STRATEGIC MANAGEMENT

(KMBN 301)
(Credits: 3)

UNIT-1

By
Dr. Subiya Rahman
Assistant Professor
UIM, Prayagraj
 SYLLABUS
Introduction: meaning nature, scope, and
importance of strategy; Model of strategic
management, Strategic Decision-Making
Process.
Corporate Governance: Composition of the
board, Role and Responsibilities of the board of
directors, Trends in corporate governance,
Corporate Social Responsibility. Case Studies
and Latest Updates.
 Where does the word strategy come
from?
• Strategy comes from the Greek word strategos,
meaning "a general," which in turn comes from
roots meaning "army" and "lead.“
• The Greek verb stratego means to "plan the
destruction of one’s enemies through effective
use of resources."

Source: Bracker, J. (1980). The historical development of the strategic management concept. Academy
of management review, 5(2), 219-224.
 Meaning of Strategy
• A strategy is an integrated and coordinated set
of commitments and actions designed to
exploit core competencies and gain a
competitive advantage.

Dictionary Meaning “A
plan of action designed to
achieve a long-term or
overall aim.”

Source: Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2009). Strategic management: Competitiveness and
globalization; concepts & cases (8. ed.). SouthWestern.
 Definitions
• Strategy is analyzing the present situation and
changing it if necessary. Incorporated in this is,
finding out what one's resources are or what
they should be. - Peter F Drucker (1954)

• 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. - Alfred D Chandler (1962)
• Strategy is a rule for making decisions
determined by product/market scope, growth
vector, competitive advantage, and synergy. -
Igor Ansoff (1965)

• Strategy is a mediating force between the

organization and its environment: consistent
patterns in streams of organizational decisions
to deal with the environment. - Mintzberg
(1979)
 Concept of Strategy
• A company’s strategy is the set of actions that its
managers take to outperform the company’s
competitors and achieve superior profitability.
• How to position the company in the marketplace?
• How to attract customers?
• How to compete against rivals?
• How to achieve the company’s performance targets?
• How to capitalize on opportunities to grow the
business?
• How to respond to changing economic and market
conditions?

Source: Kellett, P., Thompson, A. A., Strickland, Jr. A. J., & Gamble, J. E. (2018). Crafting and Executing Strategy: The
Quest for Competitive Advantage. Mc Graw Hill Education.
 Describing Strategy
• Where is the firm competing?
• The product firm supplies
• Customers it serves
• Countries or localities where it serves
• Other activities
• How is it competing?
• Cost advantage
• Differentiating advantage

Source: Grant, R. M. (2022). Contemporary strategy analysis (Eleventh edition). Wiley

 Starbucks’s Strategy in the Coffeehouse
Market
Since its founding in 1985 as a modest nine-store
operation in Seattle, Washington, Starbucks had
become the premier roaster and retailer of specialty
coffees in the world.

The key elements of Starbucks’s strategy in the

coffeehouse industry included:
▪ Purchase and roast only top-quality coffee beans.
▪ Foster commitment to corporate responsibility.
▪ Broaden and periodically refresh in-store product
offerings.
 NATURE OF STRATEGY
• Strategy is a contingent plan as it is designed to
meet the demands of a difficult situation.
• Strategy provides direction in which human and
physical resources will be deployed for achieving
organizational goals in the face of environmental
pressure and constraints.
• Strategy relates an organization to its external
environment.
• Strategic decisions are primarily concerned with
expected trends in the market, changes in
government policy, technological developments
etc.
• Strategy is an interpretative plan formulated
to give meaning to other plans in the light of
specific situations.

• Strategy is the process of defining intentions

and allocating or matching resources to
opportunities and needs, thus achieving a
strategic fit between them. Business strategy is
concerned with achieving competitive
advantage.
• The effective development and implementation
of strategy depends on the strategic capability
of the organization, which will include the
ability not only to formulate strategic goals but
also to develop and implement strategic plans
through the process of strategic management.

• A strategy gives direction to diverse activities,

even though the conditions under which the
activities are carried out are rapidly changing.
• The strategy describes the way that the organization
will pursue its goals, given the changing
environment and the resource capabilities of the
organization.
• It provides an understanding of how the organization
plans to compete.
• It is the determination and evaluation of alternatives
available to an organization in achieving its
objectives and mission and the selection of
appropriate alternatives to be pursued.
• It is the fundamental pattern of present and planned
objectives, resource deployments, and interactions of
a firm with markets, competitors and other
environmental factors.
A good strategy should specify;
• What is to be accomplished
• Where, i.e., which product/markets it will
focus on
• How i.e., which resources and activities will be
allocated to each product/market to meet
environmental opportunities and threats and to
gain a competitive advantage
 SCOPE OF STRATEGY
1. Ensures Proper Allocation of Resources –
While formulating a strategy the strategist have to
keep in mind information that they have access to
and appraise all possible outcomes before
selecting a particular alternative. A good strategy
help the organization in allocating resources in
the efficient manner.

2. Provide Direction - Organizations lose their

purpose in absence of proper guiding strategies.
Strategies direct an organization to achieve its
goals.
3. Synchronizes Activities -
• The comprehensive strategy help the organization
in synchronizing the strategic initiatives taken at
different levels.
• Organizations can also be benefited by developing
a master strategy that encompasses the entire
organization.
• A company wide strategy also ensure that there are
no variations and all the departments are working
towards achieving a single goal with minimum
conflicts, overlaps and contradictions in the
organization.
4. Facilitates Decision Making - Strategy
facilitates decision making as strategy and
strategic initiatives act as a point of reference
for any action.

5. Help Accomplishing Goals - Strategies enable

a company to achieve its goals and create a
market position by allocating resources,
providing proper training to employees,
enhancing the capacity of production etc.
6. Enables Comparison of Alternative Actions-
Strategy ensures that the valuable resources are
allocated optimally. Strategies helps in
analyzing the record of previously adopted
strategic initiatives and allow the top level
management to compare the alternative actions
and select the best option among them for
different business units.
 Strategic Management

"The field of strategic management deals with the major

intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of
resources, to enhance the performance of firms in their
external environments."

Source: Nag, R., Hambrick, D. C., & Chen, M. (2007). What is strategic management, really? Inductive derivation of a consensus
definition of the field. Strategic Management Journal, 28(9), 935–955. https://doi.org/10.1002/smj.615
 What is Strategy Management?
• Strategic management is the process of defining
and implementing procedures and objectives
that set a company apart from its competition.

• Strategic management is also a skill that can be

developed as someone gains experience and
adopts a strategic mindset.

• The adjacent fields for the study included

economics, sociology, marketing and
management. The definition of Strategy
management varied in different fields yet had a
common chord within them.
Source: Nag, R., Hambrick, D. C., & Chen, M. (2007). What is strategic management, really? Inductive derivation of a consensus
definition of the field. Strategic Management Journal, 28(9), 935–955. https://doi.org/10.1002/smj.615
• Strategic management involves developing
and implementing plans to help an
organization achieve its goals and objectives.
This process can include formulating strategy,
planning organizational structure and resource
allocation, leading change initiatives, and
controlling processes and resources.

• Strategic planning involves identifying

business challenges, choosing the best
strategy, monitoring progress, and then
making adjustments to the executed strategy
to improve performance.
Components and Elements in Strategic
Management
Component Elements
Strategy Formulation • Vision
• Mission
• Goals
• Objectives
• External Analysis
• Internal Analysis
• Industry Analysis
• Competitive Analysis
Strategy Implementation • Organizational Structure
• People and Leadership
• Organizational Systems and processes
Strategy Evaluation and Control • Evaluation models and processes
• Evaluation Criteria
• Control Methods
Importance of Strategy
Model of Strategic Management
 Developing a strategic management model typically
involves the following steps:
• Define the organization's mission, vision, and values:
These provide a clear sense of direction and purpose for
the organization.
• Conduct a SWOT analysis: This will help to identify the
organization's strengths, weaknesses, opportunities, and
threats, which can be used to inform strategy
development.
• Develop strategic objectives: These should be specific,
measurable, achievable, relevant, and time-bound
(SMART) and aligned with the organization's mission and
vision.
• Formulate strategies: This involves identifying the
actions and plans needed to achieve the strategic
objectives.
• Implement and execute the strategies: This involves
allocating resources, building a plan of action, and
communicating the plan to all stakeholders.
• Monitor and evaluate progress: This involves tracking
progress against the strategic objectives and making
adjustments as needed.
• Review and update the model: This involves
periodically revisiting the model to ensure it remains
relevant and effective in light of changes in the
organization's internal and external environment.
STRATEGIC DECISION MAKING
PROCESS
• The strategic decision-making process is a
structured approach to making the tough,
long-term decisions that will shape the
direction of an organization. It is designed to
incorporate objective analysis and subjective
judgment and generate buy-in and commitment
among those involved.
• It is a basic overview of the strategic
decision-making process in executing the
strategies.
 Elements of strategic decision-making often
include:
• Analysis: This involves understanding the
organization’s internal strengths and
weaknesses and the external opportunities and
threats (SWOT analysis). Another approach
may be using Porter’s Five Forces model to
understand the competitive forces at play in the
industry. This stage may also involve
forecasting future trends and understanding
various scenarios.
• Choice: Strategic leaders must decide on the
course of action after understanding the
environment and various possibilities. This
often involves trade-offs, as resources are
typically limited. Strategic leaders have to
decide where to focus the organization’s
efforts.
• Implementation: This involves setting up
systems to execute the strategy, such as
budgets, targets, and operational plans. The
strategy must also be communicated
throughout the organization, and buy-in from
various stakeholders must be obtained.
• Evaluation and Control: After the strategy is
implemented, its progress and results need to
be monitored, adjustments made where
necessary, and actions to ensure the
organization remains on track to achieve the
strategic objectives.
Strategic decision-making process is a structured
approach to making the tough, long-term
decisions that will shape the direction of an
organization. It is designed to incorporate
objective analysis and subjective judgment and
generate buy-in and commitment among those
involved in executing the strategies.
Here is a basic overview of the strategic
decision-making process:
• Identify the Strategic Issue: Strategic issues are
big, overarching questions about the organization’s
direction. Identifying these issues is the first step
in the strategic decision-making process.
• Environmental and Organizational Analysis:
This involves performing a detailed analysis of the
internal and external environment. The goal is to
identify strengths, weaknesses, opportunities, and
threats (SWOT analysis) that the organization
faces. This could also include analysis of
competition, market trends, social and economic
trends, technological advances, and political and
regulatory changes.
• Generation of Alternatives: Several alternative
strategies are generated based on the strategic issue
and the analysis. These alternatives should be
diverse and explore different approaches to
addressing the strategic issue.
• Evaluation of Alternatives: Each alternative is
evaluated against a set of criteria. These criteria
could include the potential for profit, alignment
with the organization’s mission and values,
feasibility, acceptance among stakeholders, etc.
The goal is to objectively assess the pros and cons
of each alternative.
• Choice of Strategy: Based on the evaluation, a
strategy is chosen. The top executives in the
organization usually make this decision and reflect
their judgment about the best course of action.
• Implementation of Strategy: The chosen strategy
is translated into actionable steps, and resources
are allocated for execution. The details of the
strategy are communicated throughout the
organization.
• Evaluation and Control: The implementation of
the strategy is monitored, and its effectiveness is
assessed. Adjustments are made as necessary to
stay on track toward the strategic objectives.
 Corporate governance
Composition of the board, role and responsibilities
of the board of directors, trends in corporate
governance, Corporate social responsibility.

Case studies and Latest updates.

Dr. Subiya Rahman

 Introduction
• Corporate governance is the system of rules,
practices and processes by which a company is
directed and controlled.

• Corporate governance essentially involves

balancing the interests of a company's
many stakeholders, such as shareholders, senior
management executives, customers, suppliers,
financiers, the government, and the community.
 Key aspects of corporate governance
include
• Board Structure and Responsibilities
• Transparency and Disclosure
• Ethical Conduct and Compliance
• Risk Management
• Shareholder Rights
• Accountability and Audit
• Executive Compensation
 PepsiCo
• One company that has consistently practiced good
corporate governance and seeks to update it often is
PepsiCo. In drafting its 2020 proxy statement, PepsiCo
took input from investors to focus on six areas:
• Board composition, diversity, and refreshment, and
leadership structure
• Long-term strategy, corporate purpose,
and sustainability issues
• Good governance practices and ethical corporate culture
• Human capital management
• Compensation discussion and analysis
• Shareholder and stakeholder engagement.
 Types of board members
An effective board should represent both management
and shareholder interests and include members from
within and outside the business. They include:
Outside directors:
These members are expected to bring an independent
view to company issues.
They are not involved in the company’s daily
operations.
Outside directors are often chosen for their expertise
in associated business fields.
Since they are not a company employee, they receive
reimbursement or pay to attend meetings.
Inside directors:
Inside directors are company employees
whose experience brings value to the board.
They are not compensated because they are
often already a C-level executive, major
shareholder or a union representative.
 Board officers and other members
Chairman:
• Sometimes referred to as a “chairperson” or
“president,” the chairman is the acting head of the
board of directors.
• While the chairman sets the direction for the board,
all board members are considered peers.
Vice chairman: Sometimes referred to as “vice
president,” the vice chairman serves in the absence of
the president or chairman.
• They also may be referred to as “chairman-elect” if
plans call for the member to serve as the next
chairman or president.
• Treasurer: They typically manage the annual budget,
financial policies, investments and financial audits.

• Secretary: This person has the overall responsibility

to create and maintain corporate records and other
important corporate documents.

• Executive director: The executive director is an inside

director that holds an executive position within the
organization.

• Shadow or de facto director: Though this individual

controls or directs the organization, they are not
listed as a board member.
 Board committees
Typically, a board of directors establishes and manages
several committees that are specifically dedicated to
certain decision-making processes. For example:

Finance committee
Audit committee
Compensation committee
 Board of Directors
• The composition of the board of directors of
the listed entity shall be as follows;
• Board of Directors shall have an optimum
combination of executive and non-executive
directors with at least
• 1 woman director and not less than fifty
percent of the board of directors shall
comprise of non-executive directors.
• Where the chairperson of the board of
directors is a non-executive director, at least
one-third of the board of directors shall
comprise of independent directors and
• where the listed entity does not have a regular
non-executive chairperson, at least half of the
board of directors shall comprise of
independent directors.
 Basic Responsibilities of Board Members
1. Establish the organization’s vision, mission, and
purpose.
2. Hire, monitor, and evaluate the chief executive
3. Provide proper financial oversight.
4. Ensure the organization has adequate resources.
5. Create a strategic plan and ensure that it’s followed.
6. Ensure legal compliance and ethical integrity.
7. Manage resources responsibly.
8. Recruit and orient new board members and assess
board performance.
9. Enhance the organization’s public standing.
10. Strengthen the organization’s programs and services.
 Duties of the board
1. Trusteeship
2. Formulation of Mission, Objection and Policies
3. Designing Organizational Structure
4. Selection of Top Executives
5. Financial Sanctions
6. Feed forward and Feedback
7. Link between the Company and External
Environment
 Corporate Social Responsibility
• Corporate Social Responsibility (CSR) refers to a
company's commitment to operating in an ethical
manner and contributing positively to society beyond
its primary goal of generating profit.

• CSR encompasses a wide range of activities and

practices that focus on the social, environmental, and
economic impacts of a company's operations.

• Corporate social responsibility (CSR) is the idea that

businesses should operate according to principles and
policies that make a positive impact on society and
the environment.
Types of corporate social responsibility
• Environmental responsibility
• Ethical responsibility
• Philanthropic responsibility
• CSR practices include donating money,
resources or time to positive causes and
organizations, such as local and national
charities, educational programs, disaster relief
and more.
• Economic responsibility
Benefits of corporate social responsibility
• Business benefits
• Consumer benefits
• Environmental benefits
• Societal benefits
Examples of corporate social responsibility
• Donating a percentage of profits to environmental or
social causes
• Committing to using recycled and eco-friendly materials
• Engaging in social activism or fundraising on behalf of
social causes
• Creating programs for the ethical use and disposal of
products, such as electronics recycling programs
• Instituting diversity, equity and inclusion (DEI) programs
that support efforts to diversify and grow the workforce
in new ways
• Supporting programs that replenish the natural
resources, such as water or timber, used for production
• Establishing employee well-being programs that support
their physical and mental health
 APPLICABLE SECTION SECTIONS & RULES:
APPLICABILITY OF THE CSR:
The applicability of the CSR provisions on the certain class
of Companies having:
(a) net worth of the company rupees Five hundred crore
or more; OR
(b) turnover of the company rupees One thousand crore
or more; OR
(c) net profit of the company rupees five crore or more.
During any financial year to constitute a Corporate Social
Responsibility (CSR) Committee of the Board. Any
financial year has been clarified as to imply any of the
three preceding financial years.
• The company spends, in every financial year, at least
2% of the *average net profits of the company made
during the three immediately preceding financial
years, in pursuance of its Corporate Social
Responsibility Policy:
• Activities of the company shall give preference to the
local area and areas around it where it operates, for
spending the amount earmarked for Corporate Social
Responsibility activities defined under the Schedule
VII of the Companies Act 2013.
• If the company fails to spend such amount, the Board
shall, in its report made under clause (o) of
sub-section (3) of section 134, specify the reasons for
not spending the amount.
 Types of the Board of CSR Committee
Company
Listed Companies 3 or More Directors including at least one Independent
Director
Public Company 3 or More Directors including at least one Independent
Director
Note: if the company is not required to independent
director then no need of independent director in the
CSR committee.

Private Company 2 Directors

Branch and Project At least 2 persons, one person resident in India authorised
Offices of a Foreign to accept on behalf of the company service of process any
Company notices or other documents served on the company and
another person shall be nominated by the foreign company
Emerging trends in corporate governance
• Trend 1: Artificial intelligence will present new
challenges
Technology is already omnipresent in many
boardrooms. Many boards utilize tools like board
portals to streamline collaboration and foster
security and transparency. Artificial intelligence
(AI) will likely revolutionize board activities inside
and outside the boardroom.
Companies may use AI to generate images, train
language learning models like GPT-4 to fulfill a
specific task, create videos and more.
• Trend 2: Ethics will be a key focus
o New technology may introduce new ethical issues.
AI, for example, isn’t easily transparent and has
biases, which can complicate data-gathering and
decision-making for boards striving to offer their
shareholders greater visibility.
• Trend 3: Boards need more effective systems for
sharing data
o Boards have an incredible amount of
responsibilities, all requiring complete oversight of
business activities. Yet, in many cases, outdated
reporting structures make it difficult for boards to
access the information they need to make key
decisions.
• Trend 4: Corporations need to nurture and
attract young talent
o Companies should start nurturing young talent
now by considering the diverse skillsets and
backgrounds that could set the company up for
future success. Legal, cybersecurity, financial and
data/analytics are skills most boards will need to
cultivate to succeed.
• Trend 5: All eyes are on board evaluations
o Board effectiveness remains a focus for investors
and consumers. They want to see board directors
and company executives not only fulfill their
fiduciary duties but act with integrity. That means
boosting financial performance and considering
the broader impact of corporate activities.