SUMMARY 1 NATURE OF STRATEGIC MANAGEMENT

SUMMARY
Strategic planning refers to strategy formulation whereas strategic management is the way of formulating, implementing and evaluating cross-functional decisions that will help the organization to achieve the desired objectives and its purpose is to create new opportunities for long-term planning. The strategic management process is a logical, objective and systematic approach for making major decisions in an organization and it is comprises of three stages: Strategy formulation: Developing mission and mission, SWOT analysis, establishing long-term objectives, designing and developing the company strategies. Strategy implementation: It is an action stage of strategic management which includes developing steps, methods, and procedures to execute the strategy by creating strategysupportive culture. Strategy evaluation: It involves examining how the strategy has been implemented as well as the outcomes of the strategy. Intuition also play a significant role in this process because most people recognize that one can made good strategic decisions based on past experiences, judgment and feelings. Apart from it, organization should also monitor internal and external events and trends during this process so that timely changes can be made as needed. Following are the certain key terms of strategic management: Competitive advantage: A firm can do or owns something that rivals cannot do or own and keeping this as its very important for long term success in an organization, Strategist: Individuals who are the most responsible for success or failure of organization. Vision and mission statement: Vision statement answers the question What do we want to become? and it is the first step in strategic planning. Mission statement

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SUMMARY 2 NATURE OF STRATEGIC MANAGEMENT

addresses the basic question What is our business? and identifies the scope of firms operation in product and market terms. External opportunities and threats: It refers to economic, social, cultural, demographic, legal, political and other trends and events that could significantly benefit or harm the organization in future. Internal strength and weaknesses: they are an organizations controllable activities that are performed especially well or poorly. Long-term objectives: They are the specific results that an organization seeks in perusing its basic mission and its duration is more than a year. Strategies: They are means by which long term objectives will be achieved. It requires top management decision and large amount of resources. Annual objectives: These are the short-term goals that organization must achieve in order to accomplish long-term objectives. Policies: It includes guidelines, rules, procedures that will help in achieving annual objectives. The strategic management process can best be studied and applied by using a model. Identifying an organizations existing vision, mission, objectives and strategies is the logical starting point for strategic management. This process is dynamic and continuous as the change in any one of the major components in the model can necessitate change in any or all of the other components. Good communication and feedback is very necessary throughout the strategic management process in order to achieve the ultimate goals and objectives. The application of this process is typically more formal in larger and well-established organization. Strategic management allows an organization to be more proactive than reactive in shaping its own future; it allows an organization to initiate and influence activities- and thus to exert control over its own destiny. The principal benefit of strategic management has been to help organizations formulate better strategies through the use of a more systematic, logical, and rational approach to strategic choice but research studies now indicate that the process, rather than the decision or document, is the more important contribution of strategic management.

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SUMMARY 3 NATURE OF STRATEGIC MANAGEMENT

Communication is a key to successful strategic management. A major aim of the strategic management is to achieve the understanding of and commitment from all managers and employees, understanding may be the most important benefit of strategic management, followed by commitment. A great benefit of strategic management is to empower employees. An increasing number of corporations and institutions are using strategic management to make effective decisions. But it is not a guarantee for success; it can be dysfunctional if conducted haphazardly. Financial Benefits: Research indicates that organizations using strategic management concepts are more profitable and successful than those that do not. High- performing forms seem to make more informed decisions with good anticipation of both short- and long-term consequences. On the other hand, firms that perform poorly often engage in activities that are shortsighted and do not reflect good forecasting of future conditions. Nonfinancial Benefits: Strategic management enhances the problem- prevention capabilities of organizations because it promotes interaction among managers at all divisional and functional levels. In order to empowering managers and employees, strategic management often brings order and discipline to an otherwise floundering firms. Some firms do not engage in strategic planning, and some firms do strategic planning but receive no support from managers and employees. Some reasons for poor or no strategic planning are Poor reward structures, Fire fighting, Waste of time, Too expensive etc. Strategic planning is an involved, intricate, and complex process that takes an organization into uncharted territory. It does not provide a ready- to- use prescription for success; instead, it takes the organization through a journey and offers a framework for addressing questions and solving problems. Being aware of potential pitfalls and being prepared to address them is essential for success. Failing to follow certain guidelines in conducting strategic management can foster criticisms of the process and create problems for the organization. An important guideline for

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SUMMARY 4 NATURE OF STRATEGIC MANAGEMENT

strategic management is open-mindedness. A willingness and eagerness to consider new information, new viewpoints, new ideas, inquiry and learning. Business ethics are principles of conducting business, good business ethics is a prerequisite for good strategic management, and good business ethics is good business. All strategy formulation, implementation and evaluation decisions have ethical ramifications. Harming the natural environment is unethical, illegal, and costly. A new wave of ethics issues has accentuated the need for strategists to develop a clear code of business ethics. The explosion of the internet into the workplace has raised many new ethical questions in organizations today and some business actions considered to be unethical. A strong military heritage underlies the study of strategic management. The word strategy comes from the Greeks strategos, which refers to a military general and combines stratus (the army) and ago (to lead). A key aim of both business and military strategy is to gain competitive advantage. A fundamental difference between military and business strategy is that business strategy is formulated, implemented, and evaluated with an assumption of competition, whereas military strategy is based on an assumption of conflict. Both business and military organizations must adapt to change and constantly improve to be successful. Organizations that conduct business operations across national borders are called international firms or multinational corporations. Parent company is a firm that invests in international operations, and host country is where business is conducted. The Strategic management process is same for both domestic and international firms but somehow complex for international firms due to more variables and relationships. Success in business increasingly depends upon offering products and services that are competitive on a world basis not just on a local basis. There are also numerous potential disadvantages of initiating, continuing, or expanding business across national borders, one risk is that foreign operations could be seized by nationalistic factions.

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