Strategic MGMT Lecture 1 and 2

BML Munjal University
Strategic Management
Executive MBA Batch – 2020
Instructor
Prof Moloy Chakravorty
contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

Moloy – The Professional
20+ years Professional Career with Global Organizations across

India, Middle East and Africa in Leadership Roles
20 years of Teaching in Global B-schools for Strategy &
Marketing.

Moloy – The Entrepreneur
7 years as an Entrepreneur – Currently with 4 Businesses

Business Growth Expert – with ActionCoach
20 years of Teaching in Global B-schools for Strategy &
Marketing.

“If you don’t have a strategy you
will be . . . part of somebody
else’s strategy.”
- Alvin Toffler
4
“Within five years, if you run your business in
the same way as you do now, you’re going to
be out of business.”
Philip Kotler

What is competitive advantage?
What is the defining factor?
“An advantage over a competitor such

as lower cost or quicker deliveries”.

Customer Lifetime Value (CLV)
• Customer lifetime value is the net profit earned

from sales to a given customer during the time that
customer purchases from the sales organization
• CLV, as a sales focus, is about how the customer is
treated over time

Customer Equity
• Customer Equity: is the total combined customer
lifetime values of all the company’s current and potential
customers.
• Clearly, the more loyal the firm’s profitable customers, the higher
the firm’s customer equity.
• Customer equity may be a better measure of a firm’s
performance than current sales or market share.
• Marketers manage equity by classifying
customers by projected loyalty and potential
profitability into four groups.

1-8
Customer Equity
• Customer Equity: is the total combined customer lifetime values of all the
company’s current and potential customers.
• Clearly, the more loyal the firm’s profitable customers, the higher the firm’s customer equity.

Stages of Strategic Management
Strategy Strategy Strategy

formulatio implementatio
n evaluation
n

• Strategy formulation
• includes developing a vision and mission,
identifying an organization’s external
opportunities and threats, determining internal
strengths and weaknesses, establishing long-
term objectives, generating alternative
strategies, and choosing particular strategies to
pursue

Strategy Formulation
• Deciding what new businesses to enter,
• What businesses to abandon,
• How to allocate resources,
• Whether to expand operations or diversify,
• Whether to enter international markets,
• Whether to merge or form a joint venture,
• How to avoid a hostile takeover.

• Strategy implementation
• requires a firm to establish annual objectives,
devise policies, motivate employees, and
allocate resources so that formulated strategies
can be executed often called the action stage

• Strategy evaluation
• reviewing external and internal factors
that are the bases for current strategies,
measuring performance, and taking
corrective actions

Three levels of strategy in organizations—corporate,
business, and functional strategies.
15
What types of strategies are used by
organizations?
Questions addressed by different strategic level:
• Corporate strategy
• In what industries and markets should we compete?
• Business strategy
• How are we going to compete for customers in this
industry and market?
• Functional strategy
• How can we best utilize resources to implement our
business strategy?
Management - Chapter 9
16
Strategic Planning Process
Internal
Analysis
Mission Develop Control
Implement
Vision Strategies Evaluate
Strategies
Objectives
External
Analysis
17
Vision The destiny that we want to reach/ to be (end
point)
Mission Scope of action that we want to implement,
Target group (Customer), philosophy or principle
of our implementation.
Strategic Issues Agenda or Focusing Area or Key Result Area
Goal Things that we want to achieve.

Key Performance Indicator that show what we achieves.
Indicators (Targets) (Benchmark or Milestone)
Strategies Methods, Procedure that lead us to the
achievement of Goals/KPI/Target (Means)

Vision and Mission
• Although Vision and Mission are often used

synonymously, sometimes a distinction is made in
which case Mission evolves from Vision:
• Vision incorporates the philosophy of the founders
or top management- where do we want to be?
• Mission articulates the value systems that guide the
operations of an organisation- how do we get
there?

Vision Statement
• It is an aspiration statement which is challenging

• It should be simple to explain and easy to
understand
• It is a dream with a deadline
• It tells us where we are going
• It should be the differentiation from competition
• It must connect with all stakeholders

Vision Statement: Examples
• Google : To provide access to the world’s

information in one click
• HUL: Unilever is a unique company, with a proud
history and a bright future. We have ambitious
plans for a sustainable growth and an intense sense
of social purpose
• Maruti Suzuki: The leader in the automobile
industry, creating customer delight and
shareholder’s wealth: a pride of India

Example: Starbucks Coffee
• The first Starbucks location opened in 1971 in Pike Place
market in Seattle, WA.
• Eleven years later, Howard Schultz was hired by the
company to be the director of retail operations and
marketing.
• The first Starbucks with the current coffee house look and
feel was opened in 1984 in downtown Seattle.
22
Example: Starbucks Vision
To "inspire the human

spirit," is a something that
can't be served in a cup with
whipped cream.
23
Examples: Vision
3M: to solve unsolved problems innovatively
Hewlett-Packard: to make technical contributions for the

advancement and welfare of humanity
Mary Kay Cosmetics: to give unlimited opportunity to

women
Nike: to experience the emotion of competition, winning,

and crushing the competition
Walt Disney: to make people happy
24
Mission Statement
• It is a statement of intent and value systems

• It defines the organisation’s purpose
• It may describe an organisation in terms of
satisfying customer needs or goods/services it
produces or market segments it caters to and so on
• It is a clear and compelling statement that serves to
unify the efforts of the organisation
• It must challenge the organisation but yet be
achievable

Mission Statement
It must answer the following questions:

1. What is our reason for being?
2. What is our basic purpose?
3. What business are we in?
4. What is unique about our organisation?
5. What do we stand for?

Mission Statement -Characteristics
1. Industry scope: degree of diversification

2. Product application scope: range of products &
applications
3. Market segment: types of market to serve
4. Vertical scope: part of value chain
5. Competence scope: technologies to apply
6. Geographic scope: local to international

Strategic Formulation
‘Eternal’ of Vision ‘Now’ of SWOT
Mission
What business / markets are we in to realise our vision?
Goals
The tasks that need to be done to enable mission
Objectives
The quantifiable targets that are set through the goals
Strategic strategy
develop a plan of action
maximizing long-run value
SWOT analysis
identifies strengths & Tactical strategy
weaknesses inside the a plan of action to take
firm and opportunities advantage of opportunities
& threats in the and minimize threats
environment.
Operational strategy
a plan of action improving
department’s ability to
create value
29
Mission Statement: Examples
• Google: to organize the world’s information and

make it universally accessible and useful
• HUL: to add Vitality to life. We meet everyday
needs for nutrition, hygiene, and personal care
with brands that help people feel good, look good
and get more out of life
• Maruti Suzuki: (combined vision and mission
statement)

Objectives
• They are goals or ends towards which efforts of

an organisation are directed
• They provide benchmarks for measuring
efficiency and effectiveness
• They can be short term or long term
• They must be SMART
• However, for Strategic planning, only long term
objectives are considered eg three years or more

Example: Starbucks Mission
• Provide a great work environment and treat each other
with respect and dignity.
• Embrace diversity as an essential component in the way
we do business.
• Apply the highest standards of excellence to the
purchasing, roasting and fresh delivery of our coffee.
• Develop enthusiastically satisfied customers all of the
time.
• Contribute positively to our communities and our
environment.
• Recognize that profitability is essential to our future
success.
32
What is SWOT?
• SWOT is the acronym for Strengths, Weaknesses,

Opportunities, and Threats.
• SWOT is very effective when applied to a specific
objective or project.
Albert S Humphrey
33
SWOT Analysis is…
• … A strategic planning tool

that separates influences
on an organization’s future
success into internal and
external factors
34
35
SWOT: External Factors
Threats
• External factors, beyond an
organization’s control, which could
place the organization mission or
operation at risk.
• The organization may benefit by
having contingency plans to address
them if they should occur.
• Classify them by their “seriousness”
and “probability of occurrence”.
36
Threats
• Who is your competition and what do they offer that
you can’t do as well or at all?
• Are there “environmental” changes or situations that
could cause problems for you and your programs?
• What other roadblocks are being thrown in your
path?

37
SWOT: External Factors
Opportunities
• External attractive factors that
represent the reason for an
organization to exist and
develop.
• What opportunities exist in
the environment, which will
propel the organization?
• Identify them by their “time
frames”

Source: Centre for Instructional Development. Strategic Planning and Visioning: SWOT Technique
38 Opportunities
• Are there new situations coming down
the road that you can take advantage of
(new programs being offered, new faculty
joining the department, new tools available to you)?
• Are there gaps in the “market” that you can fill?
• Are there partnerships that might be fruitful?

Simple Rules SWOT Analysis
• Be realistic about the strengths and
weaknesses of your organization or group
• Distinguish between where your
organization is today, and where it could be
in the future
• Be specific: Avoid gray areas.
39
Simple Rules SWOT Analysis
• Always analyze in relation to your
core values, mission, mandate,
goals, vision.
• Keep your SWOT short and simple.
• Avoid complexity and over analysis
• Empower SWOT with a logical
conceptual framework.
40
Source: Centre for Instructional Development. Strategic Planning and Visioning: SWOT Technique
(Kim and Mauborgne, 2005)

How can you grow in an unattractive market?

Blue Ocean Strategy
Within any given industry, every firm seeks to raise value & cut costs
in order to enhance value innovation and outperform the competitors
The effect is more competition,

i.e., minor profit margins for everyone

Blue Ocean Strategy
Within any given industry, every firm seeks to raise value & cut costs
in order to enhance value innovation and outperform the competitors
The effect is more competition,

i.e., minor profit margins for everyone
A Red Ocean
Blue Ocean Strategy
A successful strategy consists of “pulling ourself out” of the tough

competition by venturing into unchartered “water” where no other
competitors are present (yet)
A Blue Ocean
Group Project – BML Munjal
• Pick up any product which when launched was in the “Blue Ocean”
• Detailed Analysis as the time of launch
• Environmental Analysis
• SWOT
• Competitive Advantage
• Track the product through the life Cycle
• What did the company do towards - Innovations and Product Development
• Competition and safeguarding competitive advantage
• Did the product survive
• If yes, how
• If no, why?

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BML Munjal University

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

20+ years Professional Career with Global Organizations across

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

7 years as an Entrepreneur – Currently with 4 Businesses

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

What is the defining factor?

“An advantage over a competitor such

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• Customer lifetime value is the net profit earned

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

Strategy Strategy Strategy

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

Goal Things that we want to achieve.

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• Although Vision and Mission are often used

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• It is an aspiration statement which is challenging

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• Google : To provide access to the world’s

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

To "inspire the human

Hewlett-Packard: to make technical contributions for the

Mary Kay Cosmetics: to give unlimited opportunity to

Nike: to experience the emotion of competition, winning,

Walt Disney: to make people happy

• It is a statement of intent and value systems

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

It must answer the following questions:

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

1. Industry scope: degree of diversification

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• Google: to organize the world’s information and

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• They are goals or ends towards which efforts of

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

• SWOT is the acronym for Strengths, Weaknesses,

• … A strategic planning tool

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

The effect is more competition,

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

The effect is more competition,

A successful strategy consists of “pulling ourself out” of the tough

contact: +91 98191 22170 email: moloy@beyondredocean.com www.beyondredocean.com

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