Unit 1: Introduction to strategic management

Strategy is the determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and allocation of resources necessary to carry out these goals (Alfred Chandler). Strategic management is the set of managerial decisions and actions that determine the long-run performance of an organisation (Wheelen and Hunger).

Nature

• Long-term and future-oriented.
• Holistic: concerns the whole organisation, not one function.
• Environment-linked: responds to opportunities and threats.
• Involves top management and major resource commitments.
• Continuous and dynamic — revised as conditions change.
• Seeks competitive advantage.

• Mintzberg's 5 Ps of strategy: plan, ploy, pattern, position, perspective.
• Deliberate vs emergent strategy: intended strategies that are realised vs strategies that emerge from patterns of action.

• Gives a clear direction and sense of purpose.
• Helps anticipate and respond to environmental change.
• Improves resource allocation to priorities.
• Builds competitive advantage and long-term profitability.
• Improves coordination across departments.
• Encourages proactive rather than reactive management.
• Motivates employees through shared goals.

• The process is a feedback loop — evaluation results feed back into intent and formulation.

Strategic intent (Hamel and Prahalad) is an ambitious, long-term aspiration that stretches the organisation beyond its present resources ("Encircle Caterpillar" — Komatsu).

Vision

A vision is a mental image of the possible and desirable future state of the organisation.

• Clear, inspiring, future-oriented, brief, easy to remember.
• Example: "To be the world's most customer-centric company" (Amazon).

Mission

A mission states the organisation's purpose — why it exists, what it does, for whom and how.

• Components (David): customers, products/services, markets, technology, concern for survival and growth, philosophy, self-concept, public image, concern for employees.
• Example: Infosys — "To achieve our objectives in an environment of fairness, honesty and courtesy towards our clients, employees, vendors and society at large."

Business definition (Abell's three dimensions)

Business model

A business model describes how an organisation creates, delivers and captures value — who the customers are, what value is offered, how revenue is earned and what the cost structure is.

• Business Model Canvas (Osterwalder): customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, cost structure.
• Examples: subscription (Netflix), freemium (Spotify), marketplace (Amazon, Zomato), razor-and-blade (printers and ink), franchise (McDonald's).

• Goals: broad, open-ended statements of desired results ("increase market share").
• Objectives: specific, measurable, time-bound targets ("increase market share from 12% to 15% by March 2027").

Characteristics of good objectives (SMART)

• Specific, Measurable, Achievable, Relevant, Time-bound.
• Also: understandable, challenging, consistent with each other, set within constraints.

Areas for objectives (Drucker)

Market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, public responsibility.