Prelude; strategic management: meaning and scope; core competence; classes of decisions; levels of strategy; roles of different strategists; approaches to strategy making; strategic management process; principles of good strategy; TQM and strategic management; international strategic management; benefits and relevance of strategic management; limitations
and misgivings; growing relevance of strategic management in India; references.
1 – 37
Vision, Mission, and Objectives
Inter-relationship; vision; mission; objectives, goals, and targets; the importance of objectives; guidelines for ideal objectives; factors affecting objectives; hierarchy of objectives; classification of objectives; top-down and bottom-up approaches; references.
38 – 61
Strategy Implementation
Differences between strategy formulation and strategy implementation; components of strategy implementation; steps in strategy implementation; approaches to strategy implementation; the role of leadership in strategic management; references.
183 – 197
Strategy and Structure
Strategy-structure relationship; criteria for success (7S framework); organizational restructuring and transformation; organization: principles and types; principles of organization; types of departmentalization/organizational structure; references.
198 – 211
EXPLAIN STRATEGIC MANAGEMENT: MEANING AND SCOPE
Strategic management is a broader term than corporate strategy. Strategic Management consists of Corporate Strategy (Portfolio Strategy) and Business Strategy (Competitive Strategy). Corporate Strategy is a master plan for the entire organisation, as explained in Box 1.1. It decides the scope of the business or the business/businesses the company wants to be in. Business strategy is about how to succeed in the chosen business(es).
Glueck defines strategy as a “unified, comprehensive, and integrated plan relating the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objectives of the enterprise are achieved.”8 Strategic management is defined as “that set of decisions and actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives.”9 The above definition indicates that a strategy is not just any plan, however.“A strategy is a plan that is unified. It ties all the parts of the enterprise together. A strategy is comprehensive; it covers all major aspects of the enterprise. A strategy is integrated and all the parts of the plan are compatible with each other and fit together well.
The definitions of strategy/strategic management by their reference to mission, sustainable competitive advantage, etc. implicitly indicate the futuristic nature of strategic management. Strategic management is indeed managing for the future or competing for the future.
What is The Essence of Strategy?
Writers like Porter and Hamel and Prahalad emphasise that the essence of strategy is being distinctively different from the competitors. Porter, who points out that the crux of strategy is choosing to perform activities differently than rivals do, observes that the Japanese companies which triggered a global revolution in operational effectiveness in the 1970s and 1980s, pioneering practices such as total quality management (TQM) and continuous improvement which enabled them to enjoy substantial cost and quality advantages for many years, are increasingly caught in a trap of their own making as the gap in operational effectiveness narrows. Japanese companies rarely developed distinct strategic positions (exceptions include Sony, Canon, and Sega). Because of the rapid diffusion of best practices, competition based on operational effectiveness alone is mutually destructive, leading to wars of attrition that can be arrested only by limiting competition. Porter counsels that if they are to escape the mutually destructive battles now ravaging their performance, Japanese companies will have to learn strategy.
Briefly Describe Strategic Intent and Stretch
Global leaders have been characterised by strategic intent – an obsession with winning,
unfettered by their resource constraints – in their envisioning of the future. Hamel and Prahalad point out that companies that have risen to global leadership over the recent decades invariably began with ambitions that were out of all proportion to their resources and capabilities. “But they created an obsession with winning at all levels of organisation and then sustained that obsession over the 10-20 year quest for global leadership. This obsession is termed as strategic intent. In the words of Hamel and Prahalad, on the one hand, strategic intent envisions a desired leadership position and establishes the criterion the organisation will use to chart its progress. Komatsu set out to “Encircle Caterpillar”. Canon sought to “Beat Xerox”. Honda strove to become a second Ford – an automotive pioneer. All are expressions of strategic intent.
At the same time, strategic intent is more than simply unfettered ambition. (Many companies possess an ambitious strategic intent yet fall short of their goals.) The concept also encompasses an active management process that includes: focusing the organisation’s attention on the essence of winning; motivating people by communicating the value of the target; leaving room for individual and team contribution; sustaining enthusiasm by providing new operational definitions as circumstances change and using intent consistently to guide resources allocations.
“Stretch gives birth to the motive for resource leverage. However, much care and feeding is required to transform that newborn desire into a full-grown capability for resource leverage. Exploiting every possible opportunity for resource leverage takes creativity and persistence. A firm with an extraordinary ambition but an underdeveloped capacity for resource leverage will be dismissed as a “dreamer”. On the other hand, if a firm has developed a nascent capacity for resource leverage (e.g., a track record of successfully exploiting alliances, an ability to move skills across business unit boundaries, a creative approach to competitive tactics), but possesses no galvanizing ambition, it will be a “sleeper”. A firm with neither aspiration nor a capacity for resource multiplication will be a “loser”, and the “winners” will be those firms that have both,”
Describe the Following Terms
Strategic Planning and Tactical Planning
Strategic planning is defined as “an orderly process by which top management determines organisational objectives, strategies needed to reach these objectives, and short-range, top-level actions necessary to implement the strategy properly”.38 Strategic planning, which is also sometimes called corporate planning, is essentially top-level long-range planning.“Tactical planning refers to short-range planning that is oriented towards operations and is concerned with specific and short-range details”.39
Formal Planning and Informal Planning
Formal planning is planning which is organisationally formalised and is often systematic. In large organisations, there may be planning departments/cells manned by people with knowledge and experience in different aspects and dimensions of planning. Clearly spelt out, organisational objectives form the basis for planning. A formal planning system will have a set of procedures and it is explicit, i.e., people know what is being done. Formal plans will be documented. Informal planning, which is common with small enterprises, and sometimes with one man dominated not so small enterprises, is often done in a casual way. A small entrepreneur may have clear objectives and perceptions and plans but he may not put them down on paper. Informal planning many a time is intuitive, anticipatory planning which is the work of primarily one person. It may be based on past experience, the gut feeling, the judgement, the reflective thinking, and perspective vision of the person.
Enterprise Strategy
“Enterprise strategy is the organization’s plan for establishing the desired relationship with other social institutions and stockholder group and maintaining the overall character of the organisation”.40 Enterprise strategy seeks to answer the question ‘what do we stand for?’ The mission statement may reflect the enterprise strategy.
Policy
“A policy is a broad, general guide to action which constrains or directs goal attainment. Policies do not normally dictate what action should be taken, but they do provide the boundaries within which the objectives must be pursued. Thus, policies serve to channel and guide the implementation of strategies.
Explain the DIFFERENCES BETWEEN STRATEGY FORMULATION AND
STRATEGY IMPLEMENTATION
There are several fundamental differences between strategy formulation and strategy
implementation. As Fred David succinctly puts it:1
• Strategy formulation is largely an intellectual process, whereas strategy implementation is more operational in character.
• Strategy formulation requires good conceptual, integrative, and analytical skills but strategy implementation requires special skills in motivating and managing others.
• Strategy formulation occurs primarily at the corporate level of an organisation, while
strategy implementation permeates all hierarchical levels. Strategy formulation requires
coordination among a few individuals, but strategy implementation requires coordination
among many.
• In all but the smallest organisations, the transition from strategy formulation to strategy
implementation requires a shift in responsibility from strategists to divisional and functional managers. Implementation problems can arise because of this shift in responsibility especially if strategy formulation decisions come as a surprise to middle and lower-level managers.
What are Functional Strategies?
Functional strategies, which are short-term game plans for the key functional areas, are the means to accomplish the annual plans.
Functional strategies by clearly specifying the various measures to be taken in different
functional areas in different time horizons help operationalise the grand strategy. In other words, functional strategies provide the short-term operational details for accomplishing the long-term objectives systematically.
“Functional strategies help in implementation of grand strategy by organising and activating specific subunits of the company (marketing, finance, production, etc.) to pursue the business strategy in daily activities. In a sense, functional strategies translate thought (grand strategy) into action designed to accomplish specific annual objectives. For every major subunit of a company, functional strategies identify and coordinate actions that support the grand strategy and improve the likelihood of accomplishing annual objectives.”10
Dunne. Design thinking at work: How innovative organizations are embracing design.
Read:
Part 1: Framing Design Thinking in Organizations
Thinking Like a Designer
How Design Keeps the Dutch Dray
Design…and Design Thinking
A Deeper Look at Design Thinking
The Impact of Design Thinking: Wicked Problems
Designing Thinking in Organizations
Describe Design Thinking
“Design thinking” extends from this concept of user-centered design into a comprehensive innovation process that considers the full range of contextual factors.
Design can be seen as a reflective process, in which the “situation talks back” – that is, responds to the designer’s efforts and thereby provides feedback for the next iteration