STRATEGIC MANAGEMENT– workshop on strategy

B.V.L.NARAYANA

SPTM/ RSC/BRC– 24-01-2009

OBJECTIVE

• To develop an understanding of strategic management concepts

• To develop an understanding of evolution of the field of strategic management and business enterprise perspective

• To link it and understand case method of pedagogy

Evolution of the Concept

Source: Bracker J (1980) The Historical Development of the Strategic Management Concept, AMR, 5, 2, 219-224

Strategic management

• Set of managerial decisions that determine the long term performance of a firm

• --- Wheelan and hunger (2002)

• Entails the analysis of external and internal environments of a firm to maximize the effective use of resources in relation to its objectives–

• Bracker 2001

Chronological evolution

Descriptor 1950’s and 1960’s 1970’s 1980’s 1990’s 21st century

Environment Stable Dynamic complex Dynamic complexHighly

dynamicHypercompetitive

FocusContentTop management

ContentTop management

ContentTop management

Process,Organisation

ProcessOrganisation

Decision makingRational,

synopticRational synoptic

Rational, participative

Contextdependent

Context dependent

View of Implementation

DistinctGiven

DistinctGiven

DistinctGiven

Integrated Integrated

Research Processual ,

longitudinal Cross sectional

Cross sectional ProcessualLongitudinal

ProcessualLongitudinal

Dominant school Design Planning PositioningCulturalLearning

Learning, Organic

Strategy paradigm

Static, exploitOpportunities,

Static, detailed planning

Static, position defense

Static, adaptive

Dynamic adaptive

Adapted from Pettigrew et al (2002), Whittington (2002), Gould and Campbell (1993)

Strategy definitions

• Mintzberg 1979-• A mediating force between the organization and

environment: consistent patterns in streams of organizational decisions to deal with the environment.

• Andrews(1970)pattern of objectives, purposes, or goals stated in such a way so as to define what business the company is in or is to be in and the kind of company it is or to be

• Chandler 1962: strategy is the determinator of the basic long term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

Concepts

• Process is– Sequence of events, actions and activities unfolding over time in a

context ( Pettigrew 1997) • Content is

– matter dealt in a field of study (Merriam Webster dictionary 2007)

• Content • Answers question “ what”

• Process • Answers question “how and why” (Van de ven and Huber 1990)

• Resource: is an asset, competency, process, skill or knowledge over which control is maintained (Wheelen and Hunger 2001, pp81)

Components of Strategy

Context(why/where?)

Process(how?)

Content(what?)

The Firm

Conceptualization

Environment

‘Possessions’

‘Possessions’

Environment

The Firm

‘Possessions’

‘Possessions’

Time t = 0 Time t = 1

Strategy -- definitions

Decision Making

Strategic

Tactical

Operational

Are Rare, consequential and directive

Source: Hambrick and Fredrickson, 2001, Are you sure you have a strategy?, Academy of Management Executive, 15, 4

Source: Hambrick and Fredrickson, 2001, Are you sure you have a strategy?, Academy of Management Executive, 15, 4

Context:Strategic Analysis

Content:Strategic

Choice

Process:Strategy

Implementation

The environment

Culture and stakeholderexpectations Resources

and strategiccapabilities

Planning and

allocating

resources

Firm structure

and design

Managing

strategic change

Identifying

strategic options

Evaluating options

Selecting strategy

Components of Strategy

Strategy Hierarchy

© Prentice Hall, 2006

Tools for Managing Strategy

• TOWS Matrix

• BCG Matrix

• Ansoff’s Growth Matrix

• Industry Attractiveness Business Strength Matrix

• Porter’s Five Forces Model

• Porter’s Generic Strategies

• Core Competence

TOWS Matrix (from SWOT Analysis)

© Prentice Hall, 2006

Portfolio Analysis

© Boston Consulting Group

Ansoff’s Growth Matrix

Industry Attractiveness Business Strength Matrix

© General Electric

Porter’s Five Forces Model

© Porter M. E, 1980

Porter’s Generic Strategies

© Porter M. E, 1980

Core Competence of Corporation

Difficult to Imitate by

competition

Wide Access to Markets

Add value to the customer

Core Competence

Idea © C.K. Prahalad and Gary Hamel, 1990

Resource based view

Strategy

Competitive advantage

Capabilities

ResourcesStep 1: identify and classify firm’s resources. Assess strengths and weaknesses of these relative to competitors. Identify opportunities

Step 2: identify capabilities which are its strengths. Identify resource inputs for it

Step 3: appraise rent gathering potential in terms their potential for sustained competitive advantage and appropriability

Step 4: select a strategy which matches. These steps Step 5: identify

resource gaps. Invest in replenishing, upgrading and augmenting resource base.

Grant 1991

Summing Up

• What is Strategy?• Conceptualization

– Firm & Environment – Decision level– Content, Process, Context– Stakeholders– Tools– Concept of time– Flow of initiatives– Outcomes-- SCA

What is strategy

• Competitive strategy is being different- deliberately choosing a different set of activities to deliver a unique mix of value

• Strategy is creation of a unique and valuable position

• Strategy is about combining activities and creating a fit between them

• Strategy is creating fit among a company’s activities so as to enable it to position its product in such a way that competitive advantage is clear.

Locus of decision makingType of strategic decision process

individualrational political

group

Locus of analysisindividual group

Type of changeepisodic incremental

adaptiveInter

pretive

mechanistic

Sam

e di

ffer

ent

linear

organic

EntrePreneurial

cognitive

Design/rational

planningposition

learning

configurational

powercultural

environmental

Logical Incremen

talism

evolutionary

Key points

• Plan to achieve objectives

• Analysis –gives objectives—use tools

• Converting of strategy to actions--- detailed planning– implementation

• Actual field level actions– service delivery

• All decisions –strategic, tactical, operational– interlinked– stream of decisions

Key points

• Need to be done over time

• Role of time– Path dependency, forecasting of trends, dynamic process

• Require feed back, correction– learning

• Strategy is –– process– Dynamic– Non linear

Linkage to case method of teaching

• Objectives– do analysis- – What you want to cover– course content– Audience characteristics– level of content– No of sessions– time frame– Instruments available– pedagogy and

evaluation

• Planning- convert plan to actionable items– Cases identification and their role– Identify reading material– Communicate in advance

Linkage to case method of teaching

• Implementation – actual handling– Case title– topic to cover– Read case/ teaching note– Establish – what concepts will be covered

• Highlights

• How will you handle discussion

• Prepare for deviations• Actual handling in class- ensure particpation• Summarize

– Link case facts and analysis to concepts

Ensure student preparation– generate trust- subject grasp and commandGive assignments and feed back, submissions

THANKS