Strategic

Management
Introduction to Strategic
Management – Unit 1
 Strategy
• It is derived from the Greek word ‘Strategia’ which means ‘Office or Command of a
General’. (the art of General in the battlefield and being conscious).

• Dictionary defines strategy as something that has to do with war and ways to win over
enemy.

• In business terms, Strategy is the game plan management is using to take market position,
conduct its operations, attract and satisfy customers, compete successfully, and achieve
organizational objectives.

• The term ‘strategy’ is defined as a long range blueprint of an organization's desired image,
direction and destination what it wants to be, what it wants to do and where it wants to
go.
The Coffee Clash – Caselet
• Background:
• Two local cafés, BeanTown and BrewCrew, opened in the same neighborhood. Both sell
coffee, snacks, and offer free Wi‑Fi. Initially, they looked identical—same menu, similar
prices, and cozy interiors.
• Situation:
• BeanTown decided to focus on speed and convenience. They introduced mobile
ordering, quick pick‑up counters, and partnered with food delivery apps.
• BrewCrew chose experience differentiation. They invested in live music nights, board
games, and a “community table” for networking.
• Result:
• BeanTown attracted office workers and students who valued efficiency.
• BrewCrew built loyalty among locals who wanted a social hub. Both survived, but with
different strategies
The Coffee Clash – Group Discussion

Should a business focus on efficiency or experience? What risks do each face?

The Coffee Clash - Conclusion
Should a business focus on efficiency or experience? What risks do each face?

Strategy is about making choice/s: You can’t be everything to everyone.

Competitive advantage: BeanTown’s advantage was speed; BrewCrew’s was experience.

Fit with environment: Strategy must align with customer needs and market context.
Features in a Strategic Management Process
1. Long range: Strategy is generally long term in nature, though it is valid for short-range
situations also and may have short-range implications.
2. Action Oriented: It is action- oriented and is more specific than objectives.
3. Integrated: It is multi-pronged and integrated.
4. Flexible: It is flexible and dynamic as it gives importance to combination, sequence,
timing, direction and depth of various moves and action initiatives taken by Managers
to handle environmental uncertainties and complexities.
5. Formulated at Top Level: Strategy is formulated at the Top Management Level, though
Middle and Operational Level Managers are associated in their formulation and in
designing sub-strategies.
6. Purposive: It is generally meant to cope with a competitive and complex setting.
7. Goal oriented: It flows out of the goals and objectives of the enterprise and is meant
to translate them into realities.
8. Efficiency: Strategy is concerned with efficiency, i.e. perceiving opportunities and
threats and seizing initiatives to-cope with them. It is also concerned with deployment
of limited organizational resources in the best possible manner.
9. Harmonized: It provides an integrated and unified framework for Managers, for
effective decision-making affecting all sub-systems in an organization.
FreshBite – The Healthy Fast Food Chain-
Caselet
Background: FreshBite is a growing fast‑food chain in India that focuses on healthy meals—salads,
wraps, and smoothies. Initially, it differentiated itself by offering nutritious alternatives to traditional
fast food.
❑ FreshBite anticipated rising health consciousness among urban youth.
❑ It proactively invested in menu innovation (low‑calorie wraps, vegan options) and Stage 1
branded itself as “Fast but Fit.”
❑ It opened outlets near gyms and universities, positioning itself ahead of competitors

When a global giant like McDonald’s introduced its own “healthy menu,” FreshBite reacted by:
❑ Launching a loyalty program to retain customers.
Stage 2
❑ Adjusting prices to remain competitive.
❑ Partnering with food delivery apps after noticing rivals gaining traction online

What are your observations around stage 1 and Stage 2.

Nature and Importance
• Strategy is Proactive + Reactive - Formulation of a strategy for an organization starts with
• Making the intended plan in advance, based on assumptions about the future and how the organizations wish to respond
i.e. proactive approach.
• However, the future may not respond as expected.
• Hence a modification in plan is highly desirable to make the best use of the situation i.e. reactive approach. Hence, a
company's strategy is typically a blend of Proactive and Reactive Actions.
• The biggest portion of a company's current strategy flows from the established and tested business plans
that are working plus managerial initiatives to strengthen the company's overall position and performance.
• This part of management's game plan is planned, deliberate and proactive.

• However, things may happen in a way that cannot be fully predicted. When market and competitive
conditions take an unexpected turn, some kind of strategic reaction or adjustment is required.
• Hence, a portion of a company's strategy is always developed on the fly, coming as a reasoned response to
unforeseen developments like the following:
• Strategic changes by rival firms,
• Shifting customer requirements and expectations,
• New technologies and market opportunities
• A changing political or economic climate,
• Other unpredictable happenings in the surrounding environment.
• Proactive managers tend to be more in the departments such as finance, accounting, and marketing.
Reactive managers tend to work in the department of operations and sales.
Strategic Levels in an Organisation
Corporate Strategy

Business Level Strategy

Functional Level Strategy

 Strategic Levels in an Organisation
Management:
• Consists of the Chief Executive Officer (CEO), other Senior Executives, the Board of Directors, and
Corporate Staff.
• Occupies the apex of decision-making within the Firm, with the CEO as the Principal General
Corporate Strategy Manager.
• The role of Corporate Level Managers is to oversee the development of strategies for the whole
(Role of a CEO) organization in consultation with other Senior Executives.
• Role includes defining the mission and goals of the organization, determining what businesses it
should be in, allocating resources among the different businesses, formulating and implementing
strategies that span individual businesses, and providing leadership for the organization.

Management
• The Principal General Manager at the Business Level, or the Business-level
Manager, is the Head of the concerned division.
• The strategic role of these Managers is to translate the general statements
of direction and intent that come from the corporate level, into concrete Business Level Strategy
strategies for individual businesses.
• The business-level Managers make sure that they are pursuing robust
strategies that will contribute toward the maximization of long-run
profitability and to hold them into account for their performance.
• Corporate-Level General Managers are concerned with strategies that
span individual businesses, but Business-Level General Managers are
concerned with strategies that are specific to a particular business.

Management:
• Functional-Level Managers are responsible for the specific business functions/ tasks/ operations (e.g. human
Resources, Purchasing, Product Development, Customer Service, etc.) that constitute a Company or one of its divisions. Functional Level Strategy
• Functional Managers have a major strategic role, that is, to develop functional strategies in their area that hell fulfill
the strategic objectives set by Business-Level and Corporate-Level General Managers.
• Functional Managers provide most of the information that makes it possible for Business-Level and Corporate-Level
General Managers to, formulate realistic and attainable strategies because they are closer to the customer.
 Objectives of Strategic Management
Definition Objectives
• To create Competitive Advantage so that the
• Strategic Management refers to the Company can gain advantage over
Managerial process of- competitors, and dominate the market.
• forming a strategic vision, • To guide the Company through all changes in
• setting objectives, the environment.
• crafting a strategy, • To help the Organization and Managers in
• implementing and executing the strategy, and
Decision making.
• initiating whatever corrective adjustments in the • Strategic planning also aids in Effective
vision, objectives, strategy, and execution are planning.
deemed appropriate, over a period of time. • To organize the resources of the
organization efficiently as per the Strategy.
• According to Peter Drucker, "Strategic • Strategic management also helps in proper
Management is not a box of tricks or evaluation of each plan, policy and action.
bundle of techniques. It is analytical • It helps to determine the long term
thinking and commitment of resources to performance of an organization.
action"
Short Case Exercises
Case Objectives of Strategic Management
While many automakers compete on price and marketing, Honda’s engineering
excellence, R&D strength, and brand equity give it a sustainable edge that rivals struggle
to replicate
In the early 2000s, Amazon was primarily an online retailer. Managers faced indecision
about whether to diversify or stay focused on e-commerce. Amazon’s overarching
strategy was to leverage its technological infrastructure to create scalable platforms.
Guided by this strategy, managers launched Amazon Web Services (AWS) in 2006,
offering cloud computing services. AWS became a multi-billion-dollar business, now
contributing more profit than retail, proving that strategic clarity helped managers
overcome indecision and make bold, aligned choices.
Apple’s strategy has always emphasized simplicity and premium design rather than
flooding the market with dozens of models. Concentrated R&D spending on a few flagship
products (iPhone, iPad, Mac) instead of spreading resources thin across many lines.
Streamlined supply chain by building deep partnerships with select suppliers, ensuring
quality and efficiency. Allocated marketing resources to create a unified brand identity
rather than fragmented campaigns. Deliver innovative, high-margin products with global
appeal
Netflix shifted from DVD rentals to streaming. Instead of clinging to its original model,
Netflix invested in streaming technology, built licensing deals, and later moved into
original content. This strategic foresight allowed it not only to survive but to dominate the
entertainment industry
Short Case Exercises – Adjust Each Case with Strategic
Objectives
Case Objectives of Strategic Management
Walmart’s overarching strategy was “Everyday Low Prices”. supported by supply chain
efficiency and scale. When expanding internationally, Walmart assessed whether local
markets could support its low-cost model. In Germany, policies like centralized
purchasing and American-style store layouts conflicted with local shopping habits.
Strategic evaluation revealed misalignment, leading to eventual withdrawal. In Mexico
and other markets, Walmart’s logistics and pricing strategy aligned well with consumer
behavior, so expansion plans were reinforced and scaled.

IKEA built its entire business model around affordable, stylish furniture through cost
leadership. Flat-pack design reduced shipping and storage costs. Self-service warehouses
and minimal staff lowered operating expenses. Global sourcing and economies of scale
kept prices consistently low. This strategy allowed IKEA to expand into over 60 countries
while maintaining profitability. Even during economic downturns, IKEA’s low-cost model
attracted customers, ensuring resilience. Today, IKEA is one of the world’s largest
furniture retailers, proving that a clear strategy can sustain performance over decades.

Southwest Airlines adopted a low-cost, point-to-point strategy rather than the traditional
hub-and-spoke model used by competitors. Operated a single aircraft type (Boeing 737)
to simplify maintenance and training. Focused on short-haul routes with quick
turnaround times to maximize aircraft utilization. Eliminated frills (like assigned seating
and in-flight meals) to reduce costs and speed operations. Deliver affordable, reliable air
travel while maintaining profitability
Short Case Exercises
Case Objectives of Strategic Management
While many automakers compete on price and marketing, Honda’s engineering Competitive Advantage
excellence, R&D strength, and brand equity give it a sustainable edge that rivals struggle
to replicate
In the early 2000s, Amazon was primarily an online retailer. Managers faced indecision Help the Organization and Managers in
about whether to diversify or stay focused on e-commerce. Amazon’s overarching
strategy was to leverage its technological infrastructure to create scalable platforms.
Decision making.
Guided by this strategy, managers launched Amazon Web Services (AWS) in 2006,
offering cloud computing services. AWS became a multi-billion-dollar business, now
contributing more profit than retail, proving that strategic clarity helped managers
overcome indecision and make bold, aligned choices.
Apple’s strategy has always emphasized simplicity and premium design rather than Organize the resources of the organization
flooding the market with dozens of models. Concentrated R&D spending on a few flagship
products (iPhone, iPad, Mac) instead of spreading resources thin across many lines.
efficiently
Streamlined supply chain by building deep partnerships with select suppliers, ensuring
quality and efficiency. Allocated marketing resources to create a unified brand identity
rather than fragmented campaigns. Deliver innovative, high-margin products with global
appeal
Netflix shifted from DVD rentals to streaming. Instead of clinging to its original model, Guiding Through Changes
Netflix invested in streaming technology, built licensing deals, and later moved into
original content. This strategic foresight allowed it not only to survive but to dominate the
entertainment industry
Short Case Exercises
Case Objectives of Strategic Management
Walmart’s overarching strategy was “Everyday Low Prices”. supported by supply chain Proper evaluation of each plan, policy
efficiency and scale. When expanding internationally, Walmart assessed whether local
markets could support its low-cost model. In Germany, policies like centralized
and action.
purchasing and American-style store layouts conflicted with local shopping habits.
Strategic evaluation revealed misalignment, leading to eventual withdrawal. In Mexico
and other markets, Walmart’s logistics and pricing strategy aligned well with consumer
behavior, so expansion plans were reinforced and scaled.
IKEA built its entire business model around affordable, stylish furniture through cost Helps to determine the long term
leadership. Flat-pack design reduced shipping and storage costs. Self-service warehouses
and minimal staff lowered operating expenses. Global sourcing and economies of scale
performance of an organization.
kept prices consistently low. This strategy allowed IKEA to expand into over 60 countries
while maintaining profitability. Even during economic downturns, IKEA’s low-cost model
attracted customers, ensuring resilience. Today, IKEA is one of the world’s largest
furniture retailers, proving that a clear strategy can sustain performance over decades.
Southwest adopted a low-cost, point-to-point strategy rather than the traditional Enhances Effective planning.
hub-and-spoke model used by competitors. Operated a single aircraft type (Boeing 737)
to simplify maintenance and training. Focused on short-haul routes with quick
turnaround times to maximize aircraft utilization. Eliminated frills (like assigned seating
and in-flight meals) to reduce costs and speed operations. Deliver affordable, reliable air
travel while maintaining profitability
Steps of a Strategic Management Process

Strategic
Strategic Strategic Strategic
Analysis-
Formulation Implementation Evaluation
Environmental
Scanning

Continuous
Control and
Feedback
 Business Policy
Introduction:

• Guidelines formulated by an organization to govern its actions

• They define the limits and the scope within which decisions must be made by the subordinates.
• Allows the lower-level management to deal with the issues and challenges without consulting top level management
every time for making decisions.

Business and Policy:

• Business is exchange of goods and services for increasing utilities

• Policy may be defined as "the mode of thought and the principles underlying the activities of an organization or an
institution
• Policies are general statements of principles which guide the thinking, decision-making and actions in an organization.
• Business policy is a set of principles and rules which direct the decisions of the subordinates.
 Business Policy
Features of Business Policy : An effective business policy must have following features-

• Specific- Policy should be specific/definite. If it is uncertain, then the implementation will become difficult.

• Clear- Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no
misunderstandings in following the policy.

• Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the subordinates.

• Appropriate- Policy should be appropriate to the present organizational goal.

• Simple- A policy should be simple and easily understood by all in the organization.

• Inclusive/Comprehensive- In order to have a wide scope, a policy must be comprehensive.

• Flexible- Policy should be flexible in operation/application. This does not imply that a policy should be altered always,
but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios.

• Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for
guidance.
 Business Policy
Importance of Business Policy

1. Provide Clear Direction and Guidance

2. Ensure Consistency in Decision-Making

3. Improve Coordination Across Departments

4. Promote Efficiency and Standardization

5. Support Effective Delegation and Control

6. Reduce Risks and Legal Issues

7. Help Achieve Organizational Goals

Future Headline Workshop
• Each group to imagine it’s 10 years in the future and their organization fictional) has been wildly successful.

• Their task: write a PARAGRAPH describing the achievement.

• Groups present their stories, followed by a discussion on how vision shapes decisions today.
Vision Mission and Objectives
 Vision
Vision:

• These are long term goal projections as to what one is to be. What is intended to do over a long period?

• Vision of any organization can be defined as; “the goals that are the broadest, most general and all inclusive. The most
effective visions are those that appeal to the emotions of the employees and the aspirations of the organization’s
management”. Thus, they reveal what the organization should be like in the future.

Purpose of Strategic Vision:

• To clearly identify the direction in which the Firm is headed.

• To think creatively and prepare the Company for the future.

• To identify needs for changing directions, for survival as well as for growth.

• To create enthusiasm in organizational members to strive towards the selected course of direction.

• To encourage intelligent entrepreneurship.

Visioning for Prism Inc. Stakeholder Roles for the Exercise
• CEO: Wants bold growth and global
Basic Profile recognition.
• Industry: IT Services & Digital Transformation
• Founded: 2018, headquartered in Bengaluru, India • Employee (Software Engineer): Seeks
meaningful work, career growth, and
• Size: 500 employees, rapidly growing mid-tier firm supportive culture.

• Customer (Mid-size Retail Chain): Needs

affordable, reliable IT solutions that
Core Offerings: improve efficiency
• Cloud migration and management
• AI-driven analytics solutions • Investor: Focused on profitability,
scalability, and market differentiation
• Cybersecurity consulting
• Custom enterprise software development
• Community Member (Local NGO):
Interested in ethical practices,
sustainability, and local job creation.
To empower businesses across Asia with secure, intelligent, and scalable digital solutions
that drive sustainable growth.
 Mission
Vision:

• Mission of any organization identifies with, “the scope of operations of an organization.

• It gives the reason for the existence of an organization and clearly an organization with a mission finds it easier to
succeed than an organization without one”.

• Thus, mission of any organization is to see the scope of an organisation or the boundary of an organization, or the limit
to which the organization can expand or reach.

• EXAMPLE: IOCL (INDIAN OIL COPORATION LIMITED) has its mission statement as thus: “Maintaining national leadership
in oil refining, marketing and pipeline transportation”.

Purpose of Mission:
 Mission
Purpose of Mission:

• To ensure unanimity of purpose within the organization.

• To provide a basis for motivating the use of, the organization's resources.

• To develop a basis, or standard, for allocating organizational resources.

• To facilitate the translation of objective and goals into a work structure involving the assignment of tasks to responsible
elements within the organization.

• To specify organizational purposes and the translation of these purposes into goals in such a way that cost, time, and
performance parameters can be assessed and controlled.
 Mission
Characteristic's of Mission:

• It should be feasible.

• It should be precise.

• It should be clear.

• It should be motivating.

• It should be distinctive.

• It should indicate the major components of strategy.

• It should indicate how objectives are to be accomplished.

 Basis of Vision Mission
Comparison
A vision describes the future desired state of the A mission explains the organization’s purpose and the reason for its
Meaning organization. It expresses what the company aspires to existence. It tells what the company does and for whom.
become.
Time Orientation Vision is future-oriented and focuses on long-term Mission is present-oriented and focuses on the current activities and
dreams and aspirations. purpose of the business.

Nature The vision is inspirational, motivational, and idealistic. The mission is practical, action-oriented, and realistic.

Purpose The purpose of a vision is to set a clear direction and The purpose of a mission is to guide day-to-day operations and define how
motivate employees toward a shared future. the organization will achieve its vision.
Scope Vision has a broad, long-term scope covering the Mission has a narrower scope as it focuses on specific operations and core
organization's overall direction. activities.
Formulated By Vision is formulated mainly by top leadership to shape Mission is formulated by top management but reflects the involvement of
the company’s future identity. employees, customers, and stakeholders.

Change Vision rarely changes because it represents long-term Mission may change when the organization updates its products, markets,
aspirations or customer focus.
Frequency
Focus Area Vision focuses on “what we want to achieve in the Mission focuses on “what we do, whom we serve, and how we serve
future.” them.”

Example “To be the world’s most innovative and customer-centric “To deliver high-quality products that improve everyday life through
company.” technology and service.”
Objectives
 About Objectives
• Objectives are an organization's performance targets, i.e. the results and
outcomes it wants to achieve.
• They function as yardstick for tracking an organizations performance and
progress.
• Business organizations translate their vision and mission into objectives.
• Objectives and Goals are almost Similar, however, Objectives are our Broader
aims (open - ended), whereas Goals are more precise specific (Close - ended).
• Example: A Company’s one of the Objectives may be to increase the market
share, whereas the goal would be more specific , ‘To increase the market share
of Brand A by 10% during the current Year.’
Characteristics of Objectives
• Define the organization's relationship with its environment.
• Facilitate achievement of mission and purpose.
• Provide the basis for strategic decision-making
• Provide standards for performance appraisal.
• Be Understandable.
• Be Concrete and Specific.
• Relate to a time frame.
• Be Measurable and Controllable
• Be Challenging enough to motivate people into performance.
• Be correlated and inter-related with each other.
• Be set within constraints