Topic:

Strategic Management
Submitted To:
Prof.Muhammad Ramzan
Submitted By:
Muhammad Umair

MC13-055

Muhammad Asif

MC13-056

Muhammad Adil

MC13-094

Muhammad Bilal

MC13-061

Ahsan Azeez

MC13-060

H.Muhammad Faisal

MC13-080

Hailey College of Commerce

University of the Punjab

Table of content

Introduction
Importance of strategic management
Strategic management process
Types of strategies
Problem of implementing strategic management
Conclusion

In management theory and practice, a distinction is often made

between operational management and strategic management. Operational

management is concerned primarily with responses to internal issues such as

improving efficiency and controlling costs. Strategic management is
concerned primarily with responses to external issues such as in
understanding customers' needs and responding to competitive forces.
Strategic management provides overall direction to the enterprise
and is closely related to the field of Organization Studies. In short, it entails
specifying the organizations objectives, developing policies and plans
designed to achieve these objectives, and then allocating resources to
implement the plans. Academics and practicing managers have developed
numerous models and frameworks to assist in strategic decision making and
in understanding infinitely complex macro-economic environments. Strategic
management is not static in nature; the models often include a feedback
loop to monitor execution and inform the next round of planning.

Strategic management has become very popular and important to business

for a variety of reasons. Business has discovered that strategic management
is the pathway to success. It has been generally noted in the business
environment that more organizations succeed using business strategy and
those organizations that do not use strategic management meet with failure

and ruin. It allows a business to use forward thinking. In this process it shows
a business where they are currently, where they want to be and how to get
where they want to be.
A well-formulated strategy can bring various benefits to the organization in
present as well as in future.
1.

Strategic management takes into account the future and anticipates

for it.

2.

A strategy is made on rational and logical manner, thus its efficiency

and its success are ensured.

3.

Strategic management reduces frustration because it has been

planned in such a way that it follows a procedure.

4.

It brings growth in the organization because it seeks opportunities.

5.

With strategic management organizations can avoid helter & skelter

and they can work directionally.

6.

Strategic management also adds to the reputation of the organization

because of consistency that results from organizations success.

7.

Often companies draw to a close because of lack of proper strategy to

run it. With strategic management companies can foresee the events in
future and thats why they can remain stable in the market.

8.

Strategic management looks at the threats present in the external

environment and thus companies can either work to get rid of them or
else neutralizes the threats in such a way that they become an
opportunity for their success.

9.

Strategic management focuses on proactive approach which enables

organization to grasp every opportunity that is available in the market.

The strategic management process is a six step process that encompasses

strategy planning, implementation and evaluation. Although the first four
steps describe the planning that must take place, implementation and
evaluation are just as important. Even the best strategies can fail if
management does not implement or evaluate them properly.

Step1: Identifying the organizations current mission, goals

and strategies.
Every organization needs mission, goals, vision and strategies for effective working in
the market. One who dont focus on mission, goals, strategies and vision cannot survive for long
run business.
Mission:

A personal mission or a farm business mission statement deals with

questions like, Why are we here?, Why do we exist?, Why do we get up
each day and do what we do?, What is it that we get paid for? What
function does the organization perform? For whom? How? The mission is a
broad statement of personal or business scope, purpose and operation that
distinguishes me, or my farm, from others.
Vision:

While a mission is a statement of what is, a vision is a statement of what or

how you would like things to be. A picture of the future youre working to
create, what you want to be when you grow up, what you want your business
to become.

STRATEGY:
Strategy is a high level plan to achieve one or more goals under conditions
of uncertainty. Strategy is important because the resources available to achieve these goals are
usually limited.
Goals & Objectives:
The purpose of goal-setting is to clarify the vision for
your business. This stage consists of identifying three key facets: First, define
both short- and long-term objectives. Second, identify the process of how to
accomplish your objective. Finally, customize the process for your staff , give
each person a task with which he can succeed. Keep in mind during this
process your goals to be detailed, realistic and match the values of your
vision. Typically, the final step in this stage is to write a mission statement

that succinctly communicates your goals to both your shareholders and your
staff.
Step 2: Doing an External Analysis:
The first part of the SWOT analysis, involves
managers identifying the business' opportunities and threats. In other words, managers are to
conduct an external analysis. The identified opportunities and threats are to be factored in when
developing strategies; that is, managers will seek to take advantage of opportunities and reduce
the risk of threats, in attempts to reach the business' goals outlined in the mission.
Opportunities:

Opportunities are the elements that the project could exploit to its advantage.
Examples of opportunities include:

Changes in technology and markets, eg the Internet

Changes in government policy or regulations / legislation

Local and global events

Potential new uses of products and / or services

Use of marketing or promotional techniques to boost the business

Social factors, population fluctuation, lifestyle changes, etc.

Threats:
Threats are the elements in the environment that could cause trouble for the business or
project. External threats could be inflation, new legislation, or a new competitor in your market.
Internal threats could include a skill or staff shortage within your organization.

Step 3: Doing an Internal Analysis:

In order for the strategic management process to
begin, managers are required to conduct an internal analysis. This involves identifying the
business' strengths and weaknesses, by analyzing its competencies. It also involves managers

highlighting the business' competitive advantage. For strategies to be effective, the organization
must exploit and expand on its strengths, as well as reduce or eliminate its weaknesses; thus
furthering its competitive advantage, in order to achieve profitability.
Strengths:
Strengths are those features of the business which allow you to operate more
effectively than your competitors. For example, strength could be your specialist technical
knowledge. You need to consider your strengths from your own point of view and from that of
your customers' and clients'. You must be realistic and honest.
Weaknesses:

Weaknesses are areas capable of improvement. Are you lacking skills or new
products? Do you have a higher cost base or lower productivity than your competitors? You must
face any unpleasant truths about your business and be realistic.

Step 4: Formulating Strategies:

The first step in forming a strategy is to review the
information gleaned from completing the analysis. Determine what resources the business
currently has that can help reach the defined goals and objectives. Identify any areas of which the
business must seek external resources. The issues facing the company should be prioritized by
their importance to your success. Once prioritized, begin formulating the strategy. Because
business and economic situations are fluid, it is critical in this stage to develop alternative
approaches that target each step of the plan.
Step 5: Implementing Strategies:

Successful strategy implementation is critical to the

success of the business venture. This is the action stage of the strategic management process. If
the overall strategy does not work with the business' current structure, a new structure should be
installed at the beginning of this stage. Everyone within the organization must be made clear of
their responsibilities and duties, and how that fits in with the overall goal. Additionally, any
resources or funding for the venture must be secured at this point. Once the funding is in place
and the employees are ready, execute the plan.
Step 6: Evaluating Results:
Strategy evaluation and control actions include
performance measurements, consistent review of internal and external issues and making
corrective actions when necessary. Any successful evaluation of the strategy begins with defining
the parameters to be measured. These parameters should mirror the goals set in Stage 1.
Determine your progress by measuring the actual results versus the plan. Monitoring internal and
external issues will also enable you to react to any substantial change in your business
environment. If you determine that the strategy is not moving the company toward its goal, take
corrective actions. If those actions are not successful, then repeat the strategic management
process. Because internal and external issues are constantly evolving, any data gained in this
stage should be retained to help with any future strategies.

The three main types of corporate strategies are growth, stability, and renewal.

Growth - A growth strategy is when an organization expands the number of markets served or
products offered, either through its current business or through new business. Because of its
growth strategy, an organization may increase revenues, number of employees, or market share.
Organizations grow by using concentration, vertical integration, horizontal integration, or
diversification.
Stability - A stability strategy is a corporate strategy in which an organization continues to do
what it is currently doing. Examples of this strategy include continuing to serve the same clients
by offering the same product or service, maintaining market share, and sustaining the
organization's current business operations. The organization does not grow, but does not fall
behind, either.
Renewal - When an organization is in trouble, something needs to be done. Managers need to
develop strategies, called renewal strategies that address declining performance. The two main
types of renewal strategies are retrenchment and turnaround strategies.

Business strategy:
Business strategy is primarily concerned with how a company
will approach the marketplace where to play and how to win. Where to play answers questions
like, which customer segments will we target, which geographies will we cover, and what
products and services will we bring to market. How to win answers questions like, how will we
position ourselves against our competitors, what capabilities we will employ to differentiate us
from the competition, and what unique approaches will we apply to create new markets.
Operational strategy:
Operational strategy is primarily concerned with accurately
translating the business strategy into a cohesive and actionable implementation plan. This

strategy answers the questions, which capabilities need to be created or enhanced, what
technologies do we need, which processes need improvement, and do we have the people we
need. The vast majority of business architects are currently working in the operational strategy
domain reaching up into the business strategy domain for direction.

Transformational strategy:
Transformational strategy is seen less often as it represents the
wholesale transformation of an entire business or organization. This type of strategy goes beyond
typical business strategy in that it requires radical and highly disruptive changes in people,
process, and technology. Few organizations go down this path willingly. Transformational
strategy is generally the domain of Human Resources, organizational development, and
consultants.

Competitive strategies:
Competitive strategies are the method by which you achieve a
competitive advantage in the market. There are typically three types of competitive strategies
that can be implemented. They are cost leadership, differentiation and a focus strategy. A mixture
of two or more of these strategies is also possible depending on your business' objectives and
current market position.
Cost leadership

The aim of this strategy is to be a low-cost producer relative to your competitors and is
particularly useful in markets where price is a deciding factor. Cost leadership is often achieved
by carefully selecting suppliers and production techniques to minimise production, distribution
and marketing costs. However you need to be aware of any serious loss in quality that may
render low cost ineffective.

Differentiation
A differentiation strategy seeks to develop a competitive advantage through
supplying and marketing a product that is in some way different to what the competition is doing.
If developed successfully this strategy can potentially reduce price sensitivity and improve brand
loyalty from customers.
Focus strategy
This strategy recognises that marketing to a homogenous customer group
may not be that effective a strategy for the product the business is selling. Instead the business
focuses its marketing efforts on a different selected market segments. That is, identify the needs,
wants and interests of the particular market segments and customise marketing techniques to
reflect those characteristics.

The Benefits of Strategic Management

These benefits are:

 Promotion of strategic thought and action.

Improved decision making
Enhanced organizational responsiveness and improved performance flows from the first
two.
Benefits the organizations people.
These is no more important element in performance based Management than
Strategic plans. These plans set the organizations course, its overall programmatic and
Policy goals, and describe how these goals will be achieved

Problems of Implementing Strategic Management

In spite of the exposure on the virtues of strategic management, it has become
Clear that most organizations suffer economic setbacks due to problems internal rather
Than clear that most organizations suffer economic setbacks due to problems internal rather
In external to them. One of these problems which are almost endemic is that of Introducing,
developing and implementing strategic management. Some of the problems include the
following:
In the first place, there is suspicion and fear by managers that strategic Management might
expose their weaknesses as a result they refuse to cooperate by withholding vital planning
information. This conservative attitude and resistance to Change exacerbates the already difficult
task of planning managers. The intra-organizational politics in the workplace, particularly
common in business organizations, is another problem. They tend to be strafes within various
sections of an organization, and in such a situation of organizational politics, the planner must be
seen to be neutral, for if he/she is identified with a group, he/she may be creating antagonism in
other areas, and that will naturally make his/her job very difficult when navigating through the
organization in the humble discharge of his/her duties.
Non-availability of reliable statistical information from both within the company
Or from elsewhere frustrates planning efforts. As well as inconsistency in government
policies as government, policies are consistently inconsistency in developing countries.
The poor management of the political economy especially in developing

countries, seems to deal with its various economic crises through short-term measures, as can be
seen in the recent economic reforms. This often occur without adequate warning
to the organizations. This creates problems of planning. Most organizations see such
economic measures as a threat; rather than an opportunity for improving corporate
performance through a change in strategy.
Finally, the poor state of social infrastructure and political instability is another
problem to the organizations strategic management. In most cases, they are quickly
rendered obsolete and force the organizations to get back to the drawing board with high
losses and risks.

Conclusion
The strategic planning process does not end with the six step; it is an ongoing procedure that
manager must repeat. With each round, managers and employees gain experience and the step
become much easier. What does this strategic planning process lead to? It teaches business
owners a degree of discipline that is important to business survival. It helps them learn about
their businesses, their core competencies, their competitors and most important their customers.
It dramatically increase a business chances of survival in a hostile business environment.