Glossary of strategic management terms

1. Acquisition: When one company, the acquirer, purchases and absorbs the operations of another, theacquired.
2. Barriers to Entry/Exit: Economic or other characteristics of a marketplace that make it difficult fornew firms toenter or exit. Examples include: economies of scale; product differentiation; capitalrequirements; cost disadvantages other than size; access to distribution channels; governmentpolicy; etc.
3. Benchmarking: An analysis of competitor strengths and weaknesses; used to evaluate a firm’s relativecompetitive position, opportunities or improving, and success/failure in achieving suchimprovement.
4. Best Practices: The business methods and procedures utilized by firms considered the leader in an industry.
5. Business Model: A company’s business model is management’s storyline for how the strategy will be a money maker.
6. Company Culture: The mix of important assumptions shared by members of an organization; may be explicit or implicit, usually determined by the business environment of a firm’s industry; the  prior experience of employees in other firms, professions, communities, etc; and the experiences that the employees share in their everyday work environment within the firm.
7. Company Mission: The unique purpose of a firm that sets it apart from firms of its type; identifies scope of operations including markets, customers, products, distribution, technology, etc. in manner that reflects values and priorities of the firm’s strategies.
8. Competitive Advantage: Advantages that a firm has over its competitors. See also Sustainable Competitive Advantage.
9. Competitive Position: The position that a firm has or wishes to achieve within its industry as measured against its competition.
10. Competitive Reaction:  Anticipated reaction of competition to a firm’s strategic initiatives.
11. Concentric Diversification: A strategy of growing a firm by acquiring other firms which are similar to and synergestic with the acquiring firm in terms of markets, products or technology. See also Conglomerate Diversification.
12. Conglomerate Diversification: A strategy of growing a firm by acquiring other firms for investment purposes; usually little or no anticipated synergy with the acquired firm. See also Concentric Diversification.
13. Consolidation: The merger of business units and/or property portfolios.
14. Core Competencies: The competencies of a firm required to fulfill its value proposition with its customers; competencies may be competitively unique to an industry but not necessarily a single firm. See also Competencies, Non-Core Activities, Value Proposition.
15. Cost Advantage (Disadvantage):  Operating advantage enjoyed by an entrenched firm, which would be difficult for entering firms to capture, regardless of size. May relate to patent protection, proprietary technology, learning curve, experience curve, government subsidies, favorable locations or access to key raw materials.
16. Differentiation Strategy: One of three generic strategies in which a firm strives to create and market unique products/services for various customer groups. See also Focus Strategy and Low Cost Strategy.
17. Diseconomy of Scale: When a company has become so large that additional production creates reduced marginal revenue. See also Economy of Scale.
18. Distribution Channel:  The means by which products or services are moved from production to customer.
19. Distinctive Competence: A competence that provides a firm with a competitive advantage in the marketplace.
20. Diversified Company:  A company that has enough different products so it does not depend on success of one product or type of product.
21. Divestiture: The sale of all or major part of a firm.
22. Driving Forces: The most dominate forces because they have the biggest influence on what kinds of changes will take place in the industry’s structure and competitive environment.
23. Early Entrants:Firms entering new markets or developing new products before other firms. (Also knownas “first mover"). See also Late Entrants.
24. Economy of Scale: A reduction in costs through larger operating units, spreading fixed costs over large  numbers of items/units. See also Diseconomy of Scale.
25. Emerging (Sunrise) Industry: A newly formed or restructured industry growing faster than the overall economy.Usually created by changing customer needs, technological change or other socioeconomic conditions. See also Mature Industry.
26. External Environment: The conditions and forces that define a firm’s competitive position and influences its strategic options. Also called Competitive Environment.
27. Financial Objectives: Concerned with the financial results and outcomes the management wants the organizations to receive. Ex: earnings/growth/stock price. 
28. Flat Organization:  An organizational structure in which most middle management functions are eliminated,   allowing senior management to have greater exposure to customers and to those in the  organization that deal with customers. See also Flat and Matrix Organizations.  
29. Retrenchment Response: In a turnaround situation, cost cutting and asset reduction to improve a firm’s fortunes.
30. Short term objectives : Usually one year objectives sometimes known as Annual Objectives. They often dovetail into Long Term Objectives; they usually indicate the speed at which management wants the organization to progress. See also Long term objectives.
31.  Stakeholder:  A person, group, or business that has an interest in the outcomes of a firm’s operations. 
32. Strategic Advantage: See Competitive Advantage
33.  Strategic Alliances: Cooperative agreements between firms that go beyond normal company  to  company  dealings but fall short of merger or full joint venture partnership with formal ownership ties.  
34. Strategic Analysis: Contrasts a firm’s Company Profile with its External Environment to identify a range of possible strategic alternatives; screened against the Company Mission statement to determine desired opportunities. 
35. Strategic Business Units: The organization of a firm by “groups” of divisions that serve similar strategic interests of the firm.  Utilized by larger firms with multiple divisions
36. Strategic Decisions: Management decisions related to the future of a firm’s operations; made at the corporate, business, functional, and individual level.
37.  Five Competitive Forces: A tool that helps diagnose the principle competitive forces in the market and assess how important each one is (a) The rivalry among competitive sellers in the industry (b) The potential entry of new competitors : The market attempts of companies in other industries to win customers to their own (c) substitute products (d) The competitive pressures from sellers (e) the competitive pressure from buyers 
38. Flat Organization: An organizational structure in which most middle management functions are eliminated, allowing senior management to have greater exposure to customers and to those in the organization that deal with customers. See also Flat and Matrix Organizations. 
39. Focus Strategy: One of three generic strategies in which a firm tries to appeal to one or more customer groups focusing on their cost or differentiation concerns. See also Low Cost Strategy and Differentiation Strategy. 
40. Focused (Market Niche) Strategy Based on Lower Cost: Concentrating on a narrow buyer segment and out competing rivals by serving niche members at lower cost than rivals.  
41. Functional Organization: An organizational structure along functional lines (e.g. marketing, acquisition, asset  management, development, finance and accounting, etc.) See also Flat and  Matrix  Organizations. 
42. Functional Strategies: Strategies for each firm’s function or division; integrates into Grand Strategy and ties to Long Term Objectives. See Grand Strategy; Long term Objectives. 
43. Generic Strategies: Three approaches to strategic planning based on different fundamental ideas about how to  appeal to the customer. See Low Cost Strategy, Differentiation Strategy, and Focus Strategy. 
44. Grand Strategy: A firm’s comprehensive plan of key actions by which it plans to achieve it Long Term Objectives; usually considers factors such as market development, product development, innovation, horizontal and/or vertical integration, diversification, joint ventures and strategic alliances, turnaround, divestiture, liquidation, etc. 
45. Growth Industry: An industry growing at the same rate as the nation’s economy. 
46. Horizontal Integration: The acquisition of similar firms operating at the same stage of the production/marketing chain as the acquiring firm. Utilized to expand into new markets and/or eliminate competition. See also Vertical Integration.
47.  Joint Venture: A third party commercial operation established by two or more firms to pursue a particular market, resource supply, or other business opportunity. Created and operated for the benefit of the co-owners. 
48. Key Success Factors :  The product attributes, competencies, competitive capabilities and market achievements with the direct bearing on company profitability. 
49. Late Entrants: Firms entering new markets or  developing new products after they have been established by other firms. Also called Latecomers. See also Early Entrants. 
50. Leapfrogging: Establishing entirely new competitive space in which a firm is not only a leader but establishes most, if not all, of the standards by which other firms in its industry are measured. 
51. Long Term Objectives: A firm’s intended performance over a multi-year period of time; usually includes measures such as competitive position profitability, return on investment, technology leadership, productivity, employee relations and development, public responsibility. See also Short Term  Objectives. 
52. Low Cost Strategy: One of three generic strategies in which a firm attempts to establish itself as the cost leader in the industry. See also Focus Strategy and Differentiation Strategy. 
53. Macro environment: All relevant forces outside company boundaries that are important enough to affect the company’s business model strategies. 
54. The economy at large : Legislations and regulations. Population an demographics, Societal values and lifestyles,  Technology.  Immediate industry and competitive environment 
55. Market Leader: The company that has control over a certain market. 
56. Market Share: The revenues generated by a firm as a percentage of total revenues; usually measured by industries, markets, or products. 
57. Matrix Organization: An organizational structure which delegates power to independent operating units which then rely on centralized corporate facilities for functional support see also Flat and Matrix Organizations. 
58. Mature Industry: An industry growing slower than the overall economy or actually declining. See also Emerging Industry. 
59. Merger: Combination and pooling of equal companies, with the newly created company often taking on a new name. 
60. Outcomes: Results arising from management actions. 
61. Outsourcing: Contracting and activity to another firm.  
62. Partnerships: Entails forming a new corporate entity owned by partners that can be terminated whenever one of the partners choose. 
63. Portfolio Approach: A method of looking at each of the “businesses” of a firm as elements in a total portfolio. 
64. Product Life Cycle Analysis: A forecasting technique which analyzes/predicts the performance of a product/service during each stage of its development. 
65. Retrenchment Response: In a turnaround situation, cost cutting and asset reduction to improve a firm’s fortunes. 
66. Strategic Analysis: Contrasts a firm’s Company Profile with its External Environment to identify a range of possible strategic alternatives; screened against the Company Mission statement to determine desired opportunities. 

mullin's model of 7 domains

Mullins' Seven Domains Model

This tool is designed to be used before writing a business plan and is a sort of  "New Product Road Test" and was created for entrepreneurs interested in starting new businesses but you can use it to decide whether to pursue a new product, or launch a new project. It helps you examine an opportunity from  7 different angles.

Figure 1 – Mullins' Seven Domains

The model has 7 "domains": 4 look at  micro and macro pictures and 3 focus on your team. 

Note: The terms "market" and "industry" are sometimes used interchangeably, but they have very different meanings. Your market is the group of people who are, or will be, buying your product or service. Your industry is the group of sellers, most often organizations, that offer products or services similar to your own. These are your competitors. 

Market Domain/Macro Level

Market Attractiveness

How big is it, in terms of the number of customers, the value of sales, and the quantity of units sold? Then, look at trends within the market. Has it grown in recent years? If so, is this growth likely to continue? What you're doing here is checking that the market is big enough to give you the growth you want, and that it's growing healthily – after all, it's much easier to grow a business in a growing market than it is in a declining one. Also, use PEST analysis to explore the large-scale factors that affect your market. Do these look healthy?

Market Domain/Micro Level

Sector Market Benefits and Attractiveness

Realistically, it's unlikely that your venture will meet the needs of everyone in the market. You'll be more successful if you target your idea at one market sector or segment, and aim to meet its needs fully. To identify this segment, look at the market on a micro level. Think about the following questions:

• Which segment of the overall market is most likely to benefit from your venture?
• How is your venture or product different from others already servicing this segment?
• What trends is this segment showing? Is it growing, and, if so, is this growth set to continue?
• What other market segments could you access if you're successful in this one?

Look for qualitative and quantitative data. Talk to prospective customers to gather feedback on their needs, and to find out how well competitors are meeting these. Then, look for data on the sector you're targeting, for example, by reading analysts' reports and market research reports.

Industry Domain/Macro Level

Industry Attractiveness

It's now time to look at how attractive your industry is on a macro level. Mullins suggests using Porter's Five Forces to assess which factors affect the profitability of your industry.
To do this, first define the industry that you will be competing in, and then ask yourself how easy it is to enter this industry. If it's easy to get into, you can quickly be flooded with competitors if you are seen to make a success of your business.

Next, look at your competition. Is rivalry in this market fierce or civilized? Are organizations stealing ideas from others in the industry? Take time to gather intelligence about your potential competitors to see what they're up to.

Last, look at buyers and suppliers. How much power do they have? Are they setting their own terms and conditions because of this power? If so, how will this affect your offering?

Industry Domain/Micro Level

Sustainable Advantage

Once you've looked at your industry from a macro level, it's time to examine it close up.
Start with a USP Analysis. What can you do to build and sustain a USP? Next, explore the competencies that you'll need, and think about how to develop and sustain these.

Then think about how easy it will be for your competitors to duplicate your product or service.

Also, what resources do you possess that your competitors don't? Do a VRIO Analysis to answer this question, and then look at your competitors' resources. What do they have that you don't? This could include patents, established processes, and finances. How will these affect your ability to compete?

Team Domain: 

Mission, Aspirations, Propensity for Risk

In this domain, located in the center of the model, you're going to analyze commitment – yours, and that of your team – to this idea. Think about why you want to start this business. Are you passionate about this idea, and, if so, why? What do you want to do with this business – are you ambitious for it, or do you want it to be a "lifestyle business"? What are your personal goals and values, and how does this venture align with these? And are you prepared to take the risk and put in the hard work needed to build this business? Explore the motivations of your team, too. What are they hoping to achieve, and why? Do their motivations align with yours? And are they prepared to work really hard to make the business a success?  Money and/or reputations could be at stake if the venture fails, so think about attitudes towards risk within the team. Our article "Cautious or Courageous?" can help you think about your approach to risk.

Team Domain: 

Ability to Execute on Critical Success Factors

You now need to identify the Critical Success Factors (CSFs) for the business, and think realistically about whether your team can deliver on these.
Start doing this by thinking about these questions:

• Which decisions or activities will harm the business significantly if you get them wrong, even when everything else is going right?
• Which decisions or activities will deliver disproportionately high benefits or enhance performance, even if other things are going poorly?

Then look at the knowledge and skills of the team that you've put together. How certain are you that you and your team can deliver successfully on these CSFs? If you see a gap in skills or abilities, who can you bring on board to fill this gap?

Team Domain: 

Connectedness Up, Down, Across Value Chain

This last domain is all about your connections and how important they are to the success of your business.

First, look at your suppliers and investors. Who do you know that can supply you with the resources you need to pursue this venture? How good are your relationships with these people?

Next, look at your potential customers and distributors. In what ways can you capitalize on your connections here?

Last, look across the value chain. Do you know any of your competitors personally? If so, how could this relationship help or hinder your venture? And could these people be partners if you thought about them differently?

Next Steps

As you work through the model, it's likely that you'll come up against problems or challenges that you hadn't foreseen. You need to assess how critical these issues will be.
If they're related to your industry or your market, to what extent can you influence them? If they relate to you or your team, what can you change? What will the effect of these changes be?

GE Matrix and portfolio analysis

Focusing Effort to Give the Greatest Returns

Imagine that you're reviewing your organization's products. You need to decide which ones you should focus investment on.One of the products is doing well financially. However, demand has fallen, and this trend looks set to continue.Another product is also doing well, but it's in a new market, and needs a lot of cash to support it. Should you continue investing in it?

And another product is barely profitable, although its market is growing. Should you kill it or keep it? To make these decisions, you need to look beyond the income that the products are currently bringing in. You need to assess how they're likely to perform in future.  The Boston Matrix, also called the Boston Consulting Group (BCG) Matrix, is a simple, visual way to examine the likely financial performance of your product or business portfolio.

Understanding the Boston Matrix

Management consultants at the Boston Consulting Group developed their matrix in the early 1970s. They designed it to help managers at large corporations decide which business units they should invest in.

However, managers in all kinds of organizations now also use it to decide which of their product lines or products to invest in, and which to dispose of or to shut down.

The matrix, shown in figure 1, places products into four categories based on their market share and market growth.

Figure 1 – The Boston Matrix

The categories are:

• Dogs: Low Market Share and Low Market Growth Dogs are business units or products that have low market share in a low-growth market. They often don't make much profit, but they don't need much investment either. Much of the time, you'll need to offer a price discount to sell Dog products.
• Cash Cows: High Market Share and Low Market Growth These businesses or products are well established. They're likely to be popular with customers, which makes it easier for you to exploit new opportunities. However, you should avoid spending too much effort on these, because the market is only growing slowly, and opportunities are likely to be limited.
• Stars: High Market Share and High Market Growth Businesses and products in this quadrant are seeing rapid growth. There should be some good opportunities here, and you should work hard to realize them.
• Question Marks (Problem Children): Low Market Share and High Market Growth These are the opportunities that no one knows how to handle. They aren't generating much revenue right now, because you don't have a large market share. But they're in high-growth markets, so they could become Stars or even Cash Cows if you can build market share. However, if you cannot increase market share, Question Marks could absorb a lot of effort with little return. 

    GE / McKinsey Matrix

GE / McKinsey Matrix

		Business Unit Strength
		High	Medium	Low
	High
	Medium
	Low

It maps strategic business units on a grid of the industry and the SBU's position in the industry. The GE matrix however, attempts to improve upon the BCG matrix in the following two ways:

• The GE matrix generalizes the axes as "Industry Attractiveness" and "Business Unit Strength" whereas the BCG matrix uses the market growth rate as a proxy for industry attractiveness and relative market share as a proxy for the strength of the business unit.
• The GE matrix has nine cells vs. four cells in the BCG matrix.

Industry Attractiveness

The vertical axis of the GE / McKinsey matrix is industry attractiveness, which is determined by factors such as the following:

• Market growth rate
• Market size
• Demand variability
• Industry profitability
• Industry rivalry
• Global opportunities
• Macroenvironmental factors (PEST)

Each factor is assigned a weighting that is appropriate for the industry. The industry attractiveness then is calculated as follows:

Industry attractiveness    =		factor value1   x   factor weighting1
	+	factor value2   x   factor weighting2
	. . .
	+	factor valueN   x   factor weightingN

Business Unit Strength

The horizontal axis of the GE / McKinsey matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:

• Market share
• Growth in market share
• Brand equity
• Distribution channel access
• Production capacity
• Profit margins relative to competitors

The business unit strength index can be calculated by multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness.

Plotting the Information

Each business unit can be portrayed as a circle plotted on the matrix, with the information conveyed as follows:

• Market size is represented by the size of the circle.
• Market share is shown by using the circle as a pie chart.
• The expected future position of the circle is portrayed by means of an arrow.

The following is an example of such a representation:

The shading of the above circle indicates a 38% market share for the strategic business unit. The arrow in the upward left direction indicates that the business unit is projected to gain strength relative to competitors, and that the business unit is in an industry that is projected to become more attractive. The tip of the arrow indicates the future position of the center point of the circle.

Strategic Implications

Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows:

• Grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries.
• Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industies.
• Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.

There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.
 
 While the GE business screen represents an improvement over the more simple BCG growth-share matrix, it still presents a somewhat limited view by not considering interactions among the business units and by neglecting to address the core competencies leading to value creation. 

Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units. At this point, you can make a "go/no-go" decision. If you decide to "go," carry on to develop your business plan. 

"Lean" approach - waste reduction

According to "Lean" there are 7 types of "manufacturing wastes"

1. Transport (movement that us really not required)
2. Inventory (all components, work in process and FG not being processed)
3. Motion (More than what is needed to perform the processing)
4. Waiting (waiting for the next production step)
5. Overproduction (production ahead of demand)
6. Over Processing (poor tool /design)
7. Defects (effort in inspecting and fixing)

Similarly According to "Marketing Lean" the wastes are 

1. Features which do not create value for the customers
2. Money spent in fighting wars which should not be fought
3. Money spent in reaching / contacting customers who are not your prospects
4. Money spent in unnecessary go to market activities 
5. Value chain which does not create value for you or customer

B36C3 and C4 STRATEGY

Course Outline : Strategic Management

18 session course by Prof S K Palekar for Batch 36 over 4 contacts C3-C6

This batch consists of  high potential middle level  executives of  large companies like BPCL, L&T and  Tata Motors. These companies already employ significant practices of  strategic management in their own companies and the executive participants are aware of many of these practices.  The course is designed to simultaneously give a conceptual understanding to the uninitiated - as well as practical insights to the participants who are already exposed to strategic management so that they can contribute to the existing strategic process in their companies. This course runs parallel with – and two contacts behind – the 24-session core marketing course (which includes marketing strategy) which familiarizes with the basic concepts of strategy – the process by which an organization “aligns” its “resources” with  the customer as a “stakeholder”. It is assumed that the participants already know how marketing strategy is a fit between environment (5 C’s) and what the organization does (Marketing Mix).

CONTACT 3
( 4 Class Sessions + 1 Group Work Session )

·         What is Strategy ; An overview
What will happen if you have no strategy?
Key concepts : "Right Industry", "Right position", "Right Competencies", “Right fit”

·         Strategy in a practical context
Stages of strategic readiness of a company
Is strategic planning specialized or for everyone?
How companies develop strategies and link them to practice

CONTACT 4 

( 6 class sessions + 1 Group work session)

·         Strategic performance goals
Scale, profitability, share, competitiveness, 3Ps, stakeholder perspective

·         How the industry determines strategic outcomes
5 Forces model
how competitors behave and the drivers of their behavior

·         Competitive advantage - develop and sustain 
Generic strategies : Paradigms, Value chains, Internal structures

CONTACT 5

( 4 class sessions + 1 Group Work )

·         Strategic Implementation
7 S Model and Change Management

·         Portfolio Management
GE Matrix, Ansoff Model
Centralization and decentralization between HO and SBUs

·         Capabilities Development
Way to go : In-house, acquire, merge, outsource
M&A,  restructuring, downsizing, internationalization

CONTACT 6

( 4 class sessions + 1 Group Work )

·         Business Excellence Models
Malcolm Baldridge framework
Balanced Score card framework

·         Performance Improvement
PMS systems linking s top, middle and front line
Role of organization structures in strategic outcomes

Contact 3 : Strategic Management

Note : For the sake of saving paper and also to offer up to date readings, the  participants are advised to refer to the blog specially created for them and the URL is http://tchingu.blogspot.in/2012/11/b36-strategy-till-dec-1-2012-4-sessions.html which gives some of the material shown in the class and also refers you to other material available on the net; in addition to the readings included in this handbook.

CONTACT 3 PLAN
( 4 Class Sessions + 1 Group Work Session )

·         What is Strategy ; An overview
What will happen if you have no strategy?
Key concepts : "Right Industry", "Right position", "Right Competencies", “Right fit”

·         Strategy in a practical context
Stages of strategic readiness of a company
Is strategic planning specialized or for everyone?
How companies develop strategies and link them to practice

SPECIFIC LEARNING OBJECTIVES

1.      How strategy formulation helps the managers manage the business better

2.      Why strategy is particularly useful in large org and fast changing world

3.      What benefits accrue to businesses who use strategy as a tool of managing

4.      Definition(s) of strategy

5.      Various stages of strategic readiness in organizations : where are you on these?

6.      A glimpse : how marketing / business / corporate strategies differ from each other

7.      Understand intended (Planned) vs emergent (What actually happened) strategy

8.      Stakeholders and their role in strategy formulation and implementation

9.      External and internal aspects integral to any strategy. They are interdependent 

10.  Tools to identify areas that may warrent strategic action from you

11.  Tools to minimize bias when analysising external opportunities

12.  In practice - how much change - minor, evolutionary, revolutionary

Group Work

Preparation for the course : Study the annual report of L&T for 11-12 and answer what activities will L&T never pursue, what are the key tasks it has chosen for itself and why, what are the stakeholders the company wants to actively satisfy.

SESSIONS 1 - 2

Giving not only the coverage but even  summary notes too

5 TASKS OF A WELL MANAGED BUSINESS

1. Plan ( Examine the future and draw up a plan of action)
2. Organize (Build assets and collect people the plan happen)
3. Command (Maintain the desired activity among the people)
4. Coordinate (Bind, unify and harmonize)
5. Control (Ensure that things happen as per policy / plan / command)

STRATEGY HELPS YOU IN PERFORMING THESE 5 TASKS.

THESE TASKS BECOMING INCREASINGLY DIFFICULT BECAUSE ...

1. Organizations are becoming large
2. Environment is changing rapidly ( some make quarterly plans) 
3. Operations spread over multiple businesses / geographies 
4. People do not get to see what purpose they are serving in external world
5. People do not get feedback on how stakeholders are seeing their performance
6. People are organized and guided by departmental agendas and rules

HOW ORGANIZATIONAL  STRATEGY FORMULATION HELP

1. Strategy becomes a binding and unifying agent 
2. Gives a strong sense of common identity / purpose
3. Tells people collectively “what are we here for”
4. Enables people judge how they / department / company is doing
5. Helps people work towards right things
6. Helps people avoid effort in doing unwanted things
7. Provides a common language for performance conversations
8. Enables long term decisions : capacity, investments, locations, people, systems

WHAT MAY HAPPEN IF YOU HAVE NO STRATEGY

1. Self-starter employees / vendors will not know what direction to go in
2. Unwanted proposals will come up,  get rejected, and reduce morale
3. Cost of supervision high to keep people off going in wrong direction.
4. Resources will get used up unproductively; waste of resources.
5. Long term decisions will get taken without the benefit of long term view
6. Energies will go in "trivial many" directions (rather than "vital few")
7. The support of stakeholders may not be consistent in absence of clear policy
8. Uncordinated work and friction
9. More shocks due to lack of anticipation of future

DEFINITION OF STRATEGY

Since we shall address how to perform various tasks, we will use a task oriented definition of strategy in the course : "Analysis, Planning and Managing of major initiatives taken by your company's top management - on behalf of its various stakeholders - regarding how it develops and deploys resources and competencies - to selected issues in its chosen environments - to improve the performance of the company. This includes (a) how it chooses the organization's mission, vision (b) how it sets the objectives (c) how it developes policies and plans -  often in terms of projects and programs designed to achieve these objectives (d) how it allocates resources to implement these policies and plans, projects and programs (e) how it tracks the strategic performance of the company (in terms of balanced scorecard model)”

HOWEVER THERE ARE OTHER PERSPECTIVES

AND DEFINITIONS OF STRATEGY

The "strategy" word is used with multiple meanings  

1. Strategy as a plan : collective and documented intention : direction, course of action
2. Strategy as a ploy : a maneuver intended to outwit a competitor/s
3. Strategy as a consistent pattern : of past behavior / intended future behaviour  
4. Strategy as a position : within conceptual frame of stakeholders /environment
5. Strategy as perspective : determined by a master strategist / team

Other definitions of strategy

1. "Managing business with deep awareness of underlying purpose"
2. "An underlying pattern in a stream of decisions".
3. "Determining of basic long-term goals and objectives of an enterprise, examining various possible courses of action, selecting them, using the selected ones to decide allocation of resources, so that the goals are met"
4. "A long term direction set by the management - to satisfy the stakeholders sustainably - by choosing which aspects of external environment it will respond - in what way - and how it will develop and deploy its internal resources and competencies to do so". 
5. "Strategy provides clear guidance for taking long term decisions regarding capabilities, medium term projects and short term operations".
6. "strategy is about gaining competitive advantage or best exploiting emerging opportunities. As there is always an element of uncertainty about the future, strategy is more about a set of options ("strategic choices") than a fixed plan".
7. "Giving clarity of direction to the troops so as to focus their effort towards the right goals and yet give them enough empowerment regarding how they want to do it without straightjacketing them into a plan". 

SESSIONS 3 -4

Giving not only the coverage but even  summary notes too

DOES FORMULATION OF A STRATEGY ENABLE SUCCESS?

Nothing in life “guarantees” success. But strategy formulation does help greatly in

• creating organization wise debate and conversations on the right topics
• bringing all people on the same page
• creating a consensual agreement on broad directions for future
• having communication and involvement of all who matter
• and this makes implementation easier. Strategy formulation enables that the “emergent strategy” is as close to “intended strategy”.

DO NOT CONSIDER STRATEGY AS A PIECE OF PAPER

Changing srategy is not as easy as typing a new strategy because a strategy reflects the commitment of your company's resources to progress in a specific direction and is reflected in 6S (Staff, Structure, Systems, Skills, Shared values and Style). And changing all this is not easy : it needs commitment and persistence by the top leadership.

HOW MARKETING STRATEGY (WHICH YOU ALREADY KNOW) DIFFERES FROM THE BUSINESS STRATEGY : The class seemed to know it well and drew the process view of marketing on the board sequentially as follows

• Starting with situation analysis (technique : 5C analysis)
• Followed by strategy formulation consisting of 3 components
• selecting the target market (technique : market attractiveness index)
• developing a value proposition (technique : positioning)
• developing route- to-market (technique : selection of sales channel & process)
• Arriving at marketing mix based on the strategy ( template : 7Ps)
• Acquiring and retaining customers
• Result (Outcome) of marketing : (Profit and Customer satisfaction (simultaneously))

 THE HIERARCHY OF STRATEGIES

1.      The major preoccupation of the marketing strategy is to how to allocate company resources to front-end activities to generate value for the chosen customers and how to capture a part of it through value capture. The basic unit of discussions regarding marketing strategy is a "PxM" ( Product x Market ) combination at the front end of the business. 

2.      The major preoccupation of the business strategy is how to allocate company resources to both front-end and back-end activities so that both the front-end and back-end work together in a mutually reinforcing and efficient way to make the company sustainably competitive. The basic unit of discussions regarding business strategy is a complete combination of front end (PxM) and associated back end.

3.      The major preoccupation of the corporate strategy is how to allocate company resources to the multiple businesses that may exist under the company banner. Which of these businesses to invest in, which to maintain and which ones to downsize, re-scope or exit. Corporate strategy is also about which tasks to consolidate centrally and which ones to decentralize. 

WHAT MAKES A COMPANY STRATEGICALLY SUCCESSFUL ?

The answers seem to come from two sides 

External side : Key assumption being that you will succeed if you are in the right competitive position (not to be in a highly competitive industry where revenue or margins will be under threat and hence your resources will produce less result) in the right industry (a large and growing industry where your internal resources and competence can make a difference).   

Internal side : Key assumption being that you will succeed if you have the right resources (physical, financial, intangible) which are (a) of value when operating in the competitive position you are in your chosen industry (b) not easy for your competitors to imitate (c) available to you on a sustainable basis.  

The truth, of course, is that both are required to succeed : you need to choose the right industries to operate in, get into the right positions in these industries and finally you need to build the right capabilities within your company. 

APPLICATION ASSIGNMENT

Setting strategic agenda : take up the case of your whole company - or any one of the business divisions (not departments) - and using the techniques taught in the class identify 5 areas of action and prioritize them. You may refer (click here) or you may refer to the simple method of CONICS

• Capitalizing on which opportunities should not be missed by us
• What obstacles need to be overcome
• Neutralizing important threats
• Scaling up and improving the areas where positive performance already exists
• Correction of those weaknesses that are coming in our way
• What  problems must be solved