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Strategic Management PDF

352 Pages·2008·18.394 MB·English
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Strategic Management Dr. (Mrs.) M. JEYARATHMM MA., MBA., Ph.D. Professor, Bharathiar University COIMBATORE-46 TAMILNADU Hal Glfimalaya GpublishingGlfouse MUMBAI • NEW DELHI. NAGPUR • BANGALORE • HYDERABAD • CHENNAI • PUNE • LUCKNOW • AHMEDABAD' ERNAKULAM © Himalaya Publishing House, 2008 No part of this publication should be reproduced, stored ,in a retrieval system, or transmitted in any fonn or any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior written pennission of the publisher and author. ISBN 978-81-84881-59-2 Revised Edition 2008 Published by Mrs. Meena Pandey forHIMALAY A PUBLISHING HOUSE PVT. LTD., "Ramdoot", Dr, Bhalerao Marg, Girgaon, Mumbai -400 004. Phones: 2386 01 70/2386 38 63, Fax: 022-2387 71 78 Email: himpub@vsnl.com Website: www.himpub.com Branch Offices: New Delhi "Pooja Apartments", 4-B, Murari Lal Street, Ansari Road, Oarya Ganj, New Delhi - 110 002. Phones: 23270392, 23278631, 30180302/03/04/05/06, Fax: 011-23256286 Nagpur Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440018. Phones: 2738731, 3296733 Telefax: 0712-2721215 Bangalore No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands, Madhava Nagar, Race Course Road, Bangalore - 560 001. Phones : 22281541, 22385461, Telefax: 080-22286611 Hyderabad No. 2-2-1 167/2H, 1st Floor, Near Railway Bridge, Tilak Nagar, Main Road, Hyderabad - 500044. Phone: 65501745, Telefax: 040-27560041 E-mail: hphhyd@vsnl.net. Chennai No.2, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600 017. Phones: 044-28144004/28144005 Pune First Floor, "Laksha" Apartment, No. 527, Mehunpura, Shaniwarpeth, (Near Prabhat Theatre), Pune - 411 030. Phones: 020 - 24496323/24496333 Lucknow C-43, Sector -C, Ali Gunj, Lucknow -226 024. Phone: 0522-4047594 Ahmedabad: 114, "SHIL" 1st Floor, Opp. Madhu Sudan House, C.G.Road, Navrang Pura, Ahmedabad - 380 009. Phones: 09327324149,0931467413 Ernakulam 39/104 A, Lakshmi Apartment, Karikkamuri Cross Rd., Ernakulam, Cochin - 622011, Kerala. Phones: 0484-2378012, 2378016, Mob- 09344199799 DTPby Sri Siddhi Softtek (Bangalore) Printed by Geetanjali Press Pvt. Ltd. Ghat Road, Nagpur - 18 CONTENTS , 1 The Strategic Management Process 1 -12 Conceptual Framework for Strategic Management - Definition - Strategic Formation Process - A Model of Strategic Management Process - Approaches to Strategic Decision Making Process - Pitfalls - Techniques for Improving Strategic Decision Making - Impact of e-commerce - Learning Organization - Questions, '2 Mission and Goals 13 - 26 Definitions - How Mission is formulated? - Characteristics of a Mission Statement - How Mission Contributes to Strategic Management? - Objectives and Goals - Significance of Objectives - Areas where objectives are set - Characteristics of objective - Formulation of Objectives - Objectives and Strategic Management - Mission Statements of Indian Companies - A Content Analysis - Questions. '3 Corporate Governance and Social Responsibility 27 - 45 Role of Board of Directors - Chief Executive Officers - Corporate Planning Staff - Consultant - Board Committees- Corporate Social Responsibil ity - Theories - Wealth Creation - Business Ethics - Theories - Questions - Reading Material : "Ethics in Work Places" - "Corporate Social Responsibility and Performance: A Case of Canara Bank". '4 External Environment 46-69 Environmental Factors - Concept of Environment - Macro Environmental Forces - Demographic -Environment - Technological Environment - Socio Cultural Environment Economic Environment - Political Environment - Regulatory Environment - International Environment - Factors Relevant to specific Business - Market Environment - Industry and Competition - Government Policies - Suppl ier Environment Environmental Scanning - Task Environment - Sources - Techniques - Bench Marking - Issue Probability Matrix - External Factor Analysis Summary - Industry Analysis - Framework for Industry Analysis - General Conditions - Industry Settings / Environment -Industry Structure -Industry Attractiveness - Industry Performance - Industry Practice - Emerging Trends - Forecasting the Environment - Questions. '5 Porter's Five Forces Model and Strategic Groups 70- 85 Threat of New Entry - Bargaining Power of Suppliers - Bargaining Power of Buyers - Subs~itute Products - Rivalry among Existing Players - Competitive Structure - Demand Conditions - Exit Barriers - Strategic Croups - Limitations of Porter's Model, Strategic Group Model - Strategic types - Competitive changes during Industry - Evolution - Embryonic stage - Growth Industries - Industry Shakeout - Mature Industries - Declining Industries - Globalization and Industry Structure - National Context and Competitive Advantage - Hyper Competition - Questions. Competitive Advantage: Resource --Capabilities and Core Competence 86 - 96 - Competitive Advantage: Low cost and Differentiation - The Generic Building Blocks of Competitive Advantage - Distinctive Competencies : Sources - Evaluation of Key Resources - Durability of Competitive Advantage - Core Competence - HCL Case - Why do companies fail? - Avoiding failures and sustaining competitive advantage - Questions '7 Internal Scanning: Organizational Analysis 97 - 112 Value Chain Analysis - Industry Value Chain Analysis - Components of value chain - Structure - Culture - Strategic Financial Issues - Strategic Marketing Issues - Strategic Operations Issues - Strategic Human Resource Issues - Strategic Information Management Issues - Internal Factor Analysis Summary - Questions. Strategy Formulation: Situation Analysis 113 - 121' SWOT Analysis - Strategic Factor Analysis Summary (SFAS) Matrix - TOWS Matrix - Reading Material: Farmers Market (UZHAVAR SANDAl) in Tamilnadu - A SWOT Analysis - Reading Material. 9 Strategy Formulation: Corporate Strategy 122 - 133 Stabi I ity Strategy - Pause / proceed with caution - No change strategy - Profit strategy - Growth strategy - Concentration - Vertical Integration - advantages and disadvantages - Diversification - Related diversification - Limitations - Unrelated Diversification / Conglomerate Diversification - Concentric Diversification - Strategic alliance as alternative to diversification - Questions . . 10 Strategy Formulation: At the Business Level 134 -146 Choosing a generic business level strategy - Cost Leadership Strategy - Advantages - Disadvantages - Differentiation Strategy - Advantages - Disadvantages - Both Cost Leadership and Differentiation - Focus Strategy -Advantages - Disadvantages - Being Stuck in the Middle - Choosing an Investment Strategy at Business Level-Competitive position - Life cycle effects Embryonic Stage - Growth stage - Shakeout stage - Maturity stage - Decline stage - Competitive tactics - Timing Tactics - Market Location Tactics - Defensive tactics - Questions. 11 Strategy Formulation: Functional Strategy 147 - 154 Overview - Outsourcing - Marketing Strategy - Product Development Strategy - Advertising and Promotion - Distribution - Pricing - Financial Strategy - Operations Strategy - Human Resource Strategy - Research and Development Strategy - Information Systems Strategy - Attitude to Ri,:;k Culture - Questions. 12 Strategy in Global Environment 155 -169 Profiting from Global expansion - Transferring Distinctive Competence - Realizing Location Economies - Moving Down the Experience Curve - Competitive Pressures - Pressure for Cost reduction - Pressure for Local Responsiveness - Differences in Consumer Tastes and Preferences - Differences in Infrastructure and Traditional Practices - Differences in Distribution channel-Host Government Demands - Strategic choice - International Strategy - Multi domestic Strategy - Global Strategy - Transnational Strategy - Entrymode - Exporting - Licensing - Franchising - Joint venture - Whollyowned Subsidiaries - Global Strategic Alliance - How to make Alliance work - Questions. 13 Building and Restructuring the Corporation 170 -189 Start up route - Acquisition - joint Venture - Merger - Takeover - Restructuring - Retrenchment - Divestment - Harvest - Liquidation - Turnaround Strategy - Successful Turnaround of Indian Bank 2003 - Case Study - Turnaround ofTa ta Refractories Ltd - Indian Companies Turn Global Turnaround Specialists - Questions. 14 Strategic Choice and Balanced Score Card 190 - 216 Concept of Strategic Choice - Choice Process - Gap Analysis - Evaluation of Strategic Alternatives - Portfolio Analysis - BCG Matrix - GE Matrix - Corporate Parenting - Strategic Choice - Subjective Factors - Past Strategy - Personal Factors -Attitude to risks -Internal Political Consideration - Pressure from stakeholders - Corporate Culture - Key Managers' Desires - Constructing Corporate Scenario - Devils' Advocate - Dialectical Enquiry - Balanced Score Card - 4 Perspectives- Rockwater Illustration Questions - Balanced Scorecard in « Indian Companies - Reading Material - Measuring and Enhancing Corporate Performance - H R Score Card - Personnel Today - April-june 2005 - Dr. M.jeyarathnam - Questions. 15 Implementation of Strategy: Designing Organizational Structure 217 - 233 Basics of Designing Structure - Differentiation - Vertical Differentiation - Horizontal Differentiation - Functional Structure - Multidivisional Structure - advantages, disadvantages - Matrix Structure - Advantages, Disadvantages - Product Team Structure - Geographic Structure) - Integration and Integration Mechanism - Staffing - Questions. 16 Designing Strategic Control Systems: Matching Control and Structure to Strategy 234 - 246 Introduction - Steps in Control Process - Characteristics of Good control system - Levels of control-Types of co'ntrol Market control-Output control-Bureaucratic Control-ISO Activity Based Costing - Management Audit - Limitations - Organization Culture - Culture and Strategic Leadership - Strategic reward system - Questions. 17 Matching Structure and Control to Strategy 247 - 256 Structure and Control at Functional Level - Manufacturing functions - R&D Functions - Sales Functions - Structure and control at Business Level - Cost Leadership and Structure - Differentiation and Structure - Focus strategy and structure- Designing a Global Structure - Multi domestic strategy - International strategy - Global strategy - Transnational strategy - Structure at Corporate Level - Questions. 18 Implementation of Strategic Change: Politics, Power and Change 257 - 268 Organizational Power and Politics - Sources of Power - Organizational conflict- Differentiation - Task Relationships - Scarcity of Resources - Organization's conflict process - Managing Confl ict Strategically - Confl ict Resolution Strategies - Implementing Strategic Change - Steps in Change Process- Evaluating Change - Questions. 19 Techniques of Strategic Evaluation and Control 269 - 275 • Strategic Control - Premise Control - Environmental Factors -Industry Factors - Strategic Momentum Control-Strategic Leap Control-Implementation Control-Monitoring Strategic Thrust - Milestone Review - Strategic Surveillance Special Alert Control - Financial Ratio - PIMS - Questions. 20 Strategic Issues in Managing Technology and Innovation 276 - 285 Role of Management - Environmental Scanning - External Scanning -Internal Scanning - Resource Allocation - Time to Market Issues - Strategy Formulation - Technology Sourcing - Technology Competence - Strategy Implementation - Innovative Culture - Corporate Entrepreneurship - Organizational Design - Evaluation and Control-Questions. 21 Strategic Issues in Entrepreneurial Ventures and Small Businesses 286 - 296 Definition - Degree of Formality - Strategic Management Process in Small Business - Strategic Business Plan - Corporate Governance - Issues in Environmental Scanning - Strategy Formulation - Sources of Innovation - Factors Influencing Success of a new Venture - Characteristics of Entrepreneurs -Issues in Strategy Implementation - Transfer of Power within Family Business -Issues in Evaluation and Control-Questions. · 22 Strategic Issues in Not-for-Profit Organization 297 - 303 Nature of Not-for-Profit Organization - Application of Strategic Management Concepts - Constraints - Issues in Strategy Formulation - Issues in Evaluation and Control - Popular Strategies - Piggy backing - Mergers - Strategic Alliance - Questions. 23 Role of Technology and Knowledge Management 304 - 311 Knowledge - Characteristics of Knowledge - Knowledge Management System - Business Application - Knowledge Management Process - Approaches to the Study of Knowledge Management - Limitations of Knowledge Management - Questions. Illustrative Case - Robinhood 312-316 Cases 317 - 343 The Strategic Management Process Conceptual Framework for Strategic Management In earlier times, the managers focused on "today's decisions for today's business". However the rapid changes experienced by companies have made the managers to anticipate the future and prepare for it. They have prepared systems, procedures and manuals and evolved budgets and planning and control systems, which included capital budgeting and management by objectives. The inadequacy of these techniqu"es has led to the emergence of long range planning which in turn gives rise to strategic planning and subsequently to strategic management. Strategic management deals with decision making and actions which determine an enterprise's ability to excel, survive or die by making the best use of a firms' resources in a dynamic environment .The main purpose of study of strategic management is to examine why some organizations succeed while others fail and yet others completely change. Consider the following examples. • Bharat Heavy Electricals Ltd. (BHEL) is now planning to expand its range to 800 MW supercritical power projects. • LG Electronics India Ltd. (LGEIL) signed a MOU with Maharashtra government to expand manufacturing facility at Pune for Rs. 900 crores. • GAIL India has received an offer from China Gas Holdings for participation in a gas based petrochemical project to be set at Humor in Mongolia. • The world's largest steel conglomerate Mittal Steel Company is to become the second largest stakeholder in a Chinese Steel firm in Hunan Province. • Mittal signed three MOUs with Jharkhand Government for setting up 12 million tonne Greenfield project in two phases.

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