MBA Strategic Management – Detailed Notes
UNIT 4: Strategy Choice, Analysis &
Implementation
1. Strategy Choice and Scenario Analysis
Scenario Analysis
Scenario analysis is a strategic planning method used to create multiple possible future
situations and analyze how strategic choices might work under each.
Process
1. Identify strategic issues
– External uncertainties (technology, regulation, competition).
2. Determine critical decision variables
– Demand, cost structure, price sensitivity, economic growth.
3. Generate scenarios
– Best-case, worst-case, most-likely; or 3–5 alternative narratives.
4. Evaluate impacts
– How would each scenario affect business strategy?
5. Develop contingency strategies
6. Monitor & update scenarios regularly.
Uses
● Long-term planning
● Risk assessment
● Strategic flexibility
● Industry forecasting
Tools & Techniques of Strategic Analysis
2. BCG Matrix (Boston Consulting Group Matrix)
A portfolio analysis tool used to allocate resources across business units.
Market Share / Industry Growth High Growth Low Growth
High Share Stars Cash Cows
Low Share Question Marks Dogs
Interpretation
● Stars → Need investment; future cash cows.
● Cash Cows → Generate cash; fund other units.
● Question Marks → Unsure future; invest selectively or divest.
● Dogs → Divest/harvest.
Limitations
● Only two variables
● Oversimplifies strategy
● Market share sometimes misleading
3. Ansoff Growth Matrix
Used for evaluating growth strategies.
Existing Products New Products
Existing Markets Market Penetration Product Development
New Markets Market Development Diversification
Definitions
● Market Penetration → Increase usage, price cuts, promotions.
● Market Development → Enter new regions/segments.
● Product Development → Innovations, new features.
● Diversification → Related or unrelated expansions.
4. GE Nine-Cell Planning Grid (GE–McKinsey Matrix)
Evaluates business strength vs. industry attractiveness.
Dimensions
1. Industry Attractiveness
– Market size, growth, profitability, competitive intensity
2. Business Strength
– Market share, brand equity, distribution capability
9 Cells
Green → Invest
Yellow → Selectively Invest
Red → Harvest/Divest
Benefits
● Multi-factor evaluation
● More comprehensive than BCG
5. McKinsey 7-S Framework
Ensures internal organizational alignment.
The 7 Elements
Hard S’s
1. Strategy
2. Structure
3. Systems
Soft S’s
4. Style
5. Staff
6. Skills
7. Shared Values (core of the model)
Purpose
● Diagnose internal problems
● Support change management
● Align all elements before strategy execution
STRATEGY IMPLEMENTATION
6. Developing Programs, Budgets & Procedures
Programs
Action plans that convert strategy into specific steps.
Examples: New product launch, cost reduction program.
Budgets
● Allocate financial resources
● Convert plans into measurable goals
Types: Capital budget, operating budget
Procedures
Standard operating instructions that guide strategy execution.
7. Stages of Corporate Development
1. Stage 1 – Simple structure
– Entrepreneurial, centralized
2. Stage 2 – Functional structure
– Specialization (marketing, production)
3. Stage 3 – Divisional structure
– Multi-product, strategic business units
4. Stage 4 – Strategic business planning
– Decentralization, professional managers
5. Stage 5 – Conglomerate structure
– Complex multi-industry organizations
8. Organizational Life Cycle
1. Birth – small, informal
2. Growth – functional specialization
3. Maturity – bureaucracy, stability
4. Decline – inefficiencies
5. Revival – restructuring
9. Organizational Structures
Matrix Structure
● Dual reporting (product x function)
Advantages: Flexibility, efficient resource use
Disadvantages: Conflicts, power struggles
Network Structure
● Core company + outsourced partners
Advantages: Cost reduction, agility
Disadvantages: Loss of control, coordination issues
Modular/Cellular Structure
● Organization made of independent modules
Advantages: High speed, flexibility
Disadvantages: Coordination complexity
10. Reengineering and Strategy Implementation
Business Process Reengineering (BPR)
Redesigning processes radically to improve cost, quality, speed.
Steps
1. Identify critical processes
2. Analyze existing workflows
3. Radical redesign
4. Implement and monitor
11. Leadership & Corporate Culture
Role of Leadership
● Provide vision
● Motivate stakeholders
● Resolve conflicts
● Manage change
Corporate Culture
Shared values and beliefs influencing behavior.
Types:
● Power culture
● Role culture
● Task culture
● Person culture
Strong culture → better strategy execution.
UNIT 5: Strategy Evaluation & Control
12. Strategy Evaluation & Control Process
1. Set standards
2. Measure performance
3. Compare with standards
4. Take corrective action
13. Measuring Performance
Types of Controls
1. Premise control – early identification of changes
2. Implementation control – milestones
3. Strategic surveillance – broad monitoring
4. Special alert control – crisis response
14. Activity-Based Costing (ABC)
Assigning costs to activities rather than departments.
Helps identify cost drivers and improve profitability.
15. Enterprise Risk Management (ERM)
Holistic risk management across the organization.
Risk Categories
● Strategic
● Operational
● Financial
● Compliance
16. Primary Measures of Corporate Performance
● ROI (Return on Investment)
● ROE (Return on Equity)
● ROA (Return on Assets)
● Market share
● Profit margin
● EVA (Economic Value Added)
17. Balanced Scorecard (BSC)
Measures performance across four perspectives:
1. Financial
2. Customer
3. Internal Processes
4. Learning & Growth
18. Responsibility Centers
1. Cost Centers
2. Revenue Centers
3. Profit Centers
4. Investment Centers
19. Benchmarking
Comparing performance with best-in-class companies.
Types
● Internal
● External
● Competitive
● Functional
● Strategic
20. Problems in Measuring Performance
● Subjective metrics
● Short-term focus
● Hard-to-measure intangible assets
● Data availability
● External environmental changes
Guidelines for Proper Control
● Relevant, measurable standards
● Timely reporting
● Balanced measures
● Flexibility
● Participation from employees
21. Strategic Audit of a Corporation
A comprehensive review of the company's internal and external environment.
Components
1. External environment analysis
2. Internal analysis
3. Strategic alternatives
4. Performance evaluation
5. Implementation review
