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Unit 12

Introduction to
Strategic
Management
By C.A , ISA , M.A (Eco) , B.com
Mrugesh Madlani
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Strategic Management
Master title
– Several
style Definitions
• Chandler “ Determination of basic long term goals & objectives of an enterprise and adoption
of course of action & allocating resources to achieve out these goals
• Glueck “ Set of decisions and actions which lead to development of an effective strategy or
strategies to achieve corporate objectives
• Paine & Naumes “ SM involves decision making and activities in organization which have
1. Wider ramifications
2. Long term perspective &
3. Use critical resources towards opportunities or threats in changing environment
• Hambrick & Chen “ SM is formulation & implementation of major goals and initiatives taken by
Top management on behalf of owners , based on resources and assessment of internal and
external environment”
• Micheal Porter identifies 3 Principles Underlying Strategy “ Creating a unique and valuable
position , making trade-offs by choosing “what not to do “ and creating fit by aligning company
activities with one another to support choosen strategy 2 2
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SM Process
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• SM is set of strategies for the organization that will enable them to accomplish
improved performance

• It is not static , but continuous process as it involves continuous appraisal of Micro

& Macro environment and choosing between alternatives that meet the objectives

• SM consists of different phases , which are sequential in nature

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4 Phases
to edit
of Strategic
Master title
Management
style Process

1. Environment Scanning – BOD & Top management will have to review current
performance . We need to Scan Internal environment (S , W) & External
environment (O , T)
2. Strategy Formulation – It is deciding best course of action out of various
alternatives . After scanning , we will make corporate , business & functional
strategies
3. Strategy Implementation – Putting strategy chosen into action . Designing
organization structure , distributing resources , developing decision making
process and managing human resources
4. Strategy Evaluation – It is final step of Strategy Management process . They
key strategy evaluation activities are appraising internal and external
environment , measuring performance and taking remedial / corrective actions4
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Strategic Leadership
Master title style

• It is ability to influence others to make decisions that enhance prospects for

organization’s long term success while maintaining long term stability
• The main purpose of Strategic leadership is Strategic Productivity
• Another aim of Leadership is to generate an environment in which employees
match the organization’s needs in context of their individual job
• Leaders instill confidence to employees to follow their own ideas , yet moving
towards achieving organization goals
• It is ability to influence organization members to accomplish organizational change

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Functions & Importance
Click to edit Master title of Strategic Leader
style
1. Navigator – Clearly & Quickly works through Complexity of key issues , problems and
opportunities to affect actions
2. Strategist – Long term action to align with organizations vision
3. Entrepreneur – Identified and exploits opportunities for new products , services and markets
4. Mobilizer – Proactively builds and aligns stakeholders , capabilities and resources for getting
things done quickly and achieving objectives
5. Talent Advocate – Attracts , develops and retains talent to ensure right people with right skills at
right place at right time
6. Captivator – Builds passion & commitment towards a common goal
7. Global Thinker – Integrates information from all sources to develop well informed , diverse
perspective that is used to optimize organizational performance
8. Change Driver – Creates an environment that embraces change , makes change happen
9. Enterprise Guardian – Ensures shareholder value through courageous decision making that
supports enterprise or unit wide interests 6 6
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Roles of edit
CS inMaster
Strategic
titleManagement
style
Flawless Representation to MCA

1. Flawless Disclosure & Reporting – Drafting Governance sections of company’s annual

report & ensuring all reports are available to shareholders as per regulatory requirements
2. Representation – Representation before NCLT , CCI , Registrar of companies , tax
tribunals etc
3. Management of Board Meeting & Committees – Scheduling meetings , Proactively
managing agenda , Follow up of meetings , actions and report on matters arising
4. Compliances – Compliance with laws & regulations
5. Communication with Stakeholders – CS acts as important role in communication with
investors and should work with Chairmen & BOD to ensure effective relations with
shareholders are maintained
6. Advisory – Advisor to Chairman on induction programs , measuring performance of
directors , requisite measures based on review report 7 7
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Strategic Planning
Master title style
• As per Allison & Kaye “ Strategic planning is an organization process of defining its
strategy or direction and making decisions on allocating resources to persue the strategy
• Strategic Planning Cycle –
1. Deliberating mission of Organisation
2. Developing goals based on chosen mission
3. Examine Internal Environment (S , W)
4. Examine External Environment (O , T)
5. Summarise findings of SWOT Analysis
6. Formulate Final Strategy based on SWOT
• Strategic Planning is an iterative process and may begin with one mission and end with
another depending on outcome of the process
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Benefits of Strategic
Master title
Planning
style
1. Improved Results & Confidence – Influence organizational performance and greater
sense of purpose , progress & accountability
2. Focus – Refocus and re-energise a disorientated organisation
3. Problem Solving - Critical problems
4. Teamwork – Sense of teamwork , promote learning and build commitment
5. Communication – Direction in which organization is headed
6. Greater Control – Greater control over the environment

Limitations
1. Costs can outweigh Benefits
2. Development of poor plans
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Porter’s FiveMaster
Forces title style
• This tool was created by Harvard Business School Professor Micheal Porter
• It is analysis tool that used 5 industry forces to determine intensity of competition in
industry and its profitability level
• Strong the Forces are , less profitable is the Industry
• An Industry with
1. Low Barriers
2. Not many Buyers & Suppliers
3. Many Substitute & Competitors is Highly Competitive and less attractive due to its
low profitability

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5 Forces
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are Master title style

1.Bargaining Power of Buyer

2.Bargaining Power of Supplier
3.Threat of New Entrants
4.Nature of Rivarly
5.Threat of Substitutes

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Threat edit
NewMaster
Entrants
title style

• Threat of New Entrants is high when –

1. Small capital is required to make an entry
2. Existing companies are not influential or dominant to prevent new entrants
3. Existing firms do not have patents , trademarks or do not strong brand value
4. No/ little government regulation
5. Customer switching costs are low
6. There is low customer loyalty
7. Product are not able to be differentiated &
8. Economies of scale can be effortlessly acquired
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Click to editPower
Bargaining Master
of title
Supplier
style

• Supplier have dominant Bargaining Power when –

1. There are small no of suppliers , but plenty of buyers
2. Suppliers are large in number and pose a threat to forward
integrate
3. There are not many substitutes
4. Suppliers hold scarce / unique resources
5. Cost of switching supplier is relatively high

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Click to editPower
Bargaining Master
of title
Buyerstyle

• Buyers exert strong Bargaining Power when –

1. They buy in high volumes
2. There are only few Buyers
3. Switching costs to competitors are low (easily change Eg – Telecomm)
4. They threaten to Backward Integrate
5. There are many close substitutes
6. Buyers are price sensitive

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Threat edit
Substitutes
Master title style

• Force is threatening when buyers can easily find substitute products with
attractive prices

• When Buyers can switch from one product or service to another with little
cost

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Rivalry edit Master
Existing
titleCompetitors
style

• Rivalry among Competitors is intense when & pressure is high when –

1. There are several competitors
2. Exit barriers are high
3. Industry growth rate is slow or negative
4. Products are not differentiated
5. Products can be easily substituted
6. Low customer Loyalty

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Attractive Industry – High Profits Unattractive Industry –Low Profits

• High Barriers to New Entrants • Low Barriers to New Entrants

• Weak Supplier Bargaining Power • Strong Supplier Bargaining Power
• Weak Buyer Bargaining Power • Strong Buyer Bargaining Power
• Few Substitutes • Many substitutes
• Low Competition • Intense Competition

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2020
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