Introduction to Strategy

& Strategic Management

Prof. Sougata Ray
Indian Institute of Management Calcutta
@ Sougata Ray, IIMC
If you dont know where you are going, any road
will take you there.
The Cheshire Cat, Alice in Wonderland
Strategic Management Philosophy: Being Purposive
ACCEPT
CHANGE
COMPLAIN
It will always be like this
I have no control
I cant impact this
It is out of my hands
No need to plan
It has already happened
I dont have the authority
It is not worth the effort or risk
I cant fight it any longer
I must do something
I can make a difference
I am willing to work and fight
I can impact or influence this
I demand that things change
It is worth the risk
I must make a plan
This is my responsibility
This cant go on
I wish
They ought to
I hate
I am sick of
Somebody should
Why dont they
It is stupid
Strategic Management Philosophy
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Conventional Thinking vs. Strategic Thinking
Conventional Thinking:
If it aint broke. . . Dont fix it.
Strategic Thinking:
If it aint broke. . . You havent looked hard
enough.
Fix it anyway!
Tom Peters - Thriving on Chaos
You dont wait for the future.
You create it.
Hwang Chang Gyu,
President, Samsung Semiconductor
BusinessWeek, 25 October 2004, 58
Strategic Thinking
Strategic
Thinking
Critical
Thinking
Creative
Thinking
Future
Thinking
Holistic &
Integrative
Thinking
Elements of Strategic Thinking
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What Is Strategic Management?
Strategic management is about anticipating, driving, and
capitalizing on change:
Anticipating: Envisioning the future
Driving: Shaping the future
Capitalizing: Making the most of
the future
Central Themes in SM
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Developing next
practices, Creating a
unique, valuable and
sustainable strategic
position in the market
Assimilating, attaining, and
extending best practices
Operational
Effectiveness
Strategy
Doing Things Right
Run the same race faster
Doing the Right Things
Choose to run the race
differently or a different race
Operational Effectiveness is Not Strategy
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What Is Strategy?
Strategy is:
A stream of decisions focused on a purpose.
The creation of a unique and valuable position in
the industry / market.
Choosing what not to do.
Creating a fit among an organizations activities.
Strategy is about finding a unique way to put the organizations activities
(buying, selling, producing, hiring, firing, etc.) together that is hard or
impossible for competitors to replicate and is valuable to customers.
Strategy is About Discovery of Wealth
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Strategy is About Discovery of Wealth
Creating Wealth: Predictable, De-risked
and Sustainable Profit and Growth more
than the market
Searching for New Sources of Competitive
Advantage
Being Unique
Inventing New Rules and New Games
Timing - Reduce Risk, Investment and Time
Strategy is a set of simple rules for discovering wealth
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Learning Objectives of Strategic
Management Course
Strategic management deals with the concerns,
issues and challenges faced by top managers of a
line of business or a corporation
Primary question that engages the strategic
management discipline is about sustainable
superior performance
Manager: How can I make my business/ firm to
perform better?
Academic Researcher: Why do some firms
(businesses) perform better than others?
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What is the yardstick to measure superior
performance?
For-profit: Shareholder value, returns to
investors, market share,, what else?
Non-profit: Goals specific to the organisations
mandate
How do firms succeed in creating sustainable superior
performance?
Learning Objectives of the Strategic
Management Course
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Strategy
Effective Ineffective
Execution
Excellent
Poor
Long Term Success
Maybe successful
For a while
Success
Unlikely
Failure
A combination of effective strategies
and excellent execution
How do firms succeed in creating
sustainable superior performance?
@ Sougata Ray, IIMC
Objectives of the Strategic
Management Course
How to develop the way to achieve superior
performance in a for-profit context?
Line of business/ Single business firm: Business
Strategy or Competitive Strategy
Corporate/ Conglomerate / MNC: Corporate
Strategy
How to implement the way to achieve superior
performance?
In this course, most often we will take the
perspective of top management CEO of a firm/ line
of business who is responsible for the entire
organization and not a part of it.
Who cares about strategy?
Who:
Consultants
IB/VC
Analysts
Entrepreneurs
Managers
Administrators
Why:
Crack a case
Better valuations
Better Guidance
Business plans
Shareholder value
Stakeholder value
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Likely Value Add of the Course
Set of Concepts and techniques
Language of strategy
Powerful analytic structures
We have all been strategists
Issues are not entirely new to you. Enhance the
sophistication with which you approach them
Improve your ability to critically evaluate and
generate business models and strategy
Entrepreneur, Investment Analyst, Venture
Capitalist, or Corporate Manager
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Keep in mind: Analytical Tools +
Insight / Judgment / Intuition
Analytical tools are useful
to understand forces/ drivers of profitability,
strategic interaction, firm capabilities and scope
to think out of the box, generate new ideas and
innovate
However, they can never substitute for
managerial insight/ judgment/ intuition :
in understanding market trends, customers,
competitors, regulators, and other market forces
in understanding possibilities of entrepreneurs/
managers own organizations
to seize exceptional business opportunities in
order to sustain a competitive advantage and
create value
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A Framework for Strategic Thinking:
Marrying Rationality with Intuition
Seeking new strategic opportunities
Collection of hard data
(the scientific skills)
Collection of soft data
(the perceptual skills)
Accumulation of facts and
evaluation of probabilities
Accumulation of uncertainties
and ambiguities
Use of analytical models to
define the opportunities
Use of intuition to define
the opportunities
Unique interpretation
of the strategic opportunity
T
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R
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I
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Making choices about the future
on inadequate information
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Course Evaluation
Class Participation & Quiz 30 %
Group Assignments & Projects / Presentations 30%
End Term Examination 40%
So How Do You Prepare for Class?
1 Read the assigned readings
2 Read the case
3 Think about the study questions
4 How does the conceptual material map
(or not map) onto the case
5 Build on the knowledge gained earlier
6 Make reasoned choices and responses
7 Bounce your ideas within the group
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Analyzing Strategic
Management Cases
Some part is adapted from Dess, Lumpkin, & Eisner, Strategic Management:Text & Cases McGraw- Hill/Irwin.
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Why Analyze Strategic
Management Cases?
Case analysis
A method of learning complex strategic
management concepts
places students in the middle of an
actual situation and challenges them to
figure out what to do.
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Skills Developed from Case
Analysis
Collate & Differentiate
Collate dispersed set of information and
organize those logically
Evaluate many different elements of a
situation at once
Differentiating between the factors
that are influencing the situation
Understanding that problems are often
complex and multilayered
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Skills Developed from Case
Analysis
Diagnose
Ask series of why and so what
questions Root cause analysis
Generate several possible answers
(hypotheses) like a detective
Use the information intelligently to rule
out most hypotheses
Diagnose one or two most likely ones
fundamental problems
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Skills Developed from Case
Analysis
Envisions & Speculate
Envision explanation that might not
readily be apparent
Imagine different scenarios
Ideate possible solutions to the problem
Contemplate the outcome of a decision
Deal with uncertainty and incomplete
knowledge
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Skills Developed from Case
Analysis
Integrate
Have an organization-wide perspective
Integrate the impact of various
decisions and external / environmental
influences on all parts of the
organization
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Steps in Case Method of Learning
The case method
includes four
interrelated
components
case study
case
analysis
case
discussion
reflection or
post-mortem
Preparation and Class Participation
essential to learning
Do
prepare well for the class develop
points of view on discussion
questions
speak up when you have something
to say
be precise and concise
take the class discussion forward
help the discussion to be inclusive
respect colleagues points of view
try to understand where they come
from
Dont
try to act smart in class
without prior reading/
preparation
Fly kites no silly remarks in
our class
go on a long-winded story
paraphrase, repeat what
others said
monopolise the class time
rubbish, shout down or flame
Enjoy learning experience be prejudiced
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Preparation Process - Some Tips
Reading
Read the case once rapidly to get an idea of its main issues and types
of information provided
Reread the case carefully and seek to understand the major issues
faced by decision maker
Sorting
Create a fact file with the main info and issues (identify the places,
persons, activities, and contexts of the situation where, who, what,
when, how, etc.).
Do enough number crunching to discover the story told by the data
presented in the case.
Cracking
Draw upon the concepts, tools, theories, frameworks learnt and your
own experiences and feel
Decide on issues to be resolved and seek balanced and practical
answers to them
Support any and all opinions with well-reasoned arguments and
numerical evidence; dont stop until you can purge I think and I
feel from your assessment and, instead, are able to rely completely
on My analysis shows.
@ Sougata Ray, IIMC
Preparation Process - Some Tips
Take a position on the decision issues with a clearly articulated
logic behind it
Think through the cons and unintended consequences of your
decision
Be in touch with the explicit and implicit assumptions you have
made
Remember, the actual decision is not as important as how you
arrived at the decision
Identify some of the important take ways from the case
How to Conduct a Case Analysis
Put yourself
inside the case
Think like an actual
participant
Try different
perspectives
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Positions to Take
Strategic
Decision
Maker
Board of
Directors
Outside
Consultants
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How to Conduct a Case Analysis
Step 1: Become familiar with the
material
Read quickly through the case one time
Use initial read-through to assess
possible links to strategic concepts
Read the case again, making notes
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How to Conduct a Case Analysis
Step 1: Become familiar with the
material
Evaluate how strategic concepts might
inform key decisions or suggest
alternative solutions.
After forming first recommendation,
thumb through the case again to assess
consequences of actions you propose
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How to Conduct a Case Analysis
Step 2: Identify problems
Some cases have more than one problem
Avoid getting hung up on symptoms
Articulate the problem
Some problems are not apparent until
after you do the analysis
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How to Conduct a Case Analysis
Step 3: Conduct strategic analyses
Determine which strategic issues are
involved
Use strategic tools to conduct the
analysis
Test your own assumptions about the
case
Tools to Conduct Analysis
Five forces analysis
Value-chain analysis
Scenario Planning
Resources &
Capability Analysis
Financial analysis
Gap Analysis
How to Conduct a Case Analysis
Step 4: Propose
alternative solutions
Develop a list of
options first without
judging them
Evaluate
alternatives
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How to Conduct a Case Analysis
Step 5: Make recommendations
Make a set of recommendations that
your analysis supports
Describe exactly what needs to be done
Explain why this course of action will
solve the problem
Include suggestions for how best to
implement the proposed solution
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Group Case Presentation
Organize your thoughts as if you are telling a
compelling story
Emphasize strategic analysis
Be logical and consistent
Defend your position
Share presentation responsibilities
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How to Get the Most from
Class Discussions
Keep an open mind
Take a stand for what you believe
Draw on your own personal experience
Participate and persuade
Be concise and to the point
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How to Get the Most from
Case Analysis (cont.)
Think out of the box
Learn from the insights of others
Apply insights from other case analyses
Critically analyze and reflect on your own
performance
Conduct outside research
Thank you!
Lets have some exciting and fruitful
learning experiences together !!!