Strategies

Strategic Management
The set of
managerial ----decisions and actions
----- that determines ------the long-run
performance of an organization.

2
Strategic management process
a six-step process that encompasses
strategic planning, implementation, and
evaluation.

13
FORMATION OF CONSIDERATION OF
MISSION & SWOT ANALYSIS STRATEGIC
OBJECTIVES ALTERNATIVES

EVALUATION AND IMPLEMENTATION CHOICE OF

CONTROL STRATEGY

STRATEGIC MANAGEMENT PROCESS

 1.Mission and Goals
Mission
a statement of the purpose of an
organization
Major goals
the foundation for further planning
Secondary goals
Are objectives to be attained that lead to superior
performance.
 Definition:

determination of long term objectives, making

the best choices for the future and allocating the
resources necessary to accomplish the objectives
Concerned with positioning the business in the
market and establishing a reputation with
customers, employees and other stock holders.
Long term view and to see the big future
including the firm and competitive environment
and to consider how they fit together
 Strategic planning:

Made by top management including CEO, P,

VP, GM and divisional heads. Policies and
strategies are adopted to achieve overall
objectives of the firm.
Top management CEO, P, VP, GM, Strategic planning(up to 10
div.heads years)
Middle management- functional Tactical planning(1-2 years)
managers, production managers
Lower management- unit manager, Operational planning
first line supervisors (1 week to 1 year)
 Comparison of different planning
Distinction between strategic planning
tactical planning:
Strategic planning
Made by top management
(CEO/P/VP/GM/Divisional Heads)
Long range plan > 10 years
Time period of 10 years
Primary focus on mission, long term goals
and effectiveness
Not a detailed one
Main purpose is to ensure longterm
effectiveness and growth
Decision making under uncertain
and risky conditions
Vague in nature
Resource allotted is high
Tactical planning
made by middle management
product line managers
Medium range plan(1-2 years)
Time period of 1-2 years
Primary focus on means of
implementing strategic goals
Somewhat detailed
Main purpose is in means of
implementing strategic goals
Under moderate risk conditions
Quantitative and qualitative
objectives
Resource allotted is moderate
Distinction between strategic and
operational planning:
 Types of strategy:
Strategy is an action plan which sets the
direction that a company will be taking.
It is a decision making choice and involves
consideration of
external environment affecting the
organization and the
internal environment of strengths and
weakness of the company.
 Levels of strategy:
1. Corporate level strategy
Forward vertical integration strategy
Backward vertical integration strategy
Concentric diversification strategy
Conglomerate diversification strategy
2. Business level strategy
3.Functional level strategy
 Horizontal integration strategy: acquiring one
or more competitors to increase market share
Concentric diversification: also referred as
related diversification energy starting or
acquiring a related business
Conglomerate diversification: also known as
unrelated diversification acquiring a new
business to reduce risk or troubles.
 Business related strategy:
Action taken to achieve desired goals in
serving a specific market with high interrelate
set of products.
This is to manufacture products at low cost,
gaining competitive advantage by making
products different than competitor,
advertising and expansion and contraction of
product lines.
 3. Functional level strategy:
pertains to all major departments involving all
the functions such as research and
development, finance, purchase, production,
quality control and marketing.
This seeks to add value to a good service. This
must fit with business strategy. A company
with mature products or low cost strategy will
have different functional strategies.
 Formulation of strategies
The step can be further categorized into three
stages.
1. Formulating corporate level (portfolio)
strategies: this involves the mix of business
units and product lines that fit together in a
logical way to provide competitive advantages
for the organisation. Executives in-charge of
the entire business corporation generally
defines portfolio strategy.
BCG (Boston Consulting Group)
matrix:
 2. Formulating business level
strategy:This is proposed by porter. These are the result of 5 competitive forces.
 3. Situation analysis: (SWOT/TWOS)
MATRIX
The TOWS MATRIX provides four types of
strategies
WT strategy Min-Min strategy
WO strategy Min-Max strategy
ST strategy Max-Min strategy
SO strategy Max-Max strategy
SWOT/TOWS MATRIX: The strategy planner has to
make several TOWS MATRIX at different time periods
 SWOT :

SWOT Analysis is a strategic planning method used to evaluate

the Strengths, Weaknesses,
Opportunities, and Threats involved in a project
or in a business venture.

It involves specifying the objective of the business venture or

project and identifying the internal and external factors that
are favorable and unfavorable to achieving that objective
 Strengths: attributes of the person or company
that are helpful to achieving the objective.

Weaknesses: The absence of certain strengths

maybe considered a weakness.

Opportunities: external conditions that are helpful

to achieving the objective.

Threats: changes in the external conditions which

could do damage to the objective.
 Creative use of SWOT
How can we Use and Capitalize on each
Strength?
How can we Improve each Weakness?
How can we Exploit and Benefit from each
Opportunity?
How can we Mitigate each Threat ?
 SWOT analysis framework
Environmental Scan

Internal Analysis External Analysis

Strengths Weaknesses Opportunities Threats

SWOT Matrix
 Strengths :

Strong brand name

Good reputation among customers
Exclusive access to high grade natural
resources
Favourable access to distribution networks
 Weakness:
A weak brand name
Poor reputation among customers
High cost structure
Lack of access to best natural resources
 Opportunities:
An unfulfilled customer need
Arrival of new technologies
Loosening of regulations
Removal of international trade barriers
 Threats:
Shift in consumer tastes away from the firms
products
Emergence of substitute products
New regulations
Increased trade barriers
 SWOT MATRIX

Strengths Weakness

Opportunities S-O W-O

Strategies Strategies

Threats S-T W-T

Strategies Strategies
 S-O Strategies: Pursue opportunities that are a
good companys fit to the companys strengths

W-O Strategies: Overcome weaknesses to

pursue opportunities

S-T Strategies: Identify ways to use strengths to

reduce vulnerability to external threats

W-T Strategies: Establish a defensive plan to

prevent the firms weaknesses from making it
highly susceptible to external threats
 Implementation of strategies:
This will be more concerned with team
leadership, efficiency and other operational
matters.
This is the process of translation of strategies,
policies into action through the development of
programs, budgets and procedures.
Strategy may be implemented by middle and
lower level management.
The implementation process considers
organizational structure, people, culture and
control systems.
 2.SWOT(Identifying Organizational
Opportunities)

Strengths Weaknesses

Opportunities Threats

a. External Analysis
b. Internal Analysis
 a. External Analysis
Identify strategic opportunities and threats
in the operating environment.

Immediate (Industry)

Macroenvironment National

1-43
 b. Internal Analysis
Identify strengths
Quality and quantity of resources available
Distinctive competencies
Identify weaknesses
Inadequate resources
Managerial and
organizational deficiencies

1-44