1-strategic management overview

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STRATEGIC MANAGEMENT – OVERVIEW AND PROCESSDr. M. ThenmozhiProfessorDepartment of Management StudiesIndian Institute of Technology MadrasChennai 600 036E-mail: mtm@iitm.ac.in : 

STRATEGIC MANAGEMENT – OVERVIEW AND PROCESSDr. M. ThenmozhiProfessorDepartment of Management StudiesIndian Institute of Technology MadrasChennai 600 036E-mail: mtm@iitm.ac.in

WHICH IS THE SUCCESSFUL STRATEGY? : 

WHICH IS THE SUCCESSFUL STRATEGY? Microsoft’s Business Model – sell proprietary code & give service free Redhat Linux’s Business Model - source code open and free to all & technical support for a fee

RAYMONDS ACQUIRED COLORPLUS : 

RAYMONDS ACQUIRED COLORPLUS Strengthen Formal + casual segment Follow multiple brands strategy of Madura Garments Position as complete men’s wear company – Park avenue=mid/premium formal wear Colorplus- premium smart casuals Parx – value for money casuals Manzoni- super premium shirts/suits

TATA CHEMICALS SODA ASH PLANT : 

TATA CHEMICALS SODA ASH PLANT Outsourcing its IT infrastructure- Core activity Vs. Support functions Competency analysis Outsource to win strategy

DR. REDDY’ LAB - STRATEGY : 

DR. REDDY’ LAB - STRATEGY Major focus on discovery of new chemical entities R&D expenditure – 8% of sales in 2003 Focus areas : diabetes, anti-cancer, non-sterodial anti-infectives, anti- inflammatories Progress – licensed two anti-diabetis molecules to Novo Nordisk, five molecules in pipeline

WHICH STRATEGY IS SUCCESSFUL? : 

WHICH STRATEGY IS SUCCESSFUL? Manage present Unlearn the past Create the future

HOW COMPANIES REACT TO ENVIRONMENT? : 

HOW COMPANIES REACT TO ENVIRONMENT? Analyse the external and internal environment and evolve a strategy for implementation- proactive or reactive.

STRATEGIC MANAGEMENT - NEED : 

STRATEGIC MANAGEMENT - NEED Preliberalized regulated economy Liberalisation, Globalisation and Privatisation Need for greater strategic thinking felt

CHANGING ENVIRONMENT : 

CHANGING ENVIRONMENT

Slide 10: 

CHARACTERISTICS OF SECOND AND THIRD WAVE Second wave Third wave Standardisation Destandarisation Specialisation Despecialisation Synchronisation Spontaneous Concentration Segmentation Maximisation Appropriate Scale Centralisation Decentralisation

Slide 11: 

GLOBAL MEGA TRENDS Economic considerations transcending political considerations The movement of world wide – wide free trade The power full drive of telecommunications The relative abundance of natural resources Competition for reduced taxes The Asian consumer boom The advancement of democracy and the spread of free enterprise Inflation and interest containment The triumph of individual

Slide 12: 

ASIAN MEGA TRENDS From To Nation States Network Export led Consumer driven Western influence The Asian way Govt. Controlled Market driven Villages Super cities Labor intensive High technology Male domination Emergence of woman West East

Slide 13: 

Globalisation Liberalisation Market Changes Technological Changes Changing environment of organisations: Principal Constituents

Slide 14: 

Portfolio Related Strategic Response Mergers, Acquisition & Takeovers Demergers Diversification Share Buyback Divestiture/Disinvestments Joint Venture Strategic Alliances/collaborations Globalisation Market changes Liberalisation Technological Changes Environment Organisation Structure Related strategic Response Strategic Business Units Matrix Structure Delayering/ Flat Organisation Structure Process Related Strategic Responses Quality Strategies International Quality Certification Programmes Just-in-time (JIT) Inventory Benchmarking Building Core Competence Setting Vision & Mission Cost & Asset Utilisation Strategies Technological Upgradation & Indigenisation Information Technology Research & Development Marketing Strategies Project Management Environmental Changes and Strategic response of organisation

WHAT IS STRATEGIC MANAGEMENT? : 

WHAT IS STRATEGIC MANAGEMENT? Strategy – greek word ‘strategos’ – generalship Activities concerned with formulation and implementation of strategies to achieve organisational objectives

ESSENCE OF STRATEGIC MANAGEMENT : 

ESSENCE OF STRATEGIC MANAGEMENT Assess where are we now ? Identify where do we want to be? Generate options on how we might get there? Evaluate the options to identify which way is best? Ensure we reach the desired position.

Slide 17: 

STRATEGIC MANAGEMENT PROCESS

Slide 18: 

STRATEGIC MANAGEMENT PROCESS Feedback / Learning

ENVIRONMENTAL SCANNING : 

ENVIRONMENTAL SCANNING External: Societal, Technological, economic, regulatory,competitive environment- PEST analysis ETOP analysis Industry Analysis- Porter’s Model, Strategic groups Internal: Organisational Capabalitiy analysis- SWOT, TOWS matrix, Value Chain analysis Organisation Structure Culture (Belief, expectation, Values) Resources (Assets, skills, competencies, knowledge) BACK

STRATEGY FORMULATION : 

STRATEGY FORMULATION Mission Reason for existence Objectives What results to accomplish when Strategies Plan to achieve the mission & objective Policies Broad guidelines for decision making BACK

Slide 21: 

STRATEGY IMPLEMENTATION BACK

EVALUATION AND CONTROL : 

EVALUATION AND CONTROL Process to monitor performance and take corrective action Performance BACK

STRATEGY FORMULATION : 

STRATEGY FORMULATION Development of long range plans for effective management of environmental opportunities and threats in the light of corporate strengths and weaknesses.

DIVERSIFIED COMPANY 3 LEVELS OF STRATEGY : 

DIVERSIFIED COMPANY 3 LEVELS OF STRATEGY Corporate-Level Strategy Growth of business as a whole Business-Level Strategy Division/business unit/product level Functional-Level Strategy support corporate & business level strategy

STRATEGIC CHOICES : 

STRATEGIC CHOICES Understanding the bases for future strategy at both corporate and business unit levels and the options open for developing strategy in terms of both Corporate level – Highest level and is concerned with the scope of an organisation’s strategies and the adding of value through its relationship with the separate parts of the business and the synergies created between these parts Business level – The competitive advantage that is created from the understanding of both markets and customers based on specific competences Directions and methods – How an organisation develops in terms of feasibility and acceptability

STRATEGY INTO ACTION : 

STRATEGY INTO ACTION This is where strategies are working in practice Structuring – structure in terms of processes, boundaries and relations and their interactions Enabling – Creation of support mechanisms in the organisation in order to support strategy implementation and development Change – Creating an environment that facilitates change throughout the organisation

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