STRATEGIC IT MANAGEMENT (SIM)

ITC405

3 CREDIT HOURS

DR. GABRIEL ARMAH

CKT-UTAS

FCIS

BUSINESS COMPUTING DEP’T

 COURSE OBJECTIVES

1. The course is designed to equip students with the capacity to explore

strategic IT modules for decision making.

2. Develop techniques and models to examine the IT business environment

for the purposes of analysis.

3. The ability to formulate and implement IT strategies in the business

environment.

4. Leverage IT tools to maximize returns on IT investments in order to

maximize organizational profits.

5. Appreciate the need to integrate IT in the business operation process.

Course Outline:

Introduction to SIM

Strategic management Models

Critical duties and driving forces of SIM

IT services providers, sourcing and profitability of business processes

Strategic Transitions (Changing one strategy to another)

Case Studies
Introduction to Strategic IT Management

Strategic Management
Strategy: a general plan that is created to achieve a goal usually in a long period of time.
Strategy: deliberate decisions or plans designed to impact favorably the key factors on which the
desired outcome of an organization depends for a longer period.
Management: It is a set of principles relating to the functions of planning, organizing, directing
and controlling and the application of these principles in harnessing physical, financial, human and
informational resources efficiently and effectively to achieve organizational goals.
Management (Van Fleet and Peterson): A set of activities directed at the efficient and effective
utilization of resources in the pursuit of one or more goals.
Strategic Management: the continuous planning, monitoring, analysis and assessment of all that
is necessary for an organization to meet its goals and objectives.
Strategic I.T Management: Strategic IT management means stabilizing and increasing the sales
of the company through new IT assisted processes and IT systems.
Strategic IT also means improving the margin protection of products and services, and enhancing
customer attraction and bonding.
Strategic I.T Management: Strategic IT management means stabilizing and increasing the sales
of the company through new IT assisted processes and IT systems.
Strategic IT also means improving the margin protection of products and services, and enhancing
customer attraction and bonding.
What is Strategic IT Management?
It is the conduct of Drafting, Implementing and Evaluating (DIE) cross-functional decisions in the
IT division in order to achieve the long term objectives and Goals.
To achieve this aim, strategic IT management requires a combination of strategic knowhow and a
thorough knowledge of the company and relevant sector.
Motivation of I.T Strategic Management Focuses on;
 How added value can be created for companies using IT
 Stabilizing and increasing sales of a company through new IT assisted processes and IT
systems.
 Requires a combination of strategic knowhow and thorough knowledge of the company.
 The solutions IT presents have been tried and tested.
 Faster product development with product life cycle management (PLCM).
Product Life Cycle Management: It is a software for managing the entire life cycle of a product
from inception through the engineering design, manufacturing services and dispersal.
Strategic Management Models
Strategic management is a broader term that includes not only the stages already identified but also
the earlier steps of determining the mission and objectives of an organization within the context of
its external environment. The basic steps of the strategic management can be examined through
the use of strategic management model.
The strategic management model identifies concepts of strategy and the elements necessary for
development of a strategy enabling the organization to satisfy its mission. Historically, a number
of frameworks and models have been advanced which propose different normative approaches to
strategy determination. However, a review of the major strategic management models indicates
that they all include the following elements:
1. Performing an environmental analysis.
2. Establishing organizational direction.
3. Formulating organizational strategy.
4. Implementing organizational strategy.
5. Evaluating and controlling strategy.
Strategic management is a continuous and dynamic process. Therefore, it should be understood
that each element interacts with the other elements and that this interaction often happens
simultaneously. The major models differ primarily in the degree of explicitness, detail, and
complexity. These differences derive from the differences in backgrounds and experiences of the
authors.
The models are the following;
 Andrews' Models.
 Glueck's Model.
 The Schendel and Hofer Model.
 The Thompson and Strickland Model.
 Korey's Model.
 Schematic Model.
Other models for strategic decisions include;
 Balanced Scorecard.
 Strategy Map.
 Value Chain Analysis.
 SWOT Analysis.
 PEST Model.
  Gap Planning.
 Red-Blue Ocean Strategy.
 Porter's Five Forces Model

Developing Strategic Management Process

Frederick W. Glueck, Stephan P. Kaufman, and A. Steven Walleck, studied the evolution of
strategic management in 120 companies.
They suggested that strategic planning in most organizations must evolve through four sequential
phases.
Phase 1 Basic financial planning. Organizations in phase 1 emphasize preparing and meeting
annual budgets. Financial targets are established and revenues and costs are carefully monitored.
The emphasis is short-term, and the primary focus is on the functional aspects of the organization.
Most organizations in this phase exhibit few other characteristics relating to the future.
Phase 2 Forecast-based planning. Organizations in phase 2 usually extend of the time frames
covered by the budgeting process. Managers tend to seek more sophisticated forecasts and to
become aware of their external environment and its effect on their organizations. Therefore,
organization in phase 2 has more effective resource allocation and more timely decisions relating
to organization's long-range competitive position.
Phase 3 Externally oriented planning. Phase 3 is characterized by the attempt to understand
basic marketplace phenomena. Organization begin to search for new ways to define and satisfy
customer needs. Moreover, phase 3 differs from the earlier phases that the corporate planners are
expected to generate a number of alterative courses of action for top management. Top
management begins to evaluate strategic alternatives in a formalized manner to planning and
actions.
Phase 4 Strategic Management. Phase 4 is characterized by the merging of strategic planning
and management into a single process. This integrated approach is accomplished through the
presence of three elements: pervasive strategic thinking (managers all levels have learned to
think strategically), comprehensive planning process, and supportive value system.

STRATEGIES AND MODELS

Strategic management, as the process of business strategy formulation and strategy
implementation, is concerned with establishing goals and directions and developing and carrying
out plans to achieve those goals. The essence of these strategies in the management process is to
keep the organization competitive with respect to its Key Performance Indicators (KPIs).
These are strategies which can be implemented throughout the structural change in the
organization to expand market shares and maintain competition, these structural change ranges
from Corporate level strategies, Horizontal and Vertical Integration processes and even,
Franchises, mergers and Acquisitions.
*PORTER’S FIVE FORCES MODEL
The Five Forces Model: Porter’s model helps you analyze your industry.
How can your organization use a CRM system to decrease the power of your buyers?
How can your organization use an SCM system to reduce the power of your suppliers?
What role will ICEs play in helping your organization enter a market or sell substitute and/or
complementary products and services in your market?
What business intelligence does your organization need to better understand the competitive
landscape of a given industry? Porter’s model suggests such questions you need to ask—and
answer.

*BUYER POWER
Competitive advantages are created to get buyers to stay with a given company
Competitive advantage
First-mover advantage
All competitive advantages are fleeting
*SUPPLIER POWER
The opposite of buyer power

*THREAT OF SUBSTITUTE PRODUCTS AND SERVICES

Switching costs can reduce this threat, switching cost are the cost that a consumer incurs as a result
of changing brands, suppliers or products. Although most prevalent switching costs are monetary
in nature, there are also psychological, effort- and time-based switching costs.
*THREAT OF NEW ENTRANTS
Entry barriers: They are the existence of high startup costs or other obstacles that prevent new
competitors from easily entering an industry or are of business.
*RIVALRY AMONG EXISTING COMPETITORS
General trend is toward more competition in almost all industries. IT has certainly intensified
competition in all sectors of business
*PORTER’S THREE GENERIC STRATEGIES
Michael Porter developed three generic strategies that a company could use to gain competitive
advantage, back in 1980.
He regarded the selection of a defendable position within an industry as the end result of a
competitive strategic analysis. He argued that successful, profitable companies generally choose
to compete on either low costs or by differentiating their products to meet specific customer needs.
Although these
two strategic options are mutually exclusive, he added a third category of firms as niche players
that serve a specific market or product segment. Porter's three generic strategies are:

 *overall cost Leadership

 *Differentiation
 *Focus

ALTERNATIVE BUSINESS STRATEGY FRAMEWORKS

Top line versus bottom line
Run-grow-transform (RGT) framework
TOP LINE VERSUS BOTTOM LINE
Top Line (increase revenue): The top line refers to a company's gross sales or revenues.
Therefore, when people comment on a company's "top-line growth", they are making reference to
an increase in gross sales or revenues.
Bottom line (minimize expenses): A company's bottom line is its net income, or the "bottom"
figure on a company's income statement.
More specifically, the bottom line is a company's income after all expenses have been deducted
from revenues. These expenses include interest charges paid on loans, general and administrative
costs and income taxes. A company's bottom line can also be referred to as net earnings or net
profits.

RGT FRAMEWORK
The RGT framework is helpful in decisions about allocating percentages of your IT dollars to the
various activities involved in running your existing business and processes, in growing your
business, and/or in transforming your business in entirely new ways of operation. Again, you have
many questions to answer.
Can your organization use a CRM system to find a new market segment of customers? If so, the
CRM system enhances the “Grow” aspect of the framework.
How can your organization use an SCM system to create a tight supply chain, thus driving out
costs and supporting the “Run” aspect of the framework?
How can your organization bring together teams of people (supported by ICEs) and equip them
with the necessary business intelligence to determine how to “Transform” your organization?
How will you allocate IT resources to;
Run
Grow
Transform
COMPARING PORTER, TOP LINE VRS BOTTOM LINE AND RGT
Run = overall cost leadership = bottom line
Grow = focus and differentiation = top line
Transform = (new) differentiation = top line (when the focus is innovation).
VALUE-CHAIN ANALYSIS
Value chain: It is a high-level model developed by Michael Portal used to describe the process
by which businesses receive raw materials, add value to the raw materials through various
processes to create a finished product and then sell that end product to customers. The value chain
approach suggests quantifiable metrics concerning the value-added your organization provides to
its customers. But from where will you gather that information about your customers’ perceptions?
Value-chain analysis: It is a strategy tool used to analyze internal firm activities. Its goal is to
recognize which activity are most valuable (i.e. Are the source of cost or differentiation advantage)
to the firm and which ones could be improved to provide competitive advantage.
Business process: It a collection of linked tasked which find their end in the delivery of a service
or product to a client. Or a set of activities and tasks that, once completed, will accomplish an
organizations goals.

VALUE-CHAIN ANALYSIS
Primary value process
Inbound Logistics
This refers to everything involved in receiving, storing and distributing the raw materials used in
the production process.
E.g. The restaurant has a strong focus on different activities, such as materials handling, so as to
have quality food delivered to the consumers.
Operations
This is the stage where raw products are turned into the final product.
E.g. The restaurant has a strong focus on having appropriate operations which are in line with the
needs and demand of the consumers across the market.
Outbound logistics: This is the distribution of the final product to consumers.
Marketing and Sales
This stage involves activities like advertising, promotions, sales-force organization, selecting
distribution channels, pricing, and managing customer relationships of the final product to ensure
it is targeted to the correct consumer groups.
E.g. The restaurant has a strong focus on the marketing of the company. The company relies highly
on operations and quality with which the company is able to gain the credibility of the consumers.
This enables the restaurant to attract mass market with a focus on word of mouth.
Service
This refers to the activities that are needed to maintain the product's performance after it has been
produced. This stage includes things like installation, training, maintenance, repair, warranty and
aftersales services.
Activities designed to enhance or maintain a product’s value. The company has a strong focus on
providing high quality service to the consumers with a strong focus on training and development
for the consumers.
Support value process
Procurement This is how the raw materials for the product are obtained.
E.g. The company has a strong focus on purchasing the materials of high quality which is
consumed by the consumers.
Technological Development: Technology can be used across the board in the development of a
product, including in the research and development stage, in how new products are developed and
designed, and process automation.
E.g. The restaurant has a strong focus on improving the process as well as the product of the
company by implementing different technological development which helps it to have competitive
edge in the market of its operations.
Human Resource Management: These are the activities involved in hiring and retaining the
proper employees to help design, build and market the product.
E.g. Activities involved with recruiting, hiring, training, developing, and compensating all
personnel.
Firm Infrastructure: This refers to an organization's structure and its management, planning,
accounting, finance and quality control mechanisms.
E.g. The restaurant has a strong focus on the management as well as infrastructure of the company
which helps in enhancing the value of the firm; the company also has a strong focus on different
activities such as general management, planning, finance, accounting, legal support, and
governmental relations that are required to support the work of the entire value chain. The company
focused on having its restaurant at the premium market places, it also focuses on different aspects
such as the ambiance and the environment of the restaurant which helps the restaurant to have
competitive edge and build its core competencies.
Ask customers which processes add value and which processes reduce value Focus IT
appropriately.

VALUE-REDUCING PROCESSES
Ideally, your value chain analysis will help your company identify areas that can be optimized for
maximum efficiency and profitability.
The importance of value chain analysis is that it can help you assess costs in your chain that
might be reduced or impacted by a change in one of the chain's processes. By comparing your
value chain to your competitors, you can often find the areas or links of the chain where they might
be more efficient than you; that points the direction for you to improve.
However, you need to understand that the value chain will be influenced by the type of small
business strategy you and your competitors follow: if you are the high value, high quality market
leader, your chain will be quite different than the low cost, high volume competitor. Understand
how those differences influence your analysis and make sure that your business strategy is in-tune
with your market and with your strategic objectives.
 Expect your competitors to have a value chain quite different than yours; because their business
grew from a different set of circumstances and a different set of operating parameters than your
business.

Driving Forces of IT
What value does IT provide for the company?
I.T does not only cut-down cost but also helps organizations by granting them the potentials of
adding value, enabling new market discovering and helps companies overcome the challenges of
globalization. In this context technology should not be a neutral component of the business
processes, when effectively integrated into the business it aids in the achievement of organizational
goals.
The driving force includes;
 It results in new product creation.
 Channel of sales (easy sales)
 Value addition to products
 Value driver of companies and also impact the operations of a company.
The Three Critical Duties of the SIM
Strategic IT management has three crucial imperatives that create new perspectives for using IT:
 Drive Value: IT justifies its existence through its support of corporate strategy. Deriving
IT strategy from corporate strategy and/or shaping corporate strategy via IT strategy
increases IT’s potential to reduce business process costs and benefit operations, and
ultimately enhance revenues, and create value. Case studies from a number of sectors show
how IT can be used as an enabler for business. The more IT alters business operations, the
more the company itself will be transformed. Carrying out this transformation in such a
way that the user is able to reap the value of IT is the task of enterprise transformation.
Successful external growth and streamed portfolios demand comprehensive adjustments
to both IT and business processes as part of IT merger integration and IT carve out.

 Control output: The value of IT can be measured and thus controlled, but only if the
organizational framework of IT governance is a given. IT governance provides a blueprint
for IT within the company – a kind of IT ‘highway code’. IT planning that is an integral
part of corporate planning identifies cost saving potentials and ensures that the IT budget
no longer restricts value enhancement. IT performance management is a universal IT
management and control instrument that quantifies and controls the value of IT in direct
alignment with corporate strategy.
  Reduce costs: Cutting costs in IT also means increased performance, yet not by making
sweeping cuts across the board. IT optimization involves providing the best possible
support for business processes at the lowest possible cost. Furthermore, setting up internal
IT service providers and sourcing IT externally as part of IT outsourcing and IT offshoring
will also further enhance the cost-cutting potential of the IT. Based on numerous
international consulting projects and worldwide studies, we are convinced that IT
generates more value through its benefits for operations than is generated by reducing
spending in the IT department itself.

IT service Providers and Sourcing

Information Technology Services; refers to the application of business and technical expertise
to enable organizations in the creation, management and optimization of or access to information
and business processes.

IT Service Providers; These are entities which offer information technology packaged products
and services. These services and products includes business support and management services.
The IT services market can be segmented by the type of skills that are employed to deliver the
service (design, build, run). There are also different categories of service: business process
services, application services and infrastructure services.
If these services are outsourced, they are referred to as Business Process Outsourcing (B.P.O),
Applications Outsourcing (A.O) and Infrastructure Outsourcing (I.O).

IT externally as part of its outsourcing and out sharing further enhances the cost cutting potentials
of the IT.
IT generates more value through its benefits for operations than it is generated by reducing
spending in the IT department itself.
Strategically, it is not reducing IT spending that is most crucial, but rather increasing the impact
of IT on operations.
NB:
IT investment must be measurable as any other investment in terms of impact in sales and cost.
Also in terms of its contribution to increasing the value of the company.
IT’s Potentials to Increase the Profitability of Business Processes Assures revenue and increase in
sales;
Using IT to specifically increase value in an area can have a positive effect.
Thus,
Faster order-to-dispatch times.
Higher-quality
Stronger customer bonding
More intelligent Product design. We therefore say that,
Rather than lowering IT cost, firms should make efforts to implement their IT very effectively.
This is because IT is vital to value addition to products and services offered by the organization
hence, increases revenue which might lead to increased profits.

Benefits of Integrating IT into Business Processes

Enhancing Value: IT as a Value Driver for the Company CRM, CAD, ERP – the world of IT is
teeming with acronyms that promise considerable benefits for business operations. Yet managers
themselves are usually only sure of one thing: these terms all involve huge costs. How can they
find out which IT investments are worth the expense? This is one of the most widely-debated
issues at congresses and in the IT press and also between IT managers and senior executives. And
the answer is seductively simple: those IT investments that make the greatest contribution towards
implementing the goals of the company at the lowest possible cost are the ones that make most
economic sense. But which investments are we talking about?
Future-oriented: IT investments must be closely aligned to the goals of corporate strategy.
Therefore, the job of IT strategy is to identify innovative projects that will sustain the
competitiveness of the company and increase its value down the line.
Using IT in this sense as an enabler for business means:
Reducing costs for the company (but not only IT costs) – e.g. by reducing inventories thanks
to optimized production planning (for example in the automotive industry), greater transparency
and better logistics planning.
Strengthening revenues – e.g. by enhancing customer bonding through CRM thanks to more
information about the customer and closer contact with them or through better supply chain
management through marketplaces – or even
Increasing sales – e.g. through new business fields such as information services or higher
customer benefits through additional product features and supplementary services to the product
and ‘intelligent products’, which bond the product user more closely and permanently to the
company and reinforce the customer’s inhibitions to switch to other suppliers.
However, realizing added value with IT will always be restricted to the extent to which users
exploit IT functionalities, i.e. there is more to it than just integrating IT strategy into corporate
strategy. Leading enterprises not only modify their IT, they also align the entire company structure
(including all the interfaces) to their customers and suppliers as part of a comprehensive enterprise
transformation process, so that IT can achieve its positive impact on the business processes. A
special role is also played by IT in supporting the external growth strategies of enterprises. When
properly implemented, IT has a lot of influence on the short- and medium term success of mergers
in the form of well-directed IT merger integration, as well as on the success of disinvestments with
IT disintegration.
Using IT as an enabler for business The value of IT is measured by the results that enterprises can
achieve by using IT in primary business. Many enterprises already have extensive experience with
innovative technologies. It is remarkable that the pioneers in the use of new technologies include
not only IT-oriented sectors, such as banks or the automotive industry, but also sectors in which
the concept of value creation with IT is not evident at first glance, for example container logistics
enterprises or manufacturers of agricultural machinery.
However, not every IT application has the same impact on every company. The possible effects of
IT are influenced by a number of internal and external factors. The potential benefit of using data
warehousing, for example, depends among others on the degree of standardization of IT in the
company. In many cases, the customers and suppliers must also be persuaded to align their own
interfaces to the new IT systems of the enterprise, for example when supply chain management
systems are used.
When today’s enterprises think about the value enhancing use of IT for their business operations,
they are in no sense entering unknown territory. They can learn from enterprises in other sectors
who have already successfully implemented IT to optimize their business processes, to directly
assure or increase their sales or to use IT as an integral part of their end product to trigger new
customer demand, thus directly developing new sales potential through the use of IT:
Optimizing business processes by:
cutting costs in business processes by introducing and optimizing ERP
boosting efficiency and improving customer service with IT solutions and mobile
communication technologies
reducing and improving supply chain output with integrated supply chain planning systems
(SAP APO)
reducing costs with IT-assisted maintenance in machinery-oriented business lines
sinking procurement costs through comprehensive system support. Assuring and increasing
sales by; diversified potential benefit with data warehousing
faster product development with Product Lifecycle Management (PLM) in engineering- oriented
industries
increased sales with CRM technologies
 faster turnover by shortening clinical phases until registration with IT-assisted document
management in the pharmaceutical industry
higher level of customer bonding through better information exchange in global container
logistics IT as a component of the end product through: Independent IT-assisted services,
Intelligent products and the potential effects of IT function like building blocks.
For instance, it is nearly impossible for a company to develop new, IT-assisted business fields if
the company has not intensively studied the use of IT for increasing efficiency and assuring
revenues, thus, gaining an understanding of the IT learning curve.

STRATEGIC TRANSITIONS (CHANGING ONE STRATEGY TO ANOTHER)

CHANGING STRATEGIC SITUATION
Why the Need for Change in Strategy?
Strategy, complexity and change encapsulates the core challenges facing organization today.
When existing strategies are not meeting KPIs and there is the need to maintain and sustain
competition hence the need to provide direction and purpose to align management plans with
organizational objectives and goals.
Strategic planning is different from strategic management, in that: planning, being a set of possible
choices for action is, by itself an organized process of collective change.
To embrace aims, norms, resource, criteria of choice, structures, organizational, institutional and
personal relations.
Strategic planning enables businesses to establish clear objectives and formulate a plan to achieve
them. Companies with strategic planning have better understanding of the position and directions
of the business and the type of change that can be implemented in the long run.
The kind of changes to implement is what brings about more specific conduct such as;
 Change management strategies needed to manage change, given the unique situation of the
project or initiative.
 Introducing change normally
 Impact people and their old way of doing work.
 Suffer from slow adaption and low utilization.
 Has the risk associated with people not becoming engaged or restricting the changes?
 While each of the initiatives needs change management to be successful, the right amount
and approach for change management will be different.
ELEMENT OF CHANGE MANAGEMENT STRATEGY
Every CMS must include:
  An understanding of the unique characteristics of the change.
 A supporting structure to implement the strategy.
 Analysis of the risks of the change and potential resistance to the change.
SITUATIONAL AWARENESS
How big is the change?
Who will it affect?
How has the company handled a similar change before?
These are some of the questions you will need to answer as you prepare for the change.
These are some of the questions you will need to answer as you prepare a strategy for managing
change. Situational awareness of change characteristics begins by understanding the change that
is being introduced. Changes that can be formalized projects, strategic initiatives or even small
adjustments to how the organization operates.
Understanding the characteristics of change requires you to answer questions like:
What is the scope of change?
How many people will be impacted?
Who is being impacted?
How they are impacted? (Are the people being impacted the same way or they experiencing the
change differently?
What is being changed (processes, systems, job roles etc.)?
The time change or timeframe for the change.
SITUATIONAL AWARENESS OF CHANGE (ORGANISATIONAL AWARENESS)
This is related to the history and culture in the organization and describes the backdrop against
which this particular change is being introduced. Consider the What and the How:
The perceived need for this change among employees and managers.
The past changes been managed
Is there shared vision for the organization?
Number of change currently on going.
SITUATIONAL AWARENESS OF CHANGE (IMPACTED GROUPS) FINAL STAGE
Develop a map of who is impacted by the change and how they are being impacted. A single
change, such as development of a web-based expenses reporting program, will impact different
groups uniquely:
Employees who do not have expenses to report will not be impacted at all.
 Staff who travel once a quarter may be only slightly impacted.
Associates who are on the road all the time will be more impacted, although filing expenses is
only a portion of their day-to-day work.
Those in accounting who manage expense reporting will be heavily impacted, as their jobs will
be completely altered.
Outlining the impacted groups and how they will be impacted enables specified customized plans
later in the change management process.
SUPPORTING TEAM STRUCTURE
Without a team and sponsor to support your change, management strategy, it will be very difficult
to implement plans successfully.
The change management team structure identifies who will be doing the change management
work.
It outlines the relationship between project teams and the change management system.
TEAM STRUCTURE
Project manager (from change managers)
Centralized changed management team supporting a project team.
Change management being a responsibility assign to one of the project team members.
A specific and informed decision need to be develop when assigning change management
responsibility and resources.
SPONSOR COALITION
Describes the leaders and managers who need to be on board and activity engage in leading the
change. A primary sponsor is the person who authorizes and champions change.
CHANGE MANAGEMENT STRATEGY ANALYSIS (PROJECT RISK ASSESSMENT)
Successful strategies of change must include:
Assessments
Analysis of the characteristics of change.
Custom solutions for any unique situation of the change.
Risk: In developing the strategy, the change management team document the overall risk
specific risk factors.
Change management strategy analysis (Anticipated resistance).
In creating a strategy for change management, identify where resistance can be expected and
diffusing all forms of resistance before implementing change.
NB: A particular anticipated resistance depends on how each group is related to the change.
CHANGE MANAGEMENT STRATEGY ANALYSIS (DEVELOPING SPECIAL
TACTICS)
The final step of the change management strategy is the identification of any special tactics that
will be required for this particular change initiative.
The special tactics formalizes many of the learnings from the strategy development related to the
change and how it impacts different audiences in the organization.
Throughout the change implementation, special tactics may need to be revisited and updated.

Some Strategic Situations

A Paradigm is a typical example, pattern or model of something.
A Paradigm shift: simply refers to the fundamental change in approach / model or underlying
assumptions.
Paradoxes: A paradox is a statement or proposition which, despite sound (or apparently sound)
reasoning from true premises, leads to a self-contradictory or a logically unacceptable conclusion.
Complexity: the state or quality of being intricate or complicated.
Chaos: Complete disorder or confusion.
Chaos theory: A scientific principle describing the unpredictability of systems.
A double rod pendulum animation showing chaotic behavior. Starting the pendulum from a
slightly different initial condition would result in a completely different trajectory
Turbulence: violent or unsteady movement through a medium. In the relation to Strategic
Management, it could be defined as a rough or unsteady progression or implementation of strategic
plans.
Uncertainty: the state of being in doubt or qualm.

CASE STUDY
Case Study CASES IN STRATEGIC I.T MANAGEMENT
In strategic IT management, students use cases about actual companies to practice strategic
analysis and to gain some experience in the tasks of crafting and implementing strategy. A case
sets forth, in a factual manner, the events and organizational circumstances surrounding a
particular managerial situation. It puts readers at the scene of the action and familiarizes them with
all the relevant circumstances. A case on strategic management can concern a whole industry, a
single organization or some part of an organization; the organization involved can be either profit-
seeking or not-for-profit. The essence of the student’s role in case analysis is to diagnose and size
up the situation described in the case and then to recommend appropriate action steps.
WHY USE CASES TO PRACTICE STRATEGIC MNAGEMENT
The truth is that the mere act of listening to lectures and sound advice about managing does little
for anyone’s management skills. Accumulated managerial wisdom cannot effectively be passed
on by lectures and assigned readings alone. If anything had been learned about the
practice of management, it is that a storehouse of readymade textbook answers does not exist. Each
managerial situation has unique aspects, requiring its own diagnosis, judgment and tailor-made
actions. Cases provide would-be managers with a valuable way to practice wrestling with the
actual problems of actual managers in actual companies. The case approach to strategic analysis
is, first and foremost, an exercise in learning by doing. Because cases provide detailed information
about conditions and problems of different industries and companies, your task of analyzing
company after company situation after situation has the twin benefit of boosting your analytical
skills and exposing you to the ways companies and managers actually do things.
Cases help substitute for on-the-job experience by
1. Giving you a broader exposure to variety of industries, organizations and strategic problems.
2. Forcing you to assume a managerial role (as opposed to that of just an onlooker).
3. Providing a test of how to apply the tools and techniques of strategic management.
4. Asking you to come up with pragmatic managerial action plans to deal with the issues at hand.
OBJECTIVES OF CASE ANALYSIS
Using cases to learn about the practice of strategic management is a powerful way for you to
accomplish five things:
1. Increase your understanding of what managers should and should not do in guiding a business
to success.
2. Build your skills in sizing up company resource strengths and weaknesses and in conducting
strategic analysis in a variety of industries and competitive situations.
3. Get valuable practice in identifying strategic issues that need to be addressed, evaluating
strategic alternatives and formulating workable plans to action.
4. Enhance your sense of business judgment, as opposed to uncritically accepting the authoritative
crutch of the lecturer or “back-of-the-book” answers.
5. Gaining in-depth exposure to different industries and companies, thereby acquiring something
close to actual business experience. If you understand that these are the objectives of case analysis,
you are less likely to be consumed with curiosity about “the answer to the case.” Students who
have grown comfortable with and accustomed to textbook statements of fact and definitive lecture
notes are often frustrated when discussions about a case do not produce concrete answers. Usually,
case discussions produce good arguments for more than one course of action. Differences of
opinion nearly always exist. Thus, should a class discussion conclude with a strong, unambiguous
consensus on what to do, don’t grumble too much when you are told what the answer is or what
the company actually did. Just remember that in the business world answers don’t come in
conclusive black-and-white terms, there are nearly always feasible courses of action and
approaches, each of which may work out satisfactorily.
The only valid test of management action is results. If the results of an action turn out to be good,
the decision to take it may be presumed right. If not, then the action chosen was wrong
in the sense that it didn’t work out. Hence, the important thing for students to understand in case
analysis is that the managerial exercise of identifying, diagnosing and recommending builds your
skills; discovering the right answer or finding out what actually happened is no more than frosting
on the cake. Even if you learn what the company did, you can’t conclude that it was necessarily
right or best. All that can be said is “Here is what they did …”
The point is this: The purpose of giving you a case assignment is not to cause you to run to the
library or surf the internet to discover what the company actually did but, rather, to enhance your
skills in sizing up situations and developing your managerial judgment about what needs to be
done and how to do it. The aim of case analysis is for you to become actively engaged in diagnosing
the business issues and managerial problems posed in the case, to propose workable solutions, and
to explain and defend your assessments – this is how cases provide you with meaningful practice
at being a manager.
PREPARING A CASE FOR CLASS DISCUSSION
To prepare a case for class discussion, the following approach is recommended:
1. Skim the case rather quickly to get an overview of the situation it presents. This quick overview
should give you the general flavor of the situation and indicate the kinds of issues and problems
you will need to wrestle with. If your instructor has provided you with study questions for the case,
now is the time to read them carefully.
2. Read the case thoroughly to digest the facts and circumstances. On this reading, try to gain full
command of the situation presented in the case. Begin to develop some tentative answers to the
study questions.
3. Carefully review all the information presented in the exhibits. Often, it is an important story in
the numbers contained in the exhibits. Expect the information in the case exhibits to be crucial
enough to materially affect your diagnosis of the situation.
4. Decide what the strategic issues are. Until you have identified the strategic issues and problems
in the case, you don’t know what to analyze, which tools and analytical techniques are called for,
or otherwise how to proceed. At times the strategic issues are clear. They are either stated directly
in the case or easily inferred from it. At other times, you will have to dig out the issues from all
the information given.
5. Start your analysis of the issues with some number crunching. A big majority of strategy case
call for some kind of number crunching – calculating assorted financial ratios to check out the
company’s financial condition and recent performance, calculating growth rates of sales or profits
or unit volume, checking out profit margins and the makeup of the cost structure, and
understanding whatever revenue-cost-profit relationships are present.
6. Apply the concepts and techniques of strategic analysis you have been studying. Strategic
analysis is not just a collection of opinions; rather, it entails applying the concepts and analytical
tools that you’ve studied to cut beneath the surface and produce sharp insight and understanding.
Every case assigned is strategy related and presents you with an opportunity to usefully apply what
you have learned. Your instructor is looking for you to demonstrate that you know how and when
to use them.
7. Check out conflicting opinions and make some judgments about the validity of all the data and
information provided. Many times, cases report views and contradictory opinions (after all, people
don’t always agree on things, and different people see the same
things in different ways). Forcing you to evaluate the data and information presented in the case
helps you to develop your powers of inference and judgment. Resolving conflicting information
comes with the territory because a great many managerial situations entail opposing point of view,
conflicting trends, and sketchy information.
8. Support your diagnosis and opinions with reasons and evidence. Most important is to prepare
your answers to the question “Why?’’ For instance, if after studying the case you are of the opinion
that the company’s managers are doing a poor job, then it is your answer to “Why do you think
so?” that establishes just how good your analysis of the situation is.
9. Develop an appropriate action plan and set of recommendations. Diagnosis unconnected from
corrective action is sterile. The test of a manager is always to convert sound analysis into sound
actions that will provide the desired results. Hence, the final and most telling step in preparing a
case is to develop an action agenda for management that lays out a set of specific
recommendations. Bear in mind that proposing realistic, workable solutions is far preferable to
casually tossing out top-of-the-head suggestions. Be prepared to explain why your
recommendations.
Examples 1:
Doordarshan Case DD is the India’s premier public service broadcaster with more than 1,000
transmitters covering 90% of the country’s population across on estimated 70 million homes. It
has more than 20,000 employees managing its metro and regional channels. Recent years have
seen growing competition from many private channels numbering more than 65, and the cable and
satellite operators (C & S). The C & S network reaches nearly 30 million homes and is growing at
a very fast rate.
DD’s business model is based on selling half – hour slots of commercial time to the program
producers and charging them a minimum guarantee. For instance, the present tariff for the first 20
episodes of a program GHS30 plus the cost of production of the program. In exchange the
procedures get 780 seconds of commercial time that he can sell to advertisers and can generate
revenue. Break-even point for procedures, at the present rates, thus is GHS75.000 for a 10 second
advertising spot. Beyond 20 episodes, the minimum guarantee is GHS65 for which the procedures
have to charge GHS1,150,000 for a 10 second spot in order to break-even. It is at this point the
advertisers face a problem – the competitive rates for a 10 second spot is GHS50.000. Procedures
are possessive about buying commercial time on DD. As a result, the DD’s projected growth of
revenue is only commercial time on DD. As a result, the DD’s projected growth of revenue is only
6- 10% as against 50-60% for the private sector channels. Software suppliers, advertisers and
audiences are deserting DD owing to its unrealistic pricing policy. DD has options before it. First,
it should privates, second it should remain purely public service broadcaster and third, a middle
path.
The challenge seems to be exploit DD’s immense potential and emerge as a formidable player in
the mass media.
i. What is the best option, in your view, for DD?
ii. Analyze the SWOT factors the DD has.
iii. Why do you think that the proposed alternative is the best?
Answer
(i.) For several years Doordarshan was the only broadcaster of television programs in India. After
the opening of the sector to the private entrepreneur (cable and satellite channels), the market has
witnessed major changes. The number of channels have increased and also the quality of programs,
backed by technology, has improved. In terms of quality of programmers, opportunity to advertise,
outreach activities, the broadcasting has become a popular business. Broadcasters too have realized
the great business potential in the market. But for this, policies need to be rationalized and be
opened to the scope of innovativeness not only in term of quality of programs. This would not
come by simply going to more areas or by allowing bureaucratic set up to continue in the
organization. Strategically the DD needs to undergo a policy overhaul. DD, out of three options,
namely privatization, public service broadcaster or a middle path, can choose the third one, i.e. a
combination of both. The whole privatization is not possible under the diversified political
scenario. Nor it would be desirable to hand over the broadcasting emotively in the private hand as
it proves to be a great means of communication of many socially oriented public programmers.
The government could also think in term of creating a corporation (as it did by creating Prasar
Bharti) and provide reasonable autonomy to DD. So far as its advertisement tariff is concerned
that can be made fairly competitive. However, at the same time cost of advertising is to be
compared with the reach enjoyed by the Doordarshan. The number of viewers may be far more to
justify higher tariffs.
(ii)
The SWOT analyses involves study of strengths, weaknesses, opportunities and threats of an
organization. SWOT factors that are evidently available to the Doordarshan are as follows:
S – Strength
More than 1000 transmitters.
Covering 90% of population across 70 million homes against only 30 million home by C & S.
More than 20,000 employees.
W – Weakness
Rigid pricing strategy.
Low credibility with certain sections of society.
Quality of programs is not as good as compared to C & S network
O– Opportunities
Infrastructure can be leased out to cable and satellite channel.
Digital terrestrial transmission.
Regional focused channels.
Allotment of time, slots to other broadcasters.
T – Threats
Desertion of advertisers and producers may result in loss of revenues.
Due to quality of program the reach of C & S network is continuously expanding.
As the C& S network need the trained staff, some employees of DD may switchover and take new
jobs.
Best of the market-technology is being used by the private channels.
(iii)
It is suggested that the DD should adopt a middle path. It should have a mix of both the options. It
should have economized on its operational aspects and ensure more productivity in term of revenue
generation and optimization of use of its infrastructure. Wherever, the capacities are underutilized,
these may be leased out to the private operations. At the same time quality and viewership of
programs should be improved. Bureaucracy may reduce new strategic initiatives or make the
organization less transparent. Complete privatization can fetch a good sum and may solve many
of the managerial and operational problems. However, complete public monopoly is not advisable
because that denies the government to fully exploit the avenue for social and public use. The
government will also lose out as it will not be able to take advantage of rising potential of the
market.
Example 2
On the evening of March 17, 2000, a fire started as the result of lightning striking into the energy
and electrical system of a factory of semiconductors in Albuquerque belonging to Philips
Electronics N.V. At that time, Philips was the main supplier of micro-chips for mobile phones to
main European producers, including Ericsson (the only supplier) and Nokia.
The fire was not dangerous – it ended after 10 minutes without the Fire Department’s involvement,
and the direct damages were minor (only eight containers with several thousand products were
affected). As it appeared after some time, more serious damages occurred in neighboring rooms as
anti-fire system started the sprinkler system, and the resulting smoke damaged millions of elements
in those rooms. Also, some assemblies were damaged. The production was re-started after 3 weeks,
however after 6 months, the production level decreased by 50% from the level before the fire.
The logistics department of Nokia not only noticed the problem, but also properly assessed the
problem before it was announced by the supplier (thanks to good supply monitoring) – it was
March 20 when officials at Nokia were first informed about the fire. Nokia did not fully rely on
the information from Philips, so they sent their engineers to Albuquerque to assess the situation
for themselves. The
delegation was not well-received, however, and after assessing the situation, it gave an overview
that it would take months– not weeks –for the factory to recover.
Immediately, specific action steps were undertaken. Firstly, the monitoring of supplies was
intensified – Instead of weekly checks or inspections, quality control checks were implemented,
on a daily basis. Secondly, on the highest level Philips was forced to ensure the quantities of
deliveries and to ensure that any shortage in deliveries would be completed by the products from
other factories of Phillips. Thirdly, official representatives of Nokia, were sent to suppliers in The
USA and Japan (Nokia avoided single sourcing) to press for higher deliveries from them. Finally,
steps were taken to replace the chips used at the time, with alternative ones so that they could be
purchased from other sources.
Ericsson did not monitor and control their deliveries in a strict or precise manner, and due to their
lack of close monitoring, they found out about the accident after a long time from the producer in
a very low-key notice (which ensured that the delay would take one week which should not cause
any problems). Ericson did not follow-up or verify the information and did not undertake any
activities until April. After this time all of the reserves belonged to Nokia.
Questions:
After reading the case study and the paper, determine the kinds of risk that occurred in the case
study described above?
Classify the events/decisions and assign them into the stages of risk management
What helped Nokia to identify the problem?
Describe the actions of Nokia and compare them to the procedures/actions of Ericson; discuss their
results
Provide the solutions for the situation in Ericson in the context of ineffective reaction to risk, and
propose something to Ericson to ensure the supply/production chain was not disrupted – compare
your proposals/solutions with what they eventually did (cooperation with Sony).

APPLE’S PROFITABLE BUT RISKY STRATEGY

1. Using the concepts, undertake a competitive analysis of both Apple and Nokia – who is stronger?
Relevant concepts in the are mainly from: value added, sustainability, processes to deliver strategy,
competitive advantage, linkages, vision.
Apple strengths: Strong brand name, market leader in music delivery, user-friendly products,
design skills, quality, exclusive contracts, profitable, strong vision.
Apple weaknesses: High(er) price, limited distribution, small share of large phone market, features
can be replicated over time.
Nokia strengths: Brand name, dominant position in mobile phone market, good products,
profitable, strong processes to delivery new strategies.
Nokia weaknesses: Mature phone market, little involvement in music market to the present, its
new music service has no clear sustainable advantage.
Given Apple’s previous profit record, there is no doubt that it has benefited significantly from its
move into recorded music and the iPod. However, the extension into Apple mobile telephones
remained to be proven at the time of writing. It suddenly faced some very large companies – like
Nokia – with both the resources and the desire to take advantage of the market opportunities.
Is Apple stronger than Nokia? In the short term, arguably the answer is that they both have their
strengths. However, Nokia is just moving into the recorded music market and it has already
produced its own version of the touch phone [with clear advantages over the iPhone according to
one independent magazine review]. Thus it is worth clarifying the question of ‘who is stronger’
with respect to the time frame.
In the long run, it may be that Nokia will emerge stronger. At the time of writing, Apple’s strategy
of premium pricing for its phone service had to be revised downwards – it simply was not hitting
its sales targets. In addition, Apple managed to upset some loyal customers by introducing a new
version of its phone that had more features and was also lower-priced. Apple does not look like a
company that is strong in the mobile phone market.
But Apple had one great competitive advantage: its technology and software were superior – i.e.
more user=friendly – than Nokia. The Finnish company understood the competitive threat from
the new smartphones but failed to recognize that its software was not up to the task. Even in 2013,
Apple has not taken a dominant share of the mobile phone market, but it is highly profitable.
By contrast, Nokia is really struggling.
Importantly with regard to assessing who is stronger, it is essential to identify the uncertainties in
the market place – new technologies, responses of consumer electronics companies, etc. These
should add up to major doubts as to how the market will develop. This then raises the question of
what strategy to adopt – an emergent strategy is essential.
2. What are the problems with predicting how the market and the competition will change over the
next few years? What are the implications for strategy development?
The main problems relate to the uncertainties of new technology and the difficulty in predicting
how these will be exploited. An additional problem is the degree of economic uncertainty that may
impact on customer ability to buy phones. The implications for strategy development relate to the
difficulty in using prescriptive processes in this strategic context.
3. What lessons can other companies learn from Apple’s strategies over the years?
Lessons in at least few years:
1. The benefits of being an innovator and the risks attached with that strategic route – the iPod
itself and the rivals now entering the market.
2. The need to build on the competitive advantages of the company if possible – the Apple brand
name, user-friendly software design, etc.
3. The importance of understanding your customers and their needs – the desire of its young target
group to have a large album list available along with the ability to augment this legally.
4. The value of taking market-based opportunities in order to launch new products – the recorded
music market/download market was arguably ready for this new product and Apple’s timing was
good.
5. The difficulties that can arise as companies move out of their existing product ranges and begin
to compete in other markets – the move into the wider area of consumer electronics and mobile
phones, as explained in the case.