1 An Overview of Strategic Management  References  Strategic Management Concepts & Cases, Fred R. David  Strategic Management: Text and Cases, Gregory G. Dess, G. T. Lumpkin  Advanced Strategic Management: A multiple Perspective Approach, Mark Jenkins, Véronique Ambrosini, Nardine Collier Resource Person: Furqan-ul-haq Siddiqui Chapter # 1 May 05, 2016

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4 In September 2013, Nokia sold what was once the world's largest vendor of mobile phones to Microsoft as part of an overall deal totaling €5.44 billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and several other executives joined the new Microsoft Mobile subsidiary of Microsoft as part of the deal, which closed on 25 April 2014.

5 Strategy…!  A strategy is an integrated plan of action designed to achieve a particular goal.  The word strategy has military connotations, because it is derives from the Greek word for army ("leader or commander of an army, general“).

6  Tactic is concerned with the conduct of an engagement while strategy is concerned with how different engagements are linked.  Tactics are the actual means used to gain an objective, while strategy is the overall campaign plan, which may involve complex operational patterns, activity, and decision-making.  a method of employing forces in combat

7 Strategic Management cross- functional decisions  Strategic or Institutional management is comprehensive and ongoing management process aimed at the conduct of drafting, implementing and evaluating cross- functional decisions that will enable an organization to achieve its objectives cross-functional decisions  Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Strategic management  Analyses, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. o Strategic management is the study of why some firms outperform others o How to compete in order to create competitive advantages in the marketplace o How to create competitive advantages in the market place.

Two Fundamental Questions 1. How should we compete in order to create competitive advantages in the marketplace? 2. How can we create competitive advantages in the marketplace that are unique, valuable, and difficult for rivals to copy or substitute?

Strategic Management Concepts

11 Intuition is based on:  Past experiences  Judgment  Feelings SM Integrates Intuition & Analysis Intuition is useful for decision making in conditions of:  Great uncertainty  Little precedent  Highly interrelated variables  Several plausible alternatives

12 Strategic Management Achieves Organizational Success Process of Integrating:  Marketing  HRM  Finance/Accounting  Production/Operations  R & D  Computer information systems

13 General Terminology “Strategic Management” Synonymous with “Strategic Planning” Strategic management  Used more often in academia Strategic planning  Used more often in the business world

14 Specifically Strategic management  Refers to:  Strategy formulation  Strategy implementation  Strategy evaluation Strategic planning  Refers to:  Strategy formulation

15 Strategic-Management Process Strategy Formulation Strategy Implementation Strategy Evaluation

16  Strategy formulation: the set of processes involved in creating or determining the strategies of the organization; it focuses on the content of strategies.  Strategy implementation: the methods by which strategies are operational or executed within the organization; it focuses on the processes through which strategies are achieved.  Strategy evaluation: Process by which strategies are evaluated & rectified Strategic-Management Process

17 Strategy Formulation Vision & Mission Alternative Strategies Long-Term Objectives Strengths & Weaknesses Opportunities & Threats Strategy Selection

18 Strategy Implementation Motivate Employees Policies Annual Objectives Resource Allocation

19 Strategy Evaluation Corrective Action Measure Performance Review External & Internal

20 Strategic Planning vs. Long-range Planning Long-range planning is considered to mean the development of a plan for accomplishing a goal or set of goals over a period of several years, with the assumption that current knowledge about future conditions is sufficiently reliable to ensure the plan's reliability over the duration of its implementation. Strategic planning assumes that an organization must be responsive to a dynamic, changing environment Strategic planning assumes that organization must be quick to respond to a dynamic, changing environment, which may require changes in the future. Strategic planning, then, points out the importance of making decisions that will ensure your organization's ability to successfully respond to changes in the environment.

21 Adaptation to Change Organizations must monitor events  On-going process  Internal and external events  Timely changes Rate and magnitude of changes  Increasing dramatically E-commerce Demographics Technology Merger-mania “ The measure of intelligence is the ability to change.” ― Albert Einstein Albert Einstein

22 Importance of Strategic Management 1. Provides a sense of long-term direction for organisation members. 2. Enhanced awareness of SWOT 3. Understanding of competitors’ strategies 4. Increased employee productivity & involvement 5. Reduced resistance to change 6. Clear performance-reward relationships 7. Order and discipline to the firm 8. View change as opportunity 9. Proactive vs. Reactive 10. More profitable and successful 11. Formulate better strategies (Systematic, logical, and rational approach)

23 Importance of Strategic Management Competitive Advantage Direction for the Organisation Supports Innovation Builds Commitment

24  Poor reward structures-  Fire-fighting- Embroiled in crises management  Waste of time-  Too expensive-  Laziness-  Content with success- We are successful so what's need of SM  Fear of failure-  Overconfidence on experience-  Prior bad experience  Self-interest- viewing new plans as threat  Fear of the unknown- uncertainty regarding new plans, system, new role, new skills  Suspicion- distrust upon management Why Some Firms Do No Strategic Planning

25 Strategic Management Terms Competitive Advantage  Anything that a firm does specially well as compared to rival firms.  A firm can sustain CA for only a certain period due to rival firms imitating & undermining that advantages.  A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.  Cost and differentiation advantages are known as positional advantages since they describe the firm's position in the industry as a leader in either cost or differentiation.

26 Long-Term Objectives Long-term objectives are results that an organization seeks over a multiyear period. Common categories for business long-term objectives include profitability, employee development, productivity, technology development, employee relations & competitive position etc.  Challenging  Measurable  Consistent  Reasonable  Focus coordination  Provide basis for effective management

27 Annual Objectives Short-term milestones necessary to achieve long-term objectives.  Represent the basis for allocating resources  Established at corporate, divisional, and functional levels  Stated in terms of accomplishments for:  management  marketing  finance/accounting  production/operations  research and development  information systems accomplishments

28 Policies Important in strategy implementation as the means by which annual objectives will be achieved  Guide to decision making and address repetitive situations  Established at corporate, divisional, or functional levels  Allow consistency & coordination within and between organizational departments