BLOG # 8: STRATEGIC MANAGEMENT | CAP CLASSES

PART 1 : INTRODUCTION TO STRATEGY

Do you know what the desi synonym for this English word strategy is? Yes. It is Vyuha; which means - 'to arrange troops in a battle array (formation) in war. [crafting a plan to utilize resources in an optimal level]

Chakra vyuha (disc formation) which is also known as Padmavyuha (circular formation) a large formation was devised by the Kauravas in which Abhimanyu, son of Arjuna, was trapped and killed. [the formation is utilized to achieve the goal]

The Padmavyuha is a multi-tiered defensive formation that looks like a blooming lotus (padma) or disc (chakra) when viewed from above. The warriors at each interleaving position would be in an increasingly tough position to fight against. The formation was crafted in the Kurukshetra war by Dronacharya, the commander-in-chief of the Kaurava army. [optimum utilization of resources to achieve the goal)

PART 2 : DEFINITIONS OF STRATEGY

1) According to Michael Porter, strategy is "a broad formula for how a business is going to compete, what its goals should be, and what policies will be needed to carry out those goals" and the "...combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there." “The essence of formulating competitive strategy according to Michael Porter, is relating a company to its environment”.

2) According to Alfred Chandler "Strategy is the determination of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals."

3) Henry Mintzberg described five definitions of strategy in 1998:

i) Strategy as plan – a directed course of action to achieve an intended set of goals; similar to the strategic planning concept;

ii) Strategy as pattern – a consistent pattern of past behavior, with a strategy realized over time rather than planned or intended. Where the realized pattern was different from the intent, he referred to the strategy as emergent;

iii) Strategy as position – locating brands, products, or companies within the market, based on the conceptual framework of consumers or other stakeholders; a strategy determined primarily by factors outside the firm;

iv) Strategy as ploy – a specific maneuver intended to outwit a competitor; and

v) Strategy as perspective – executing strategy based on a "theory of the business" or natural extension of the mindset or ideological perspective of the organization.

4) Henrik von Scheel defines the essence of strategy, “as the activities to deliver a unique mix of value and choosing to perform activities differently or to perform different activities than rivals”.

5) According to Max McKeown "strategy is about shaping the future" and is the human attempt to get to "desirable ends with available means".

6) Dr. Vladimir Kvint defines strategy as "a system of finding, formulating, and developing a doctrine that will ensure long-term success if followed faithfully."

Looking at all the above definitions, the summary is, Strategy is a long range blue print of an organisation for its desired image in future. It is developed to utilise the resources optimally to achieve the organisational goals. It gains more importance when the ends are heavy and the means are scarce. The skill of managers lies in utilising limited resources to achieve the objectives of winning over competition, create a brand, increase and preserve the market share, create value to customers, cope up with the environmental changes and last longest possible with profitability and growth.

Do you know?It is surprising to know that till 1960s; in management literature the words “strategy” and “competition” rarely appeared. You open any management book today and search for these words, am sure you will get these words thousands of time.

PART 3 : STRATEGY - MEANING

1. The word Strategy is derived from the Greek word strategia, which means “the art of troop leader” in the context of a war. In today’s business landscape, the competition is so fierce that it is not less than any war to compete to win over the competitors.
2. It was meant to a high level plan to achieve one or more goals under conditions of uncertainty.
3. Strategy gains more importance when the resources available to achieve these goals are limited.
4. Strategy generally involves

1. a. setting goals,
2. b. determining actions to achieve the goals, and
3. c. mobilizing resources to execute the actions.

5. Strategy typically involves two major processes. They are
a. Strategy formulation
Formulation involves

1. analyzing the environment or situation,
2. Understanding the environmental influences,
3. Forecasting the changes that are going to come,
4. Defining strategic responses to the environmental changes and
5. Developing guiding policies.

It includes such activities as strategic planning and strategic thinking.b. Strategy implementation
b. Implementation refers to the action plans taken to achieve the goals established by the guiding policy.

PART 4 : STRATEGIC MANAGEMENT:

1) In a highly competitive marketplace, companies can operate successfully by

1. Creating and delivering superior value to target customers and
2. Learning how to adapt to a continuously changing business environment.

2) To meet changing conditions in their industries, companies need to be farsighted and visionary, and must develop long-term strategies.

3) Strategic planning is an important component of strategic management which involves developing a strategy to meet competition and ensure long-term survival and growth.

4) The overall objectives of strategic management are twofold:

1. To create competitive advantage, so that the company can outperform the competitors in order to have dominance over the market.
2. To guide the company successfully through all changes in the environment.5) The tasks of crafting, implementing and executing company strategies are the heart and soul of managing a business enterprise.

PART 5 : THE PROCESS OF STRATEGIC MANAGEMENT

The term strategic management refers to the managerial process of

1. forming a strategic vision,
2. setting objectives,
3. crafting a strategy,
4. implementing and executing the strategy, and
5. Evaluating performance and initiating whatever corrective adjustments in the vision, objectives, strategy, and execution are deemed appropriate.

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