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Organisation of the Course

Organisation of the Course. Session Plan Lectures with caselet applications – 17 sessions Integrated Case studies – 1 sessions End of course Test Quiz, assignments Feedback Output Strategic Analysis Creating business plans ►. Evolving Study of Strategic Management.

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Organisation of the Course

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  1. Organisation of the Course • Session Plan • Lectures with caselet applications – 17 sessions • Integrated Case studies – 1 sessions • End of course Test • Quiz, assignments • Feedback • Output • Strategic Analysis • Creating business plans ► @Prof. Ashok Sar

  2. Evolving Study of Strategic Management • 1950 – Analysis of Business School curricula & teaching by Ford Foundation & Carnegie Corporation • Gordon Howell Report – Business education to be broadened to conclude with a capstone course:- • Integrate students’ knowledge in accounting, finance, marketing, management, and economics. • Birth of Business Policy Course –To integrate the functional areas -> consistent direction for an organization, addressing Strength, Weakness, Opportunity & Threats. • Strategic Management –Scope expanded to cover more formal analysis of macro & industry environments, strategy formulation, implementation & control . @Prof. Ashok Sar

  3. Business Policy &Strategic Management • Business policy: Set of management decisions oriented towards enhancing and sustaining the firm’s competitive advantage based on a system of extrinsic and intrinsic values. • Strategic Management: Process of planning, programming, performing, profiting from and developing business policy. • Strategy: Pursuit of competitive advantage, i.e., winning in the market place @Prof. Ashok Sar

  4. What is Strategy? • A coherent set of actions aimed at • Gaining a sustainable advantage over competition, • Improving position vis-à-vis customers, or • Allocating resources …McKinsey 7S framework • Successful strategy results from applying consistent principles (economic and behavioural relationships that apply to wide classes of circumstances) to constantly changing business conditions. ► @Prof. Ashok Sar

  5. Economic Environment of Business • From • 1st Industrial revolution – steam • 2nd Industrial revolution – electricity • To • 3rd Industrial Revolution – technological leaps • Microelectronics • Computers • Telecommunications • New man made materials • Robotics • Biotechnology • The old economy vs. new economy: changes in infrastructure, production technology, govt. orientation • The challenge – the way that firms think about strategies has to change ► @Prof. Ashok Sar

  6. Why? Strategy andDeparture from Perfect Competition Markets (industry) – set of firms vying to sell similar goods to a similar set of customers. • Few participants • Barrier to entry and exit • Difference among products • Difference among sellers • Imperfect information . @Prof. Ashok Sar

  7. Why? Strategy andMathematical Biology • Experiment by Prof. G.F.Gause in 1934 • Two very small animals (protozoans) of the same genus in a a bottle with adequate food supply couldn’t survive • But animals of different species survived • Gauses principle of Competitive Exclusion . @Prof. Ashok Sar

  8. Expectations from Management Graduates • Perspective – to win • Analytical skills • Leadership skills • Decision making • What could be a key problem? @Prof. Ashok Sar

  9. Six Blind Persons & the Elephant CEO Manufacturing Marketing IT HRD Finance R&D @Prof. Ashok Sar

  10. Role of Strategy in Success • Madonna • Giap & North Vietnamese Military • Richard Williams (Venus & Serina’s Dad) @Prof. Ashok Sar

  11. Common Elements in Successful Strategy Successful Strategy EFFECTIVE IMPLEMENTATION Objective appraisal of resources Long-term simple and Agreed objectives Profound understanding of the competitive environment @Prof. Ashok Sar

  12. Elements of Success …Goals that are simple, consistent, and long term • Madona: • Single minded quest for stardom • Giap & North Vietnamese Military: • Reunification of Vietnam under Communist rule • Richard Williams: • Wealth & recognition ► @Prof. Ashok Sar

  13. … Elements of Success…Profound understanding of the competitive environment • Madona: • Identified emerging trends in popular culture • Recognized power of sex. • Understood showbiz distribution channels. • Giap & North Vietnamese Military: • Intimate knowledge of terrain • Understanding U.S. political system • Richard Williams: • Careful diagnosis of the physical and Psychological determinants of success in women’s professional tennis ► @Prof. Ashok Sar

  14. … Elements of Success… Objective appraisal of resources • Madona: • Recognized limited raw talent. • Relied on strengths in self-promotion, image-creation, relationship management • Giap & North Vietnamese Military: • Recognized economic and military weaknesses and political strengths • Richard Williams: • Systematically developed key skills and physical, mental and social attributes from an early age► @Prof. Ashok Sar

  15. … Elements of Success Effective implementation • Madona: • Commitment to hard work • Disciplined, inspirational Leadership. • Attention to details • Giap & North Vietnamese Military: • Tight control • Long-term commitment. • Effective propaganda • Inspirational leadership • Richard Williams: • Careful meshing of roles - father, coach & manager. Sustained supportive leadership. ► @Prof. Ashok Sar

  16. Strategy Formulation as a Single Process The 10 Schools and 5Ps Environmental School Cultural School Planning School Design School Cognitive School Entrepreneurial School Positioning School Learning School Power School Configuration School 5Ps: Plan, Ploy, Pattern, Position, and Perspective @Prof. Ashok Sar

  17. Design School: Process of Conception • Selznick (1957),Chandler (1962), Andrews (1965) • Strategy as fit between internal strengths and weaknesses and external threats and opportunities. • Senior management formulates clear simple and unique strategies in a deliberate process of conscious thought. • Dominant in 1970, still influences present day teaching and practice . @Prof. Ashok Sar

  18. BASIC DESIGN SCHOOL MODEL External Analysis Internal Analysis Threat and Opportunity in environment Strength and Weakness of organization Key Success Factors Distinctive Competence Creation Of Strategy Social responsibility Managerial values Evaluation And choice of Strategy Implementation Of strategy @Prof. Ashok Sar

  19. Planning School: A Formal Process • Strategy process in not just cerebral but also formal – • decomposable into distinct steps, • delineated by checklists, • supported by objectives, budgets, programs and operating plans. • The senior managers were replaced in the process by staff planners . @Prof. Ashok Sar

  20. Positioning School: An Analytical Process • Michael Porter-1980 • Strategy reduces to generic positions selected through formalized analysis of industry situations. • Analysis of hard data to determine “scientific truths.” • Expanded to strategic groups, value chain, etc.-all with analytical view . @Prof. Ashok Sar

  21. Entrepreneurial School: A visionary process • CEO centered. Forceful CEO • Rooted in the mysteries of intuition. • Vague visions replaced precise designs, plans • Leader maintains control over implementation in addition to formulation . @Prof. Ashok Sar

  22. Cognitive School: A Mental Process • How is strategy developed in people’s minds • Looks at cognitive bases of strategy formation such as information processing, knowledge structure mapping and concept attainment • Progress has been minimal • Has lead to interpretive or constructionist view • Construct strategies as creative interpretation, not mapping reality . @Prof. Ashok Sar

  23. Learning School: An Emergent Process • Strategies are emergent • Strategists can be found throughout the organization • Formulation and implementation are intertwined . @Prof. Ashok Sar

  24. Power School: A Process of Negotiation • Micro power sees development of strategies within the organization as political • Macro power views the organization as an entity that uses power over others and among its partners in alliances, joint ventures, networks . @Prof. Ashok Sar

  25. Cultural School: A Social Process • Focuses on common interest and integration • Role of culture in discouraging change . @Prof. Ashok Sar

  26. Environmental School: A Reactive Process • Not strictly strategic management • How organizations maneuver through their environments • Contingency theory-how an org reacts to environment • Population ecology-limits to strategic choice • The basic structure and character of organizations is determined shortly after “birth”-hard to change due to sunk costs, specialized equipment and personnel, etc. • Institutional theory-pressures to conform faced by organizations . @Prof. Ashok Sar

  27. Configuration School: A Process of Transformation • Configurations refers to the organization and its surrounding context. • More academic and descriptive • Clusters of behavior and characteristics • Planning prevails in “machine-type” organization (bureaucracies) • Entrepreneurship in Adhocracies • Etc.. . @Prof. Ashok Sar

  28. Why Organisations Need Strategy • The rationale: • Create and capture opportunities to win owing to market imperfections • How it helps • Setting direction • Focussing effort • Defining the organisation • Providing Consistency► @Prof. Ashok Sar

  29. Levels of Strategy Corporate Strategy Corporate Head office Business Strategy Division - A Division - B R & D R & D Functional Strategies HR HR Finance Finance Production Production Marketing Marketing @Prof. Ashok Sar

  30. Business Model • Management’s model of how strategy will allow the company to gain competitive advantage and achieve superior profitability • Business Decision & tradeoffs: • Revenue sources • Cost drivers • Investment size • Key success factors ► @Prof. Ashok Sar

  31. Fundamental Dimensions ofStrategy Multi-business Organization Profitable Growth Perimeter Value Start-up Strategy Competitive Advantage Strategic Stretch Imitation Me-too Competitor @Prof. Ashok Sar

  32. Dell Computer @Prof. Ashok Sar

  33. Performance in Nonprofit Enterprises Nonprofit entities such as government agencies, universities, and charities: • Are not in business to make a profit • BUT…still need to use their resources efficiently and effectively • Must meet goals • Set strategies to achieve goals and compete with other nonprofit organization for scarce resources A successful strategy gives potential donors a compelling message as to why they should contribute. @Prof. Ashok Sar

  34. Next Class: Strategic Direction - SpryLab • Segment SpryLab’s customer base and define a value proposition for each customer tier.  • Define SpryLab’s Mission statement in its various dimensions.  • Formulate a Strategic Agenda that helps SpryLab attain its growth objectives.  • Develop a budget and allocate strategic funds ► @Prof. Ashok Sar

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