MBA ZG611/MM ZG611/POM ZG611/QM ZG611
Strategic Management and Business Policy
BITS Pilani
Pilani | Dubai | Goa | Hyderabad
Ambuj Gupta, Nirankush Dutta, Parag Rastogi, R. Raghunathan, Rahul Kaurav
BITS Pilani
Pilani Campus
Topic 2
Elements of Strategic Management Process
Discussion Topics
• Basic elements of Strategic Management process –
Revisited
• Mission, Objectives, Levels of strategies, Policies,
Program, Budgets, Procedures
• Crafting Strategy and Strategy Logics
• Strategic Decision Making
• Mintzberg’s Modes of Strategic Decision Making
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Strategic Management Model
Expanded Model
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Mission
A mission statement defines an organization's core purpose
and direction.
Example: Walmart's mission is "to save people money so
they can live better.“
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Nvidia Mission
https://www.youtube.com/watch?v=lXLBTBBil2U&t=407s
(1.5 to 2.5)
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Objectives
Objectives are specific, measurable goals aligned with the
mission.
• Example: KPIs for the business over a certain period of
time. E.g. achieving 500 cr turnover in 3 years time.
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Levels of Strategies
Strategies exist at different levels in an organization:
• Corporate Strategy : At Org level
• Business Strategy : At BU Level
• Functional Strategy: At Department/Function level
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BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Walmart Corporate Strategy
• Everyday Low Prices (EDLP) : Offering low prices
consistently across all stores and online
• Omnichannel presence : Providing access to its products
through stores, online, and mobile
• Digital transformation : Investing in digital platforms to
compete with online retailers
• Private label brands : Offering its own brands to compete
with other retailers
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Walmart E-commerce Business strategy
• Omnichannel approach: Integrating online and in-store shopping
experiences, allowing customers to browse online, buy in-store, or pick
up online orders at a nearby Walmart.
• Everyday Low Price (EDLP): Corporate level
• Grocery focus: Corporate level
• Efficient supply chain: Corporate Level
• Marketplace integration: Endless aisle – 3rd party sellers
• Membership programs: Amz Prime equivalent
• Technology : Continuous upgradation
https://www.youtube.com/watch?v=6cXnuvKSCDs
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Functional Strategy : Logistics
• Walmart Logistics strategy of cross-docking
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Policies
Policies guide decision-making within organizations.
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https://www.walmart.ca/en/help/arti
cle/pricing-
policy/0677cc5f171e42509e9dbf66
ba09be7a
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Programs
Programs are structured initiatives to achieve strategic
objectives.
• Example: ITC’s e-Choupal program for rural digital
empowerment.
https://www.itcportal.com/businesses/agri-business/e-
choupal.aspx
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https://www.walmart.ca/en/hel
p/channel/refer-a-
friend/8c5df966bcd34d859de3
d9b43740baaf
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Budgets
Budgets allocate financial resources to different activities.
• Example: Capital expenditure budgets to set up a new
factory to achieve 500 Cr turnover in 3 years.
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Procedures
Procedures define step-by-step actions to execute tasks.
• Example: Organization’s quality control procedures in
manufacturing to maintain product standards.
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https://corporate.walmart
.com/content/dam/corpor
ate/documents/suppliers/
requirements/complianc
e-areas/u-s-product-
quality-and-compliance-
manual.pdf
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Introduction to Crafting Strategy
• Mintzberg (“Crafting Strategy”), challenges the traditional
view that strategy is always deliberately planned
• Introduces the metaphor of strategy as "crafting" rather
than just planning
• Like a potter at the wheel, strategists must balance
between thoughts and actions, control and learning,
stability and change
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https://www.youtube.com/watch?v=lXLBTBBil2U&t=407s
7:00 to 8:00
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The Strategy Crafting Process
• Strategy formation is a dynamic process that combines:
– Deliberate strategies: Intended plans that are actually realized
– Emergent strategies: Patterns that develop without clear
intentions
• Organizations need both approaches:
– Deliberate strategies provide direction and control
– Emergent strategies allow learning and adaptation
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Source : R2, Chapter 1
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Key Principles of Crafting Strategy
• Effective strategy requires intimate knowledge of the
business
– Like a craftsperson's deep understanding of their materials
– Hands-on experience matters more than abstract analysis
• Past patterns inform future strategy
– Historical context shapes strategic possibilities
– Success comes from recognizing and building on existing patterns
• Strategic thinking must be connected to operational details
– Strategy emerges from daily activities and decisions
– Small actions can lead to major strategic shifts
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Implications for Management
• Managers should:
– Balance planning with flexibility and learning
– Stay closely connected to operations
– Watch for emerging patterns in organizational behavior
– Create conditions for strategic thinking at all levels
• Strategy is not just about planning but about:
– Recognizing and responding to emerging opportunities
– Building on organizational capabilities
– Maintaining strategic continuity while ensuring renewal
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Introduction to Strategic Logics
• Study (“Which Strategy When?”) identifies three
fundamental strategic logics:
– Position Logic: Creating unique, valuable market position
– Leverage Logic: Extending existing resources into new markets
– Opportunity Logic: Pursuing flexible, adaptive strategies
• Each logic works best in different market conditions
• Success depends on matching strategy to environment
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https://www.youtube.com/watch?v=lXLBTBBil2U&t=407s
9:20 to 10:20
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Position Logic
• Best for: Stable, mature markets with clear industry structure
• Focus: Building sustainable competitive advantage
• Key elements:
– Detailed analysis of industry forces
– Clear market positioning
– Building strong entry barriers
• Example: Walmart's cost leadership strategy
– Developed sophisticated logistics system
– Located stores in underserved rural markets
– Created economies of scale in purchasing
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Leverage Logic
• Best for: Related markets with clear links to core business
• Focus: Extending existing capabilities to new opportunities
• Key elements:
– Identifying core competencies
– Finding new applications for existing resources
– Building on proven strengths
• Example: Disney's entertainment empire
– Extended animation expertise into theme parks
– Leveraged character IP across multiple platforms
– Applied storytelling capabilities to different media
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Opportunity Logic
• Best for: Unpredictable, fast-moving markets
• Focus: Quick capture of temporary advantages
• Key elements:
– Rapid experimentation
– Simple, flexible rules
– Quick decision-making
• Example: Zara's fast fashion approach
– Rapid design-to-store cycle (2-3 weeks)
– Constant market testing with small batches
– Quick abandonment of underperforming styles
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https://www.youtube.com/watch?v=lXLBTBBil2U&t=407s
11:00 to 13:00
BITS Pilani, Deemed to be University under Section 3 of UGC Act, 1956
Implementation Guidelines
• Match logic to market conditions:
– Use Position in stable markets with high entry barriers
– Apply Leverage when expanding into adjacent markets
– Adopt Opportunity in unpredictable environments
• Common pitfalls:
– Mismatching logic to environment
– Trying to use all logics simultaneously
– Not adapting as market conditions change
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Initiation of Strategy
• A Triggering event is that acts as a stimulus for a change
in strategy.
• Some of the Triggers are :
– New CEO
– External Intervention
– Threat of a change in ownership
– Performance Gap
– Strategic Inflection Point
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Examples of Strategy Initiation
• Trigger: Strategic Inflection Point
– Example: Mahindra & Mahindra's Shift to Electric Vehicles (2020)
– Initiative: M&M initiated a major transformation in its automotive strategy.
– Action: Focused on developing EVs with the launch of several models
– Outcome: Positioned Mahindra & Mahindra as a key player in India's EV market
• Trigger: External Intervention
– Example: Air India Privatization (2021)
– Initiative: The government decided to privatize Air India after years of financial stress.
– Action: Tata Group emerged as the successful bidder, taking ownership of Air India.
– Outcome: A major strategic shift, as Tata Group focused on revamping the airline’s
operations and integrating it with its other travel ventures (Vistara, Air India Express).
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Strategic Decision Making
• Three Characteristics of Strategic Decision (as compared
to other decisions):
– Rare (or Unusual)
– Consequential
– Directive
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Strategic Decision Making
– RIL made a strategic move to enter the telecom sector by
launching Reliance Jio.
– Characteristics of the Decision
• Rare. Investment of over 1.5 L Cr. Disruptive Pricing Model. Industry
having multiple players
• Consequential. Competition had to lower tariffs/or merge/or exit.
Democratization of data.
• Directive. Redirected RIL focus on tech-driven B2C conglomerate
– The decision also set the stage for Reliance to expand into
digital services, e-commerce, and fintech. (Reliance Jio
Platform)
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Mintzberg’s Modes of Strategic Decision Making
• Entrepreneurial Mode
• Adaptive Mode
• Planning Mode
• Logical Incrementalism
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Entrepreneurial Mode
• Focus: Visionary and opportunity-driven decisions, often led by a strong
leader.
• Characteristics:
– Dominated by a central figure (often a founder or CEO).
– Decisions are bold and innovative, focusing on long-term growth and
opportunities.
– Risk-taking is a key component.
• Example:
– Narayan Murthy of Infosys: The founding team’s decision to establish Infosys in
1981, despite limited capital and infrastructure in India, reflects an
entrepreneurial mode of decision-making. Their vision of creating a global IT
powerhouse drove their strategy.
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Adaptive Mode
• Focus: Reactive solution in response to existing challenges.
• Characteristics:
– Decisions are made to adapt to external changes rather than to
pursue a long-term vision.
– Focuses on resolving immediate problems or crises.
– Incremental improvements rather than transformative shifts.
• Example:
– Nokia: Its pivot to mobile networks after losing dominance in the
mobile handset market is an example of adaptive decision-making.
It responded to market realities rather than pursuing a visionary
shift initially.
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What Nooyi did in 2010
Reduced portion sizes: Reduced the portion sizes of "fun for you" products.
Promoted "diet" products: Promoted "diet" products as aspirational, similar to full-
sugar products. For example, Gatorade was marketed to athletes instead of as a
recreational beverage.
Reduced salt, sugar, and fat:
Increased "good for you" products: Increased the production of "good for you"
products.
Transformed portfolio: Transformed the company's portfolio from "fun-filled" to
"good-filled" products.
https://www.youtube.com/watch?v=KzLpryLUYsk
18:06 to 19:10
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Planning Mode
• Focus: Formal, structured, and analytical decision-making based on
data and forecasts.
• Characteristics:
– Involves detailed analysis, long-term planning, and multiple layers of review.
– Highly rational and systematic, focusing on measurable goals.
• Example:
– Reliance Industries’ Entry into Petrochemicals: RIL (’80s) strategically planned
its entry into the petrochemical sector. The decision was based on comprehensive
market analysis and long-term forecasts about India's demand for polymers and
plastics. Reliance set up state-of-the-art facilities and adopted backward
integration strategies to ensure cost efficiency.
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Logical Incrementalism
• Focus: Gradual, step-by-step implementation of a larger
strategy while remaining flexible to new information.
• Characteristics:
– Strategy evolves through small, manageable decisions rather than
large-scale changes.
– Emphasizes flexibility and learning through action.
• Example:
– Flipkart: Its gradual evolution from an online bookstore to India’s
leading e-commerce platform shows logical incrementalism. The
company adapted its offerings (e.g., introducing fashion, groceries,
and fintech) based on market feedback and growth opportunities.
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Strategic Decision Making Process: 8 Steps
Source: Fig 1.5 of
Textbook
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Strategic Audit
• Strategic Audit: A systematic evaluation of an
organization's strategies, processes, and performance to
align with its long-term goals.
• Purpose:
– Provides a comprehensive analysis of internal and external
environments.
– Identifies opportunities, threats, strengths, and weaknesses.
– Facilitates data-driven, informed decision-making.
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Globalization, Innovation and Sustainability as
Challenges to Strategic Management
• Globalization
– Complexity of Operations: Managing cross-border activities,
diverse markets, and cultural differences.
– Geopolitical Risks: Tariffs, regulations, and trade wars affecting
strategies.
– Talent and Resources: Navigating global talent pools and
supply chain disruptions.
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Globalization, Innovation and Sustainability as
Challenges to Strategic Management
• Innovation
– Rapid Technological Change: Staying ahead of digital transformation and
disruptive technologies.
– Short Product Life Cycles: Balancing R&D investments with market needs.
– Resistance to Change: Managing organizational inertia and fostering an
innovation culture.
• Sustainability
– Regulatory Pressures: Complying with ESG (Environmental, Social,
Governance) mandates.
– Stakeholder Expectations: Balancing profitability with environmental and
social responsibilities.
– Resource Scarcity: Addressing long-term resource depletion and circular
economy integration.
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