Description
Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resources and performance in internal and external environments.
1
?
? ?
SM is development of sustainable competitive position in which the firm?s competitive advantage provides continued success. A strategy is a set of goals & specific action-plan that , if achieved, provides desired competitive advantage. Ellen Earl Chaffe (1985) summarized main elements of SM 1) SM involves adopting organization to its business environment ( emphasis on competitive environment). 2) SM is fluid & complex. 3) SM involves both strategy formation & strategy implementation. 4) SM affects entire organization by providing direction. 5) SM is partially planned & partially unplanned. 6) SM is done both at individual level & corporate level. 7) SM involves both conceptual & analytical process.
SM-intr0duction © Baba 2
?
?
?
Strategy may be defined as integrated ser of action aimed at securing sustainable competitive advantage , competitive advantage may in the sense superior product quality, lower costs, more efficient distribution, more profits, larger market share etc. Identification of optimal core strategic actions require reasoning & diagnosis, it is not attained through application of fixed set of procedures, & is situational. In short thinking & creativity is required. Managers must think competitively, & doing so requires strategy.
SM-intr0duction © Baba 3
?
SM as a discipline originated in 50s & 60s.The most influential pioneers were ? Alfred Chandller :- he recognized the importance of coordinating various aspects of management under one overall encompassing strategy. ? Philips Seznick (1957) implemented the idea of matching the organization's internal factors with external environment circumstances…-this core idea was developed into SWOT(Strengths, Weaknesses, Opportunities, Threats) by Learned, Andrews & others. ? Igot Ansoff talked about horizontal & vertical integration & diversification strategies, he developed Gap Analysis. ? Peter Drucker- stressed the importance of MBOManagement by Objectives. ? Gary Harmel & C.K. Pralhad explained the idea of „Core
SM-intr0duction © Baba
4
• Michael Porter- creation of sustainable competitive
advantage by differentiation and cost leadership. According to him survival & growth of firm depends on its ability to
enhance the difference between the value it offers to its customers and its cost of creating value. A firm is
likely to create sustainable competitive advantage by creating a cost advantage for itself by following differentiation strategy He has described following generic strategies for achieving above average performance- cost
• In differentiation strategy a firm seeks to be unique in the industry along with some differentiation that are widely valued by customers. Differentiation can be based on the product itself, the delivery system ,marketing approach, & broad range of other factors. It is rewarded for its unfitness with a premium price. A firm can achieve above average performance only if price premium is greater than the cost of differentiation. Moreover differentiation must achieve cost parity or proximity relative to its competitors in the areas that do not affect cost differentiation.
SM-intr0duction © Baba 5
leadership, differentiation and focus.
• In focus strategy –cost focus exploits difference in cost behavior in some segments while differentiation focus exploits the special needs of buyers in certain segments. • Robin Cooper- “when firms cannot create sustainable competitive advantage , they are forced to adopt confrontation strategy, in which they confront competition by creating stream of temporary competitive advantages.” Three product related characteristics – “The Survival Triplets”namely cost-price , quality & functionality play critical role in determining how firms compete.
SM-intr0duction © Baba 6
doc_903519850.pptx
Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resources and performance in internal and external environments.
1
?
? ?
SM is development of sustainable competitive position in which the firm?s competitive advantage provides continued success. A strategy is a set of goals & specific action-plan that , if achieved, provides desired competitive advantage. Ellen Earl Chaffe (1985) summarized main elements of SM 1) SM involves adopting organization to its business environment ( emphasis on competitive environment). 2) SM is fluid & complex. 3) SM involves both strategy formation & strategy implementation. 4) SM affects entire organization by providing direction. 5) SM is partially planned & partially unplanned. 6) SM is done both at individual level & corporate level. 7) SM involves both conceptual & analytical process.
SM-intr0duction © Baba 2
?
?
?
Strategy may be defined as integrated ser of action aimed at securing sustainable competitive advantage , competitive advantage may in the sense superior product quality, lower costs, more efficient distribution, more profits, larger market share etc. Identification of optimal core strategic actions require reasoning & diagnosis, it is not attained through application of fixed set of procedures, & is situational. In short thinking & creativity is required. Managers must think competitively, & doing so requires strategy.
SM-intr0duction © Baba 3
?
SM as a discipline originated in 50s & 60s.The most influential pioneers were ? Alfred Chandller :- he recognized the importance of coordinating various aspects of management under one overall encompassing strategy. ? Philips Seznick (1957) implemented the idea of matching the organization's internal factors with external environment circumstances…-this core idea was developed into SWOT(Strengths, Weaknesses, Opportunities, Threats) by Learned, Andrews & others. ? Igot Ansoff talked about horizontal & vertical integration & diversification strategies, he developed Gap Analysis. ? Peter Drucker- stressed the importance of MBOManagement by Objectives. ? Gary Harmel & C.K. Pralhad explained the idea of „Core
SM-intr0duction © Baba
4
• Michael Porter- creation of sustainable competitive
advantage by differentiation and cost leadership. According to him survival & growth of firm depends on its ability to
enhance the difference between the value it offers to its customers and its cost of creating value. A firm is
likely to create sustainable competitive advantage by creating a cost advantage for itself by following differentiation strategy He has described following generic strategies for achieving above average performance- cost
• In differentiation strategy a firm seeks to be unique in the industry along with some differentiation that are widely valued by customers. Differentiation can be based on the product itself, the delivery system ,marketing approach, & broad range of other factors. It is rewarded for its unfitness with a premium price. A firm can achieve above average performance only if price premium is greater than the cost of differentiation. Moreover differentiation must achieve cost parity or proximity relative to its competitors in the areas that do not affect cost differentiation.
SM-intr0duction © Baba 5
leadership, differentiation and focus.
• In focus strategy –cost focus exploits difference in cost behavior in some segments while differentiation focus exploits the special needs of buyers in certain segments. • Robin Cooper- “when firms cannot create sustainable competitive advantage , they are forced to adopt confrontation strategy, in which they confront competition by creating stream of temporary competitive advantages.” Three product related characteristics – “The Survival Triplets”namely cost-price , quality & functionality play critical role in determining how firms compete.
SM-intr0duction © Baba 6
doc_903519850.pptx