Strategic Management

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Unit I


1 Concept of Corporate Strategy

LESSON OUTLINE           Introduction What is strategy? Why corporate strategy? Levels of strategy Crafting a strategy An ongoing process Summary Self assessment questions Activities References LEARNING OBJECTIVES After reading this lesson you should be able to  Define and understand the concept of corporate strategy  Identify the different levels of corporate strategy  Examine the reasons for developing strategies  See corporate strategy as an on going process

Organizations are facing exciting and dynamic challenges in the 21st century. In the gloabalized business, companies require strategic thinking and only by evolving good corporate strategies can they become strategically competitive. A sustained or sustainable competitive advantage occurs when firm implements a value – creating strategy of which other companies are unable to duplicate the benefits or find it too costly to initiate. Corporate strategy includes the commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns. The goals of corporate strategy are challenging not only for large firms like Microsoft but also for small local computer retail outlets or even dry cleaners. Table 1.1 lists the top ten strategists in India in 2005..

TABLE 1.1 - INDIA’S TOP TEN STRATEGISTS Name of the company Infosys Technologies Reliance Industries Wipro Hindustan Lever Maruti Udyog Dr. Reddy’s Laboratories HDFC Bank Jet Airways ICICI Bank Ranbaxy Laboratories Position in the industry 1 2 3 4 5 6 7 8 9 10

* Source - Internet What is strategy? Strategy”, narrowly defined, means “the art of the general” (the Greek stratos, meaning ‘field, spread out as in ‘structure’; and agos, meaning ‘leader’). The term first gained currency at the end of the 18th century, and had to do with stratagems by which a general sought to deceive an enemy, with plans the general made for a campaign, and with the way the general moved and disposed his forces in war. Also was the first to focus on the fact that strategy of war was a means to enforce policy and not an end in itself. Strategy is a set of key decisions made

to meet objectives. A strategy of a business organization is a comprehensive master plan stating how the organization will achieve its mission and objectives.

I keep six honest serving men. They taught me all I know. Their names are What, Why, When, How, Where and Who. - Rudyard Kipling Here are some definitions of strategy. Chandler(1962)Strategy is the determinator of the basic long-term goals of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals; Mintzberg (1979) Strategy is a mediating force between the organization and its environment: consistent patterns in streams of organizational decisions to deal with the environment. Prahlad (1993) Strategy is more then just fit and allocation of resources. It is stretch and leveraging of resources Porter (1996) Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value

Mintzberg has identified the 5 P’s of strategy. Strategy could be a plan, a pattern, a position, a ploy, or a perspective.

1. A plan, a “how do I get there” 2. A pattern, in consistent actions over time 3. A position that is, it reflects the decision of the firm to offer particular products or services in particular markets. 4. A ploy, a maneuver intended to outwit a competitor 5. A perspective that is, a vision and direction, a view of what the company or organization is to become. Why Corporate Strategy? Strategic management is basically needed for every organization and it offers several benefits. 1.Universal Strategy refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise, memories, perceptions, and expectations that provides general guidance for specific...
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