Unit I – Understanding Strategy and Strategic Management

1. Understanding Strategy and Strategic Management

Strategy

Meaning: Strategy is a long-term plan of action designed to achieve a particular goal or set of objectives.
Simple words me – Strategy ek aisi plan hai jo organization ko competition me jeetne aur apne long-term goals achieve karne me help karti hai.
Example: Reliance ka strategy – Diversification (petroleum se telecom aur retail me enter karna).

Strategic Management

Meaning: Strategic management is the continuous process of planning, monitoring, analyzing, and assessing everything that is necessary for an organization to meet its goals and objectives.
It deals with:
1. Formulation of strategy (plan banana)
2. Implementation of strategy (apply karna)
3. Evaluation & Control (review karna aur improve karna)
Example: Tata Group ka strategic management – “Global Expansion + Affordable products for Indian market”.

2. Strategic Management Process

Steps:

Environmental Scanning – Study internal & external environment.
Strategy Formulation – Decide mission, goals, and best possible strategies.
Strategy Implementation – Apply strategies in real business.
Strategy Evaluation & Control – Monitor & take corrective actions.

(Ye ek continuous cycle hai)

3. Strategic Decision Making

These are decisions which affect long-term future of the company.
Characteristics:
- Future-oriented
- Large investments involve hote hain
- High risk hota hai
- Irreversible decisions hote hain (easy to change nahi hote)

Example: Tesla ka electric cars me invest karna ek strategic decision hai.

4. Levels of Strategy

Corporate Level – Overall purpose of the organization. Example: Tata Group deciding to enter new industries.
Business Level – Strategy for a particular business unit. Example: Tata Motors deciding product positioning in Indian car market.
Functional Level – Departmental level strategy. Example: Marketing department ka “Digital Marketing Campaign”.

5. Defining Strategic Intent

Vision

Future picture of the organization.
Example: Microsoft – “To empower every person and every organization on the planet to achieve more”.

Mission

Present purpose – why the company exists.
Example: Google – “To organize the world’s information and make it universally accessible and useful.”

Goals

Broad, long-term targets.
Example: Increase market share, become global leader.

Objectives

Specific, measurable steps to achieve goals.
Example: Increase revenue by 15% within 2 years.

6. Characteristics of a Good Mission Statement

Clear and Precise
Realistic and Achievable
Customer Oriented
Broad in scope but not vague
Motivating and Inspiring
Differentiates company from competitors

Example: Nike – “Bring inspiration and innovation to every athlete in the world.”

7. External Environment Analysis

Strategically Relevant Components

Macro Environment (PESTLE Analysis)
- Political, Economic, Social, Technological, Legal, Environmental factors
Industry Environment
- Competition, suppliers, customers, substitutes, new entrants

Industry Analysis

(a) Porter’s Five Forces Model

Threat of New Entrants – New competitors entering market.
Bargaining Power of Suppliers – Suppliers’ control over prices.
Bargaining Power of Buyers – Customers’ influence on price/quality.
Threat of Substitutes – Alternative products available.
Industry Rivalry – Competition intensity.

(Example: Telecom industry in India – High rivalry, low entry barrier, customer bargaining power high).

(b) Strategic Group Mapping

Identify companies with similar strategies in the same industry.
Helps to see direct competitors.

(c) Key Success Factors (KSFs)

Those things that give success in a particular industry.
Example: Automobile industry – Technology, Cost efficiency, Strong distribution network.

External Factor Evaluation (EFE) Matrix

A tool to evaluate external environment.
Steps:
1. List external factors (opportunities + threats).
2. Assign weight (importance).
3. Rate effectiveness (1–4).
4. Multiply weight × rating = weighted score.
5. Total score → measure of external position.

8. Environmental Scanning Techniques

ETOP (Environmental Threats and Opportunities Profile)

Identify external threats & opportunities systematically.
Example: For a pharma company –
- Opportunity: Growing health awareness
- Threat: Strict government regulations

COWS Analysis (Company’s Opportunities, Weaknesses & Strengths)

Similar to SWOT but more focused on linking company’s internal strength/weakness to external opportunities/threats.

✅ Summary:

Strategic Management = Long-term planning + implementation + control.
Mission, Vision, Goals, Objectives → define direction.
External Analysis tools = PESTLE, Porter’s 5 Forces, ETOP, COWS, EFE.

Unit II – Internal Environment Analysis & Strategies

1. Internal Environment Analysis

(a) Resource Based View (RBV) of an Organization

RBV bolta hai ki organization ka competitive advantage andar ke resources pe depend karta hai, na ki sirf external environment pe.
Types of Resources:
1. Tangible Resources – Physical assets (factories, technology, capital).
2. Intangible Resources – Brand reputation, goodwill, patents.
3. Human Resources – Skilled employees, leadership, culture.

👉 If resources are valuable, rare, inimitable, and organized (VRIO framework), tabhi wo sustainable competitive advantage dete hain.

(b) Value Chain Analysis (Michael Porter’s Model)

Company apne activities ko Primary Activities & Support Activities me divide karke analyze karti hai.
Purpose: Find out where company can cut cost ya add value to get competitive advantage.

Primary Activities:

Inbound Logistics (raw material handling)
Operations (manufacturing)
Outbound Logistics (distribution)
Marketing & Sales
Services (after-sales support)

Support Activities:

Firm Infrastructure
Human Resource Management
Technology Development
Procurement

👉 Example: Amazon ka logistics & distribution system is its strongest value chain element.

(c) Competitive Advantage

A firm has competitive advantage when it can perform activities better or cheaper than rivals.
Sources:
- Cost advantage (kam price)
- Differentiation advantage (unique product/service)

(d) Core Competency (Prahalad & Hamel)

Those unique strengths of a firm which competitors cannot easily copy.
Characteristics:
- Provides access to multiple markets
- Adds significant value to customer
- Difficult to imitate
Example: Honda’s core competency = engine design & manufacturing.

(e) Internal Factor Evaluation (IFE) Matrix

Like EFE matrix, but for internal factors.
Steps:
1. Identify strengths & weaknesses
2. Assign weights (importance)
3. Rate (1 = major weakness, 4 = major strength)
4. Multiply → Weighted score
5. Total score → measure of internal position

👉 Example: If score > 2.5 → strong internal position, < 2.5 → weak internal position.

2. Business Level Strategies

Porter’s Framework of Competitive Strategies

Cost Leadership
- Firm aims to become lowest cost producer in industry.
- Example: Big Bazaar, Walmart.
Differentiation
- Firm offers unique products/services valued by customers.
- Example: Apple (design + innovation), Starbucks (premium coffee experience).
Focus Strategy
- Target a niche market with either cost focus ya differentiation focus.
- Example: Rolls Royce (luxury cars niche), Patanjali (Ayurvedic niche).

3. Corporate Level Strategies

(a) Growth Strategies

Horizontal Integration: Merging/acquiring competitors in same industry.
Example: Facebook acquiring Instagram.
Vertical Integration: Controlling supply chain (backward or forward).
Example: Reliance – backward integration into petroleum, forward into retail.

(b) Strategic Outsourcing

Non-core activities outsource karke cost efficiency lana.
Example: Nike outsourcing manufacturing to Asian countries.

(c) Diversification

Related Diversification – New business related to existing one.
Example: PepsiCo → Snacks + Beverages.
Unrelated Diversification – Entering totally different industry.
Example: Reliance → Petroleum + Telecom + Retail.

(d) International Entry Options

Exporting
Licensing/Franchising
Joint Ventures
Wholly Owned Subsidiary
Mergers & Acquisitions

(e) Harvesting Strategy

Gradually reducing investment in a business to maximize short-term profit before exit.
Example: Companies phasing out old products like DVD players.

(f) Retrenchment Strategy

Reducing business activities due to losses or declining market.
Types:
1. Turnaround (revival efforts)
2. Divestment (selling off part of business)
3. Liquidation (closing down business)

✅ Summary of Unit II

Internal analysis = RBV, Value Chain, Core Competency, IFE.
Business Level = Porter’s 3 strategies (Cost, Differentiation, Focus).
Corporate Level = Growth (horizontal, vertical), Outsourcing, Diversification, International entry, Harvesting, Retrenchment.

Unit III – Portfolio Strategies & Corporate Restructuring

1. Portfolio Strategies

Portfolio strategy ka matlab hota hai ek firm ke multiple businesses/units ko analyze karke unke liye suitable strategy banana.

(a) BCG (Boston Consulting Group) Matrix

Ek 2×2 matrix jo market growth rate aur relative market share ke basis pe businesses ko classify karta hai.

Quadrants:

Stars → High growth, High share
- Need heavy investment but future profit potential.
- Example: iPhone for Apple.
Cash Cows → Low growth, High share
- Generate maximum cash, stable profit.
- Example: Microsoft Office.
Question Marks → High growth, Low share
- Risky, need big investment.
- Example: Tesla Solar panels.
Dogs → Low growth, Low share
- Weak position, should divest/close.
- Example: Old DVD players.

👉 Purpose = Decide where to invest, divest, or harvest.

(b) GE Business Planning Matrix (McKinsey Matrix)

Improvement over BCG.
Uses Industry Attractiveness (high/medium/low) & Business Strength (strong/medium/weak).
Gives 9-cell matrix instead of 4-cell.

Strategy Implication:

High Industry + Strong Strength → Invest/Grow
Low Industry + Weak Strength → Harvest/Divest
Middle cells → Selective investment

(c) Shell’s Directional Policy Matrix

Similar to GE Matrix, but based on:
1. Industry Prospects (High/Medium/Low)
2. Company’s Competitive Capability (Strong/Average/Weak)
Provides 8 cells with strategies:
- Leader, Try Harder, Growth, Double or Quit, Custodial, Cash Generator, Phased Withdrawal, Exit.

👉 Example: Oil companies (Shell) used this model for multi-country operations.

2. Growth of the Firm

(a) Internal Development (Organic Growth)

Growth by expansion of existing business.
Example: Infosys opening new offices globally.
Pros: More control, steady growth.
Cons: Slow pace.

(b) Mergers & Acquisitions

Merger: 2 companies combine to form one.
- Example: Vodafone + Idea = Vi.
Acquisition: One company buys another.
- Example: Facebook acquired WhatsApp.

Benefits: Market power, economies of scale, diversification.

(c) Strategic Alliances

Partnership between two firms to share resources without merging.
Example: Starbucks + Tata in India.
Advantage: Entry into new markets, risk sharing.

(d) Restructuring Strategies for Growth

Changing structure/operations to improve efficiency or growth.
Types:
1. Spin-off → Creating independent company from parent.
2. Split-up → Breaking company into smaller units.
3. Equity carve-out → Selling partial ownership of subsidiary.

3. Corporate Restructuring

Corporate restructuring ka matlab hai company ke operations, structure, ownership ya financial arrangements me bade level par changes.

(a) Types of Corporate Restructuring

Financial Restructuring → Capital structure change (debt/equity).
Organizational Restructuring → Change in management, hierarchy.
Portfolio Restructuring → Adding/divesting businesses.
Operational Restructuring → Efficiency improvements (cost-cutting).
Mergers/Acquisitions/Demergers.

(b) Synergy in Restructuring

"2 + 2 = 5" Effect → Combined firm is stronger than individual ones.
Types:
- Operating Synergy (cost reduction, economies of scale).
- Financial Synergy (better credit rating, capital access).

(c) Location & Timing Tactics

Location: Entering new geographic regions, closer to raw materials or customers.
- Example: Maruti Suzuki plants near suppliers.
Timing: Enter market at right time → first mover advantage or fast follower.
- Example: Jio’s entry in 2016 at right timing with 4G revolution.

✅ Summary of Unit III

Portfolio Models: BCG, GE, Shell → help in resource allocation among businesses.
Growth Options: Internal, M&A, Alliances, Restructuring.
Corporate Restructuring: Different forms with focus on synergy, right location, right timing.

Unit IV – Strategy Implementation & Evaluation

1. Strategy Implementation

Strategy formulation ke baad अगला step होता है implementation → यानी जो plans banaye gaye hain unko practically apply करना।

(a) Strategy–Structure Fit

हर strategy ko sahi organizational structure chahiye.
Agar structure aur strategy me mismatch ho to success mushkil hai.

Examples:

Agar ek company cost leadership strategy follow karti hai → तो functional structure (production, marketing, finance departments) best fit hai.
Agar company diversification strategy follow karti hai → तो divisional structure (each product line ke liye alag division) suitable hoti hai.

👉 Rule = "Structure should follow strategy".

(b) Developing & Modifying Organizational Structure

Jab company grow karti hai to apne structure me बदलाव करना पड़ता hai:
1. Functional Structure → suitable for small firms.
2. Divisional Structure → suitable for diversified firms (Tata, Reliance).
3. Matrix Structure → dual reporting (project + functional).
4. Network/Virtual Structure → outsourcing-based, modern tech companies.

(c) Leadership & Organization Culture

Leadership → Effective leader strategy ko implement karne me crucial hai.
- Motivates employees.
- Allocates resources.
- Handles resistance to change.
Organization Culture → Shared values, beliefs & behaviors.
- Strong culture aligns employees with strategy.
- Example: Google’s culture = innovation-focused → supports differentiation strategy.

👉 Agar culture aur strategy match nahi kare to resistance hota hai.

2. Strategy Evaluation & Control

Formulation & Implementation ke baad, evaluation zaroori hai → taaki check ho ki strategy sahi direction me ja rahi hai ya nahi.

(a) Nature of Strategy Evaluation

Continuous process (not one-time).
Focuses on:
1. Relevance of objectives → Kya goals abhi bhi valid hain?
2. Performance measurement → Kya results aa rahe hain?
3. Corrective actions → Agar deviation hai to remedy.

👉 Basically, strategy evaluation = "Test of validity & effectiveness".

(b) Strategy Evaluation Framework

Framework ke main steps:

Fix performance standards (financial + non-financial).
Measure performance (sales, profit, market share).
Compare actual vs expected.
Identify deviations.
Take corrective action.

(c) Balanced Scorecard (BSC)

Developed by Kaplan & Norton.
Ek modern tool jo strategy evaluation ko multi-dimensional banata hai (sirf financial nahi).

Four Perspectives:

Financial → Profit, ROI, Sales growth.
Customer → Satisfaction, loyalty, retention.
Internal Processes → Efficiency, quality, innovation.
Learning & Growth → Employee training, skill development, knowledge base.

👉 Example: Infosys uses BSC for tracking both customer satisfaction & employee development.

(d) Benchmarking

Best practice approach.
Company apne processes ko industry leader ya competitor se compare karti hai.
Types:
1. Competitive Benchmarking → compare with rivals.
2. Functional Benchmarking → compare with similar functions across industries.
3. Internal Benchmarking → compare among departments within the same firm.
4. Generic Benchmarking → compare with world-class standards.

👉 Example: Toyota benchmarking its manufacturing with world-class lean production.

✅ Summary of Unit IV

Implementation → Strategy-Structure Fit, Modifying structures, Leadership role, Organizational culture alignment.
Evaluation → Continuous monitoring, Corrective actions, Balanced Scorecard (multi-dimensional), Benchmarking (learning from best).

Strategic Management (MBA-7301) hptu MBA SYLLABUS #HPTU #MBA 3RD SEM