IMPORTANT POINTS IN STRATEGIC MGT
1.Planned policy formulation replaced ad-hoc policy making.
2.S.M. or Business Policy is about present & future.
3.Strategy- Greek word- Strategos meaning Generalship- the actual direction of military force, as distinct
from governing its deployment.
4.Michael Porter says the core of Gen. Mgt is strategy.
5.Without operational effectiveness, the company can’t survive.
6.Trade-offs occur when activities r incompatible.
7. Trade-offs occur for 3 reasons: a) inconsistencies in image and reputation b) from activities themselves
c) limits of internal coordination and control
8.3 levels of Fit- simple consistency, when activities r reinforcing each other, when there is optimization of
efforts.
9.Operational level strategies r derived from functional strategy.
10. Functional level strategies r derived from SBU level strategy.
11. SBU level strategies r derived from corporate strategy.
12. Corporate level strategies r derived from societal strategy.
13.Criteria for decision making r concept of maximization, satisfying and incrementalism.
14.Board of Directors ------ link b/w Company & enviornment.
15.CEO --------- link b/w Company & Board of Directors.
16.Mission is expression of Corporate intent.
17.Mission ---- what company is & why it exists?
18.Vision ------ what the company aspires to be?
19.Corporate strategy ensures fit b/w firm & its enviornment.
20.Book of Jerry Porras and James Collins is “Build to last.”
21.Core ideology is unchanging part of the organisation.
22.Envisioned future is goal to be reached.
23.Audacious goals r what company would like to achieve. It is thinking far into future of what to achieve
and start today.
24.Vivid description is putting goals into words that evoke picture of what it would like to achieve.
25.Strategic intent implies sizeable stretch for an organisation.
26. Strategic intent implies what organisation strives for.
27.Tempting refers to focus on internal parameters.
28.Looking at denominator may bring short term results, but there may be serious long-term sacrifices.
29.Startegy is compromise b/w what enviornment has got to offer in terms of opportunities and counter
offer that organisation makes in form of capabilities.
30.Goals ---- targets that organisation wants to accomplish in future period of time.
31.Objectives ---- ends that state how goals can be achieved.
32.While goals r qualitative, objectives r quantitative in specification.
33.If objectives r too broad, they will be confused with goals and if too narrow, will be confused with
targets.
34.Policies r guides to decision making.
35.Programs r combination of policies, goals, procedure, rules, task assignment steps to be taken,
resources to be employed & other elements necessary to carry out given course of action.
36.Budget is also called profit plan.
37.Book of Michael Hammer and James Chapy is Reengineering.
38.With globalisation, change has become pervasive and persistent.
39.External enviornment give rise to threats & opportunities.
40.Factors considered for enviormental scanning r issues, trends, events & expectations.
41.Trends r general tendencies or courses of action along which events take place.
42.Tangible resources r physical, financial, organizational and technological.
43.Intangible resources r human resource, innovation and reputational.
44.Capabilities ---- firm’s capacity to deploy resources that have been purposely integrated to achieve
desired end state.
45.Core competence is communication, deep involvement & commitment to work across organizational
boundaries across all levels and functions.
46. Core competence is glue that binds existing businesses and guide market entries instead of market
attractiveness.
47.Tangible link b/w identified core competence & end products is core product.
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48.Organisational capability is inherent capacity of organisation to use its strength& overcome its
weaknesses to exploit opportunities and face threats in external enviornment.
49.Maintain strategies r dangerous in current markets, where there is intense competition and economy is
dynamic.
50.Backward integration is retreating to source of raw materials i.e., becoming ur own supplier.
51.Forward integration is move organisation nearer to ultimate customer i.e., becoming ur own customer.
52.Eg : of Backward integration is automobile Company going for steel mill.
53.Concentric diversification is when organisation takes up activity related to existing business.
54.Conglomerate diversification is when organisation takes up activity not related to existing business.
55.Startegic turnaround leads to divestment or liquidation.
56.Cash Cows is secured source of income for business.
57.Cost leadership is used when there is demand for functional products.
58.Through differentiation, customer loyalty can be gained.
59.Position defence --- build fortification around one’s territory.
60.Flank defence --- protect weak front by creating outposts to stop attackers.
61.Counteroffensive defence --- respond after attack.
62.Preemptive defence --- attack before competitor starts offence.
63.Mobile defence ---- stretch over new territories, broaden markets.
64.Contraction defence ---- strategic withdrawl and give up weak positions.
65.Counterfeiter ---- duplicate leader & claims to be same.
66.Cloner ---- emulate leader with slight variations.
67.TELCO --- Tata Engineering & Locomotive Company.
68.Payoff is cash that can’t be reinvested in that product.
69.Shell Oil Company developed Directional Policy Matrix in 1970’s.
70.In Directional Policy Matrix, vertical axis is market attractiveness & horizontal axis is competitive
strength.
71.Heartland business --- give highest priority.
72.Edge of Heartland business --- some fit some misfit.
73. Balast Business --- fit well, but low opportunities.
74.Alien territory business ---- little opportunity.
75.Value trap business --- fit well with parenting opportunities, but misfit with understanding of CSFs.
76.PIMS --- Profit Impact of Market Strategy.
77.Delphi model is useful in answering single dimension question.
78.SPACE --- Strategic Position & Action Evaluation.
79.Organisational pyramid gives vertical hierarchy.
80.Attributes of staff function ---- advice, evaluation and expert guidance.
81.Line represent operating deptts and staff- auxiliary deptts.
82.In high growth rate industry, phase of evolution is small and phase of revolution is longer.
83.End of Creativity Phase is marked by Crisis of leadership.
84. End of Direction Phase is marked by Crisis of autonomy.
85. End of Delegation Phase is marked by Crisis of control.
86. End of Coordination Phase is marked by Red tape. Crisis .
87.Empathy ---- thoughtful consideration of emotions or feelings of people while making intelligent
decisions.
88.Invisible hand ---- make profits and obey law.
89.eg of discretionary activities ---- making philanthropic contribution, sponsoring clinic for AIDS victim.
90.Basic & security needs r satisfied by means of economic profits.
91.Affiliation & status needs r satisfied by market structure, conduct & performance.
92.Self actualization needs r satisfied by industry recognition & leadership.
93.Austere model --- owner is at focus.
94.Hoseholder’s model ---- owners and employees r at focus.
95.Vendor model --- customer is at focus.
96.Investment model --- fulfil social responsibility now to reap benefits in future.
97.Civic model --- company attempts to behave as law abiding corporate citizen.
98.Creative model ---- company’s resolution to improve overall quality of life.
99.Sattwa(righteousness) , rajas(selfishness) , tamas(laziness).
100.Archie B Carroll has given 3 major levels of model.
101.Immoral Mgt --- lacks ethical principles and is opposed to ethical behaviour.
102.Principle of Immoral Mgt is “Can we make money with this action, delegation or behaviour?”
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103. Principle of moral Mgt is “Is this action, delegation or behaviour fair to us and all parties involved?”
104.Moral Mgt ---- strives to follow ethical principles.
105. Principle of ammoral Mgt is “within scope of law can we make money with this action, delegation or
behaviour fair to us and all parties involved?”
106.Ethics Hotline --- special telephone line established to enable employees to bypass normal chain of
command in reporting grievances & serious ethical problems.
107.Debt is cheapest source of financing.
108.TMS is Target Market Segment.
109.Explicit knowledge is formal, systematic and easily communicated.
110.Tacit to explicit is articulation.
111.Explicit to tacit is internalization.
112.BTO is Built to order.
113.Acquisitions unfriendly r takeovers.
114.Synergy bias is overestimating benefits & underestimates costs of synergy.
115.ABB evolved concept of Human Engineering.
116.Capital is scarcest resource in company.
117.Money, competence and physical facilities r critical factors.
118.Sense of urgency increases performance.
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