Antim Prahar

The MOST Important

Questions
By
Dr. Anand Vyas
1 Meaning, Nature, Scope, and Importance of Strategic
Management
• Meaning of Strategic Management:
• Strategic management refers to the systematic process of
formulating, implementing, and evaluating an organization's
strategies to achieve its long-term goals and objectives. It involves
analyzing internal and external factors, making informed decisions,
and adapting to changes in the environment to ensure the
organization's success.
• Nature of Strategic Management:
• Continuous Process: Strategic management is an ongoing, dynamic
process that requires constant assessment and adaptation to
changing internal and external conditions.
• Comprehensive Approach: It involves considering various aspects of
the organization, including its internal resources, external
environment, and the competitive landscape.
• Multifunctional: Strategic management integrates various functions
of the organization, such as marketing, finance, operations, and
human resources, into a cohesive plan.
• Future-oriented: Strategic management is future-focused, aiming to
position the organization favorably in the long term by anticipating
and responding to emerging trends and challenges.
• Scope of Strategic Management:
• Environmental Analysis: Assessing the external environment to
understand opportunities and threats that may affect the
organization.
• Internal Analysis: Evaluating the organization's strengths and
weaknesses, including its resources, capabilities, and core
competencies.
• Strategy Formulation: Developing strategies based on the analysis of
the internal and external environment to achieve long-term goals.
• Strategy Implementation: Putting the formulated strategies into
action through proper planning, organization, and resource
allocation.
• Strategy Evaluation: Regularly assessing the effectiveness of
implemented strategies and making adjustments as needed.
• Importance of Strategic Management:
• Direction Setting: Provides a clear sense of direction and purpose for
the organization, guiding decision-making at all levels.
• Resource Allocation: Ensures efficient use of resources by focusing on
activities that contribute most to the achievement of long-term goals.
• Competitive Advantage: Helps organizations gain a competitive edge
by identifying and leveraging their unique strengths and
opportunities.
• Adaptability: Allows organizations to adapt to changes in the
business environment, reducing the impact of uncertainties.
• Improved Performance: Enhances overall organizational performance
by aligning activities with strategic goals and objectives.
• Risk Management: Helps in identifying and managing risks associated
with both internal and external factors.
2 Strategic intent Vision, Mission, Business definition,
Goals and Objectives
• Strategic intent, vision, mission, business definition, goals, and
objectives are critical components of the strategic management
process. Each element serves a specific purpose in guiding an
organization toward its desired future state. Let's explore each of
these concepts:
• 1. Strategic Intent:
• Strategic intent is a concept introduced by management scholars Gary Hamel and
C.K. Prahalad. It represents a compelling and ambitious vision of the future that
goes beyond merely setting goals or targets. Strategic intent inspires and
motivates an organization to stretch beyond its current capabilities, fostering
innovation and a commitment to continuous improvement. It is about achieving
long-term goals that may seem challenging but can drive transformation within
the organization.
• 2. Vision:
• A vision is a concise and inspiring statement that outlines the desired future state
of an organization. It provides a clear picture of where the organization aims to
be in the long term. A well-crafted vision statement serves as a guiding beacon
for employees, stakeholders, and customers, aligning their efforts toward a
common purpose.
• 3. Mission:
• A mission statement defines the fundamental purpose and reason for an
organization's existence. It describes the organization's core values, its
primary functions, and its commitment to its stakeholders. A mission
statement communicates what the organization does, who it serves, and
how it contributes to society or its industry.
• 4. Business Definition:
• The business definition, also known as a business definition statement,
clarifies the scope and nature of the organization's operations. It outlines
the products or services the organization offers, the target market or
customers, and the key differentiators that set the business apart from
competitors. This statement helps stakeholders understand the essence of
the organization's business.
• 5. Goals:
• Goals are broad, overarching statements that articulate what an
organization aims to achieve in the long term. They provide a general
direction for the organization and are often qualitative in nature. Goals are
typically more enduring and guide the development of more specific and
measurable objectives.
• 6. Objectives:
• Objectives are specific, measurable, time-bound targets designed to
support the achievement of broader goals. They are the tangible steps an
organization takes to realize its strategic intent. Objectives should be
realistic and achievable, providing a roadmap for the organization's
progress toward its vision.
3 Role and Responsibilities of the board of directors
• The board of directors plays a crucial role in the governance and strategic
direction of a company. Their responsibilities encompass a wide range of
activities, aimed at ensuring the company's success, transparency, and adherence
to legal and ethical standards. Here are the key roles and responsibilities of a
board of directors:
• 1. Setting Strategy and Vision:
• Establishing the company's long-term vision and mission.
• Developing and approving the overall strategic direction and business goals.
• 2. Decision-Making:
• Making critical decisions on major issues, investments, and corporate policies.
• Approving budgets, financial plans, and significant business transactions.
• 3. Governance and Oversight:
• Ensuring compliance with laws, regulations, and ethical standards.
• Overseeing financial reporting and audit processes to maintain accuracy and
transparency.
• 4. Executive Leadership Oversight:
• Selecting, evaluating, and compensating top executives, including the
CEO.
• Providing guidance and support to executive leadership.
• 5. Risk Management:
• Identifying and assessing potential risks to the company.
• Implementing risk management strategies and monitoring risk
exposure.
• 6. Shareholder Relations:
• Representing and safeguarding the interests of shareholders.
• Communicating with shareholders and addressing their concerns.
• 7. Succession Planning:
• Planning for the succession of key executives and board members.
• Identifying and developing future leaders within the organization.
• 8. Financial Oversight:
• Reviewing and approving financial statements and reports.
• Ensuring the financial health and stability of the company.
• 9. Ethical and Legal Compliance:
• Promoting a culture of ethics and integrity within the organization.
• Ensuring compliance with all applicable laws and regulations.
4 PESTEL Analysis
• PESTEL analysis is a strategic management tool that helps organizations
identify and analyze the external factors that can impact their business
environment. The acronym "PESTEL" stands for Political, Economic, Social,
Technological, Environmental, and Legal factors. Conducting a PESTEL
analysis allows businesses to better understand the macro-environmental
forces that may influence their operations, decisions, and overall strategy.
• Here's an overview of each component of PESTEL analysis:
• Political Factors:
• Government stability and policies
• Political ideologies and influences
• Tax policies and regulations
• Trade tariffs and barriers
• Political stability and risk
• Economic Factors:
• Economic growth and stability
• Inflation rates
• Exchange rates
• Interest rates
• Unemployment rates
• Consumer confidence
• Social Factors:
• Demographic trends (age, gender, income, education)
• Cultural and social attitudes and values
• Lifestyle changes and preferences
• Social mobility
• Health consciousness and trends
• Technological Factors:
• Innovation and technological advancements
• Research and development activities
• Automation and efficiency
• Intellectual property issues
• Adoption of new technologies
• Environmental Factors:
• Climate change and weather patterns
• Environmental regulations and policies
• Sustainability practices
• Ecological and environmental awareness
• Impact on resources and raw materials
• Legal Factors:
• Employment laws and regulations
• Consumer protection laws
• Health and safety regulations
• Intellectual property laws
• Compliance with industry-specific regulations
5 PORTER Five Forces Model and IFE matrix (Internal Factor Evaluation)
IFE matrix (Internal Factor Evaluation)
• Internal Factor Evaluation (IFE) Matrix is a strategy tool used to
evaluate firm's internal environment and to reveal its strengths as
well as weaknesses. The internal and external factor evaluation
matrices have been introduced by Fred R. David in his book .
6 EFE Matrix and VRIO Framework
• External Factor Evaluation (EFE) Matrix is a strategic analysis tool used
to evaluate firm's external environment and to reveal its strengths as
well as weaknesses. The external and internal factor analyses have
been introduced by Fred R. David in his book, Strategic Management.
VRIO Framework
• VRIO is an acronym for a four-question framework focusing on value,
rarity, imitability, and organization, the criteria used to evaluate an
organization's resources and capabilities.
• Value:
• This criterion assesses whether a resource or capability adds value to the
organization and its customers. Resources and capabilities that enable a
company to exploit opportunities or mitigate threats in its external
environment are considered valuable.
• Rarity:
• Rarity refers to how rare or unique a resource or capability is compared to
those of competitors. If a resource or capability is rare, it can provide a
competitive advantage because it is not readily available to other firms.
• Imitability:
• Imitability examines the extent to which competitors can imitate or replicate a
resource or capability. Resources and capabilities that are difficult to imitate
or substitute are more likely to sustain a competitive advantage over time.
• Organization (or Exploitability):
• Organization assesses whether an organization is capable of effectively
leveraging its resources and capabilities to create value and achieve its
strategic objectives. This criterion considers factors such as the company's
culture, processes, and management systems.
7 Situational Analysis using SWOT approach
8 Competitive Strategy: Cost Leadership, Differentiation & Focus

• Competitive strategy encompasses three main approaches: cost

leadership, differentiation, and focus. Cost leadership involves
becoming the lowest-cost producer in an industry, typically through
economies of scale, efficient operations, and tight cost controls.
Differentiation strategy focuses on offering unique or distinctive
products or services that are valued by customers, leading to
premium pricing and customer loyalty. Focus strategy entails
concentrating efforts on serving a narrow market segment or niche,
tailoring products or services to meet the specific needs of that
segment. Each strategy offers its own set of advantages and
challenges, and the choice of strategy depends on factors such as
market conditions, competitive dynamics, and organizational
capabilities.
9 Outsourcing , Integration Strategies: Horizontal & Vertical
• Outsourcing:
• Outsourcing involves the delegation of specific business functions or
processes to external third-party providers rather than handling them
in-house. This strategic approach allows companies to concentrate on
their core competencies and strategic activities while entrusting non-
core functions to specialized external vendors. By outsourcing tasks
such as IT services, customer support, or manufacturing,
organizations can often realize cost savings, access specialized
expertise, and benefit from increased flexibility in scaling operations.
Additionally, outsourcing can enable companies to adapt more
quickly to changing market conditions and focus their internal
resources on value-added activities that drive innovation and
competitive advantage.
• Integration Strategies: Horizontal & Vertical:
• Integration strategies encompass two main approaches: horizontal
integration and vertical integration. Horizontal integration involves merging
with or acquiring competitors operating at the same stage of the value
chain. This strategy enables companies to expand their market share,
achieve economies of scale, and eliminate competition. By consolidating
similar businesses, organizations can streamline operations, reduce
redundant costs, and potentially gain greater bargaining power with
suppliers or customers. Vertical integration, on the other hand, involves
merging with or acquiring companies operating at different stages of the
value chain. Backward integration entails acquiring suppliers or sources of
raw materials, allowing companies to control inputs, improve supply chain
efficiency, and potentially reduce costs. Forward integration involves
acquiring distributors or retailers, granting companies greater control over
distribution channels, enhancing market access, and increasing their
bargaining power in the marketplace. Both horizontal and vertical
integration strategies offer opportunities for companies to strengthen their
market position, optimize value creation, and enhance competitiveness in
their respective industries.
10 Strategy Analysis process and Strategy Evaluation & Control process
• Strategy Analysis Process:
• Environmental Analysis:
• Begin by conducting an analysis of the external environment, including factors such
as political, economic, social, technological, environmental, and legal (PESTEL
analysis). This step helps identify opportunities and threats that may impact the
organization's strategic direction.
• Internal Analysis:
• Assess the organization's internal strengths and weaknesses. This involves evaluating
resources, capabilities, core competencies, and organizational culture. Tools like
SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can be utilized to
gain insights into internal factors.
• Competitive Analysis:
• Analyze the competitive landscape by examining competitors' strengths,
weaknesses, strategies, and market positioning. Porter's Five Forces model is
commonly used to assess industry rivalry, threat of new entrants, bargaining power
of buyers and suppliers, and threat of substitutes.
• Strategic Choice:
• Based on the findings from environmental, internal, and competitive
analyses, identify strategic alternatives that align with the organization's goals
and objectives. Consider factors such as differentiation, cost leadership,
diversification, or market penetration strategies.
• Strategy Formulation:
• Select the most suitable strategic option(s) and formulate a comprehensive
strategy that outlines specific objectives, action plans, resource allocation,
and timelines. This step involves translating strategic choices into actionable
plans that guide organizational activities.
• Strategy Evaluation & Control Process:
• Establish Performance Metrics:
• Define key performance indicators (KPIs) and metrics to measure the
effectiveness and progress of strategic initiatives. These metrics should be
aligned with strategic objectives and provide quantifiable benchmarks for
evaluation.
• Monitor Implementation:
• Continuously monitor the implementation of strategic plans to ensure
adherence to timelines, budgets, and objectives. This involves tracking
progress, identifying potential bottlenecks or challenges, and making
necessary adjustments to stay on course.
• Evaluate Performance:
• Regularly assess the performance of strategic initiatives against established
KPIs and benchmarks. Analyze variances, trends, and outcomes to determine
the effectiveness of strategies and their impact on organizational
performance.
• Conduct Strategic Reviews:
• Conduct periodic reviews or strategic meetings to evaluate the overall
effectiveness of the strategy and its alignment with changing external and
internal factors. This allows for course correction, adjustments, or revisions as
needed to maintain relevance and competitiveness.
• Take Corrective Actions:
• Identify areas of improvement or areas where strategic objectives are not
being met, and take corrective actions accordingly. This may involve
reallocating resources, revising tactics, or revisiting strategic priorities to
address emerging challenges or opportunities.
• Feedback Loop:
• Establish a feedback loop to facilitate continuous learning and improvement.
Encourage open communication, gather input from stakeholders, and
incorporate lessons learned into future strategic planning processes.
11 BCG Matrix, Ansoff Grid, McKinney 7’s
Framework and GE Nine Cell Planning
• BCG Matrix
• Stars:
• High-growth, high-market-share products or business units that have the potential to
become market leaders. Stars typically require significant investment to maintain or increase
their market share and capitalize on growth opportunities.
• Question Marks (or Problem Children):
• High-growth, low-market-share products or business units that are in competitive markets.
Question marks require careful consideration and strategic decisions to determine whether
to invest in them to increase market share and turn them into stars, or to divest or
discontinue them if growth prospects are limited.
• Cash Cows:
• Low-growth, high-market-share products or business units that generate substantial cash
flows and profits. Cash cows have established market dominance but have limited growth
potential. These units typically generate excess cash that can be reinvested in other parts of
the business or returned to shareholders as dividends.
• Dogs:
• Low-growth, low-market-share products or business units that may not be profitable and
may require significant resources to maintain. Dogs typically have limited strategic value and
may be candidates for divestment unless they contribute to the overall strategic objectives of
the company.
The McKinsey 7-S Model
The McKinsey 7-S Model is a
change framework based on a
company's organizational design. It
aims to depict how change leaders
can effectively manage
organizational change by
strategizing around the interactions
of seven key elements: structure,
strategy, system, shared values,
skill, style, and staff.
GE Nine Cell Planning
12 Balance scorecard approach to measure key Performance

• The balanced scorecard involves measuring four main aspects of a

business: Learning and growth, business processes, customers, and
finance. BSCs allow companies to pool information in a single report,
to provide information into service and quality in addition to financial
performance, and to help improve efficiencies.
• The balanced scorecard requires specific measures of what customers
get—in terms of time, quality, performance and service, and cost. 2.
Internal business perspective. Focus on the core competencies,
processes, decisions, and actions that have the greatest impact on
customer satisfaction.
13 Values, Ethics and Social responsibility
• Values:
• Values are the fundamental beliefs and principles that guide
individual and organizational behavior. They represent what is
considered important, desirable, and worthy within an organization.
Values serve as the foundation for decision-making, shaping the
culture, norms, and actions of employees and leaders. Examples of
organizational values include integrity, accountability, respect,
innovation, and teamwork. When values are effectively
communicated, shared, and upheld throughout an organization, they
contribute to a positive work environment, ethical conduct, and
alignment with organizational goals.
• Ethics:
• Ethics refer to the moral principles and standards that govern individual and
organizational behavior. Ethical behavior involves acting in accordance with
accepted principles of right and wrong, honesty, fairness, and integrity. Ethical
decision-making considers the interests and welfare of all stakeholders, including
employees, customers, suppliers, shareholders, and the broader community.
Organizations establish codes of ethics or conduct to guide employee behavior
and ensure compliance with legal and regulatory requirements. Ethical business
practices enhance reputation, build trust with stakeholders, and contribute to
long-term sustainability and success.
• Social Responsibility:
• Social responsibility involves the obligation of organizations to act in ways that
benefit society, beyond their financial interests. It encompasses a range of
activities aimed at addressing social, environmental, and community concerns
while balancing the interests of various stakeholders. Corporate social
responsibility (CSR) initiatives may include environmental sustainability efforts,
philanthropy, ethical labor practices, community development projects, and
diversity and inclusion initiatives. By embracing social responsibility, organizations
demonstrate their commitment to ethical business practices, contribute to
positive social change, and enhance their reputation and brand value.
14 Types of controls and Activity based costing
• Types of Controls:
• Feed forward Controls:
• Feed forward controls are proactive measures implemented before an activity
or process takes place. They aim to anticipate potential issues and prevent
problems from occurring. For example, training programs for employees
before they start new tasks or projects.
• Concurrent Controls:
• Concurrent controls are implemented during the execution of activities or
processes. They involve monitoring and adjusting operations in real-time to
ensure that they remain on track and aligned with organizational objectives.
Examples include regular progress meetings, real-time performance
dashboards, and quality control checkpoints on production lines.
• Feedback Controls:
• Feedback controls are reactive measures implemented after an activity or process
has been completed. They involve evaluating performance outcomes against
predefined standards or benchmarks and taking corrective actions if necessary.
Examples include performance reviews, customer feedback surveys, and financial
audits.
• Preventive Controls:
• Preventive controls are measures designed to avoid potential problems or risks
before they occur. They focus on identifying and mitigating risks through policies,
procedures, and safeguards. Examples include cybersecurity protocols, compliance
training, and disaster recovery plans.
• Detective Controls:
• Detective controls are implemented to identify and address problems or
irregularities after they have occurred. They involve monitoring and detecting
deviations from expected norms or standards. Examples include internal audits,
variance analysis, and fraud detection mechanisms.
Activity-Based Costing (ABC):
• Activity-Based Costing (ABC) is a cost accounting method that assigns
costs to products or services based on the activities involved in
producing them. Unlike traditional costing methods that allocate
overhead costs based on volume metrics like labor hours or machine
hours, ABC identifies the specific activities that consume resources
and assigns costs accordingly. The ABC approach involves the
following steps:
• Identify Activities:
• Identify all the activities involved in producing a product or delivering a
service. These activities can include setup, materials handling, production,
quality control, and distribution.
• Assign Costs to Activities:
• Determine the costs associated with each activity, including direct costs and
indirect overhead costs. This may involve analyzing cost drivers or cost pools
that drive activity consumption.
• Allocate Costs to Products or Services:
• Allocate the costs of activities to products or services based on the resources
consumed by each. This is typically done using cost drivers that measure the
volume or intensity of activity usage by each product or service.
• Calculate Cost per Unit:
• Calculate the total cost of producing each product or delivering each service
by aggregating the costs assigned to the activities consumed. Divide the total
cost by the number of units produced or services delivered to determine the
cost per unit.