1 - Introduction to Strategic Management

Commerce Simplified

3 Oct 202209:42

Summary

TLDRIn this video, Dr. Vinod Kamble explains the concept of strategic management as part of an M.Com course. He discusses how the term 'strategy' originated from military science and is now used in business management. Dr. Kamble highlights the importance of creating and implementing strategies to tackle business challenges caused by changing internal and external environmental factors like customer preferences, competition, and government policies. He also covers various business strategies, including stability, growth, mergers, joint ventures, and retrenchment, emphasizing their role in achieving business objectives and facing competition.

Takeaways

😀 The term 'strategy' originates from the military, where it referred to the planning and actions of generals to counter enemy attacks.
🎯 In business, 'strategy' refers to the plans and actions a company takes to adapt to changing business environments and to mitigate risks and challenges.
🌐 Business environment includes both internal and external factors, with internal factors being more controllable and external factors often beyond a company's control.
🔄 The need for strategic planning arises from the constant changes in the business environment, such as shifts in customer preferences, competitive actions, and government policies.
📈 Strategic management is a process of formulating, implementing, and executing strategies to achieve an organization's objectives, such as maximizing profits and sales.
🛠️ Businesses adopt different strategies like stability, growth, retrenchment, and divestment to manage their position in the market and respond to competition.
🏢 Stability strategy involves maintaining the current position and operations of a business, often in response to satisfactory current performance or unfavorable economic conditions.
🌱 Growth strategy can include launching new products, entering new markets, or forming joint ventures to expand a company's reach and market share.
✂️ Retrenchment strategy may involve downsizing or closing parts of the business that are not performing well to focus on more profitable areas.
💡 The concept of strategic management is defined by authors like Pearce and Robinson as the set of decisions and actions taken by managers to formulate and implement strategies to achieve organizational objectives.

Q & A

What does the term 'strategy' originate from and what does it mean?
-The term 'strategy' originates from the static Greek word 'strategos', which means 'generalship' or 'the art of the general'. In English, it refers to the planning and directing of the movements and actions of an organization or institution to achieve its objectives.
How is the concept of 'strategy' applied in business management?
-In business management, 'strategy' refers to the creation and implementation of plans that help businesses adapt to changing environments, manage risks, and seize opportunities to achieve their goals such as maximizing profits, increasing sales, and expanding the business.
What are the two types of factors that affect a business's environment?
-The two types of factors that affect a business's environment are internal environmental factors, which are controllable to some extent, and external environmental factors, which are less controllable and can create risks for the business.
What is the role of strategic management in addressing competition in the market?
-Strategic management plays a crucial role in addressing competition by formulating and implementing strategies that help a business remain competitive, adapt to market changes, and achieve its objectives despite the challenges posed by competitors.
What are some examples of strategic actions businesses can take to stabilize their position?
-Businesses can take strategic actions such as maintaining their current position by continuing to offer the same products or services, entering new markets, or forming joint ventures to stabilize their position.
What does the term 'retrenchment' mean in the context of business strategy?
-In business strategy, 'retrenchment' refers to the reduction of a business's scope or operations, which may involve cutting costs, downsizing, or even closing down certain business units to improve efficiency and profitability.
Can you provide an example of a business that has adopted a retrenchment strategy?
-An example of a business that adopted a retrenchment strategy is the Tata Group's Tomco company, which sold its soap business to Hindustan Lever Limited due to the inability to manage the business effectively.
What is meant by a 'growth strategy' in business?
-A 'growth strategy' in business involves plans and actions aimed at expanding the business's operations, increasing market share, and enhancing profitability through methods such as introducing new products, entering new markets, or acquiring other companies.
How does strategic management help businesses achieve their objectives?
-Strategic management helps businesses achieve their objectives by guiding the decision-making process and actions of managers and strategists to formulate and implement strategies that align with the organization's goals and objectives.
What are the key components of strategic management according to the definition provided by Pearce and Robinson?
-According to Pearce and Robinson, the key components of strategic management include the actions taken by business managers or strategists to design and implement strategies that help achieve the organization's objectives.
What is the importance of understanding the concept of strategy for students and professionals?
-Understanding the concept of strategy is important for students and professionals as it equips them with the knowledge to navigate and succeed in dynamic business environments, make informed decisions, and contribute to the success of their organizations.

Outlines

00:00

📚 Introduction to Strategic Management

Dr. Vinod Kamle introduces the concept of strategic management, explaining the term 'strategy' originating from the Greek word for 'generalship' or 'art of the general'. He discusses its military origins and how it has evolved to be used in business management. The term 'strategy' in business refers to plans made to navigate the changing business environment and the challenges it presents. Dr. Kamle emphasizes the importance of understanding both internal and external factors that affect a business, such as customer preferences, competitive actions, and government policies. He outlines the need for businesses to create effective strategies to manage risks and achieve desired positions, such as growth or profitability, through strategic management processes.

05:03

🔍 Exploring Business Strategies for Stability and Growth

This paragraph delves into various business strategies aimed at maintaining stability and achieving growth. It discusses stability strategies, where businesses aim to continue in their current position without significant changes, and growth strategies, where businesses look to expand their product lines or enter new markets. The paragraph also touches on strategies like mergers and joint ventures to strengthen market positions. It contrasts these with retrenchment strategies, where businesses may reduce their scope or even shut down operations if they are not viable. Examples are provided, such as the sale of a business unit to Hindustan Lever Limited due to mismanagement, and the complete shutdown of a business established in 2011 that ceased operations in 2013 due to regional issues. The paragraph concludes with a call to action for students to attend lectures, engage with the content, and subscribe to the YouTube channel for more insights on strategic management.

Mindmap

Keywords

💡Strategy

Strategy in the context of the video refers to a plan or a set of actions designed to achieve specific business goals. It is central to the video's theme as it discusses how businesses can navigate through changing environments and challenges. The video uses the term to explain how businesses formulate and implement plans to counteract risks and achieve desired positions in the market.

💡Business Environment

The business environment encompasses all the internal and external factors that can affect a business's operations. The video explains that businesses must create strategies to adapt to the ever-changing business environment, which includes economic conditions, customer preferences, and government policies. It is a key concept as it influences the need for strategic planning.

💡Risk

Risk, as discussed in the video, represents the potential threats or challenges that a business might face due to changes in its environment. The video emphasizes the importance of strategic management in identifying and addressing these risks to ensure business stability and growth. Examples from the script include changes in customer preferences and government policies that can pose risks to businesses.

💡Internal and External Factors

Internal factors are those within a company's control, such as its management and resources, while external factors are outside the company's control, like market trends and competition. The video uses these terms to illustrate how businesses must consider both types of factors when developing strategies to manage risks and seize opportunities.

💡Competition

Competition refers to the rivalry among businesses in the same market. The video highlights the need for businesses to formulate strategies to stay competitive in the face of increasing competition. It mentions that businesses must continuously innovate and adapt their strategies to maintain their position in the market.

💡Stability Strategy

A stability strategy, as mentioned in the video, is one where a business aims to maintain its current position and operations without significant changes. This strategy is adopted when businesses are satisfied with their current state or when the economic conditions are not favorable for growth. The video provides examples of businesses that continue to operate with their existing products and markets as part of a stability strategy.

💡Growth Strategy

Growth strategy in the video refers to a business's plan to expand its operations, increase sales, and enhance profitability. The video discusses how businesses can adopt various strategies to grow, such as introducing new products, entering new markets, or forming joint ventures. It is presented as a way for businesses to improve their market position and achieve their desired objectives.

💡Retrenchment

Retrenchment is a strategy where a business reduces its scope or operations to focus on its core competencies or to manage financial difficulties. The video uses the term to describe a defensive strategy where businesses might sell off non-performing assets or divisions to concentrate on more profitable areas.

💡Market Leader

A market leader is a business that holds the dominant position in its market. The video mentions market leaders like Godrej, Hindustan Unilever, and Reliance as examples of companies that have successfully implemented strategies to maintain their leading positions over the years.

💡Strategic Management

Strategic management is the process by which businesses formulate, implement, and execute strategies to achieve their objectives. The video defines it as the actions taken by business managers or strategists to design and execute strategies that align with the organization's goals. It is the overarching process that ties together all the concepts discussed in the video.

Highlights

Introduction to the concept of 'strategy' and its origin from the military term 'general'.

Explanation of how strategy is used in business management to create plans to face changing business environments.

Importance of strategy in dealing with challenges and risks created by changes in the business environment.

Differentiation between internal and external environmental factors and their impact on business strategy.

The need for businesses to adapt to customer preferences and competitor actions as part of strategic planning.

Impact of government policies and economic conditions on business strategies.

Definition of strategic management as a process involving the formulation and implementation of strategies.

The role of strategic management in achieving business objectives such as profit maximization and sales growth.

Discussion on the necessity of formulating and implementing new strategies to face increasing market competition.

Introduction to stability strategy and its application for businesses to maintain their current position.

Examples of businesses adopting stability strategies to continue their operations without significant changes.

Exploration of growth strategies and how businesses expand their product lines or enter new markets.

Case studies of companies that have merged or joint ventured to strengthen their strategic positions.

Analysis of retrenchment strategies where businesses reduce their scope or close down operations.

Real-world examples of companies that have adopted retrenchment strategies due to unmanageable business challenges.

The definition of strategy according to Pierce and Robbins, emphasizing decision-making and action for achieving organizational objectives.

Graphical representation of the definition of strategic management and the importance of strategy in business.

Encouragement for students to attend lectures, like, share, comment, and subscribe to the YouTube channel for more insights.