performance gap
5. Strategic inflexion point (major change in
the external environment)