1 - Introduction to Strategic Management

Summary

In 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.