1 Introduction_ Strategic Management [Autosaved]

8/16/2019 1 Introduction_ Strategic Management [Autosaved]

1/50

WELCOME TO

Lecture of

StrategicManagement


2/50

Introduction

Organisations translate their vision into programs and

actions to deliver outcomes

Economic thought till 20th century dominate by the concept

of invisible hand, it means firm do not have an ability to

impact the external environment

1799 Eli Whitney began mass production

ue to industrial revolution organi!ations began to exploit

economies of scale in production and economies of scale

in distribution

"cope of business strategy as a #ay to control mar$et

forces and shape competitive environment


3/50

%rederic$ Winslo# &aylor

%rederic$ Winslo# &aylor, father of scientific management

#as focus on machine and the system of their utili!ation

"cientific la# govern #or$ so scientific method can be

used to analyse #or$

Wor$ers are different so match #or$ers #ith their 'ob and

then train them thoroughly

(se employee self interest to motivate

"eparate the responsibility of #or$ers and managers

"cientific management lead to the development of &ime )

*otion study


4/50

"trategy means +the art of general from -ree$ #ord

strat.gos by #hich general sought to deceive enemy

/lause#it!, a russian, #as the first great student ofstrategy and father of modern study of strategy

&erm strategy has expanded far beyond its original military

meaning and no# use all areas #here the hori!on is long

termThe set of decisions and actions that result in the

formulation and implementation of plans design to

achieve a company's objective

trategy


5/50

Characteristics of trategy

(niversal corporate, govt, military, "*Es

3s an abstraction has no concrete form of

substance

3s the art of general broad long range and

far reaching

3s a general plan of attac$

3s direction and destination

3s a set of decision made


6/50

trategic Management

trategic management is the continuous

planning, monitoring, analysis and assessment of

all that is necessary for an organi!ation to meet its

goals and ob'ectives


7/50

4 %undamental 5uestions

Where do #e compete6

o# do you compete6

o# do you execute6


8/50

Early "chool of thoughts

Early thought on strategy played an important role in

formali!ing the place of strategy as a formal tool in

managing company

"ubse8uent theories explain the end and means that is

ho# the firm can maximi!e its potential in the mar$etplace

&oday strategy use creatively

/orporate strategy has become combination of different

approaches of traditional theories and thin$ing of the ne#

approaches to#ards strategy

:e# approaches are ;esource based &heory, ositioning

&heory and "trategic 3ntent approach


9/50

ositioning .pproach

&he behavioral basis for predicting competitors action and

reactions #as anticipated


10/50

;esource =ased >ie#

Cocca Cola verses !epsi

/o$e superiority in tangible? #arehouses , bottling plant

computeri!ation , cash@ and intangible assets?reputation,

brand name a#areness, tight competitive culture , global

business system@

/apability to use this asset effectively , managing

distribution globally influencing retailer shelf allocation ,

mar$eting survey , investing in bottling infrastructure,speed decision ma$ing to ta$e advantage of changing

global condition

/ombination of asset and capabilities are the competitive

advantage #hich are durable and not easily imitated


11/50

;esourceA=ased >ie# of the

%irm

. method of analy!ing and identifying a firms strategic advantages

based on examining its distinct combination of assets s$ills

capabilities and intangibles as an organisation

;=> is perspective that firms competitive advantages are due totheir endo#ment of strategic resources that are valuable, rare, costly

to imitate, and costly to substituteB

Once core competencies are identified, nurtured and deployed

throughout the firm become the basis for lasting competitiveadvantage


12/50

&ypes of ;esources

1. Tangible resources

Organizational assets that are relatively easy to identify and often

found in firm’s balance sheet , including physical assets, financial

resources, organizational resources, and technological resources.2. Intangible resources organizational

Assets that are difficult to identify and account for and are typically

embedded in unique routines and practices, including human

resources, innovation resources, and reputation resources, brand

name , trademark , accumulated experience with in an organization3. Organizational capabilities

The competencies and skills that a firm employs to transform inputs

into outputs.


13/50

What *a$es the ;esource >aluable

Once the manager begin to identify their firms resources ,

they face the challenge of determining #hich of those

resources represent strength or #ea$nesses , #hich

resource generates core competencies that are sources ofsustained competitive advantage B

&his has been a complex tas$ for managers attempting to

conduct a meaningful internal analysis B

&he ;=> has addressed this by setting forth some $eyguideline that help determine #hat constitute a valuable

asset , capability or competency that is #hat ma$es a

resource valuable


14/50

What *a$es the ;esource >aluable

1B /ompetitors superiority oes the resource help fulfill a

customer need better than those of the firms competitors6

2B ;esource scarcity 3s resource in short supply

4B 3nimitability 3s resource easily copied or ac8uired


15/50

The Value of a CoreCompetence


16/50

(sing the resource based vie# in

3nternal analysis

&o use ;=> in internal analysis , a firm must identify and

evaluate its resources to find those that provide the basis for

future competitive advantageB &his process involves defining

the various resources the firm possesses and examining them#hich resources them #hich resources have truly strategic

value

"tresses the choices manager can ma$e to learn to develop ne#

competencies and other#ise to change the strength the firm

possesses

/ompetitive advantage is achieved by continuously

developing existing and creating ne# resources and capabilities

and response to rapidly changing mar$et condition


17/50

&heory of "tretch

3s based on the proposition , competitiveness is born in the

gap bet#een companies resources and its managers goal

ong term competitive success depends on managers

#illingness to continually challenge their frame of reference

/reating stretch a misfit bet#een resources and aspiration is

the single most important tas$ of strategy


18/50

&hree evels of "trategy

Corporate level : board of directors, /EO )

administration FighestG

Business level : business and corporatemanagers F*iddleG

Functional level : roduct, geographic, and

functional area managers Fo#estG


19/50


20/50

/orporate evel "trategy

What businesses are #e in6 What

businesses should #e be in6

%our areas of focusiversification management ?ac8uisitions and

divestitures@

"ynergy bet#een units

3nvestment priorities

=usiness level strategy approval ?but not

crafting@


21/50

3t is fundamentally and simply concerned #ith deciding

#hat type of business the organi!ation should be in and

ho# the overall group of activities should be formed and

managed B

/orporate strategy deals #ith issues of strategicmanagement at the level of the firm as a #holeB

"uch issues involve the basic character, capability and

competence of the firmH the direction in #hich it should

develop its activityH the nature of its internal architectureH

governors and structureH the nature of its relationships#ith its sector, its competitors and the #ider

environmentB

/orporate strategies usually fit #ithin the three main

categories of stability, gro#th and retrenchment

Corporate Level trategy


22/50

Corporate"Level trategies

Firm

Status

Valuablestrengths

Critical

weaknesses

n!ironmental Status

"bun#ant

en!ironmentalo ortunities

Critical

en!ironmentalthreats

Corporate

growth

strategies

Concentric #iversification

?Economies

of "cope@

Conglomerate#iversification

?;is$ *gtB@

Corporate

retrenchmentstrategies

/an still go for businessAlevel

gro#th ?economies of scale@

Corporatestabilit$

strategies


23/50

=usiness strategy refers to the actions

and approaches crafted by management

to create successful performance in one

particular line of businessB

3t is also concerned #ith creating

competitive advantage in each of the

strategic business units of the

organi!ationB

$usiness"Level trategies


24/50


25/50


26/50


27/50


28/50


29/50


30/50


31/50

41

$enefits of trategic Management

Enhances the firms ability to prevent problems

Emphasi!es groupAbased strategic decisions li$ely to be based on best available alternatives

3mproves employees understanding of the productivityAre#ard

relationship

;educes gapsIoverlaps in activities among employees as their participation clarifies differences in roles

;esistance to change is reduced


32/50

%is&s of trategic Management

&he time that managers spend on the strategic management

process may have a negative impact on operational

responsibilitiesB 3f the formulators of strategy are not intimately involved in

its implementation, they may shir$ their individual

responsibility for the decision reachedB

"trategic managers must be trained to anticipate andrespond to the disappointment of participating subordinates

over unattained expectationsB


33/50

Critical Tas&s of trategic Management

44

(ormulate the company)s mission(ormulate the company)s mission

** #evelop company profile+ reflecting its internal conditions#evelop company profile+ reflecting its internal conditions

,, -ssess company)s e.ternal environment-ssess company)s e.ternal environment

// -naly0e company)s options-naly0e company)s options

11 Identify most desirable optionsIdentify most desirable options

22 elect long"term objectives and grand strategieselect long"term objectives and grand strategies

33 #evelop annual objectives and short"term strategies#evelop annual objectives and short"term strategies

44 Implement the strategic choicesImplement the strategic choices

55

Evaluate success of the strategic processEvaluate success of the strategic process


34/50

DEFINITION – Decision Making

The act of narrowing down the possibilities, choosinga course of action and determining the action’spotential conseuences!

“ the process ofresponding to aproblem by searchingand selecting asolution or course ofaction”.


35/50

trategic #ecision Ma&ing

Organi!ational develop effective strategies #hich are

"ustainable

ermit to deliver greater value

/reate a similar value or greater value at lo#er cost

hases are

1B 3dentification hase

2B evelopmental hase4B "election hase


36/50

ecision *a$ing rocess

1B 3dentification hase

ecision recognition Opportunity ,problem are recogni!e and evo$e decisional

activity

iagnosis /ollect information

2B evelopmental hase

"earch search alternative solution to problem

esign *odify readymade solution as per problem of evolved ne# solution

4B "election hase

"creen most desirable alternative select and infeasible are eliminatedEvaluation criteria Either through a process of analysis and 'udgement or

bargaining among decision ma$ers

.uthori!ation 3ndividual ma$ing decision does not have authority then moves

up the organi!ational hierarchy until it reaches a level at #hich necessary

authority resides


37/50

&ypes of processes of decision

ma$ing

/ommand mode "trategy driven by organi!ation leader

"ymbolic mode "trategy driven by mission and vision of

the future

;ational mode driven by formal structure and planning

system

&ransactive mode strategy formulation is driven by

internal processes and mutual ad'ustment

-enerative mode most strongly influenced by the

initiative of organi!ational actors

&he process of decision ma$ing starts at vision and then

bac$#ards by focusing on ho# to achieve that visionB

i d i i $i


38/50

"trategic decision ma$ing

rocess

henomena

-rouping

.bstraction

etermination of approach

rovisional formulation of hypothetical solution by indepth

analysis

Emergence of conclusion/oncrete forms of conclusion

raft plan of actions

3mplementation by line managers


39/50

"tages of "trategic *anagement

trategyformulatio

n

trategyimplementation

trategycontrol


40/50

"teps in "trategic *anagement rocess

1B %ormulate the companys

>ision and *ission

2B .ssess the external

environment J competitive and

general contexts

4B /onduct an internal analysis


41/50

"trategies and their ;ole in "trategic *anagement

"trategic management demands a clear analysis of situation facing

organi!ation have

. strategic direction endorsed by the team and sta$eholders

. clear business strategy and vision for the future . frame#or$ for governance

.n ability to exploit opportunity and respond to external changes

%rame#or$ for managing ris$

&he firm has to continuously interact #ith the mar$et, the business and

technology environments and $eep reevaluating its options in terms of the prevalent or changing conditions and develop its strategies in follo#ing

areas


42/50

trategies and Their role in

trategic Management

Environmental scan at corporate level

&he mission of the firm

=usiness segmentation

ori!ontal strategy

>ertical 3ntegration

/orporate hilosophy

"trategic osture of the firm /orporate performance Ob'ective

ortfolio *anagement

Organi!ational and managerial 3nfrastructure

uman resource management of $ey personnel


43/50

T6-78 9O:


44/50

"hare prices of 3ndian otels and otel eela venture have

dropped 9 per cent and 24 per cent respectively over the past year

as the t#o hotels have together piled up losses of over ;s 2,400

crore over three yearsB

=ut in this ocean of distress is E3 ?Oberoi and &rident@, #ith a

preAtax profit of ;s 1


45/50

"o #hat ma$es Oberoi, 3ndiaLs most profitable

topArung hotel6

. lean corporate structure, marginal debt #ith hardly any interest

liability ?unli$e most other hotel companies@, better cost

management and no significant investments in ac8uiring land

assets have helped the group gro# profitsB MWe are recognised for lu.ury hotels and prefer a bespo&e

approach to hotel development loo&ing for good

opportunitiesB .ll our ne# pro'ects N #hether o#ned or those

that #e manage for our partners, #e are 'udicious in selection ofsites and conscious of the need to al#ays create value for all

sta$e holders,M says >i$ram Oberoi, *) /OO, &he Oberoi

-roupB


46/50

otel experts say most global brands across the #orld have adopted an

asset light strategy and successfully expanded through the

management contract routeB /ontrary to this, 3ndian otels and otel

eelaventureLs expansion #as based on asset development through

ac8uisition of hotels or greenfield developmentsB &hese companies

purchased land and property at the pea$ of the real estate valuation

cycle, says "iddharth &ha$er, managing partner of rognosis -lobal

/onsulting, a hotel consultancyB &his has no# hamstrung these

companies #ith an overload of debtB

M3n the past fe# years, the industry has been facing the doublechallenge of #ea$ demand and increased supply of roomsB E3 #as

able to increase mar$et share and hence the strong profit gro#th,M says

OberoiB


47/50

.dds omi .ibara, partner and consultant, *aha'an ) .ibara, a

management consultancy firm ME3 has lo#er debt and legacy

properties #hich continue to perform #ellH its cautious approach,

given the current mar$et conditions has helpedBM

It begins =ith a bottle of jam

uxury hotels need to pay great attention to the smallest of detailsB &he

Oberoi -roup #anted to ensure fruit content in all the 'ams it served

#as not less than C0 per centB &hat meant it had to import 'am, leading

to an annual bill of ;s 2 croreB

=ut the company started #or$ing #ith local organic suppliers and

managed to shave D0 per cent off the cost N a savings of ;s 1B2 crore

that #ent straight to the bottomlineB "imilarly, it rationalised its

mineral #ater sourcing from t#o brands to one and saved ;s 1 croreB

.nother ;s < crore #as saved by revie#ing sales and mar$eting and

international consortiasIbul$ contractsB


48/50

MWe set up our o#n sales and distribution net#or$ in $ey source

mar$ets, reducing distribution cost,M says OberoiB &he hotel also gre#

its direct online boo$ings by 40 per cent, saving ;s 4 crore in

commissionB &his attention to cost, #ithout compromising on the

customer experience, helped boost profitabilityB

&he chain of 40 hotels in six countries is run #ith a management staff

of only 42 membersB Each general manager runs an individual profit

centre and is evaluated on a guest and employee satisfaction,

profitability and revenue penetration indexB

espite these measures, there #as small dip in preAtax profit in fiscal

201CB &his #as due to additional depreciation charges in accordance

#ith the ne# /ompanies .ct 2014B M&he hotel division profits gre# by

over 2C per cent if not for the changed depreciation and ne# /";

norms,M says says apil /hopra, president of the Oberoi -roupB

"everal measure on the revenue front also helpedB


49/50


50/50

(actors %esponsible for >ro=th ;ising income in households 3ncrease in niche tourism such as ecoAtourism, luxury tourism and medical

tourism

&ourism and hospitality sector attracted second highest %3 iBeB (" P4B2 billion in the year 2014

100 percent %3 allo#ed through automatic route in hotel and tourism sector iversity of the country attracts an ever increasing number of tourists every

year

-overnment initiatives in improvement of infrastructure li$e airports,high#ays, ports and rail#ays

3ndia is a labour intensive country 3ndia has been ran$ed as the fourth most preferred travel destination by

onely lanet selecting the country among the top five destinations from

Documents

1 Introduction_ Strategic Management [Autosaved]