business strategy intro i

8/9/2019 Business Strategy Intro i

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I n t r o d u c t i o n I

BUSINESS STRATEGY


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THE GENESIS

In 1911 Harvard Business School created anintegrative course to create general managementcapability

Gordon & Howell Report sponsored by the FordFoundation recommended a capstone course which

will enable students to integrate their learnings inthe various fields of management

In 1969 the AACSB made this course mandatory in allMBA programmes


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EVOLUTION

Four paradigm shifts mark the evolution of StrategicManagement

Mid 1930s marked the period of Ad Hoc decisionmaking in policy when the business environment

was relatively simple- entrepreneur driven

In the late 1930s and the 1940s the ad hoc approachwas replaced by planned policy formulation


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EVOLUTION

Increasing complexity of the environment forcedstrategy formulation to be based on a critical look at

businesses and their relationships with theenvironment- 1960s

In 1980s strategy management had to focus on theintersection of strategic processes and theresponsibilities of general management

Just strategy development does not equip a managerto take many managerial actions in the course ofrunning a business


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A MODEL OF LOOKING AT STRATEGICMANAGEMENT

Hambrick & Frederickson ModelVision & Mission

Goals & Objectives

Strategy: Arenas, Vehicles, Differentiators, Staging,Economic Logic

Implementation Levers & Strategic Leadership

Accompanied by Internal & External Strategic

Analysis


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WHAT DO THESE TERMS MEAN?

Arenas: where will we active?- products, services,channels, geographic and other markets, technologyetc.

Vehicles: How will we get there? Acquisitions,alliances, internal development on variousdimensions

Differentiators: How will we win in the marketplace?The features, attributes of our products andservices- prices, quality, reliability etc.


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Staging: the speed and sequence of our movesEconomic Logic: How will we get our returns? The

profit over & above the cost of capital.

Some Questions: do firms behave like rational actors?How are firms different? The heterogeneity amongfirms in the same competitive market?


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Role of the Head Office in diversified firms?What determines success or failure in international

competition?

Gradually these questions and issues are becomingcritical for Indian Companies as they enter aglobalising environment

Pre Liberalisation: on the fringes of government


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INDIAN IMPERATIVES

Pre Liberalisation: follow the Government strategies1990s Transitional Euphoria & Reality Check

Post Liberalisation: Be a global maverick,

entrepreneurship with professionalism, demergebusinesses, decentralise, develop technologies,


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WHAT IS STRATEGY?

Creating a common thread and thrust among themany initiatives

To move from a current state to a desired future state

Achieve a trade off and fit among activitiesContinually aligning the organisation with the

environment without losing ones strategic goals


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SCHOOLS OF STRATEGY FORMATION

Prescriptive School- Design School, Planning School,Positioning School

Descriptive Schools- Entrepreneurial School,Cognitive School, Learning School ,Power School,Cultural School, Environmental School

Integrative School- Configurational School


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Design School based on conceptualising a strategyheaded by the CEO

Planning School on strategy as a formal process led bythe analytical thinkers

Positioning School on generic positioning of theorganisation in a competitive scenario like inMichael Porter

Entrepreneurial School based on vision of theentrepreneur


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Cognitive School based on intellectual process led bythe strategic thinker

Learning School based on strategy development as anemergent process resulting from the concreteexperience of the firm as in Prahalad

Cultural School on collective process of the seniormanagement with their unique perspective


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Power School based on negotiations among theinfluence holders in the organisation

Environmental School on strategy as a reactiveprocess shaped by the environment

Configurational School with strategy formation as atransformative process with one of the proponentsof the above schools playing the lead role

business strategy intro i

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