Strategic

Management
MBA: SEM: - IV

Module 1
Introduction to Strategic Management
Concept and Process of Strategy
Strategic Frameworks
Vision, Mission, Objectives and Goals
Strategic Analysis- Environmental Analysis
Competitive Forces-Five forces analysis
Internal analysis
SWOT Analysis

Strategy - Definition

A comprehensive action plan that identifies

long-term direction for an organization and
guides resource utilization to accomplish
organizational
goals
with
sustainable
competitive advantage.

Strategic Management

The process of formulating and

implementing strategies to accomplish longterm goals and sustain competitive
advantage.

Competitive Advantage
Competitive advantage operating with an

attribute or set of attributes that allows an

organization to outperform its rivals.

Sustainable competitive
advantage

Sustainable competitive advantage one that is

difficult for competitors to imitate.

Strategic Management Process

Strategy Analysis

Strategy Formulation

Strategy Implementation

Strategy Analysis
Developing a vision and mission statement,
identifying an organizations external
opportunities and threats (PESTLE),
determining internal strengths and
weaknesses, (SWOT) establishing long-term
objectives, generating alternative
strategies, and choosing strategies to
pursue.

Strategy formulation
The process of creating strategy.
Involves assessing existing strategies,
organization, and environment to develop new
strategies and strategic plans capable of
delivering future competitive advantage.
establish annual objectives, devise policies,
motivate employees, and allocate resources so
formulated strategies can be executed.

Strategy formulation and implementation

in the strategic management process

Strategy implementation
The process of allocating resources and putting
strategies into action.
All organizational and management systems must
be mobilized to support and reinforce the
accomplishment of strategies.

Essential tasks for strategy implementation:

Identify organizational mission and objectives.
Assess current performance vis--vis mission
and objectives.
Create strategic plans to accomplish purpose
and objectives.
Implement the strategic plans
Evaluate results; change strategic plans and/or
implementation processes as necessary

Vision
Mission
Objectives and
Goals

Vision
A vision is a clear, comprehensive
statement of aspiration of an organization
at some point in the future.
It provides direction because it describes
what the organization needs to be like, to
be successful within the future.

Vision Airasia

To be the largest low cost airline in Asia and

serving the 3 billion people who are
currently underserved with poor
connectivity and high fares.

Example of a Strategic Vision

Provide a global trading platform where practically anyone

can trade practically anything.

Mission
Mission is a clear and succinct statement
of the reason the organisation or project
exists. It brings clarity of purpose to
members of the organisation, and broad
direction as to what members of the
organisation should be aiming for. It
includes:
The purpose
The core function(s)
The main methods used to reach those
purposes

Mission
Analysis of mission:

The reason for an organizations existence.

Good mission statements identify:

Customers
Products and/or services
Location
Underlying philosophy

An important test of the mission is how well it

serves the organizations stakeholders.

How external stakeholders can be valued as

strategic constituencies of organizations.

Mission Airasia
To be the best company to work for whereby
employees are treated as part of a big
family
Create a globally recognized ASEAN brand
To attain the lowest cost so that everyone
can fly with AirAsia
Maintain the highest quality product,
embracing technology to reduce cost and
enhance service levels\

Vision V/S Mission

A strategic
vision concerns
a firms future
business path where
we are going
Markets to be
pursued
Future
product/market/
customer/technolog
y focus

The mission
statement of a
firm focuses on
its present
business
purpose - who
we are and
what we do
Current product and
service offerings
Customer needs
being served

Goals

Goals are an expected or desired outcome

of a planning process. Goals are usually
broad, general expressions of the guiding
principles and aspirations of a community.

Objectives

Objectives are precise targets that are

necessary to achieve goals. Objectives are
detailed statements of quantitatively or
qualitatively measurable results the plan
hopes to accomplish.

Setting Objectives

Purpose of setting objectives

Converts vision into specific performance
targets
Creates yardsticks to track performance

Well-stated objectives are

Quantifiable
Measurable
Contain a deadline for achievement

Environmental Analysis
PESTLE Analysis - Macro Environment
Analysis
Five Forces Analysis: Michael Porter Micron
Environment Analysis

PESTLE Analysis

A PESTEL analysis is a framework or tool used by marketers

to analyse and monitor the macro-environmental (external
marketing environment) factors that have an impact on an
organisation. The result of which is used to identify threats
and weaknesses which is used in aSWOT analysis.

PESTEL stands for:

P Political
E Economic
S Social
T Technological
E Environmental
L Legal

PESTLE Factors

PEST Analysis How Airasia capitalized on

the variables in macro environment.

Political Factors
* Political Stability (World Bank Report)
* Government Support, as a part of
privatization drive (SE Ismail, 2010)
* National Development Policy Malaysia (effective from 1991) made
legislation less cumbersome and
encouraged private sector entrepreneurs.
* Open Skies agreement between
ASEAN member states (Forsyth et al, 2004)

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Economic Factors
GDP growth rate in Malaysia (8.9% 2000; 6.1-1991)
Increase in Per Capita Income ($47832001. The 5 year prior averaged
$4573)
Low interest rate
(4.treasury.gov.my)

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Social Factors
* Change in life style
* Attitude towards leisure
Malaysia's multiracial population
composition (Malays 50%, Chinese 23%,
Indians 7%-Total population 3Cr )
(B Mohamed, 2001)
(CIA, World Fact Book, 2014)

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Technological factors

Internet Penetration and Resultant

Disintermediation (20% penetration by
2001)

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Five Forces Analysis

Named after Michael E. Porter, this model
identifies and analyzes 5 competitive forces
that shape every industry, and helps
determine an industry's weaknesses and
strengths. The analysis reveals the
attractiveness of the industry.
1. Competition in the industry
2. Potential of new entrants into industry
3. Power of suppliers
4. Power of customers
5. Threat of substitute products

Five Forces Analysis

Elaborating Five
Forces

Levels of Strategy

CorporateLevel
Managers
BusinessLevel
Managers
Functiona
l
Managers

Corporate
Strategy
Two-Way Influence

Business
Strategies

Two-Way Influence

Functional Strategies

Three levels of strategy in organizations

corporate, business, and functional
strategies.

SWOT Analysis

SWOT Analysisis a useful technique for

understanding the Strengths and
Weaknesses, and for identifying both the
Opportunities open to you and the Threats
you face. Used in a business context, it
helps you carve a sustainable niche in your
market.

SWOT analysis

SWOT Analysis - Sigapore

Airlines
Strength

Weakness

Well k known and reputed brand

Cash rich
Backed by Govt of Singapore
Youngest fleet

Expensive

Opportunities

Threats

Opportunities in emerging market Competition from low cost

and ASEAN countries (Increasing
carriers in emerging markets.
disposable income, changing
lifestyle-tourism)
Strategy: Singapore Airlines started a low cost carrier named Tiger
Airways, relying on the strength, by selling airtickets at a lower
price (overcoming the weakness) to capitalize on the opportunities
(emerging markets) and there by minimizing the threats from low
cost carriers.