Introduction To Strategic Management Book
Introduction To Strategic Management Book
Introduction To Strategic Management Book
M.Com.
PART - I
STRATEGIC MANAGEMENT - I
: Dr. B. B. Kamble
Chinoy College of Commerce and Economics,
Andheri (E), Mumbai - 400069
M.Com
Part - I
Strategic Management - I
Course Objectives
1. To introduce the subject of Strategic Management to the
students and make them understand its process, and levels.
To help students identify and link Strategy formulation and
implementation with environmental analysis.
2. To provide information pertaining to business, corporate and
global reforms taking place globally and familiarizing the
students to new formats of the market.
3. To acquaint the students with knowledge of disaster
management to handle critical situations through practical
application of strategies of control and prevention.
4. To outline and illustrate how the market for corporate strategy
and control is related to corporate governance and help
students relate their knowledge of India context to emerging
trends of the global world.
5. To develop learning and analytical skill of the students to solve
business cases and provide Strategic Solutions.
SECTION I
MODULE I
MODULE II
MODULE III
SECTION- II
MODULE IV
MODULE - V
MODULE - VI
References
1. Strategic Management, A Dynamic Perspective - Concepts
and Cases - Mason A. Carpenter, Wm. Gerard Sanders,
Prashant Salwan, Published by Dorling Kindersley (India) Pvt
Ltd, Licensees of Pearson Education in South Asia.
2. Strategic Management and Competitive Advantage - Concepts
- Jay B. Barney, William S. Hesterly, Published by PHI
Learning Private Limited, New Delhi.
3. Globalization, Liberalization and Strategic Management - V. P.
Michael.
4. Business Policy and Strategic Management - Sukul Lomash
and P. K. Mishra, Vikas Publishing House Pvt. Ltd., New Delhi.
5. Strategic Management - Fred R. David, Published by Prentice
Hall International.
6. Business Policy and Strategic Management - Dr. Azhar Kazmi,
Published by Tata McGraw Hill Publications.
7. Strategic Management - Bern Banerjee.
8. Business Policy and Strategic Management - Jauch Lawrence
R & William Glueck Published by Tata McGraw Hill.
9. Strategic Management - Thomas L. Wheelers & J David
Hunger Addison, Wesley publishers.
10. Strategic Management - A Multi Perspective Approach, Edited
by Mark Jenkins & Veroruque Ambrosini Palgrave.
11. Strategic Management : Competitiveness & Globalisation -
Michael Hilt and R. Duane Ireland, Robert E. Hoskisson South,
Published by Western Thomson Learning.
12. Strategic Management - John A. Pearce II & Richard B.
Robinson Jr. A.I.T.B.S., Delhi.
13. Business Policy and Strategy - Concepts & Readings - Daniel
McCarthy, Robert Minichiello, Joseph Curran, Published by All
India Traveller Bookseller.
14. Public Enterprise Management and Privatisation - Laxmi
Narain Published by S. Chand & Company Ltd, New Delhi.
15. Business Organisation - Rajendra P. Maheshwari, J. P.
Mahajan, Published by International Book House Pvt Ltd.
16. Disaster Management Strategies - A Global Perspective -
Deolankar Vivek, Published by Commonwealth Publishers,
New Delhi.
17. Disasters and Development - Cuny Fred C. Published by
Oxford University Press, Oxford.
V
1
INTRODUCTION TO STRATEGIC
MANAGEMENT
Unit Structure:
1.0. Objective
1.1 Introduction
1.2 Meaning and definition of strategy.
1.3 Nature of business strategy
1.4 Strategic management process.
1.5 Benefits of strategic management.
1.6 Summery
1.7 Questions
1.0. OBJECTIVES
1.1. INTRODUCTION
was popular but after 1980s its place has taken by strategic
management to face stiff competition arisen by globalization.
Definitions:-
Strategy is the determination of the basic long term goals
and objectives of an enterprise and the adoption of the course of
action and the allocation of resources necessary for carrying out
these goals.
Alfrred D. Chandler.
1. Objective Oriented:
The business strategies are objectives oriented and are
directed towards organizational goal. To formulate strategies the
business should know the objectives that are to be pursued. For
4
2. Future Oriented:
Strategy is future oriented plan and formulated to attain
future position of the organization. Therefore strategy enables
management to study the present position of organization and
decides to attain the future position of the organization. This is
possible because strategy answer question relating to the following
aspects.
a) Prosperity of the business in future.
b) The profitability of the business in future.
c) The scope to develop and grow in future in different business.
4. Influence of Environment:
The environmental factors affect the formulation and
implementation of strategy. The business unit by analyzing internal
and external environment can find out its strength and weaknesses
as well as opportunities and threats and can formulate its strategy
properly.
5. Universally Applicable:
Strategies are universally applicable and accepted
irrespective of business nature and size. Every business unit
designs strategy for its survival and growth. The presence of
strategy keeps business moving in right direction.
6. Levels of strategy:
There are companies that are working in different business
lines with regards to products /services, markets or technologies
and are managed by same top management. In this case such
companies need to frame different strategies. The strategies are
executed at three different levels such as
5
a) Corporate level
b) Business level
c) Functional/operational level
7. Revision of strategy:
Strategies are to be reviewed periodically as in the process of
its implementation certain changes are going to take place. For
example while implementing growth strategy there could be
shortage of resources because of limited sources or recession
during the period so retrenchment strategy should be considered.
8. Classification of strategy:
Strategies are classified into four major categories known
as
a) Stable growth strategy
b) Growth strategy
c) Retrenchment strategy
d) Combination strategy.
C) Implementation of strategies.
D) Strategic evaluation.
B. Formulation of strategy:
3. Setting of objectives:
After SWOT analysis, the management is able to set
objectives in key result areas such as marketing, finance,
production, and human resources etc. While setting objectivities in
these areas the objectives must be realistic, specific, time bound,
measurable, and easy attainable.
4. Performance comparison :
By undertaking gap analysis management must compare
and analyze its present performance level with the desired future
performance. This enables the management to find out exact gap
between present and future performance of the organization. If
there is adequate gap then, the management must think of strategic
measures to bridge the gap.
5. Alternative strategies :
After making SWOT analysis and gap analysis management
needs to prepare (frame) alternative strategies to accomplish the
organizational objectives.
It is necessary as some strategies are to be hold and others to be
implemented.
6. Evaluation of strategies :
The management must evaluate the benefits and costs of
each every alternative strategy in term of sales, market share,
profit, goodwill and the cost incurred on the part of the strategy in
terms of production, administration, and distribution costs.
7. Choice of strategy :
It is not possible to any organization to implement all
strategies therefore management must be selective. It has to select
the best strategy depending on the situation and it has to consider
in terms of its costs and benefits etc.
C. Strategy Implementation :
D. Strategic Evaluation:
1. Stability strategy:-
2. Growth Strategy:-
the business unit can move from its local level function to national
or international level.
3. Intensification Strategy:
4. Diversification Strategy:
TYPES OF DIVERSIFICATION:
5. Turnaround Strategy:
6. Divestment Strategy:
7. Liquidation Strategy:
8. Modernization strategy:
9. Merger Strategy:
1.6.1 MEANING
Corporate level strategies lay down the frame work in
which business strategies operate. For example, corporate level
decides to stabilize, expand or retrench whereas an individual
business needs their own strategies in order to contribute to the
achievements.
A. PRODUCTION STRATEGIES.
B. MARKETING STRATEGIES.
Marketing refers to thorough understanding of customer that
how he desire the product (from the view point of his perceptions to
the products.) It is important aspects of any organization as its
success is mostly attributed to the performance of the marketing.
Therefore every business needs to frame suitable marketing
strategies in respects of the following.
C. FINANCIAL STRATEGY.
Under the company law both methods are accepted but for
income tax purpose, in certain cases written down method is
accepted and in some cases straight line method is accepted.
1.10 SUMMARY
1.11 QUESTIONS:
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Unit Structure :
2.0 Objectives
2.1 Introduction
2.2 Meaning and Definition of business Environment
2.3 Environmental scanning
2.4 Summery
2.5 Questions
2.0 OBJECTIVES
2.1 INTRODUCTION
It is said that the business can not live exist, survive in its
isolation. It need support from different aspects of its surrounding.
That surrounding factors around the business is known as
environment. It may be living or non - living but its support, positive
response is essential for business smooth functioning. Therefore
we can summarize environment as all those factors or forces,
residing besides the business and affecting its functions or various
decisions of the business.
30
Definition :
2.2.2 FEATURES
With the help of above noted definitions and the meaning, we can
points out some of its features.
1. Internal Environment:
iii) Plans & Policies : Plans & policies are nothing but deciding in
advance, of a particular activity i.e. what is to be done, how it is to
be done, when it is to be done etc. and according executing them to
attain the success. Here business unit need to frame there plans &
policies with the consultation of business objectives and available
resources. Here internal environment analysis will help to the firm
to know the appropriateness of plans & policies.
vi) Financial resources: Finance is the back bone of each & every
business. So every business needs to have proper financial
management, which includes the consideration of financial sources.
Financial policies, financial positions, capital structure,
management of working & fixed capital, build up adequate reserves
for future etc.
2. External Environment :
i) Micro Environment :
2) Macro - Environment :
i) Forecasting
ii) Scenarios
iii) Spying
2.4 SUMMARY
2.5 QUESTIONS:
40
GLOBAL STRATEGIES:
PRACTICES AND ISSUES
Unit Structure
3.0 Objectives
3.1 Introduction to Corporate Restructuring
3.2 Forms of Corporate Restructuring
3.3 Corporate Portfolio Analysis
3.4 Strategic Change
3.5 Corporate Renewal
3.6 Organizational Failures - Causes
3.7 Culture of Organization
3.8 Management of Strategies and Cultures
3.9 Strategies for Foreign Direct Investment
3.10 Strategies for International Trade in India
3.11 Summary
3.12 Questions
3.0 OBJECTIVES
Merger can bring out a revival of sick units. The sick units
can merged with strong companies, and therefore, the problem of
industrial sickness can be avoided in case of certain units.
2. Amalgamation:
3. Take over:
It is generally involves in the acquisition of a block of equity
capital of a company which enables the acquirer to take control of
45
the affairs of the taken over firm. In the theory, the acquirer must
buy more than 50% of the paid up capital of the acquired company
to take over the control of the affairs of the acquired firm, but in
practice in most of the cases, even between 20% to 40% is
sufficient enough to exercise control, as the remaining shareholders
are scattered and unorganized, and therefore, are not likely to
challenge the control of the acquirer.
Quick growth
Diversification
Establishing oneself as industrialist
Reducing competition
Increasing the market share or even creating goodwill.
B. PORTFOLIO RESTRUCTURING:
Reasons of Divestiture:
Raising capital
Reduction of losses
Concentration on core business
Improvement in Efficiency
Reasons of Demerger:
Sharper focus
Improved initiatives and accountability
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C. FINANCIAL RESTRUCTURING:
D. ORGANIZATIONAL RESTRUCTURING:
E. REHABILITATION SCHEMES:
3. Strict control over costs: A sick unit should have a strict control
over costs, especially over its discretionary expenses.
1. The stars are market leaders and are usually able to generate
enough cash to maintain their high market share. When their
market growth rate slows, stars become cash cows. The main
features of stars are:
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2. The question marks are also called as wild cats. They are new
products with the potential for success, but they need a lot of cash
for development. The main features of question marks are:
High industry growth
Low market share
4. The dogs have low market share and do not have the potential
to bring in much cash. According to BCG matrix, dogs should be
either sold off or managed carefully for the small amount of cash
they can generate. At times, the dogs may be withdrawn from the
market so that the company concentrates its efforts on question
marks or stars. The main features of dogs are:
Low industry growth
Low market share
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Unattractive
Average
Average
Weak
Average
Strong
In the Weakness (W) block, list the firms weakness that the
company has now or in the near future.
Market share
Investment intensity
Corporate diversity
Product or Service quality
Product promotion
Product pricing
Product design etc
I. Individual factors
ii) Status quo: Most individuals are satisfied with their present
routine of work environment. They feel that changes could disturb
their present pattern of work and life.
the values and beliefs of the founder and the mission of the firm. It
gives a sense of identity to the organizations members This is
who we are. This is what we do. This we stand for.
10. The informal work rules that employees follow without question.
Replacing key managers who are deeply associated with the old
and problematic culture.
10. Global Strategy: In this case, the firm adopts standard strategy
across all global markets. The same competitive approach is
used in all countries / markets where the firm has its presence.
For instance, a firm may adopt premium pricing strategy world
wide as in the case of Mercedes Benz or a company may adopt
low-cost strategy worldwide and accordingly charge low price in
all the global market.
3.12 SUMMARY
3.13 QUESTIONS:
77
Unit Structure
4.0 Objectives
4.1 Introduction
4.2 Outsourcing
4.3 Management Information System
4.4 Re - Engineering Business Process
4.5 Virtual Company Strategies
4.6 Knowledge Creating Company
4.7 Emerging Strategies in Tele Communication Sector:
4.8 Summery
4.7 Questions
4.0 OBJECTIVES
4.1 INTRODUCTION
3) Tower Investment :
5) Specialized Services :
4.3.1 Meaning:
1) Systematic Process :
2) Scope :
3) Components :
5) Report Generation :
MIS used not only to store data but also to generate reports.
When prompted by the user, the system complies the report
required, inserting the data into the template and then printing the
report for decision making.
7) Professional Approach :
8) Continuous in Nature :
2) Resource Crunch :
5) MIS Flexibility :
6) Information Overload :
8) Time factor :
That of time is required for creating and updating MIS, this
may create delays in decision making as timely data may not be
presented to decision makers.
4.3.4 Advantages of Information Technology :
Information Technology (IT) benefits the business world by
allowing organisations to work more efficiently and to maximize
productivity. Since computerized systems are widely used it is
advantages to incorporate information technology into you
organization.
The following are the advantages :
2) Automated Process :
3) Remote Access :
4) Communication :
5) Cost Effectiveness :
6) 24 7 Business Hours :
7) Competitive Advantage :
4.4.1 DEFINITION
4) Adequate IT Infrastructure :
4.5.1 DFINITION
1) VO separate Entity :
2) Inter dependence :
5) Temporary in Nature :
6) Excellence :
4.6.1 MEANING
2) Knowledge Business :
3) Human Knowledge :
4) Tacit Knowledge :
1) Broadband Strategy :
3) Increase in FDI :
5) Technology Strategy :
The govt. of India has initiated the move towards one nation
free roaming strategy. The National Telecom Policy 2012 states
one of the objectives - To achieve one - full Mobile number
portability and work towards one Nation Free Roaming. This
measure would benefit the mobile customers and consequently
expand the telecom sector.
4.8 SUMMARY
4.9 QUESTIONS:
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5
DISASTER MANAGEMENT: THE
DEVELOPMENT PERSPECTIVE,
CONCERNS AND STRATEGIES.
Unit Structure
5.0 Objectives
5.1 Introduction
5.2 Disaster Management-Meaning and Features
5.3 Disaster Management Strategies in Global Context
5.4 Strategic Ways of Managing Disasters at the National, State,
District Levels in India.
5.5 Challenges of Disaster Management and Governance in India.
5.6 Economic Losses due to disasters-Issues and Strategies
5.7 Strategies for preventing disasters and Preparedness
Measures
5.8 Strategies to cope with Disasters
5.9 Summary
5.10 Questions
5.0 OBJECTIVES
.
93
5.1 INTRODUCTION
5.2.1 MEANING
2. Man-made Disasters:
5.2.3 FEATURES
1) It needs to be professionalized.
This has laid the basis for the shifting of focus from rescue and
relief to preparedness and mitigation.
5.9 SUMMARY
5.10 QUESTIONS
4. What are the economic losses due to disaster? How can they
be avoided?
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6
STRATEGIC ALLIANCES, CORPORATE
STRATEGY AND CORPORATE
GOVERNANCE
Unit Structure :
6.0 Objectives
6.1 Introduction
6.2 Meaning of Strategic Alliances, Types and Structures
6.3 Problems in Indian Strategic Alliances
6.4 Meaning of Corporate Strategy, Corporate Level Strategies-
Mergers and Acquisitions, Takeovers, Joint Ventures,
Diversification, Turnaround, Liquidation
6.5 Relationship Between International Strategy and Corporate
strategies
6.6 Corporate Governance Principles and Practices in India
6.7 Corporate Governance Practices around the World
6.8 Summary
6.9 Questions
6.0 OBJECTIVES
6.1 INTRODUCTION
The term alliance can be derived from the word ally or the
old French word aligre which mean to associate with or to bind or to
co-operate with another with some common cause or interest. An
alliance therefore is an association that involves co-operation and
collaboration and merging of complementary interests to achieve
individual and mutual goals and objectives.
2) Amalgamations
3) Joint Ventures
2) Amalgamation -
3) Joint Ventures -
c) Retrenchment Strategies -
2) Divestment Strategy -
3) Liquidation Strategy :
D) Combination Strategies :
e. Accountability
f. Trusteeship:
g. Empowerment
h. Ethics
i. Oversight
b. Securities Law :
e. Statutory Audit
norms and practices. They must be the leaders in the industry not
only in the technology, organizational practices, product features, R
& D, marketing organization and performance, but they must also
lead in ethics and social responsibility in their home countrles & all
other countries.
6.8 SUMMARY
6.9 QUESTIONS
125
7
EMERGING TRENDS IN GLOBAL
BUSINESS ENVIRONMENT
Unit Structure.
7.0 Objectives
7.1 Introduction
7.2 Strategies for Growing Green Economies.
7.3 Meaning of Corporate Social Responsibility Strategies for
Governing Public Private Participation of Business Sector in
India.
7.4 Strategies for governing PPP of Business Sector in India.
7.5 Strategies for Environmental Accounting & Auditing.
7.6 Summary
7.7 Questions
7.0 OBJECTIVES
7.1 INTRODUCTION
7.3.1 Meaning
1) Why the government joins the hands with the private sector?
The user fee PPP contract is for a fixed period, say 25-30
years, after which responsibility for operation goes back to the
public authority. The private party recovers its investment,
operating and financing costs and its profit by charging
members of the public a user fee (e.g. a road toll). Thus a key
130
Availability based PPP also require that the long term payment
obligations of the government are acceptable to insures especially
since such payments may rely on multi annual budget approvals.
However, user fee PPPs also presents their own challenges with
regard to demand risk and user affordability.
7.4.1 MEANING
quality of the products, paying taxes, rules regarding labour and fair
work environment. In voluntary responsibilities, a company can take
both internal and external roles. In internal role, it can work towards
betterment of its staff, giving them more rights and better facilities,
making the superior quality product and making it available at
reasonable price giving benefit to its state holders, being ethical in
all its dealings etc. In external role, it can contribute to any social
cause, like in the field of education, health, sanitation etc.
to make profits but also in the interest of the society such as for
employment generation, better customer service etc. Also
health issues of the society must be considered in setting up of
industries.
7.7 SUMMARY
In PPP, two sectors of the economy the i.e. Public and the
Private Sector work together for completion of certain project
involving huge investment. Different forms of PPPs may exist
involving various combinations of public and private sector finance
138
and exposures to project risk. The role of the private party varies
based on the type of sector and the nature of the market.
7.8 QUESTIONS
Question Paper Pattern for STRATEGIC MANAGEMENT
M.Com Parts I (Revised) for IDOL-Annual Pattern
Note: Question No. 1 will be from Module No. 1 and Question No. 2 to 5 will
be from remaining modules.
M.Com. (Part- I)
Strategic Management (Rev)
{April 2016}