NOTES OF BPSM

INTRODUCTION TO STRATEGY and STRATEGIC

MANAGEMENT

Strategy:
1. A roadmap to success: It's a plan that outlines how you'll achieve your goals.

2. Focuses on the future: It's about where you want to be and how you'll get
there.

3. Outperforms the competition: It's about finding ways to be better, faster, or

different than your rivals.

4. Directs resource allocation: It guides how you use your resources (money,
people, time) to achieve your objectives.

Strategic Management:
1. Formulating the strategy: This involves analyzing your situation, setting goals,
and creating the plan.

2. Putting the plan into action: This involves implementing the strategy and
making sure it's carried out effectively.

3. Monitoring progress and making adjustments: This involves measuring results,

identifying problems, and making changes as needed.

4. A continuous process: Strategic management is an ongoing process of planning,

implementing, and evaluating.

PROCESS OF STRATEGIC MANAGEMENT

The strategic management process is a systematic approach to developing and

implementing strategies that help an organization achieve its goals. It involves
several key steps:
Here's the strategic management process in points:

1. Analyse: Understand your internal strengths and weaknesses, and external

opportunities and threats.

2. Set Goals: Define clear, measurable, and achievable goals for the future.

3. Formulate Strategies: Develop plans and actions to achieve your goals.

4. Implement: Put your strategies into action and allocate resources.

5. Evaluate: Monitor your progress, measure results, and make adjustments as

needed.

CLASSIFICATION AND LEVELS OF STRATEGY

Levels of Strategy:
1. Corporate Level: Deals with overall direction of the organization. It focuses on:

* Portfolio Management: Deciding which businesses to enter, exit, or invest in.

* Diversification Strategies: Moving into new markets or industries.

2. Business Level: Focuses on how a specific business unit competes within its
industry. It involves:

* Competitive Advantage: Finding ways to outperform competitors.

* Focus Strategies: Targeting a specific customer segment or niche.

3. Functional Level: Concerns specific departments or functions within a business

unit. It includes:

* Marketing Strategies: Targeting customers, positioning products, and

promoting brands.

* Finance Strategies: Managing financial resources, investments, and debt.

* Human Resources Strategies: Recruiting, training, and retaining employees.

Classifications of Strategies:
* Growth Strategies: Expanding the organization's size and market share.

* Stability Strategies: Maintaining the current position and avoiding major

changes.

* Retrenchment Strategies: Downsizing, divesting, or restructuring to improve

performance.

* Defensive Strategies: Protecting the organization from external threats.

* Competitive Strategies: Outperforming rivals in the marketplace.

TYPES OF STRATEGIES

* Corporate-Level Strategies: Concerned with the overall direction and

scope of the organization. Examples include mergers and acquisitions,
diversification, and vertical integration.

* Business-Level Strategies: Focus on how to compete in a specific

industry or market. Examples include cost leadership, differentiation,
and focus strategies.

* Functional-Level Strategies: Concerned with the specific activities

within each functional area of the organization, such as marketing,
finance, and operations.

* Growth Strategies: Aim to increase the size and scope of the

organization. Examples include market penetration, market
development, and product development.

* Stability Strategies: Maintain the current size and scope of the

organization.
* Renewal Strategies: Focus on reversing declining performance.
Examples include retrenchment, turnaround, and divestiture.

DEFINE STRATEGIC INTENT

Strategic intent is a powerful concept that outlines an organization's long-term
ambitions and its commitment to achieving them. It's more than just a mission
statement or vision; it's a driving force that permeates every aspect of the
organization.

OR

Strategic intent is the organization's ambitious, long-term goals and the

unwavering commitment to achieving them, even if it means challenging the
status quo and pushing boundaries.

Mission of strategic intent

* Defining the organization's purpose: What does the organization exist to do?
What are its core values and beliefs?

* Setting ambitious goals: What does the organization aspire to achieve? What are
its long-term aspirations?

* Motivating and inspiring: How can the organization rally its employees and
stakeholders around a shared vision?

* Guiding decision-making: How can the organization make strategic choices that
align with its overall goals?

* Ensuring long-term success: How can the organization stay focused and adapt to
change while pursuing its long-term ambitions?

Business Ethics
1. Principles and Values: Business ethics are based on principles like honesty,
fairness, integrity, and responsibility. They guide how businesses operate and
interact with stakeholders.

2. Stakeholder Impact: Businesses are accountable to various stakeholders,

including employees, customers, investors, suppliers, and the community. Ethical
practices consider the impact on all these groups.

3. Legal Compliance: While ethics go beyond legal requirements, they often align
with laws and regulations. Ethical businesses strive to operate within legal
boundaries and uphold ethical standards.

4. Reputation and Trust: Ethical behaviour builds trust and a positive reputation
for businesses. This fosters strong relationships with stakeholders, attracts talent,
and contributes to long-term success.

CORPORATE SOCIAL RESPONSIBILITY

1. Beyond Profits: CSR goes beyond simply maximizing profits. It recognizes that
businesses have a responsibility to consider the broader social and environmental
impacts of their operations.

2. Stakeholder Engagement: CSR involves actively engaging with stakeholders,

including employees, customers, communities, and the environment. It seeks to
address their concerns and create shared value.

3. Ethical Conduct: CSR is rooted in ethical principles. It promotes transparency,

accountability, and responsible practices throughout the business.

4. Sustainable Practices: CSR often focuses on sustainable practices, such as

reducing environmental impact, promoting social equity, and supporting ethical
sourcing. It aims to create a positive and lasting impact on society and the planet.

UNIT 2
External Environment Analysis
1. Understanding the Big Picture: It's about scanning the environment to identify
factors that could impact your business, both positively and negatively. It helps
you anticipate trends, opportunities, and threats.

2. Identifying Key Forces: This involves analysing various forces like political,
economic, social, technological, environmental, and legal factors (PESTLE).
Understanding these forces helps you understand the context in which your
business operates.

3. Assessing Impact: Once you've identified key forces, you need to assess their
potential impact on your business. This helps you prioritize and focus on the most
critical factors.

4. Developing Strategies: External environment analysis informs your strategic

decisions. It helps you identify opportunities to exploit, threats to mitigate, and
adjust your strategies accordingly.

PORTER 5 FORCE MODEL

The Porter Five Forces model is a framework for analyzing the competitive
landscape of an industry. It helps businesses understand the forces that influence
profitability and make informed strategic decisions.

Here's a breakdown of the five forces:

1. Threat of New Entrants: How easy is it for new competitors to enter the
market? This depends on factors like barriers to entry (e.g., high capital
requirements, government regulations), economies of scale, and brand loyalty.

2. Bargaining Power of Buyers: How much power do buyers have to negotiate

prices and demand favourable terms? This depends on factors like the number of
buyers, the importance of the product to buyers, and the availability of
substitutes.

3. Bargaining Power of Suppliers: How much power do suppliers have to dictate

prices and terms? This depends on factors like the number of suppliers, the
availability of substitute inputs, and the importance of the supplier's product to
the buyer.

4. Threat of Substitute Products or Services: How likely are customers to switch to

alternative products or services? This depends on factors like the price and
performance of substitutes, and the ease of switching.

5. Rivalry Among Existing Competitors: How intense is the competition among

existing players in the industry? This depends on factors like the number of
competitors, the growth rate of the industry, and the level of product
differentiation.

VUCA ENVIRONMENT
VUCA stands for Volatility, Uncertainty, Complexity, and Ambiguity. It describes a
dynamic and unpredictable environment where traditional approaches to
planning and decision-making may not be effective.

* Volatility: Rapid and unpredictable changes in the market, technology, and

consumer behavior.

* Uncertainty: Lack of clarity about the future and the potential outcomes of
decisions.

* Complexity: Interconnectedness of factors and the difficulty in understanding

cause-and-effect relationships.

* Ambiguity: Lack of clear information and the presence of multiple

interpretations of events.

An Environmental Threat and Opportunity Profile

(ETOP) is a strategic planning tool that helps organizations identify and assess
external factors that could impact their business. It's a structured way to analyze
the environment and identify potential threats and opportunities.

Here's a basic framework for an ETOP:

1. Identify Key Environmental Factors: Start by listing the major external factors
that could affect your organization. These could include:

* Economic factors: Interest rates, inflation, economic growth, unemployment

* Political factors: Government policies, regulations, political stability

* Social factors: Demographics, cultural trends, consumer preferences

* Technological factors: New technologies, innovation, digital disruption

* Environmental factors: Climate change, resource scarcity, environmental

regulations

* Legal factors: Laws, regulations, court decisions

2. Assess the Impact of Each Factor: For each factor, determine whether it
presents a threat or an opportunity to your organization. Consider the following:

* Threat: Could this factor negatively impact your business?

* Opportunity: Could this factor create new opportunities for your business?

3. Prioritize the Factors: Rank the factors based on their potential impact on your
organization. Focus on the factors that are most likely to have a significant impact,
both positive and negative.

4. Develop Strategies: Based on your ETOP analysis, develop strategies to mitigate

threats and capitalize on opportunities. This might involve:

* Threat mitigation: Developing contingency plans, adjusting operations,

investing in new technologies, etc.
 * Opportunity exploitation: Expanding into new markets, developing new
products or services, forming strategic alliances, etc.

VALUE CHAIN ANALYSIS

1. Primary Activities: Directly involved in creating and delivering the product or
service (e.g., inbound logistics, operations, outbound logistics, marketing,
customer service).

2. Support Activities: Enhance the efficiency and effectiveness of primary

activities (e.g., procurement, technology development, human resource
management, infrastructure).

3. Analysis: Assess each activity's value added, cost drivers, and competitive
advantage.

4. Strategic Implications: Use the analysis to identify opportunities for cost

reduction, quality improvement, and differentiation.

STRATEGIC ADVANTAGE PROFILE

1. Cost Leadership: Offering products or services at the lowest cost in the industry.

2. Differentiation: Offering unique products or services that are valued by

customers and command a premium price.

3. Focus: Targeting a specific niche market and serving it better than competitors.

4. Innovation: Developing new products, processes, or business models that

create a competitive advantage.

Scenario Analysis
* Identify potential risks and opportunities: By exploring different scenarios,
companies can anticipate potential challenges and capitalize on emerging trends.
* Develop contingency plans: Scenario analysis helps to prepare for unexpected
events and develop alternative strategies to mitigate risks.

* Improve decision-making: By considering multiple future possibilities,

companies can make more informed and robust decisions.

* Enhance strategic planning: Scenario analysis helps to develop more

comprehensive and flexible strategic plans that can adapt to changing
circumstances.

PESTEL
PESTEL analysis is a framework used to analyze the external macro-environmental
factors that can impact an organization. It stands for:

* Political: Government policies, regulations, and stability.

* Economic: Economic growth, interest rates, inflation, and exchange rates.

* Social: Demographics, cultural trends, and lifestyle changes.

* Technological: Technological advancements, innovation, and automation.

* Environmental: Climate change, environmental regulations, and resource

availability.

* Legal: Laws, regulations, and legal frameworks.

SWOT ANALYSIS
SWOT analysis is a strategic planning tool that helps organizations identify their
internal strengths and weaknesses, and external opportunities and threats.

* Strengths: Internal capabilities and resources that give the organization an

advantage.

* Weaknesses: Internal limitations that hinder the organization's performance.

* Opportunities: External factors that the organization can leverage to its
advantage.

* Threats: External factors that could negatively impact the organization.

TOWX MATRIX
The TOWS Matrix, also known as the SWOT Matrix, is a strategic planning tool that
helps organizations develop strategies by combining their internal strengths and
weaknesses with external opportunities and threats.

Here's how it works:

* SO Strategies: Leveraging strengths to capitalize on opportunities.

* WO Strategies: Overcoming weaknesses to capitalize on opportunities.

* ST Strategies: Using strengths to mitigate threats.

* WT Strategies: Minimizing weaknesses to avoid threats.

INDUSTRY LIFE CYCLE

The industry life cycle describes the stages that an industry goes through from its
emergence to its decline.

Here are the stages:

* Introduction: Characterized by slow growth, high costs, and limited

competition.

* Growth: Rapid growth, increasing competition, and falling prices.

* Maturity: Slowing growth, intense competition, and stable prices.

* Decline: Falling demand, declining profits, and consolidation.

CYCLES OF COMPETITION
The cycles of competition are the recurring patterns of competitive behaviour that
occur within an industry. These cycles can be influenced by factors like:

* Innovation: New products, services, or technologies can disrupt the competitive

landscape.

* Economic Conditions: Recessions or booms can impact demand and

profitability.

* Government Regulations: Changes in regulations can affect industry structure

and competition.

* Consumer Preferences: Shifts in consumer tastes can create opportunities for

new entrants or threaten established players.

CRITICAL SUCCESS FACTORS

Critical Success Factors (CSFs) are the key areas where an organization must excel
to achieve its strategic goals. They are specific, measurable, achievable, relevant,
and time-bound (SMART).

Customer Satisfaction: Meeting or exceeding customer expectations.

* Product Quality: Producing high-quality products or services.

* Innovation: Developing new products or services that meet market needs.

* Operational Efficiency: Optimizing processes and reducing costs.

* Financial Performance: Achieving profitability and growth.

* Employee Engagement: Motivating and retaining employees.

IF A COMPANY WANT TO ENTER A NEW MARKET WHAT STRATEGIES

SHOULD IT APPLY
Entering a new market requires careful planning and execution. Here are some
strategies a company can apply:

* Market Research: Thorough analysis of the target market, including customer

needs, competition, and market trends.

* Product Adaptation: Tailoring products or services to meet local preferences

and regulations.

* Pricing Strategy: Determining competitive pricing that balances profitability and

market acceptance.

* Distribution Strategy: Establishing effective channels to reach target customers.

* Marketing and Promotion: Developing a marketing plan to create awareness

and build brand loyalty.

* Partnerships: Collaborating with local businesses or distributors to leverage

existing networks.

* Cultural Sensitivity: Understanding and respecting local customs and values.