1. SHREE GANESHA WELCOMES YOU TO EXPLORE AND UNDERSTAND HOW TO
CRAFT AND EXECUTE STRATEGY
STRATEGIC MANAGEMENT

2. 1
CHAPTERS
1. Business Environment
2. Business Policy & Strategic Management
3. Strategic Analysis
4. Strategic Planning
6. Strategy implementation & control
7. Reaching Strategic Edge
5. Formulation of Functional Strategy

3. 2
14. Porter’s Five Forces Model – Competitive Analysis
CONTENTS
CHAPTER 1 : BUSINESS ENVIRONMENT
1. Introduction
2. Business
3. Objectives of a Business (Eco & Soc.)
4. Environmental Influences on Business
5. Why Environmental Analysis?
6. Characteristics of Business Environment
8. Relationship between Organization and its Environment
9. The Micro and Micro Environment
10. Elements of Macro Environment
11. Elements of Macro Environment
12. Strategic Responses to the Environment (3 types)
13. Competitive Environment (Porter)

4. 3
10. Strategic Levels in Organizations (3 levels)
CHAPTER 2
BUSINESS POLICY AND STRATEGIC MANAGEMENT
1. Introduction
2. Business Policy as a Discipline (1911-Harward)
3. What is a Strategy ?
4. Generic strategic alternatives (4 types)
5. The Dynamics of Competitive Strategy (5 factors)
6. Strategic Management
7. Strategic Decision Making
8. The Task of Strategic Management
9. Vision, Mission and Objectives

5. 4
1. Introduction
2. Strategic Analyses
3. Situational Analysis
4. The Methods of Industry and Competitive Analysis
5. SWOT Analysis
6. Tows Matrix
7. Portfolio Analysis (BCG,Ansoff’s,GEC,portfolio)
1. Introduction
2. Corporate Strategy
3. The Stages of Corporate Strategy Formulation
Implementation
4. Strategic Alternatives (Cost leadership, generic)
CHAPTER 3
STRATEGIC ANALYSIS
CHAPTER 4
STRATEGIC PLANNING

6. 5
1. Introduction (facilitate flow of SM to all depts)
2. Marketing Strategy Formulation
3. Financial Strategy Formulation
4. Production Strategy Formulation
5. Logistics Strategy
6. Research and Development
7. Human Resource Strategy Formulation
CHAPTER 5
FORMULATION OF FUNCTIONAL STRATECY

7. 6
1. Introduction
2. Interrelationships between Strategy Formulation
and implementation
3. Issues in Strategy Implementation
4. Organization and Strategy Implementation
5. Strategic Business Units & Core Competence
6. Leadership and Strategic Implementation
7. Building a Strategy-Supportive Corporate Culture
CHAPTER 6
STRATEGY IMPLEMENTATION AND CONTROL

8. 7
1. Introduction
2. Business Process Reengineering
3. Benchmarking
4. Total Quality Management (TQM)
5. Six Sigma and Management
6. Contemporary Strategic Issues
CHAPTER 7
REACHING STRATEGIC EDGE

9. 8
BUSINESS
ENVIRONMENT
Chapter 1

10. 9
2. L. H. Haney
“Business is a human activity directed towards producing or
acquiring wealth through buying and selling activities.”
Entity View
Company /
corporation
Work View
(occ/profession) Process
(Buy/sell/produce)
MEANING OF BUSINESS
DEFINITION OF BUSINESS
1. B. O. Wheeler
“Business is an institution organised & operated to provide goods &
services to society under the incentive of private gain.”

11. 10
Objectives of Business
1. Survival
2. Stability
3. Growth
4. Efficiency / Productivity
5. Profitability
6. Others Objective

12. 11
Smooth workflow
2. Stability Least resistance in hostile environment
Conservative & cautious objective
Dynamic response
Objectives of Business
Basic objective
1. Survival Will & anxiety to remain in Business
Depends upon nature of business /
competence / Financial strength / Eco.
conditions

13. 12
4. Efficiency Productivity - Input - output ratios
Utilise resources efficiently
3. Growth Qualitative- Image / product innovation
/ Brand image / ISO 9000 / HR / Foreign Entry
Quantitative – Net worth (Total cap. + Res. + )
value / volume / assets / sales/ output / no. of
people / capacity / power - R/W mat.
Operational objective

14. 13
6. Others Employee welfare
Compliance of laws
Societal welfare
Stakeholders satisfaction
Survival
5. Profitability Main objective
Creation of wealth for shareholders
Self – reliance
Competitive strength
Qly. Product to customer

15. Business does not function in an isolated vacuum
What are the interactions / exchanges between
organizations & environment ?
OR
Exchange of information Exchange of resources Exchange of influence
& power
Inflow Outflow Men materials
machines etc.
Other Inputs Inflow Outflow
14

16. Business does not function in an isolated vacuum
What are the interactions / exchanges between organizations
& environment ?
OR
Exchange of information Exchange of resources Exchange of influence
& power
Inflow Outflow
Market condition
Technological
Demographical
Govt. policies
Activities of other co’s
Advertisements
Annual Reports
Press releases
Stock exchanges
Trade unions
Govt. agencies
Employees
15

17. 17
Exchange of resources Exchange of influence
& power
Inflow
outflow
Inflow Outflow
Exchange of information
Inflow
Outflow
5M’s
M
M
M
M
M
Goods & services
Values & interests
Govt.
Other
organisations
Suppler
Investor
Customers
If a firm has
command over
resources, it
can dictate terms
Eg. Monopoly
Eg. Qly. Managers
16

18. 17
1. Does not exist in vacuum.
2. Bus. will thrive only if it interacts with environment.
3. Passive to environment will fade away.
4. Givers and takers
5. Opportunities and threats
6. Identity, appraise and respond
7. Monitor the environment for growth/survival and prosperity
Brief Note on Environmental Influence on Business

19. 18
(a) Study current environment
(b) Study change in environment
(c) Inputs for strategic Decision making
(d) Strategic thinking for fresh view points
1. Complex - factors / events / conditions
2. Dynamic - Fast changing
3. Multifaceted - Depends upon the perception of the
observer (opportunity for some while threats for others).
4. Far - reaching impact opportunities / threats
5. Pervasive – irrespective of its size, objective, nature,
products etc.
Characteristic of Business Environment
Why ? Environmental Analysis ?

20. 19
1. Diversity - All factors cannot be studied
2. Uncertainty - Technological changes
3. Complexity - Don’t rely on past
Problems in understanding environment

21. (SWOT Analysis)
What are the various environmental influences on business?
Item Description Example
1. Opportunity Opportunity is a favorable
condition in the Firms
‘environments which enables
it to consolidate and
strengthen its position.
Increase in consumer income, and growing
demand for the products or services that a
company provides.
2. Threat Threat is an Unfavorable
condition in the Firms
environment which creates a
risk for, or causes damage to
the Firm
Emergence of strong new competitors who
are likely to offer stiff competition to the
existing companies
3. Strength Strength is an inherent
capacity which a Firm can use
to gain strategic advantage
over its competitors
Superior R& D skills which can be used
for new product development so that the
company gains competitive advantage
Huge production infrastructure leading to
mass production & economies of scale.
4. Weakness Weakness is an inherent
limitation or constraint which
creates a strategic
disadvantage.
Over dependence on a single product line or
single Customer or Supplier which is
potentially risky for a Firm in times of
crisis
20

22. SWOT Analysis
21
 Examples
1. Godrej
2. State Bank of India
3. L & T
4. HUL etc.
5. R & D
6. Dependence on a single product
(weakness)
7. Growing demand
8. New strong competitor
(weakness)

23. Q. What are the board categories or components of
environment ?
22
Categories environment
External environmentInternal environment
Micro Macro
(S + W) (O + T)

24. Q. What are the board categories or components of
environment ?
23
 MICRO ENVIRONMENT (Components)
1. Micro Environment is the immediate environment
2. Also called Internal Environment or Task Environment
3. Micro Environment is related to small area or
immediate periphery of an Firm
4. Micro-Environment affects business and
marketing in the day to day operational level
5. Its refers to factors within the origination
1. Organisation
2. Suppliers
3. Customers
4. Competitors
5. Market
6. Intermediaries
Features of Micro Environment

25. 24
MACRO-ENVIRONMENT
1. Demographic environment
2. Economic environment
3. Political legal environment
4. Socio-cultural environment
5. Technological environment
6. Global environment
Element of Macro Environment
A. General Env.
B. External to the firm
C. They provided opportunity or pose threats
D. They are beyond the control and influence of the organisation.
E. They exert powerful influence on the organisation.
Features of Macro Environment

26. Q. Write short notes on Demographic environment.
1. Age
25
2. Income
3. Education
4. Sex Ratio
5. Employment status
6. Living standard
7. Wage Structure
8. Growth rate

27. Economic Environment.
26
Eco System Eco Conditions
Eco Policies
1. General situation in the region and the nation
2. Strength and size of the market
3. Key economic factors to be considered are -
(a) Rates :
(b) GDP Aspects :
(c) Customer related :
(d) External Trade :
(e) General :
4. Level of political morality,
5. Law and Order situation,

28. 6. Public attitude towards business,
7. Specific legal enactments and framework in which the
enterprise has to function,
8. Specific legal enactments and framework in which the
enterprise has to function,
9. Degree of effectiveness with which laws are implemented,
10. Government policies (fiscal, monetary, industrial, labour
and export-import policies),
11. Extent and nature of governmental intervention in the
economy and the industry.
12. Purposefulness and efficiency of Governmental agencies.
27

29. Q. Explain the various aspects of Technological Environment.
1. Technology and Business are highly inter-related.
2. Technology influences the business operations.
3. Factors to be considered in the Technological
Environment are -
4. Opportunities arising out of technological inventions,
5. Risk and uncertainty of technological development,
28
i) The prevalent technique / technology
ii) The future technological needs
iii) The R & D needed

30. 6. Role of R & D in a country and Government’s R & D budget,
7. Technologies used by the Company (Manufacturing and
Information Technologies),
8. Sources of Technology (Internal or External / foreign
collaboration
9. Investment in Technology,
29

31. 31Q.How organisation respond to the environment
(OR)
What are the strategic responses to environment.
3 Types of Responses
Least Resistance
Proceed with
caution
Dynamic Response
Just to survive
stability strategy.
Non Ambitious
approach.
Monitor changer
and Proceed
consciously.
Anticipate changers
and change
strategies
Aggressive
response. Highly
powerful. Convert
threats into
opportunities.
Confident

32. Q. What are the reasons for Globalization ? [or]
What are the advantages of Globalization ?
1. Rapid shrinking of time and distance
2. Global Market
3. Cheaper source of Raw Materials
4. Foreign investment
5. Lower Transportation Costs
6. Global Technology
7. Increasing emphasis
8. The rise of service sector
32

33. Q. What are the effects / manifestations of Globalization?
1. Global locations :
2. Inter-linked and inter-dependent international environment:
3. Lowering of Trade barriers :
4. Infrastructure :
5. Privatization :
6. Entrepreneurship :
7. Mobility of skilled resources :
8. Efficiency and Quality :
9. Regional Blocs :
33

34. 34MAICHAEL PORTER’S FIVE FORCES MODEL FOR COMPETITIVE ANALYSIS
Potential development of substitute products
Potential entry of new competitors
Bargaining power of suppliers Bargaining power of consumersRivalry among
Competing firms
Harvard Business
School
Prof.MAICHAEL
PORTER

35. 35
Rivalry among competing firms
1) Most powerful
2) Everyone has strategy to compete
3) Your Strategy must have competitive advantage
4) Tool is Retaliatory or Counter moves such as : -
a) Lowering Price
b) Add on features
c) Extended warranty
b) Increased Advertising
e) Set up E- commerce
sites
( MTNL)
(Airline - Hotel)
(3 year on Spark, G.Motors)
(“What an Idea sir ji”)
( Make My Trip/Foreign
Tour Amazon watches)
5) Intensity is higher as competitors increase
6) Rivalry increases when consumers can switch over easily
(cell phone – number portability)
7) Paves the way for more Mergers and Acquisitions
8) Else, Profit declines
9) Industry becomes un attractive
(1)

36. 36
Potential entry of new competitors
Intensity of competition increases when
a) Ind. Attractiveness increases
(e.g. 1. cellular phones
2. shopping malls)b) When new entrants appear
What Prevents Competitors ?
[ Barriers to entry]1) Technology
2) Economies of scale
3) Experiences
4) Customer loyalty
5) Brand image
6) Huge capital
7) Distribution channels
8) Raw materials
9) Potential Saturation of Market
(2)

37. 37
Potential development of substitute products(3)
Plastic containers Vs Glass and Aluminum
Paper glasses / cups Vs Glass / plastic/cups
PVC Vs steel
Disposable Vs Conventional Durable
Soft squeeze tubes Vs Metal tubes
1) So, be conscious about your pricing
2) Else, consumer may switch over

38. 38
Bargaining power of suppliers(4)
1) Concentration on suppliers
2) Alternate source of supply
3) Switching over cost is cheap/less.
4) supplier resorting to forward integration
5) Customer is least important to the supplier.
(Indian Oil)
(because of specialization)
(Raymond wollen Mills Ltd.)
(without cartel)

39. 39
Bargaining power of consumers(5)
1) Concentration of Buyers
2) Alternate sources of supply.
3) Switching over cost is cheap/less
4) Threat of backward integration
5) Availability of substitutes
(Opp. Of 4 - 1)
(Opp. Of 4 - 4)
(Opp. Of 4 - 3)
What did you learn from Michal Porter ?
Collective strength of the above 5 forces to determine
Weather current business is attractive or not ?

40. 40
Concept of co-operation
1. Individually
2. Collectively (OPEC)
3. Forms 1. cartel
2. Same family control / Tatas / Birlas
3. Brand Tie - ups Godrej - HUL
Colgate - HUL
ITC Agarbatti - Match Box (Ship)
4. KIERETSUS 1. Co-operative Networks
2. Related Industries
3. Allow competition
4. Interlocking of Capital
5. Common Board of Directors (ITC - Oberoi)
6. Independent Companies
7. Preference for members in business
8. Different from Coglomerates
9. No Agreement to share information
10. But share activities such as purchases, distribution, etc.

41. 41
Political and Legal Environment
1) State of political development
2) Degree of politicalisation of business issues
(1. Valentine Day
2. Coke controversy
3. sons of the soil
4. language issues)
3) Level of Political Morality
( Nano – in west Bengal)
4) Law and order situation
5) Political stability
( Industrial Revolution in England)
6) Political ideology of the Ruling Party
7) Efficiency of government Agencies
8) Government policies – Industrial, Monetary, Export-Import policies

42. 42
PESTLE ANALYSIS
(Acronym for)
P - Political
E - Economic
S - Socio - Cultural
T - Technological
L - Legal
E - Environmental

43. Shared Vision v/s Vision Shared
People in organisation
connect themselves with the
vision of their organisation.
People bring vision of the
organisation close to their
hearts and minds.
Creates commonality.
Brings coherence to diverse
activities.
Compliance is a commitment.
Top Management imposes
vision of the organisation on
the people in the
organisation,
Compliances demanded.
Brings diversity.
Incentives and penalties are
introduced.
Commitment is lacking.
Shared Vision is better than Vision Shared
Lacks coherence.