Strategic Management Slides PDF

Strategic Management
MM ZG611/QM ZG611/ MBA

ZG611/POM ZG611
Lecture 1
Introduction to Strategic Management
BITS Pilani Dr. Neetu Yadav
Pilani|Dubai|Goa|Hyderabad neetu.yadav@pilani.bits-pilani.ac.in
Course Outline
• Course name: Strategic Management
• Course code: MM ZG611 /QM ZG611/ MBA ZG611/POMZG611
• Number of modules: 7
• Number of Lectures: 22 (delivery in 11 sessions 2 hours each)

• Textbook: “Wheelen, Thomas L. and J. David Hunger, Concepts in
Strategic Management and Business Policy, Pearson Education, 13th ed..
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BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Text Book Evaluation Components
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Important Links
• e-learn portal: https://elearn.bits-pilani.ac.in
• Courseware-Supporting Resource
• HBR articles: https://hbr.org/

An individual can access upto 6 free articles every month after
registering on the website
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BITS Pilani
Pilani Campus
MODULE 1 : STRATEGY & STRATEGIC MANAGEMENT

SESSION 1: Introduction to Strategic Management
Lecture 1: Learning Outcomes
• What is Strategy
– DEFINITION OF STRATEGY
– WHAT IS NOT STRATEGY
– FALLACY OF STRATEGIC PLANNING
• Benefits of Strategic Management
• Challenges to Strategic Management
• Basic Model of Strategic Management
• Illustration
• Readings: Michael E. Porter, “What is Strategy?” Harvard Business Review, 1996
• Collis and Rukstad, “Can you say what your strategy is?” Harvard Business Review, 2008.
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What is Strategy?
• Dictionary: Strategy is a plan, method, or a series of maneuvers or stratagems for
obtaining a specific goal or result.
• Strategy is about understanding what you do, looking out over the long-term future
to determine what you want to become, and—most importantly—focusing on how
you plan to get there.
• Military: Strategy is concerned with “drafting the plan of war, shaping the individual
campaigns and within these, deciding on the individual engagements”. (On War by
Clausewitz) (See Book- The Art of War)
• Management: Strategy is a plan or pattern that integrates an organization’s major
goals, policies and action sequences into a cohesive whole.
• To Drucker “Strategy is a purposeful action”.
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What Do We Mean By Strategy?
• What is our present situation?
– Business environment and industry conditions
– Firm’s financial and competitive capabilities
• Where do we want to go from here?
– Creating a vision for the firm’s future direction
• How are we going to get there?
– Crafting an action plan for heading the firm in the intended direction, staking out a market
position, attracting customers, achieving the targeted financial and market performance, and
getting the firm
where it wants to go is its strategy.
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What Is Strategy About?
• Strategy is all about How:
– How to attract and please customers.
– How to compete against rivals.
– How to position the firm in the marketplace.
– How best to respond to changing economic
and market conditions.
– How to capitalize on attractive opportunities
to grow the business.
– How to achieve the firm’s performance targets.
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What is NOT Strategy
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Strategy is NOT…OE
• Strategy is Not Operational Effectiveness
– Operational effectiveness
means performing similar
activities better than rivals, the
quest for improving cost,
quality & speed.
– The productivity frontier is
constantly shifting outward as
new technologies, tools and
techniques are developed
Note: Japanese companies rarely have strategies (refer Porter’s Article, HBR)
Read Example- Southwest Airlines, Ikea
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Strategy is NOT…Planning
• Strategy is Not about Planning & Budgeting. Planning represent calculating
style of management, not a committing style which engages people.
• Thinking and Acting are most obviously separated in the dichotomy between
formulation and implementation-
Fallacy of strategic planning:

1. The fallacy of prediction: Planning stresses the importance of accurate
forecasting, ex: by extrapolating past performance.
2. The fallacy of detachment: Detachment of strategy from operations.
3. The fallacy of formalization: Formalization is achieved through
decomposition, that is essentially analytical.
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Alternative Views of Strategy
(Source: Porter, “What is strategy?”, Harvard Business Review)

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Identifying a Company’s Strategy –
What to Look For
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(Source: Thompson and Strickland, Crafting and Executing strategy”, McGraw Hill Education, 19e) BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
A Hierarchy of Company Statement
• Collis and Rukstad (2008)
MISSION
VALUES
VISION
STRATEGY Basic elements of Strategy
statement:
BALANCED SCORECARD Objectives
Scope
Advantage
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Illustration
• McDonald’s strategy in Quick-service Restaurant Industry
• Plan-to-Win strategy focus-”Being better, not just bigger” (2011)
• Key initiatives of the Plan-to-Win strategy:
– Improved restaurant operations (employee training program, leadership institute,
close monitoring food and utility costs)
– Affordable pricing (Scrutinizing operating costs)
– Wide menu variety and beverage choices (McCafe, Mcbreakfast)
– Convenience and expansion of dining opportunities (Dining outlets, drive-thru)
– Ongoing restaurant reinvestment and international expansion (emerging markets)
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Benefits of Strategic Management
• Clearer sense of strategic vision for the firm
• Sharper focus on what is strategically important
• Improved understanding of a rapidly changing environment

• Additional benefits of strategic management:
-Improved organizational performance
-Achieves a match between the organization’s environment and its strategy, structure and processes
-Important in unstable environments
-Strategic thinking
-Organizational learning
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Challenges to Strategic Management
• Impact of Globalization (See book The World is Flat by Thomas
Friedman)
• Regulatory Risk (Eg: Indian IT Sector)
• Technological Risk
• Environmental sustainability
• Changing business models
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Theories of Organizational Adaptation
Population ecology suggests that once an organization is successfully
established in a particular niche, it is unable to adapt to changing
conditions. Inertia prevents organization from changing in a significant
manner.
Institution theory suggests that organizations can and do adapt to

changing conditions by imitating other successful organizations. The
theory, however does not explain how or by whom successful new
strategies are developed in the first place.
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Theories of Organizational Adaptation
Strategic choice perspective: Organizations adapt to change and have the
ability to reshape their environment. The decisions of a firm’s
management have at least as great an impact on firm performance as
overall industry factors.
Organizational learning theory: Organizations adapt defensively to a

changing environment and use knowledge to improve their relationship
with the environment.
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Basic Model of Strategic Management
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Strategic Management Process
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MM ZG611/QM ZG611/ MBA ZG611
Lecture 2
Elements of Strategic Management Process
Course Outline
• Course name: Strategic Management
• Course code: MM ZG611 /QM ZG611/ MBA ZG611/POMZG611
• Number of modules: 7
• Number of lectures: 22
• Textbook: “Wheelen, Thomas L. and J. David Hunger, Concepts in
Strategic Management and Business Policy, Pearson Education, 13th ed..
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Lecture 2: Learning Outcomes
• Elements of Strategic Management Process
• Levels of Strategies
• Crafting Strategy
• Strategic Decision-Making
• Readings: Henry Mintzberg, “Crafting Strategy”, Harvard Business Review, 1987.
• Collins and Porras, “Building your company’s vision’, Harvard Business Review, 1996.
• Bingham, Eisenhardt, and Furr, “Which Strategy When?” MIT Sloan Management Review, 2011.
Text Book Ch. 1 (1.5, 1.7)
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Environmental Scanning
General Environment:
• Political Factors
• Economic Factors
• Sociocultural Factors
• Technological Factors
• Legal Factors
Specific Environment:
• Government
• Shareholders
• Suppliers
• Employees/Labor unions
• Customers
• Competitors
• Special Interest Groups
• Communities
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Elements of Strategic Formulation
• Vision- What core to preserve and what
future to stimulate progress towards; Core ideology
what we preserve and envisioned future is what we
Inspire to become
IKEA: To create a better everyday life for many people
• Mission- Purpose or reason for the organization’s

Existence. Mission statement defines the fundamental, unique purpose
that sets a company apart from other firms and identifies scope or domain
of company’s operations. (Source: Collins and Porras, “Building your company’s vision”, HBR
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Elements of Strategic Formulation
• Objectives: End results of planned activity; specifies what is to
be accomplished by when and quantified, if possible.
• Strategies: form a comprehensive master plan that states how

the corporation will achieve its mission and objectives
• Policies: Broad guideline for decision making that links the

formulation of a strategy with its implementation.
• Eg: 3M says researchers should spend 15% of their time working on something other
than their primary project
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Three Types of Strategy
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Three Types of Strategy
• Corporate Strategy- Company's overall direction in terms of its general
attitude toward growth and the management of its various business and
product lines. Three main categories-Growth, Stability, Retrenchment
• Business Strategy-Occurs at the business unit or product level, it

emphasizes improvement of the competitive position of corporation’s
products or services in specific industry or market segment
• Functional Strategy- Approach taken by functional area to achieve

corporate and business unit objectives and strategies by maximizing
resource productivity
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Crafting Strategy-Henry Mintzberg
• Manager-Craftsman, Strategies-Clay
• Strategies are both plans for future and patterns from the past
• Strategies need not to be deliberate, they can also emerge
• There is no one best way to make strategy
• To manage strategy is to craft thought and action, control and
learning, stability and change.
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4 P Strategy by Mintzberg
• Perspective describes the Vision & direction.
• Plan is often referred to an Intended Strategy, it is the deliberate course

of action charting path towards strategic objectives.
• Positioning becomes the mediating force between the Organization and

the environment i.e. between internal & external context.
• Patterns describe a series of consistent decisions and actions over time.

They are the basis for Emergent Strategies.
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Types of Strategy by Mintzberg
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Strategic Decision Making
• Strategic decision making focuses on the long-run future of the organization
Characteristics of strategic decision making include:
Rare- Strategic decisions are unusual and typically have no precedent to follow.
Consequential- Strategic decisions commit substantial resources and demand a great

deal of commitment from people at all levels.
Directive- Strategic decisions set precedents for lesser decisions and future actions
throughout an organization.
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Illustration: Southwest Airlines (1993)
• 1993-Southwest airlines the seventh-largest airlines, strong financial
performance
• Focused, point-to-point airlines model, low cost-high frequency, quick
turnaround, high productivity, equipment usage, clear target market,
customer services
• Southwest Model-
– Southwest Service-Family fun
– Operations-No booking through agents, point-to-point route system, flying into
uncongested airports of small cities, only drinks and snacks, 84% unionized
workforce, using only Boeing 737 jets, turned in time was 15 min as compared to
industry average was 55 min
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Illustration: Southwest Airlines (1993)
• Cost control- Great services at low cost-buying fuel from variety of
vendors depending on the best price; gate cost and landing fees lower
at small airports; optimizing number of departure from each airport
• Marketing- ‘we have a lot of ambassadors out there-our customers’
• People- hiring process-customers part of selection process, peer hiring,
turnover averaged 7%, training at Southwest’s People University, profit-
sharing plans
• Corporate Culture- unwritten rules: You have to compassionate to
internal and external customers; You have to have a positive attitude;
You have to want to work and use common sense; You have to have a
great sense of humor
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Lecture 3
Environmental Scanning and Industry Analysis
Lecture 3-Learning Outcome
• Environmental scanning
• Monitoring trends in the natural and societal environments
• Identifying external strategic factors
• Porter’s Five Forces Model
• Readings:
Michael E. Porter, “The Five Competitive Forces that Shape the Industry”, Harvard
Business Review, 2008
T1 Ch. 4.1, 4.2 4.6
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Environmental Scanning
• Environmental scanning: The monitoring, evaluation and dissemination
of information from the external and internal environments to key
people within the corporation
• Positive correlation between Environmental Scanning and Profit
• 75 % executives state-Global, social, environmental, business trends are

increasingly important to corporate strategy (McKinsey & Company,
2008)
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Environmental Variables
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Scanning Societal Environment
• STEEP Analysis
– Sociocultural
– Technological
– Economic
– Ecological
– Political-legal
Also known as PESTEL analysis (Political, Economic, Sociocultural,
Technological, Ecological, Legal Factors)
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Important Variables in Societal Environment
Read: Life and death in Apple’s forbidden city

https://www.theguardian.com/technology/2017/jun/18/foxconn-life-death-forbidden-city-longhua-
suicide-apple-iphone-brian-merchant-one-device-extract
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Illustration: Indian Retail Industry Analysis
• Fourth most attractive nation for retail investment among 30 emerging markets
• Transition from traditional retail sector to organized retail
• Political Environment- FDI in multi-brand retailing, make-in India

• Technological Environment- Relatively stable
• Social and Demographic Environment- Fast growing middle class, changing
consumption pattern
• Economic Environment- Increasing growth rate, high consumers’ capacity to shop
• http://economictimes.indiatimes.com/small-biz/startups/government-approves-amazons-proposal-for-fdi-in-
food/articleshow/59533012.cms
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Scanning the Task Environment
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Porter’s Approach to Industry Analysis
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Threat of New Entrants
• Entry barrier-obstruction that makes it difficult for a company
to enter an industry.
– Economies of scale
– Product differentiation
– Capital requirements
– Switching costs
– Access to distribution channels
– Cost disadvantages independent of size
– Government policy
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Rivalry Among Existing Firms
• Number of competitors
• Rate of industry growth
• Product or service characteristics
• Amount of fixed costs
• Capacity
• Height of exit barriers
• Diversity of rivals
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Threat of Substitute Products or Services
• Substitute Product- Products that appear different but can satisfy the
same need as another product
• Tea & coffee
• Any other example?
• Many substitute products
– Are a threat and limit the price that companies in one industry can charge for
their product, and thus industry profitability
• Few or weak close substitutes
– Gives the industry the opportunity to raise prices and earn additional profits
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Bargaining Power of Buyers
Bargaining power of buyers: Ability of buyers to force prices down, bargain for higher quality, play
competitors against each other.
– Large purchases
– Backward integration
– Alternative suppliers
– Low cost to change suppliers
– Product represents a high percentage of buyer’s cost
– Buyer earns low profits
– Product is unimportant to buyer
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Bargaining Power of Suppliers
Bargaining power of suppliers: Ability of suppliers to raise prices or reduce quality.
– Industry is dominated by a few companies
– Unique product or service
– Substitutes are not readily available
– Ability to forward integrate
– Unimportance of product or service to the industry
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Sixth Force (Relative Power of Complementors)
• Complementors-companies that produce closely related
products or services
• When complementors are important and their number is
increasing
– Demand and profits in the industry are boosted
• When complementors are weak
– Industry growth can slow and profits can be limited
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Lecture 4
Industry Analysis
Lecture-4 Learning Outcome
• Application of Porter’s Five Forces Model
• Analysis of Low-cost Carriers In India
• Environmental Factor Analysis
• Readings:
– Ch 4- 4.2, 4.6
– McGhan, “How industries change?” Harvard Business Review, 2004
– Low-cost Carriers in India: SpiceJet’s Perspective

Porter’s Approach to Industry Analysis
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Preparing Porter’s Five Forces Model Analysis
• Carbonated Beverage Industry in India: (Analysis for Coca-Cola)
– Threat of New Entrants- Moderate

– Rivalry amongst existing players-High
– Threat of Substitutes: Moderate to high
– Bargaining power of Buyers: Low to Moderate
– Bargaining power of Suppliers: Low
• (http://valuationacademy.com/porters-five-forces-in-action-sample-analysis-of-coca-cola/)

Low-cost Carriers in India
• Pre-liberalization: Air Corporation Act 1953; 2 nationalized entities: IA (Domestic
services), AI (International services), restricted private players from operating across
India
• Post-liberalization: six private airlines
• 2003-Two survived-Jet Airways and Sahara Airlines
• 2003-Entry of Air Deccan
• 2003-04 to 2007-08-CAGR 19.14% air passenger traffic; entry of new players
• 2011-passenger demand grew only by 5.9 %
• Growth of the industry was threatened by- mounting losses, rising aviation fuel
prices, high taxation and airport charges, shortage of qualified pilots and technical
manpower, congestion at airports, upgrading of airport security

Case Discussion
• What factors encouraged the growth of LCC in India?
– Growing corporate demand for official trips coupled with severe cost-cutting
– Rising income and growing propensity to spend on leisure among the vast middle
class, especially from Tier-II and III cities;
– Comparable fares with higher class ticket categories of Railways;
– Corporate tie-up, bundling of travel tickets, bulk booking
– Connectivity to Tier-II and III cities

Case Discussion
Carry out Industry analysis of LCC.
• Porter’s Five Forces Analysis-
– Threat of New Entrants- High
– Rivalry amongst existing players-High
– Threat of Substitutes: Moderate
– Bargaining power of Buyers: Moderate
– Bargaining power of Suppliers: High

Current Status-LCC in India (2016)
• (Source: http://www.financialexpress.com/industry/indigo-tops-in-market-share-spicejet-leads-the-
plf-tally/139955/) Data-Aug 2016 BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
How industries Change?
(Source: McGhan, “How industries change?” Harvard Business Review, 2004)

Fair share of change?
(Source: McGhan, “How industries change?” Harvard Business Review, 2004)

Strategic Groups
• Strategic group: A set of business units or firms that pursue
similar strategies with similar resources
• Some strategic groups in same industry are more profitable than others.
• Mapping of strategic groups:
• Select two broad categories that differentiate companies in an industry
• Plot the firms on these two dimensions.
• Draw a circle around those companies that are closest to one another.

Mapping of Strategic Groups
Source: Strategic Management, Hills & Jones

64
Strategic Types
Definition: A category of firms based on a common strategic orientation and
a combination of structure, culture and processes consistent with strategy.
General types (Miles and Snow):
• Defenders: Focus on improving efficiency of their existing operations

• Prospectors: Focus on product innovation and market opportunities
• Analyzers: Operate in at-least two different product-market areas, stable
and variable.
• Reactors: Lack a consistent strategy-structure-culture relationship.

External Factors Analysis Summary
66
EFAS (Steps)
S-1: List Opportunities and Threats in Column 1
S-2: Weight each factor from 1.0 (most important) to 0 (not important). The total
weight must sum to 1.0 (Column 2)
S-3: Rate each factor from 5.0 (outstanding) to 1.0 (Poor) based on the company’s
response on that factor (Column 3).
S-4: Multiply each factor’s weight with its rating to obtain each factor’s weighted score
(column 4).
S-5: Use column 5 for rationale used for each factor.
S-6: Add individual weighted scores (in column 4) to obtain total weighted score for
company. This tell how well the company is responding to factors in its external
environment.
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MM ZG611/QM ZG611/ MBA ZG611/
POM ZG611
Lecture 5
Internal Scanning: Organizational Analysis (I)
Learning Outcome
• Applying the resource-based view of the firm to determine core and distinctive
competencies
• Use the VRIO framework
• How to assess an organization’s competitive advantage and how it can be sustained
Readings:
T1 Ch. 5 5.1
C.K. Prahalad and Gary Hamel, “The core competence of the corporation”. Harvard Business Review. 1990
Jay Barney (1991), “Firm Resources and Sustained Competitive Advantage,” Journal of Management 17, no. 1
(March 1991): 99–120
Collis, D.J. & Montgomery, C.A., “Competing on Resources”. Harvard Business Review, 2008
Case I: Mobileye: The future of driverless cars, Harvard Business Publishing, 2015 (Discussion on Feb 10)
Pre-recorded video: RL 2.2.1, RL 2.2.2
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Opening Question
• Why few companies excel while others don’t in the same
industry?
• Flipkart V/S Snapdeal
• Key insights of “Built to Last”:
 Preserve the core, stimulate progress
 Home grown management
 Cult-like culture
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Organizational Analysis
• Organizational analysis is concerned with identifying and developing an
organization’s resources and competencies
• To identify internal strategic factors-critical strengths and weaknesses.

• Different Approaches:
• Resource-Based Approach
• Value-chain analysis
• Scanning Functional resources and capabilities
Source: Barney (1991)
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Resource-based Approach
• Resources-Organization’s assets and basic building blocks

– Tangible Assets: Plant, Equipment, Finances, Human Assets
– Intangible Assets: Technology, Culture, Reputation
• Capabilities- Corporation’s ability to exploit its resources
– Marketing capabilities, HRM capabilities
• Dynamic Capabilities- Capabilities that are constantly being
changed and reconfigure to make them more adaptive to
uncertain environment.
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Resource-based Approach
• Competency- A cross-functional integration and coordination of
capabilities
• Core competency- A collection of competencies that cross divisional

boundaries, is wide-spread throughout the corporation and is
something the corporation does exceedingly well
Distinctive competencies- The core competencies that are superior to

those of the competition
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Core Competence
• Prahalad and Hamel- Core competencies are collective learning in the organization,
especially how to coordinate diverse production skills, and integrate multiple
streams of technologies.
• Eg: Sony-Miniaturization
• Philips- Optical-media
• Honda-Engines
Unlike physical assets, competencies do not deteriorate as they are applied and
shared, they grow
Three tests can be applied to identify core competence:
1. it provides potential access to wide variety of markets
2. It makes a significant contribution to the perceived customer benefits of the end product
3. Core competence should be difficult for competitors to imitate
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Core Competence
Source: Prahalad and Hamel, The Core Competence of Corporation, Harvard Business Review: 1990.
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VRIO Framework
• VRIO framework (Barney)- To evaluate firm’s competencies:
– Value: Does it provide customer value and competitive advantage?
– Rareness: Do no other competitors possess it?
– Imitability: Is it costly for others to imitate?
– Organization: Is the firm organized to exploit the resources?
Barney (1991): Firm resources and sustained competitive advantage

https://business.illinois.edu/josephm/BA545_Fall%202011/S10/Barn
ey%20(1991).pdf
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A Resource-based approach
for organizational analysis
Ways to gain access to a Distinctive Competency:
1. Asset endowment: such as key patent, coming from the founding of the
company (Xerox).
2. Acquired from someone else: through acquisition of other firm
3. Shared with another business unit or strategic partner
4. Built and accumulated over time within the company (Eg: Honda)
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Sustainability of
firm’s distinctive competencies
Two characteristics determine the sustainability of firm’s distinctive

competencies:
Durability- the rate at which a firm’s underlying resources, capabilities, or core

competencies depreciate or become obsolete.
Imitability- the rate at which a firm’s underlying resources, capabilities, or core

competencies can be duplicated by others.
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Sustainability of
firm’s distinctive competencies
A core competency can be easily imitated to the extent that it is

transparent, transferable and replicable.
Transparency- the speed at which other firms can understand the relationship
of resources and capabilities supporting a successful firm’s strategy.
Transferability- the ability of competitors to gather the resources and
capabilities necessary to support a competitive challenge.
Replicability- the ability of competitors to use duplicate resources and
capabilities to imitate the other firm’s success.
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Continuum of Resource Sustainability
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Sustainability of an Advantage
It is relatively easy to learn and imitate another company’s core

competency or capability if it comes from explicit knowledge
than tacit knowledge.
Explicit knowledge- knowledge that can be easily articulated and
communicated
Tacit knowledge- knowledge that is not easily communicated because it

is deeply rooted in employee experience or in the company’s culture
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Lecture 6
Internal Scanning: Organizational Analysis (II)
Learning Outcome
• Value Chain Analysis
• Scanning Functional resources and capabilities
• Technology Discontinuity
• Learning curve
• Readings:
• T1 Ch. 5 5.3, 5.4, 5.7
• Case: The Rise and Fall of Nokia, Harvard Business Publishing, 2017 (Discussion Pending)
• Pre-recorded content/video
• RL 2.2.3
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Value-chain Analysis
• Value chain: A linked set of value creating activities that begin with
basic raw materials coming from suppliers, moving on to a series of
value-added activities involved in producing and marking a product or
service, and ending with distributors getting the final goods into the
hands of the ultimate consumer
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Porter Value-chain analysis
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Value-chain Analysis
Three steps:
• S-1: Examine each product line’s value chain in terms of the various
activities involved in producing the product or service
• S-2: Examine the linkages within each product line’s value chain
• S-3: Examine the potential synergies among the value chains of different
product lines or business units
• Forward Integration & Backward Integration
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Scanning Functional resources and capabilities
• Basic Organizational Structures
• Corporate Culture
• Strategic Marketing issues
• Strategic Financial issues
• Strategic R&D issues
• Strategic Operations issues
• Strategic HRM issues
• Strategic Technology issues
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Scanning Functional Resources and Capabilities
Basic Organizational Structures
• Simple
• Functional
• Divisional
• Strategic Business Units
• Conglomerate
Tata Motors is shrinking structure of its white-collar workforce to five layers from the existing 14, in what is seen as
the biggest organisational restructuring in the company’s history. Under the new structure, the top two levels of
managers will be responsible for execution of strategies formulated by an executive committee, comprising the
managing director and function and business heads. Tata Motors has already picked more than 100 high-performers
for the L1and L2 positions. (Source: Economic Times)
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Scanning Functional Resources and Capabilities
Assessing Corporate culture – The company way
Corporate culture- the collection of beliefs, expectations and values learned and
shared by a corporation’s members and transmitted from one generation of
employees to another.
Functions of Corporate Culture
• Conveys a sense of identity for employees

• Generates employee commitment
• Adds to the stability of the organization as a social system
• Serves as a frame of reference for employees to understand organizational
activities and as a guide for behavior
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3M’s Innovation Culture
• Employing the Thirty Percent Rule, 30% of each division’s revenues must come from
products introduced in the last four years. This is tracked rigorously, and employee
bonuses are based on successful achievement of this goal.
3M has a rich set of structures and systems to encourage resourcefulness:

• Seed Capital
• New Venture Formation
• Dual-career ladder
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Strategic R&D Issues
• Impact of technological discontinuity on strategy-
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Impact of Technology Discontinuity on Strategy
• Innovator’s Dilemma- The established market leaders are
typically reluctant to move in a timely manner to a new
technology (Christensen)
• Eg: Computer Disk Drive Manufacturer-Moserbear

• http://www.forbesindia.com/printcontent/33432 Copyright @Forbes India
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Strategic Operations issues
• Experience Curve (Learning curve)-Unit production costs
decline by some fixed percentage each time the total
accumulated volume of production units doubles
• (The more experience a firm has in producing a particular product, the
lower its costs)
• "Building Strategy on the Experience Curve," by Pankaj Ghemawat (March-April 1985),Harvard

business review.
• (https://hbr.org/1985/03/building-strategy-on-the-experience-curve)
• The Experience Curve (http://www.economist.com/node/14298944)
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Experience Curve
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Internal Factor Analysis Summary
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Lecture 7
Strategy Formulation: Business Strategy
Learning Outcome
• Situation analysis tools-SWOT, SFAS, TOWS Matrix
• Business Strategies
• Porter’s Generic Strategies
– Cost Leadership
– Differentiation
– Focus
Readings:
T1 Ch. 6 6.1 6.2 6.3 6.4
There Are Still Only Two Ways to Compete (2015), Harvard Business Review
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Situation Analysis
• Strategy formulation concerns developing a corporation’s
mission, objectives, strategies and policies
• Situation analysis: The process of finding a strategic fit

between external opportunities and internal strengths while
working around external threats and internal weaknesses
– SWOT analysis
– SFAS matrix
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SWOT Analysis
• Survey says- 82.7% firms used

Criticisms of SWOT analysis
• Generates lengthy lists
• Uses no weights to reflect priorities
• Uses ambiguous words and phrases
• Same factor can be in two categories
• No obligation to verify opinion with data or analysis
• Requires only a single level of analysis
• No logical link to strategy implementation
•
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Strategic Factors Analysis Summary (SFAS)
Matrix
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SFAS Matrix
• S1: List the most important EFAS, IFAS.
• S2: Assign weights as per importance, total weight 1.00
• S3: Rating 5 (outstanding) 1(poor)
• S4: Weighted score-multiply weight and rating
• S5: Duration-Short-term (<1 yr), intermediate-term (1-3 yrs),
long-term (3 and beyond)
• S6: Comments
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Alternative Strategies- TOWS Matrix
• TOWS matrix illustrates how the external opportunities and threats can
be matched with internal strengths and weaknesses to result in four
possible strategic alternatives: (SO strategies, ST strategies, WO
strategies, WT strategies)
Provides a means to brainstorm alternative strategies
Forces managers to create various kinds of growth and retrenchment
strategies
Used to generate corporate as well as business strategies
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TOWS Matrix
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Business Strategies
• Business strategy focuses on improving the competitive position

of a company’s or business unit’s products or services within the
specific industry or market segment it serves.
• Business strategy is comprised of:

Competitive strategy
Cooperative strategy
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Porter’s Competitive Strategies
• Competitive Strategy raises the following questions:
– Should we compete on the basis of lower cost, or should we
differentiate our products or services on some basis other than cost,
such as quality, or service?
– Should we compete head to head with our major competitors for the
biggest but most sought-after share of the market, or should we
focus on a niche in which we can satisfy a less sought-after but also
profitable segment of the market?
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Porter’s Generic Strategies
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Porter’s Competitive Strategies
• Lower cost strategy: The ability of a company or a business

unit to design, produce and market a comparable product
more efficiently than its competitors.
• Differentiation strategy: The ability of a company or a

business unit to provide a unique or superior value to the
buyer in terms of product quality, special features, or after
sale service.
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• Cost leadership: A lower-cost competitive strategy that aims at the
broad mass market and requires efficient scale facilities, cost
reductions, cost and overhead control; avoids marginal customers, cost
minimization in R&D, service, sales force and advertising
Provides a defense against competitors
Provides a barrier to entry
Generates increased market share
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• Differentiation involves the creation of a product or service that is
perceived throughout the industry as unique. Can be associated with
design, brand image, technology, features, dealer network, or customer
service
Lowers customers sensitivity to price
Increases buyer loyalty
Barrier to entry
Can generate higher profits
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• Cost focus: Low-cost competitive strategy that focuses on a
particular buyer group or geographic market and attempts to
serve only this niche to the exclusion of others
• Differentiation focus: It concentrates on a particular buyer
group, product line segment, or geographic market to serve
the needs of a narrow strategic market more effectively than
its competitors
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Few Examples
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There are still only two ways to compete?
• Martin (2015) https://hbr.org/2015/04/there-are-still-only-two-ways-to-compete
• Cost-leadership: customers see the value to them of the firm’s offering as
indistinguishable from those of other competitors and hence the firm is simply a
price taker, at whatever level the market sets. In such a market there was, is, and
always will be only one generic way to gain competitive advantage and that is to
have the low-cost position among those making offers to customers in that market.
• Differentiation: Customers think to varying degrees that there is something about
the firm’s offering that is distinct from other offerings; to them, it is not “the same”
as those of competitors. In making a purchase decision, therefore, they make a
trade-off between the perceived value of the distinctiveness and the price. Those
who value the distinctiveness more are prepared to pay a higher price.
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There are still only two ways to compete?
• But has anything changed since 1980 to fundamentally alter
the implication of those economics?
• Let’s look at the main features that distinguish competition
today from previous decades:
 Increased Ferocity
 New Business Models
 The Rise of the Ecosystem (Read about Japan “Keiretsu”)
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Lecture 8
Business Strategy
Learning Outcome
• Competitive strategies and risk
• Competitive strategies and industry structure
• Timing to market
• Cooperative Strategies
Readings:
• T1 Ch 6 6.4
• Fernando Suarez and Gianvito Lanzolla, “The Half-truth of first mover advantage”,
Harvard Business Review, 2005.
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Competitive Strategies
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Risks in Competitive Strategies
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Issues in Competitive Strategies
• Stuck in the middle: When a company has no competitive advantage and is

doomed to below-average performance.
• K-Mart- Imitating both Wal-Mart’s low-cost strategy and Target’s quality
differentiation strategy
• Toyota and Honda Auto companies (High quality products at lower costs thus
achieving higher market share)
• Entrepreneurial firms follow focus strategies where they focus their product or
service on customer needs in a market segment and differentiate based on
quality and service
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Industry Structure and Competitive Strategy
• Fragmented industry: Many small- and medium-sized
companies compete for relatively small shares of the
total market
• (Sandwich shops; Hair Salon, Drycleaners)
Products are typically in early stages of product life cycle
Focus strategies are used
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Industry Structure and Competitive Strategy
• Consolidated industry: Domination by a few large companies
Emphasis on cost and service

Economies of scale
Regional and national brands
Slower growth over capacity
Knowledgeable buyers
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Amul and Competitive Strategies
• Media Campaign: Educating customers on difference between ice-
creams and frozen desserts (Real Milk, Real Ice-cream)
(https://www.youtube.com/watch?v=zPoxF9sxgnw)
HUL filed case against Amul. How do you see HUL’s concern to Amul’s
media campaign?
-It is to create awareness regarding the fundamental difference between
the two
-The campaign does not say that other companies are making a false
representation on their product labelling
-the ice-cream and frozen dessert industry has been growing in India at an
average of 15-17 per cent.
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Competitive Tactics
• Tactic: A specific operating plan that details how a

strategy is going to be implemented in terms of when
and where it is to be put into action
Narrower in scope and shorter in time horizon than
strategies
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Timing Tactics: When to Compete
• Timing tactics: When a company implements a strategy
First movers
Late movers
• (Netscape V/S Microsoft)
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Puma: Good Run In India
Puma-2006
2014- sales of Rs. 766.75 Cr inching closer
to Adidas and Nike
This allowed Puma to fill the gap in the
market created by Reebok's absence. It
also won the trust of Reebok's vendors by
utilising their capacity.
"In terms of franchisee management, we

focused on long-term sustenance of our
stores and never opened multiple stores in
the same location. We have always
believed in quality distribution and not in
over distribution. In some ways, we had the
late-mover's advantage and we learnt
what not to do. So while others focused on
just opening stores, we put our energies in
improving our customers' experience in our (Source: ET Brand Equity, 2015)
stores."
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Half-Truth of First-Mover Advantage
• Two factors that powerfully influence a first mover’s fate:
– The pace at which the technology of the product in question is evolving
– The pace at which the market for the product is expanding.
16/02/2019 Merged MMZG611 (Source: Harvard Business Publishing,

1272005)
Is a First-Mover Advantage Likely?
16/02/2019 Merged MMZG611 (Source: Harvard Business Publishing,

1282005)
Market Location: Where to Compete
• Market location tactics where a company implements a strategy:
Offensive tactics
Frontal assault
Flanking maneuver
Bypass attack
Encirclement
Guerrilla warfare
Defensive tactics
Raise structural barriers
Increase expected retaliation
Lower the inducement for attack
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Cooperative strategies
• Cooperative strategies are used to gain a competitive
advantage within an industry by working with other
firms
• Collusion: The active cooperation of firms within an
industry to reduce output and raise prices to avoid
economic law of supply and demand
• Strategic Alliances
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Collusion
• Explicit: Firms cooperate through direct communication and
negotiation (Cartel, OPEC)
• Tacit: Firms cooperate indirectly through an informal system of
signals
• CCI (Competition Commission of India)

• Section 3 anti-competitive agreements
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Strategic Alliances
• Strategic Alliances: A long-term cooperative arrangement between
two or more independent firms or business units that engage in
business activities for mutual economic gain.
• Strategic alliance is used to Examples: ICICI Bank and
Vodafone India- m-pesa
Obtain or learn new capabilities Ashok Leyland forms
Obtain access to specific markets strategic alliance with
SUN mobility for electric
Reduce financial risk vehicles
Reduce political risk

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Growth of Mahindra & Mahindra
Mahindra and Mahindra and Ford
 To explore cooperation in the sphere of
products, technologies and distribution
including future mobility program, connected
vehicle projects, electrification of cars amongst
other areas.
 The scope of the agreement will allow Ford and
Mahindra to look beyond mobility programs,
connected vehicle projects, electrification to
product development, sourcing and commercial
efficiencies, distribution within India; improving
Ford’s reach within India and global emerging
markets and thereby helping Mahindra’s reach
outside of India.
Read more at:

//economictimes.indiatimes.com/articleshow/6
0731811.cms?utm_source=contentofinterest&u
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tm_medium=text&utm_campaign=cppst BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Types of Cooperative Agreements
• Mutual service consortia
• Joint venture
• Licensing arrangements
• Value-chain partnerships
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Lecture 9
Corporate Strategy: Growth Strategies
Learning Outcome
• Types of Corporate Strategy
• Directional Strategy
– Growth Strategy
– Diversification Strategy
– Conglomerate Strategy
Readings:
T1 Ch 7 7.1, 7.2
RL RL 4.1.4, RL 4.1.5
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Corporate Strategy
Corporate strategy: The choice of direction of the firm as a whole and the
management of its business or product portfolio and concerns:
 Directional strategy: The firm’s overall orientation toward growth, stability, or
retrenchment.
 Portfolio analysis: Industries or markets in which the firm competes through its products
and business unites
 Parenting strategy: The manner in which management coordinates activities and transfers
resources and cultivates capabilities among product lines and business units.
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Directional Strategy
• 1. Should we expand, cut back, or continue our operations
unchanged?
• 2. Should we concentrate our activities within our current
industry, or should we diversify into other industries?
• 3. If we want to grow and expand nationally/and/or globally,
should we do so through internal development or through
external acquisitions, mergers, or strategic alliance?
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Directional Strategy (Grand Strategy)
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Growth Strategies
• Concentration Growth
Vertical growth
Horizontal growth
• Diversification
Concentric Diversification
Conglomerate Diversification
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Vertical Growth
• Taking over the function previously provided by a supplier or by a distributor
Vertical integration: The degree to which a firm operates vertically in multiple
locations on an industry’s value chain from extracting raw materials to manufacturing
to retailing
Backward integration is assuming a function previously provided by a supplier

Forward integration is assuming a function
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previously provided by a distributor
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Reliance Textiles-Integration
• Reliance Textiles-1966
• Manufacturer of Polyester Textile
• Backward integration-Petrochemical and plastic business
• Forward integration-Only Vimal Brand Retailing
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ABCTL-Forward Integration as Café Coffee Day
• Amalgamated Bean Coffee Trading (ABCTL)
• Largest exporters of green coffee from India since 1999
• Entered into Retailing as CCD
• ABCTL is an arm of Coffee Day Group that runs the flagship coffee
retailing chain, Café Coffee Day.
• Different businesses in the coffee value chain-
– Coffee exports, production, procurement and exports
– CCD, CCD square, CCD lounge
– Coffee Day Express
– Vending Division
– Packaging Division
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Vertical Integration Continuum
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Vertical Integration
• Full integration: A firm internally makes 100 per cent of its key suppliers and
completely controls its distributors
• Taper integration: A firm internally produces less than half of its own
requirements and buys the rest from outside suppliers (Concurrent Sourcing)
• Quasi-integration: A company does not make any of its key supplies but
purchases most of its requirements from outside suppliers that are under its
partial control.
• Long-term contracts: Agreements between two firms to provide agreed-upon

goods and services to each other for a specific period of time (Captive
Company)
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Horizontal Growth
• Horizontal growth: Expansion of operations into other geographic
locations and/or increasing the range of products and services offered
to current markets. Horizontal growth is achieved through:
Internal development
Acquisitions
Strategic alliances
• Horizontal integration: The degree to which a firm operates in multiple

geographic locations at the same point on an industry’s value chain
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International Entry Options for Horizontal Growth
Exporting
Licensing
Franchising
Joint venture
Acquisitions
Greenfield development (Brownfield)
Production sharing
Turn-key operations
BOT concept (Build-Operate-Transfer)
Management contracts
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Motivation of the joint venture
• Formed in 2001, as a result of a 50:50 joint venture between Sony Corporation Japan
and the Swedish telecommunications company Ericsson.
• The alliance aimed at combining Sony’s consumer electronics expertise with
Ericsson's technical wireless expertise and large market share in mobile
communications.
What’s in for Sony What’s in for Ericsson
Ericsson's mobile platform and state of the art Sony's design and production processes, forte in
mobile technology. multimedia devices.
Ericssion’s strong presence in European markets Sony’s access to closed Japanese markets
Ericssion’s ability to cater to networking Sony’s capability of targeting mass markets
customers with high end products. with low-tech handsets.
SE’s first successful product was
Sony Ericssion’s first integrated
camera phone T 610
Image source: mobile gazzete.com
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Problems with the venture
SE W810i
• SE’s model line-up mostly consisted of high-end models and with
few products in the discount segment.
• Uneven product line-up, violent competition, and the difficulty of unifying two
product lines.
• Reliance on too many different technology partners caused delay in release of new
products. Image source:
pocket-lint.com
• Cultural deviation, saturated markets, brand portfolio, product delays, logistic issues,
supply chain management problems and rational
model difficulty finally lead to their separation in 2011.
Further details: http://www.bbc.com/news/business-15285258 SE’s limited edition Casino Royale cybershot

16/02/2019 Merged MMZG611 Image source:esato.com 149
Airtel in South Africa
• Bharti Airtel had bought Kuwait-based Zain Telecom's African
assets for $10.7 billion in 2010, after which the carrier had
operations in 17 African countries.
• Airtel had big plans for Africa—a target of 100 million
subscribers, up from 42 million at the time of acquisition, $5
billion in revenue, up from $3.6 billion, and $2 billion of Ebitda,
by March 2013, less than three years after the acquisition.
• Their strategy at the time of entering was wrong. The
understanding of the market was lacking. Costs were high and
they were experimenting with tariff cuts. The minute factory
model works when the volumes (of calls) are already there,
which they did not have. Then there was the fact that India, the
core market, was still drawing too many management resources
of the company. They got a very poor asset. Zain had not
invested much in key things such as brand and network, which
made integration more difficult. They seem to be doing some of
the right things now, but it’s a case of whether it’s too little too
Read full story on Bharti Airtel’s overseas operations: https://www.business-
late.
standard.com/article/companies/bangladesh-goes-africa-way-for-bharti- Source: Business Standard
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Diversification Strategies
• Concentric (Related) diversification: Growth into a related
industry when a firm has a strong competitive position but
attractiveness is low
Synergy: When two businesses will generate more profits
together than they could separately
• Conglomerate (Unrelated) diversification: Growth into an
unrelated industry
Management realizes that the current industry is unattractive
Firm lacks outstanding abilities or skills that it could easily transfer
to16/02/2019
related products or services in other industries
Merged MMZG611 151
4 Basic Rules for Sodexo’s Success
• Rule 1: Be True to the Business Model
 No Investments in Fixed Assets
 Standardized work and best practices.
• Rule 2: Make People Happy and Productive
 Example: Where to put the photocopier ?
 How the layout will affect the efficiency of individual employees.
• Rule 3: Help Clients Execute Their Strategies
 Example: Helped company move research center to outskirts
 Problem – Commutation for employees.
 Helped company architects on the layout of the offices and developed a transportation plan to make
commuting easy.
 Also arranged for laundering, travel, restaurant reservations etc.
 Results: Employee satisfaction rose to 98% after the move, from 84% before; and staff turnover fell to
8% from 12%.
• Rule 4: Rely on Employees, Not Subcontractors
 They invest a lot in training their workers so that they’ll have opportunities.
 They also offer career paths inside the company.
 One of the top female executives in the U.S.—started out 18 years ago as a waitress for one of our
Ref:https://hbr.org/2015/03/sodexos- clients.
ceo-on-smart-diversification
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Ref:https://hbr.org/2015/03/sodexos-ceo-
on-smart-diversification
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Controversies in directional strategies
Is vertical growth better than horizontal growth?
Is concentration better than diversification?
Is concentric diversification better than conglomerate diversification?
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Lecture 10
Corporate Strategy: Stability and Retrenchment Strategies
Pilani|Dubai|Goa|Hyderabad
neetu.yadav@pilani.bits-pilani.ac.in
Learning Outcome
• Grand Strategies
– Stability Strategies
– Retrenchment Strategies
• Portfolio Analysis
– BCG Matrix
– GE Business Screen
Corporate Parenting
Readings:
T1 Ch7
Turnaround- Indian Railways-http://www.iimahd.ernet.in/publications/data/2007-02-03graghuram.pdf
Turnaround-Havells- http://www.businesstoday.in/case-study/smart-turnaround-strategy-helped-
havells/story/197235.html
Turnaround-Jet Airways- http://economictimes.indiatimes.com/industry/transportation/airlines-/-
aviation/how-ceo-cramer-ball-got-jet-airways-flying-back-to-profits/articleshow/51131125.cms
Merged MMZG611-Strategic Management and Business
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Policy
Grand Strategies

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Policy
Stability Strategies
• Stability strategies: Continuing activities without any
significant change in direction
Pause/Proceed with caution strategy: An opportunity to rest before
continuing a growth or retrenchment strategy
No change strategy: Continuance of current operations and policies
Profit strategies: To do nothing new in a worsening situation but instead
to act as though the company’s problems are only temporary
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Policy
Retrenchment strategies
• used when the firm has a weak competitive position in
some or all of its product lines from poor performance.
– Turnaround Strategy
– Captive Company Strategy
– Sell-out/Divestment Strategy
– Liquidation Strategy

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Policy
Turnaround strategy
• Turnaround strategy emphasizes the improvement of
operational efficiency when the corporation’s problems are
pervasive but not critical
Contraction: Effort to quickly “stop the bleeding” across the
board but in size and costs
Consolidation: Stabilization of the new leaner corporation

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Policy
Indian Railways Turnaround
• Freight business, there was focus on higher volumes
& lowering the unit costs, resulting in the record surplus.
• Strategy of higher volumes was also carried through in the

passenger business. The concept of revenue management, The second largest profit
Indian Railways (IR), where in differential prices could be charged for making Public Sector
which was declared to be differential services like tatkal and superfast were Undertaking after ONGC. The
heading towards leveraged. fund balance crossed
bankruptcy as per the Rs.12,000 crores in 2005-06,
Expert Group on Indian • Other business areas of parcel, catering and advertising, which had reached a low of
Railways in 2001. the strategy of outsourcing through public private just Rs.149 crores in 1990-
partnership and wholesaling rather than retailing was 2000.
adopted. (2005-06)
• Strategy of increasing asset utilization.

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Policy
Indian Railways Turnaround
23/02/2019
Merged MMZG611-Strategic Management and Business (Source: IIMA, W.P. No.2007-02-03
162
)
Policy
Jet Airways Turnaround (2016)
Merged MMZG611-Strategic Management and Business (Source: Economic Times, 2016)

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Policy
Havells Turnaround
18 months
Restructuring Plan
Phoenix & Prakram
Operations at a
UK factory were
suspended and
shifted to India,
Havells worked closely with Since 2007, where labour
logistics companies and shut outsourcing from accounts for four to
down some warehouses, India and China five per cent of the
reducing logistics costs from has jumped from total cost (in
14 to six per cent of total cost. 38 to 60 per cent. Europe, it accounts
for 22 per cent)

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Policy
Retrenchment strategies
• Captive company strategy: Company gives up independence in
exchange for security
• Sell-out strategy: Management can still obtain a good price for its
shareholders and the employees can keep their jobs by selling the
company to another firm
• Divestment: Sale of a division with low growth potential
• Bankruptcy: Company gives up management of the firm to the courts in
return for some settlement of the corporation’s obligations
• Liquidation: Management
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165
Divestment Plans of GOI

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Policy
Portfolio analysis
• Management views its product lines and business units as a

series of investments from which it expects a profitable return.
• Popular portfolio analysis techniques include:

BCG Matrix
GE Business Screen

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Policy
BCG Growth-Share Matrix

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Policy
BCG Growth-Share Matrix
• Question marks: New products with the potential for success but
require a lot of cash for development
• Stars: Market leaders at the peak of their product cycle and are able to
generate enough cash to maintain their high market share and usually
contribute to the company’s profits
• Cash cows: Products that bring in far more money than is needed to
maintain their market share.
• Dogs: Products with low market share and do not have the potential to
bring in much cash.
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Policy
BCG Matrix of FMCG Companies

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Policy
BCG Matrix—Limitations
• Use of highs and lows to form categories is too simplistic
• Link between market share and profitability is questionable
• Growth rate is only one aspect of industry attractiveness
• Product lines or business units are considered only in relation to one
competitor
• Market share is only one aspect of overall competitive position

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Policy
GE Business Screen
• Nine cells-Industry attractiveness (Market growth rate, industry
profitability, size, pricing practices) & Business strength (market share,
technological position, profitability, size)
• Four steps:
– Assess industry attractiveness for each product line on a scale from 1(very
unattractive) to 5 (very attractive)
– Assess business strength for each product line on a scale of 1 (very weak) to 5
(very strong)
– Plot each product line’s current position on a matrix
– Plot firm’s future portfolio and examine whether there is a gap between
projected or desired portfolio?
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Policy
GE Business Screen

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Policy
GE Business Screen—Limitations
• Complex and cumbersome

• Numerical estimates of industry attractiveness and business
strength/competitive position give the appearance of
objective, but are actually subjective judgments that can vary
from person to person.
• Cannot effectively depict the positions of new products and
business units in developing industries.
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Policy
Corporate Parenting
• Corporate parenting views a corporation in terms of resources and
capabilities that can be used to build business unit value as well as
generate synergies across business units
• Corporate parenting generates corporate strategy by focusing on the

core competencies of the parent corporation and the value created
from the relationship between the parent and its businesses

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Policy
Developing a Corporate Parenting Strategy
• Examine each business unit in terms of its strategic

factors
• Examine each business unit in terms of areas in which
performance can be improved
• Analyze how well the parent corporation fits with the
business unit Merged MMZG611-Strategic Management and Business
23/02/2019 176
Policy

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Strategic Management

MM ZG611/QM ZG611/ MBA

• Course code: MM ZG611 /QM ZG611/ MBA ZG611/POMZG611

• Number of Lectures: 22 (delivery in 11 sessions 2 hours each)

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• HBR articles: https://hbr.org/

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MODULE 1 : STRATEGY & STRATEGIC MANAGEMENT

– WHAT IS NOT STRATEGY

– FALLACY OF STRATEGIC PLANNING

• Benefits of Strategic Management

• Challenges to Strategic Management

• Basic Model of Strategic Management

• Readings: Michael E. Porter, “What is Strategy?” Harvard Business Review, 1996

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Fallacy of strategic planning:

(Source: Porter, “What is strategy?”, Harvard Business Review)

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• Sharper focus on what is strategically important

• Improved understanding of a rapidly changing environment

-Important in unstable environments

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Institution theory suggests that organizations can and do adapt to

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Organizational learning theory: Organizations adapt defensively to a

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• Course code: MM ZG611 /QM ZG611/ MBA ZG611/POMZG611

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• Readings: Henry Mintzberg, “Crafting Strategy”, Harvard Business Review, 1987.

Text Book Ch. 1 (1.5, 1.7)

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• Mission- Purpose or reason for the organization’s

• Strategies: form a comprehensive master plan that states how

• Policies: Broad guideline for decision making that links the

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• Business Strategy-Occurs at the business unit or product level, it

• Functional Strategy- Approach taken by functional area to achieve

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• Plan is often referred to an Intended Strategy, it is the deliberate course

• Positioning becomes the mediating force between the Organization and

• Patterns describe a series of consistent decisions and actions over time.

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Characteristics of strategic decision making include:

Consequential- Strategic decisions commit substantial resources and demand a great

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• Positive correlation between Environmental Scanning and Profit

• 75 % executives state-Global, social, environmental, business trends are

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Read: Life and death in Apple’s forbidden city

• Political Environment- FDI in multi-brand retailing, make-in India

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