Detailed lectures on Strategic Management

1. Prepared by:
Mr.A.P.Shareef MBA,M.Com,NET
STRATEGIC MANAGEMENT
AP Shareef’s lecture
On
Strategic management

2. AP Shareef’s lecture
On
CHAPTER 1 Strategic management
ESSENTIALS OF BUSINESS POLICIES
Based on organization objectives
Simple and easily understandable
Written policies
Stable
Comprehensive
Ethical
Fair and responsible
Planned for development

3. AP Shareef’s lecture
On
Strategic management ELEMENTS OF BUSINESS POLICIES
 Ascertaining the problem
 Policy formation
 Dissemination of the policy
 Acceptance of the policy
 Explanation of the policy
 Policy implementation
 Policy control

4. AP Shareef’s lecture
On
Strategic management TYPES OF POLICIES
 Marketing policies
 Production policies
 Purchasing policies
 Financial policies
 HR policies

5. AP Shareef’s lecture
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Strategic management MARKETING POLICIES
Product type, depth of product line, size and
quality of product or service
Place- channels of distribution, types of
outlets and transportation methods desired
Price- methods of pricing, trade and quantity
discounts, mark ups and mark downs
Promotion- advertising, personal sales effort

6. AP Shareef’s lecture
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Strategic management PRODUCTION POLICIES
Determining factory layout
Maintaining minimum movement of materials
and work in progress
Machine utilization and inventory control
Product control and scheduling

7. AP Shareef’s lecture
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Strategic management PURCHASING POLICIES
Deciding if established suppliers will be used
exclusively or if orders will be placed with
any available vendor
Fixing the amount that should be bought on
each order
Establishing the minimum inventory size of
each item in computing the reorder point
Utilizing purchase discounts

8. AP Shareef’s lecture
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Strategic management FINANCIAL POLICIES
Determining the debt-equity proportion
Deciding dividend pay out ratio
Establishing fixed and variable expense
relationships
Setting credit norms, credit period, and
discount rate collections
Spelling out financial ratios and control
techniques to be used for judging the
effectiveness of fund utilization

9. AP Shareef’s lecture
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Strategic management HR POLICIES
Developing job descriptions
Recruitment of employees
Use of testing programs in establishing
applicant capabilities
Establishing training programs
Deciding compensation and fringe benefits

10. AP Shareef’s lecture
On
Strategic management CHAPTER 2
UTILITY AND
APPLICATION OF
STRATEGIC
MANAGEMENT

11. AP Shareef’s lecture
On
Strategic management
Definition of strategic management
According to Azhar Kazmi “strategic
management is defined as the dynamic
process of formulation, implementation,
evaluation and control of strategies to
realize the organization’s strategic
intent”

12. AP Shareef’s lecture
On
Strategic management
1
Four phases in Strategic
management process
• Establishment of strategic intent
2 • Strategy formulation
3
• Implimentation of strategis
4
• Strategic evaluation

13. AP Shareef’s lecture
On
Strategic management
1.Establishment of
strategic intent
Vision
Mission
Business definition
Business model
objectives

14. AP Shareef’s lecture
On
Strategic management
2.Strategy
formulation
Environmenta
l appraisal
Organizationa
l appraisal
SWOT analysis
Corporate level
strategies
Business-level
strategies
Strategic analysis
and choice
Strategic plan

15. AP Shareef’s lecture
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Strategic management
3. Strategy
implementation
project
procedural
Resource allocation
Structural
Behavioral
Functional
operational

16. AP Shareef’s lecture
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Strategic management
4 Strategic evaluation .

17. VISION: DEFINITION
AP Shareef’s lecture
On
Strategic management
According to El Namaki: vision is “mental perception of the
kind of environment an individual, or an organization, aspires
to create within a broad time horizon and the underlying
conditions for the actualization of this perception”

18. AP Shareef’s lecture
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Strategic management MISSION: DEFINITION
According to Hunger and wheelen
(1999) mission is the “purpose or
reason for the organization’s
existence”

19. AP Shareef’s lecture
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Strategic management BUSINESS DEFINITION
Find answer to the following:
1. What is our business?
2. What it will be
3. What it should be

20. AP Shareef’s lecture
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Strategic management
LEVELS AT WHICH BUSINESS COULD BE
DEFINED
Corporate level
SBU level
Execution level

21. AP Shareef’s lecture
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Strategic management
THE PRODUCT/ SERVICE CONCEPT
Bhadrachalam paperboards Ltd.
Recognized paper as a product and not as
a commodity. As a result of this, it was
able to consider the productivity of its
customers and make tailor-made products
for them . In the process, it came in direct
contact with its customers rather than with
the wholesale agents, thus defying the
traditional way in which the paper
business operates

22. AP Shareef’s lecture
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Strategic management
HCL Ltd. Perceived the computer not as a
sophisticated awe-inspiring machine but as
an everyday commodity. Such a product
concept prompted it to advertise the
computer as a consumer durable available
through an innovative hire purchase
scheme.

23. AP Shareef’s lecture
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Strategic management GOALS AND OBJECTIVES
Goals denote what an organization hopes to
accomplish in a future period of time
Objectives are the ends that state specifically
how the goals shall be achieved.

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Strategic management
CHAPTER 3
ENVIRONMENTAL APPRAISAL

25. AP Shareef’s lecture
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Strategic management THE CONCEPT OF ENVIRONMENT
Prof. Keith Davis defines “the aggregate of
all conditions events and influences that
surround and affect it”

26. AP Shareef’s lecture
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Strategic management
ENVIRONMENTAL ANALYSIS AND COMPETITIVE
ADVANTAGE
 Purpose of
analysis
1. To follow a course of
action different from its
rival firms
2. To develop a strategy
which will provide
different and better
outcomes than those of
its competitors ,and
3. To make it difficult for
other firms to duplicate
the strategy of enter the
area of opportunity if the
strategy works
 Competitive
advantage
It is the ability of an organization to
out perform its competitors. It is a
function of
The company’s resources and capabilities

27. AP Shareef’s lecture
On
Strategic management
MEASUREMENT OF STRATEGIC CAPABILITY
Resource audit
Value chain analysis
Finance and accounting
Production and operations
Human resource management
Research and development
General management
capability

28. AP Shareef’s lecture
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Physic Strategic management
al
resour
ces
Huma
n
resour
ces
Financ
ial
resour
ces
Resourc
e
audit
Intangi
bles

29. AP Shareef’s lecture
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Strategic management VALUE CHAIN ANALYSIS
This concept is introduced by Porter (1985)While
the organization is performing various activities,
each activity is to contribute towards the creation
of value to the economic activity of the
organization. Value chain is a set of interlinked
value-creating activities performed by an
organization. These activities may begin with the
procurement of basic raw materials and go
through processing in various stages right up to
the end products marketed to the ultimate
consumer. The value chain of a company may be
linked to the value chain of upstream supplier and
downstream buyers, forming a series of chains
that Porter terms as the value system.

30. AP Shareef’s lecture
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Strategic management

31. AP Shareef’s lecture
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Strategic management ENVIRONMENTAL SCANNING
According to Azhar Kazmi “Environmental
scanning can be defined as the process by
which organizations monitor their relevant
environment to identify opportunities and
threats affecting their business for the purpose
of taking strategic decisions”.

32. AP Shareef’s lecture
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Strategic management

33. AP Shareef’s lecture
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CRITICAL SUCCESS FACTORS(CSFS)/KESYtra tegic management
SUCCESS FACTORS(KSFS)
 Structure of industry
 Competitive strategy and geographic location
 Environmental factors
 Temporal factors

34. Chapter 4
AP Shareef’s lecture
STRATEGY FORMULATION/STRATEGIC
PLANNING
On
Strategic management

35. AP Shareef’s lecture
On
Strategic management STRATEGIC PLANNING
Strategic planning is an organization’s
process of defining its strategy, or
direction, and making decisions on
allocating its resources to pursue this
strategy, including its capital and people

36. AP Shareef’s lecture
STRATEGIC PLANNING PROCESS
On
Strategic management 1.Organizational vision and mission
2.Setting goals and objectives
3.SWOT Analysis
4.Formulation of strategic alternatives
5.Selecting the best strategy
6.Preparing an operational plan
7.Resource allocation
8.Coordinating internal factors
9.Integrating strategy and operational plan

37. AP Shareef’s lecture
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Strategic management
2. SETTING ORGANIZATIONAL GOALS AND
OBJECTIVES
It involves a complex
process of research
and decision making.
These are guided by
vision and mission
A goal is a long range
aim for a specific
period of time.

38. AP Shareef’s lecture
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Strategic management
FACTORS THAT INFLUENCE THE SETTING OF
OBJECTIVES ARE Resources of the
organization
Past objectives
Environmental factors
Thinking and value system
of the top management
Internal power system in
the organization

39. AP Shareef’s lecture
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Strategic management 3. SWOT ANALYSIS
Analyzing the Strengths, Weaknesses, Opportunities and
Threats of various environments.

40. AP Shareef’s lecture
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Strategic management
4. FORMULATING STRATEGIC ALTERNATIVES
A.Functional strategy
B.Stability and contingency
strategies
C.Major and minor strategies
D. Strategy in tune with policy
E. Turn around strategies

41. AP Shareef’s lecture
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Strategic management 5. SELECTING THE BEST STRATEGY
Strategy should be clearly identified and
be explicit in practice or words
Strategy should be capable of exploiting
environmental opportunities
It should sustain threats of environment
It should be consistent with corporate
competence and resources

42. AP Shareef’s lecture
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Strategic management
6. PREPARING AN OPERATIONAL PLAN
The plan which explains how
the strategic plan is implemented
is called operational plan.

43. AP Shareef’s lecture
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Strategic management 7. RESOURCE ALLOCATION
Allocation of both monetary and non-monetary
resources to implement designed
strategies is essential . The limited
resources are to be allocated according to
the priorities.

44. AP Shareef’s lecture
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Strategic management
8. COORDINATING INTERNAL FACTORS
Successful implementation of strategy
depends upon coordinating internal factors.
The flow of work should be smooth and
steady. Obstacles and disturbances should
be avoided.
Co ordination between various departments
is very important in this regard

45. AP Shareef’s lecture
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Strategic management
8. INTEGRATING STRATEGY AND OPERATIONAL
PLAN
Operational plans should be integrated with
strategies so as the attainment of
objectives is assured.
Objectives
Strategies
Operational plans

46. AP Shareef’s lecture
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Strategic management CORPORATE LEVEL STRATEGIES
1. Stability strategy
2. Expansion/growth strategy
3. Merger strategy
4. Retrenchment strategy
5. Restructure strategy/ combination strategy

47. AP Shareef’s lecture
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Strategic management STABILITY STRATEGY
It is also called as neutral/ no growth
strategy
This strategy is adopted by the organization
to maintain its existing business if it has no
scope for further growth.

48. AP Shareef’s lecture
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Strategic management EXPANSION STRATEGY
This strategy calls for further expansion in the
business. It takes the following modes.
 If the organization has no future in existing operations
 If the organizations resources are not fully utilized
 When a competitor enters the existing business
 To imitate the competitors for not loosing the customers

49. AP Shareef’s lecture
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Strategic management
IMPORTANT GROWTH/ EXPANSION STRATEGIES
Intensive growth strategy
Integrative growth strategy
Diversification growth strategy

50. AP Shareef’s lecture
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Strategic management INTENSIVE GROWTH STRATEGY
Market penetration
To make aggressive sales efforts to increase sales by
1.inducing customers to buy more
2.pulling customers from competitors
3.converting non-users into users
Market development
To broaden the existing market by entering new markets by
1.adding new channels
2.new market segments
Product development
Acceleration of growth by increasing the quality/ creating
entirely a new product

51. AP Shareef’s lecture
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Strategic management INTEGRATIVE GROWTH STRATEGY
Horizontal integration: Integration of two or
more firms in the same industry.
Vertical integration: This integration means
joining of firms performing different
processes of a product for a common
purpose.

52. AP Shareef’s lecture
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Strategic management
DIVERSIFICATION GROWTH STRATEGY
Adding new products to the existing line. It
needs new products, processes,
technology, markets and services.

53. AP Shareef’s lecture
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Strategic management MERGER STRATEGY
Two or more organizations performing
same operation join together to avoid
competition.
A. Horizontal Mergers
B. Vertical mergers
a.Sugar cane cultivation farm
b.Sugar cane crushing plant
c.Sugar mill
d.confectionery
Unit X
AP Shareef’s lecture
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Strategic management

54. AP Shareef’s lecture
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Strategic management
Concentric mergers
Leather industry
Footwear
manufact
uring
Bag
manu
factur
ing
Leather
coats
manufact
uring
Hosiery industry
Men’s
wear
manufact
uring
Kids wear
manufactu
ring
Socks
manufact
uring
Firm X
Merged unit

55. AP Shareef’s lecture
On
Strategic management
Conglomerate mergers: This is the case where
corporates from unrelated industries are merged
together.
Footwear industry
Firm
1
Firm
2
Firm
3
Pharmaceutical
industry
Firm
1
Firm
2
Firm
3
Firm X
Merged
Unit

56. AP Shareef’s lecture
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Strategic management RETRENCHMENT STRATEGY
Turn around strategy: The strategy which
is formulated to turn a sick company into
a healthier one.
change in the top management
quick cost reduction
Better internal control
Building Credibility
neutralizing external pressures

57. AP Shareef’s lecture
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Strategic management
Disinvestment Strategy: Sale of those units of
part of business that no longer contribute for
the development of the organization.
negative cash flow generated by a
particular unit causing bad financial implication
of the overall activities of the organization
if an acquired business is proved to be a
big mismatch
if technological up gradation is not
affordable or possible

58. AP Shareef’s lecture
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Strategic management
RESTRUCTURE STRATEGY/ COMBINATION
STRATEGY
The combination of several strategies to suit
the prevailing environment. Careful
combination of various strategies at the right
time, takes the organization to the new heights.

59. AP Shareef’s lecture
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Strategic management BUSINESS LEVEL STRATEGY
These are formulated for strategic business
units.
Any part of a business organization which is
treated separately for strategic management
purpose.

60. AP Shareef’s lecture
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Strategic management
WAYS OF GAINING COMPETITIVE ADVANTAGE
 Cost Leadership
 Differentiation
 Focus

61. Chapter 5
STRATEGY IMPLEMENTATION
AP Shareef’s lecture
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Strategic management

62. AP Shareef’s lecture
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Strategic management
ASPECTS OF STRATEGY IMPLEMENTATION
Strategies
Policies
Procedures
Programs
Rules
Methods
Budgets

63. AP Shareef’s lecture
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Strategic management STEPS IN IMPLEMENTATION OF A STRATEGY
1.Resource allocation
2.Fixing key tasks and priorities
3.Assigning tasks
4.Authority delegation
5.Formulating methods for co ordination
6.State policies as designed for implementation
7.Clearly state the various goals for individual managers
8.Develop MIS and feed back systems for evaluation
9.Provide incentives and rewards to reinforce the behaviour of workers to new systems
10. Manager improvement programs to develop to develop the talent to implement the strategy
11. Implement the designed strategies
12. Watch the operations, evaluate results and provide feed back to management to correct the deviations.

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Strategic management
ISSUES IN STRATEGY IMPLEMENTATION
Project implementation
Procedure implementation
Resource allocation
Structural implementation
Functional implementation
Behavioral implementation

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PROJECT IMPLEMENTATION Strategic management
It involves decision
regarding the project to
be undertaken in future
and to see that they are
properly executed.
1.Conceptual
stage
2.Analyzing
stage
3.Planning
stage
4.Implementatio
n stage
5.Launching
stage
Phases in
project
implementa
tion

66. AP Shareef’s lecture
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Strategic management PROCEDURE IMPLEMENTATION
It means the regulatory framework within which the
management is supposed to implement its plans, plans,
projects and policies according to the government’s
approvals.
Formulation of a
company
Licensing procedure
SEBI requirements
Foreign collaboration
FEMA Requirements
MRTP Requirements
Business incentives
Import and export
requirements
Labour legislation
Patenting requirements
Environmental
requirements
Consumer protection
requirements

67. AP Shareef’s lecture
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Strategic management RESOURCE ALLOCATION
 Utilization of scarce resources for the
maximum benefit of the organization
 Investment decision based on cost benefit
theory.
 Men materials and money are the basic
resources.

68. AP Shareef’s lecture
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Strategic management STRUCTURAL IMPLEMENTATION

69. AP Shareef’s lecture
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Strategic management
Mc Kinsey’s Value Based Management
VBM describes how one can holistically
and effectively organize a company.
Together these factors determine the way in
which a corporation operates.
These are categorized as Hard S’s and Soft
S’s.
The hard elements are feasible and easy to
identify.
The four soft S’s are hardly feasible.

70. AP Shareef’s lecture
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Strategic management The Hard S’s
1. Strategy
Long term decision aimed at gaining
competitive advantage for the organization.
Strategy must give scope for modification
to suite environmental changes.

71. AP Shareef’s lecture
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Strategic management
2.Structure
Shows authority and responsibility
relationship between people working at
different levels. It is a chart that explains who
reports to whom. It clearly shows how the tasks
are sub-divided and integrated. Based on the
change in the strategy, structure must also be
altered.

72. AP Shareef’s lecture
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Strategic management 3. Systems
Many activities are there in the day to day
operations of a business. A proper system can
avoid confusion and duplication of work.
Effective accomplishment of objectives needs
a system for flow of activities.
a. HRIS
b. MIS
c. DSS
d. PCS

73. AP Shareef’s lecture
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Strategic management
4.Style
It refers to the leadership style followed by
the management. A manager can influence the
behavior of subordinates in different ways.
How do they act is more important than what
they say.

74. AP Shareef’s lecture
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5. Staff Strategic management
procurement and development of Human
resources is very important. They must be
motivated to contribute maximum. Adequate
quantity and quality has to be maintained for
proper utilization of Human resources.

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Strategic management 6. Skills
capabilities and competencies of an
organization to gain competitive advantage.
These should be always kept up.

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7.Shared Values Strategic management
Values, beliefs, mindset and assumptions
in an organization is as important as its
physical resources. Shaping the people’s
mindset to adjust to the changed environment
is very important.

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Strategic management STRUCTURES FOR STRATEGIES
1. Entrepreneurial structure.

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Strategic management
2. Functional Structure

79. AP Shareef’s lecture
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Strategic management 3.Product Based structure

80. AP Shareef’s lecture
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Strategic management
4.SBU organizational structure
CEO
President SBU 1 President SBU 2 President SBU 3
divisions
A
B
C
divisions
A
B
C
divisions
A
B
C

81. AP Shareef’s lecture
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Strategic management
1. Abu Dhabi Onshore Oil Operations (ADCO).
2. Abu Dhabi Marine Operating Company (ADMA-OPCO).
3. Abu Dhabi Gas Industries (GASCO).
4. Abu Dhabi Gas Liquefaction Company (ADGAS)
5. Zakum Development Company (ZADCO).
6. Abu Dhabi Oil Refining Company (TAKREER).
7. National Drilling Company (NDC).
8. ESNAAD company.
9. Abu Dhabi Petroleum Ports Operating Company (IRSHAD).
10. Ruwais Fertiliser Industries (FERTIL).
11. Abu Dhabi Polymers Company (BOROUGE).
12. Abu Dhabi National Tanker Company (ADNATCO).
13. National Gas Shipping Company (NGSCO).
14. ADNOC - Distribution.
15. ADNOC Linde Industrial Gases Company (ELIXIER).
16. Abu Dhabi Gas Development Company.

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Strategic management

83. AP Shareef’s lecture
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Strategic management
5. Geographical Organization Structure

84. AP Shareef’s lecture
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Strategic management BCG MATRIX
High low

85. Chapter 6
STRATEGY EVALUATION
AP Shareef’s lecture
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Strategic management

86. AP Shareef’s lecture
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Strategic management
STRATEGY EVALUATION AND CONTROL
The process of determining the effectiveness
of a given strategy in accomplishing
organizational objectives and to take corrective
action wherever necessary.

87. AP Shareef’s lecture
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Strategic management
EVALUATION AND CONTROL PROCESS

88. AP Shareef’s lecture
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Strategic management
 Determine what to measure
An organization includes many complex
activities. Managers need to specify what
implementation and results will be monitored
and evaluated.
 Establish standards
Standards are the yardsticks towards
which the actuals are compared. They may be
quantitative of qualitative.

89. AP Shareef’s lecture
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Strategic management
 Measure performance
Periodic measurement of actuals with
established standards is necessary.
 Compare actual performance with
standards
Recorded performance must be
compared with the desired results. It helps to
identify the deviations.

90. AP Shareef’s lecture
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 Take corrective action Strategic management
corrective action is taken if the
performance is outside the acceptable
tolerance limit.
Following factors may affect the performance
adversely,
 Wrong allocation of resources
 Faulty organization structure
 Inefficient leadership
 Lack of motivation
 Absence of proper information system
 Improper and inefficient communication system

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Strategic management OPERATIONAL CONTROL
 Premise control
 Implementation control
 Strategic surveillance
 Strategic alert control

92. AP Shareef’s lecture
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Strategic management
EVALUATION TECHNIQUES FOR OPERATIONAL CONTROL
 Value chain analysis
 Bench marking
 Balanced score card
 Quantitative performance measures
 Key factor rating

93. AP Shareef’s lecture
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Strategic management BALANCED SCORE CARD
A. Customer perspective
B. Internal business perspective
C. Innovation and learning perspective
D. Financial perspective

94. Chapter 7
AP Shareef’s lecture
CORPORATE SOCIAL RESPONSIBILITY
On
Strategic management

95. AP Shareef’s lecture
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Strategic management AREAS OF SOCIAL RESPONSIBILITY
A. Towards owners of enterprise
B. Towards workers
C. Towards consumers
D. Towards government
E. Towards society