The document provides an overview of strategic management concepts from several reference books. It discusses key topics in strategic management including environmental scanning, strategy formulation, objectives, strategies, implementation, and evaluation. Examples are provided of mission statements from companies like ONGC and Nirma. The importance of strategic flexibility and organizational learning are covered. The strategic management model involving environmental scanning, strategy formulation, implementation, and evaluation is depicted.

1. Reference Book:- Concepts in
strategic management and
business policy
By
Thomas L Wheelen, J David Hunger and
Krish Rangarajan
&
strategic management and business
policy
By C Appa Rao, BP Rao & Shivramkrishna

2. Basic Concepts of
Strategic
Management
By RNK

4. WHY EFFECTIVENESS
• White Star Liner, Once safest Ship in the
World, did sink with 1513 People on Board
• 850 Foot long, weighed 46,000 tons
• Double hull, all watertight compartments
• Mistake 1: Believing in Invincibility.
• Mistake 2: Underrating the Threats in the
Environment.
• Mistake 3: Doing too Little too Late.
• Mistake 4: Was carrying only 16 life crafts
instead of 48.

5. THE CORPORATE TITANICS
• Swiss Watchmakers held 65% of Market in
1968. Reduced to 10% by 1980.
• Sears a retail giant in the sixties, Lost US$
3.9billion in 1992.
• In 1990 both, K-Mart Wal-Mart had
overtaken and Wal-Mart made US$ 2
billion, K-Mart 1 billion.
• GM’s Market value fell from Fourth in 1972
to Fortieth in 1992 and in 1992 it lost
$23.5B (Biggest loss by any Company).

6. B-SCHOOLS IN INDIA
• In 1991 there were only 130 B-Schools in
India with 12,000 seats
• Presently, there are 3,000 B-Schools with
1,50,000 seats
• Half of them had been setup in last 5 years
• Dowry index of IIM(A) students is Rs 50 to
100 Lacs

7. Word Meaning
• Strategic = Planned
= Tactical
= Calculated
= Deliberate
= Premeditated
= Intentional

8. Other Names for Strategic
Management
• Strategic Planning
• Business Planning
• Corporate strategy
• Corporate planning

9. SM
• Strategic management is a field of inquiry that
focuses on the organisation as a whole and its
interaction with the environment.
• The corporate world is in the process of
transformation driven by information
technology and globalization.
• Strategic management takes a panoramic
view of this changing corporate terrain and
attempts to show how large and small firms
can be more effective and efficient not only in
today’s world but in tomorrow’s as well.

10. Some Definitions
• A strategy is a commitment to undertake one
set of actions rather than another.
• It is management’s game plan for growing the
business, staking out market position,
attracting and pleasing customers, competing
successfully, conducting operations and
achieving target objectives.
• SM is tricks and techniques to keep your
company ahead of your competitors.

11. Importance
• Strategic management is extremely important in
current scenario to make the Co. successful and
stay successful.
• Even MNCs having business around the world must
constantly review itself else be out maneuvered by
aggressive newcomers.
• Realising potential impact of internet on
businesses, Jack Welch, in march 1999 told to all
managers that you must replace your product
before others could do it. (otherwise U will
become obsolete)
• Welch also told these 600 managers to find their
internal internet mentors.

12. What is Strategic Management?
• Strategic management is that set of managerial
decisions and actions that determine long run
performance of corporation.
• It includes following:-
– Environmental scanning
– Strategy formulation (strategic or long range planning)
– Strategy implementation
– Strategy evaluation and control
• SM therefore emphasize on monitoring and
evaluation of external opportunities and threats in
light of corporations strengths and weaknesses.

13. • It was originally called as business policy.
• Business policy has a general management
orientation and looks inwards for properly
integrating the CO’s many functional
activities.
• On the other hand SM , incorporates the
integrative concern of business policies
with heavier environmental and strategic
emphasis.
• Therefore management has replaced the
business policy with strategic management.

14. Exercise
• One of the students to read out, the chief
elements of Southwest airline’s strategy.
Other students to make a note of important
strategic points. Any one from the class will be
asked to summarise these Important points
for better learning. Thereafter class to also
discuss about Indian low cost airlines.

15. Phases of Strategic Management
• Phase-1 Basic Financial planning:-
– Managers initiate serious planning when they are
requested to propose next year’s budget.
– Proposals are made based on little analysis.
– Sales people provide some environmental data.
– It only pretends to be strategic, yet time
consuming.
– Normal company activities are suspended for
weeks.
– The time horizon is normally a year.

16. • Phase-2 Forecast Based Planning:-
– Managers attempt to propose five year plan.
– They now consider projects beyond one year.
– In addition to internal data they also try to get
some external on an ad hoc basis –and
extrapolate current trends into five years.
– This phase is also time consuming often involving
full month of activities.
– The process gets very political as managers
compete for larger share of funds.
– Endless meetings to evaluate proposals and justify
assumptions.
– The time horizon is two to five years.

17. • Phase-3 Externally Oriented Planning:-
– It is also called strategic planning.
– Top management takes control of planning by initiating
strategic planning.
– It improves its responsiveness to changes and
competition by strategic thinking.
– Planning is given to planning staff for developing strategic
plan for the corporation.
– Consultants provide sophisticated and innovative
techniques that are used by planning staff.
– Upper level managers meet once a year at a resort to
evaluate and update the current strategic plan.
– It is known as top down planning, implementation is left
to lower level.
– It develops five years plan with inputs from consultants
and minimum from lower level.

18. • Phase-4 Strategic Management:-
– Best strategic plans are worthless without inputs and
commitment from lower level managers.
– Top management forms planning group of managers
and key employees at many levels.
– They develop and integrate the series of strategic
plans aimed at achieving Co’s primary objectives.
– Strategic plans now deal with the implementation,
evaluation and control issues.
– The plans emphasize probable scenarios and
contingency strategies.
– It leads to strategic thinking at all levels.
– Strategic information on intranet is available at all
levels.
– Planning is typically interactive at all levels and is no
longer top down

19. How is budget planning done
in your organisation? Lets
share planning process of
your organisation for better
learning by all.

20. Benefits of Strategic Planning
• Organisations that engage in strategic planning
generally outperform those do not.
• The attainment of appropriate match between an
organisation’s environment and its strategy,
structure and process has positive effect on the
performance.
• A survey of 50 corporations of various countries
found following benefits of SM:-
– Clear sense of vision for the firm.
– Sharper focus on what is strategically important.
– Improved understanding of rapidly changing
environment

21. • To be effective, SM need not always be
formal process. It can begin with simple
Qs:-
– Where is the organisation now?
– If no change are made, where will the
organisation be in 1year, 2years, 5years and
10 years?
– If the answers are not acceptable, what
specific actions management should take?
– What are the risks and pay offs involved?

22. Globalization and E-Commerce-
Challenges to SM
• Till late 90s sales were made by sale forces but it
is not so now.
• Globalisation has changed the way the modern
corporations do business.
• To achieve economies of scale for keeping cost to
minimum, Co are using global market instead of
national.
• International assignment are considered key for
any one wants to reach top positions.
• SM is important tool to keep track of
international development.

23. Impact of Globalisation
• Nike and Reebok manufacture shoes in
many countries of Asia to sale them in all
other continents.
• International assignments are considered
Key to any one interested in reaching top
management.

24. Impact of Electronic Commerce
• Use of internet to conduct business transactions.
• Internet is reshaping global market place.
• It has a major impact on corporate strategy.
• Many organisations including banks, air lines and
railways have started using internet for their most
businesses.
• Major engineering and B- schools conduct
entrance examinations using internet.
• The internet is forcing Cos. to transform
themselves.

25. • The concept of electronically networking customers,
suppliers and partners is now new reality.
• It is leading to closer relationship with end users,
improving service and reducing cost.
• The balance of power is shifting to consumer. Now
having unlimited power to information on the internet,
customers are much more demanding than their
nonwired predecessors.
• Cos. are exploring the net to become more innovative
and efficient.
• The pace of business is increasing drastically.
• The internet is pushing corporations out of their
traditional boundaries.
• Knowledge is becoming key asset and source of
competitive advantages.

26. I/O Model of Superior Returns
• 06 stage model The external environment (General, Industry
• 60s to 80s &Competitor environment)
An attractive industry ( with above average ROI )
Strategy formulation ( linked with above average
returns in a particular industry
Your Strategy should be
Based on ext. environment
Asset and skills (Develop or acquire asset and skills
needed to implement strategy
Strategy implementation (use the firm’s strength
to implement the strategy
Superior return ( earning of above average return)

27. The resource based model of superior
Returns
• 06 stage Model Resources (identify the firm’s resources and study
them for sts, wks and compare with comp)
Capability (What do the capabilities allow the firm
to do better than its comp )
Competitive advantages (ability of a firm to out
perform its rivals )
Strategy be based on int.
resource An attractive Industry ( industry with
opportunities that can be exploited with St & Wks
Strategy formulation and Implementation (best
strategy that allows to utilise resources and
capabilities
Superior returns

28. The Theories of Organisational
Adaptation
• The population ecology Theory:- Once an
organisation is established in a particular
environment it does not change, hence co. is
replaced by other new organisations.
• Institution theory:- It proposes that
organisation can adapt to changing conditions
by imitating other successful organisations.
Does not explain how and why?

29. • The strategic choice perspective:- One step
ahead of institution theory and believes that
the organisation have the power to reshape
their environment. It emphases on managers
making rational decisions.
• Organisational learning theory:- It expands the
strategic choice perspectives to include people
at all levels, becoming involved in providing
inputs into strategic decision making.

30. Creating a learning Organisation
• SM has evolved to the point that its primary value
is in helping the organisation operate successfully
in a dynamic, complex environment, (SAIL uses
strategic planning for change).
• To be competitive in dynamic environment,
corporations are becoming less bureaucratic and
more flexible. (Explain)
• Corporations must generate strategic flexibility
that is ability to shift from dominant strategy to
another.

31. • Strategic flexibility demands that the Co.
becomes learning organisation:- An
organisation skilled at creating, acquiring and
transferring knowledge and at modifying
behaviour to reflect the new knowledge and
insights.
• Organisational learning is particularly
important for innovation and new product
development, HP uses extensive network of
informal committees to transfer knowledge.

32. Skills of Learning Organisations
• Solving problem systematically.
• Experimenting with new approaches.
• Learning from their own experience and past history
as well as from experience of others.
• Transferring knowledge quickly and efficiently
through out the organisation.
• Example:-Motorola developed an action learning
format in which people from marketing, product
development and manufacturing meet to argue and
reach an agreement about the needs of the market,
the best new product and schedule of each group
producing it

33. Basic Model of SM
• Environment scanning.
• Strategy formulation.
• Strategy implementation.
• Evaluation and control.
Environment Strategy Strategy Evaluation and
scanning Formulation Implementation control

34. Strategic Management Model
Environmental Strategy Formulation Strategy Implementation Evaluation
& Control
Scanning
Mission Objectives Strategie Policies Programs Budgets Procedures
Performance
External s
Societal
Environmental:
Reason for What result Plan to Broad
General Forces existence to achieve guidelines
accomplish the for Activities Cost of Sequence
Task Environment:
by when mission & decision
needed to the of Steps Actual
objectives making
Industry Analysis
accomplish Programs needed to Results
a plan do the job
Internal
Structure: Chain of
Command
Culture: Beliefs,
Expectations,
Values
Resources: Assets,
Skills,
Competencies,
Knowledge
Feedback / Learning

35. Environmental Scanning
• It is monitoring, evaluating and disseminating of
information from the ext. and int. environment to
key people within the organisation.
• Purpose is to identify strategic factors that will
determine the Future of corporations.
• Simplest way is to conduct scanning is through
SWOT analyses.
• External environments consists of opportunities
and threats.
• Internal environment consists of strengths and
weaknesses that are within the organisation(
Structure, Culture and resource)

36. Strategy Formulation
• This is development of long range plan for
management of environmental opportunities and
threats in light of corporation’s strengths and
weaknesses.
• It includes corporate mission, achievable
objectives, budding strategy and setting
guidelines.
• Mission is the purpose or the reasons for
organisation existence. It tells what company is
providing to the society.

37. • A well conceived mission statement defines the
fundamental, unique purpose that sets company
apart from others.
• Identifies the company’s scope of operations in
terms of product offered and market served.
• It may also specify how firm treat their
employees.
• It puts into words not only what the company is
now, but also what it wants to become. (
management’s strategic vision and firm’s future ).
• It tells who we are and what we do as well as
what we would like to become.

38. Examples
• ONGC Limited:- To be the world class oil gas
company integrated in energy business with
dominant Indian leadership and Global
presence.
• FMCG Nirma Limited:- Nirma is a customer
focused company, committed to consistently
offer better quality products and services that
maximises value for the company.

39. Assignment-1
• Each of you write mission
statement of 10 companies
and discuss in your group
thereafter make a
presentation.

40. Objectives
• Objectives are end result of planned activities.
• They state what is to be accomplished by when
and should be quantified if possible.
• The achievement of corporate objective should
result in fulfillment of corporation’s mission.
• The term goal is often used interchangeably with
the term objective.
• As per Thomas L. Wheelen, goal is an open
statement of what one wants to achieve with no
quantification of what is to be achieved and no
time criteria for completion.
• Example:-Goal—Increased profitability
Objective– Increase profit 10% over last
10 years

41. Some of the areas in which corporations
might establish their goals and objectives
• Profitability (net Profit).
• Efficiency (low cost ).
• Growth ( increase in assets, sales etc ).
• Shareholders wealth (Dividends +stock price appreciation).
• Utilisation of Resources (return on investment).
• Reputation (top firm)
• Contribution to employees(security, wages etc)
• Contribution to Society ( tax paid, participation in charities
etc.)
• Market leadership (market share).
• Technological leadership.

42. Assignment-2
• Select 10 companies of your choice
and down load their corporate
objectives. Make a group of five
students discuss/ analyse each
objectives and make a class
presentation.

43. Strategies
• A Strategy forms a comprehensive master plan
stating how the corporation will achieve its
mission and objectives.
• It maximises competitive advantages and
minimises competitive disadvantages.
• Example: When Tata group realised that it
could no longer realize its objectives by
continuing its strategy of diversification into
multiple line of business, it sold cos. like
Tomco, lakme etc to HLL.

44. Types of strategy
• Corporate Strategy:-
– Describes the Co.’s overall direction.
– It concentrates on stability, growth and retrenchment
(Nicholas piramal followed a corporate growth
strategy by acquiring other Cos)
• Business strategy:-
– At the level of business unit or product level.
– Emphasis on improvement to face competition.
– Business strategy fits within two overall categories of
competitive and cooperative.
– Apple computers followed competitive strategy where
as Air India and Lufthansa followed cooperative
strategy to provide global service.

45. • Functional strategy:-
– Strategy adopted by functional area to achieve
corporate and business level objectives and
strategies by maximising resources productivity.
– Example:- In terms of marketing functional
strategy, P & G is a master of marketing pull ( the
process of spending huge amounts on advertising
in order to create customer demand, Strategy is
differentiating its product from its competitors).
– Firms use all types of strategy simultaneously.
– Functional strategy must support business
strategies which in tern supports corporate
strategies.

46. Policies
• A policy is a broad guide line for decision making that links
the formulation of strategy with its implementation.
• Policies are made in such a way that employees make
decision and take actions which support the Co’s mission,
objectives and strategies.
• Example:-1 Satyam computers strategy was to grow by
intelligence application of technology to compete on
quality rather than cost. It also made policy in such a way
that every associate was considered as leader.
• 2. The researcher of 3M should spend 15% of
their time working on something other than primary
project, which support the strategy of product
development.
• Policies must provide clear guide lines to managers
through out the organisation.

47. Strategy Implementation
• The process by which strategies and policies are
put into action through development of
programmes, budgets and procedures.
• The strategy implementation process might
involve change within the over all culture,
structure, management style etc. of entire
organisation.
• Implementation of strategies is normally done by
middle and lower management with a review by
the top management.
• Strategy implementation often involves day to
day decision in resources allocation.

48. Programmes
• A programme is a set of activities or steps needed
to achieve a single use plan.
• It makes the strategy action oriented.
• It may involve the restructuring the corporation,
changing the Co’s internal culture, or beginning a
new efforts.

49. Budgets
• A budget is a statement of corporation
programme in terms of Rs/$.
• When used in planning and control, a budget lists
cost of each programme.
• Correct budget control will ensure that the new
programmes will significantly add to the
corporation’s profit, performance and build
shareholders value.
• Example: GM budgeted $4.3 billion during 2000-
04 to update and expand Cadillac line of
automobile. With this the Co hoped to reverse its
declining market share by appealing to younger
market.

50. Assignment-3
• Go through sites of Indian
automobile Cos and find out how
much budget allocation was done for
which model and how it paid back to
the Companies.

51. Procedures
• Some times called SOPs, are systems of
sequential steps and techniques that describe
in detail how a particular task and job is to be
done?
• Details of activities that must be carried out in
order to complete corporations programmes.

52. Evaluation and Control
• It is a process in which corporate activities and
performance are monitored to compare with
desired performance.
• Managers at all levels use the resulting
information to take corrective actions and
resolve problem.
• It is final element of strategic management
and pin points weakness in previously
implemented strategic plans and thus
stimulate the entire process to begin again.

53. Performance
• It is the end result of activities.
• It is the actual outcome of the SM process.
• The practice of SM is justified in terms of its
ability to improve the organisations performance.
• Typically measured in terms of profit and ROI.
• For evaluation to be effective managers must get
correct input from people below them.
• With the help of this information managers can
compare, what is actual performance with
planned.
• The evaluation and control of performance, it
completes the strategic management model.

54. Initiation of Strategy
• Triggering Events:-
– A triggering event is something that acts as
stimulus of change of strategy. Some triggering
events are:-
• New CEO: New CEO cuts through the veil of
complacency and forces people to question very reason
for companies existence.
• External intervention: The bank may refuse to approve
the loan. A customer complain about a serious product
defect.
• Threat of change in ownership.
• Performance gap

55. Assignment-4
• Class to discuss triggering events at
sun micro system given on page 16

56. Strategic Decision Making
• The distinguished characteristic of SM is its emphasis
on strategic decision making.
• As organisations grow and become complex, hence
decision making becomes more difficult.
• What makes a decision strategic?
– Strategic decision deals with long run future of the entire
organisation and have three characteristics:
• It must be rare
• Consequential
• Directive
• BPL ltd moved away from manufacturing precision
panel meters to major consumer electronic company.

57. Mintzberg’s Model of Strategic
Decision making
• Entrepreneurial mode:- Strategy is made by one powerful
individual.
• Adaptive mode:- sometimes referred to as muddling
through (reactive solution to existing problem) rather than
proactive approach to new opportunities.
• Planning mode:- It involves systematic gathering of
appropriate information for situation analysis, generation
of number of alternatives and selecting most appropriate
one.
• Logical incrementalism:-Proposed by Quinn, top
management has a clear idea of corporations mission and
objectives. It chooses to use an interactive process for
probing future, experiment and learn from incremental
commitment..

58. Strategic Decision Making Process
(An aid to better decisions)
• Planning mode is best mode of decision, hence a
company must follow following 08 steps:-
– Evaluate current performance results.
– Review corporate governance.
– Scan and asses the external environment.
– Scan and asses the internal corporate environment.
– Analyse strategic factors (SWOT).
– Generate, evaluate, and select the best alternative
strategy.
– Implement selected strategy.
– Evaluate selected strategy.

59. Assignment-5
• Browse the internet and down load
mission statement of TCS, TISCO,
Tata Motors, TIFR or any other
company and discuss in your group
and thereafter make a presentation
in the class in front of all the
students of your class

60. Questions and their answers
• Strategic management is a field of inquiry that focuses on the organisation
as a --------and its interaction with the environment.
• In which year Jack Welch told his managers that u must replace your
product before others do it?
• What is the Time horizon for forecast planning?
• Why are organisations are going for globalisation?
• What is the purpose of environmental scanning?
• What are the main components of strategy formulation?
• Three types of strategies are 1)---------2)------------3)------------
• Development of programmes is part of--------------------------
• What is triggering event?
• What are the three characteristics strategic decision?