Strategic management-ii

Prof.(dr.) s p singh

Think
What we think, know, or believe in is, in the end, of little consequence, The only consequence . . . is what we do..
-- (Haines, 1995)

What is strategy & strategic management.

strategy means .. a carefully devised plan of action to achieve a goal, or the art of developing or carrying out such a plan E.g. a business plan Hence, strategic management can be defined as a set of decisions and actions that result in the formulation of and implementation of plans designed to achieve companys objectives.

Contd
It has following nine tasks 1)formulate companys mission ,philosphy and goals. 2)know the capabilities of the organisation 3)know the companys external environment,competition and contextual factors. 4)Analyze the companys resources and match options against external environment,

Contd
5)identify the most desirable options in light of co.s mission and goals, 6)select a set of long term objectives and strategies that shall achieve the goals and mission 7)develop annual objectives and short term strategies that shall help achieve goals in long term, 8)implement the strategic choices by means of budgeting, resource allocations,people tasking, using structures and technologies etc. 9)evaluating and controlling the strategic process for future decision making, and continuosly improving n the way to achievement of goals.

Contd
Strategic management. ,as a term and concept is not new. The term was first used in the 1970.s, and it meant that a staff or strategic planners more or less thought up the strategic programs. and then tried to sell them to decision makers. In the 1990.s, the view of strategic planning and strategic management is much different. Goodstein, Nolan, and Pfeiffer's definition of strategic planning takes us away from the notion that strategic planning is a staff job and focuses us more on a process that requires the senior leaders of an organization to set its strategic direction .... the process by which the guiding members of an organization envision its future and develop the necessary procedures and operations to achieve that future.. (Goodstein, Nolan, and Pfeiffer, 1992)

Contd
The concept of strategic management builds on this definition of strategic planning, recognizing that although ,planning is the prelude of strategic management, it is insufficient if not followed by the deployment and implementation of the plan and the evaluation of the plan in action.

Contd
Strategic management is a systematic approach to identifying and making the necessary changes and measuring the organizations performance as it moves toward its vision. It has been defined as . . . .systemic management . . . that links strategic planning and decision making with the day-today business of operationalizing the management of the organization. (Gluck, Kaufman, and Walleck, 1982)

Do you agree..
There is no great tradition or heritage for strategic thinking in many organizations; the skill to set and implement strategy is sometimes missing; and there are barriers to strategy . . .. All this makes strategic thinking and action a tough challenge . . .. The first step requires finding the motivation to begin.. (Tregoe, Zimmerman, Smith, and Tobia, 1989)

Strategic decision making

Decision making is most important function of the manager, Strategic decision making is the primary task of management While decision making largely relates to managerial functions,strategic decision making relates to responsibility of the senior management.

Issues in strat.decision making

--like the working of human mind, strategic management process is very complex. Henry mintzberg,says that the key managerial processes are enormously complex and mysterious,drawing on the vaguest of information and using the least articulated of mental processes.These processes seem to be more relational and holistic than ordered and sequential and more intuitive than intellectual.

Six issues of decision making

Because ,it is very complex to understand how strategic decision takes lace in human mind for the organizations benefit,we can attempt to understand it by considering following issues. 1)Criteria for decision making-objectives serve as basis of decision making critrias may be maximisation,satificing or incrementalisation.

Contd
2)Rationality in decision making 3)creativity in decision making 4)variability in decision making Person related factors affecting decision making Individual vs. Group related factors affecting decision making

Other issues
It requires Top management attention It requires large amount of resources It affects the firms long term prosperity Are future oriented Have multi- functional or multi-business consequences Can not do without considering external as well as internal environment as a whole

Levels of strat. Decision making

- Corporate levele.g ITC ltd.headquarters - -division levelsagro,edible oils,tobbaco etc. - Strat. Business unit level-SBU biscuit unit,edible oil factory,tobacco depot - Functional leveli.e. finance,marketing,operations,hrm,IT,etc - INDIVIDUAL EMPLOYEE level - (do you think it should be done at personal level also)

Strategy makers
Who are the strategist in a co. Ideally strategic management team includes ceo.heads of SBUs,heads of functional units viz.mktg.,fin,hr,IT,warehousing,logistics etc. Who is the greatest strategist known to you in modern India ,establishing the biggest conlomerate . Obviously Mr.Ratan Tatasteel king, acquired the Corus group-dutch-british steel gaint , in 2007.

Benefits of strategic mgmt.

Since all levels interact in organosational strategic management activities,behavioural benefits are in line with participative decision making. Help in setting a goal towards which to drive each and every effort. Enhances the co.s abilities to prevent problems because of the strategic planning.

Contd
Group based strategic decisions enable choose best alternatives because of the deliberations in the group. Involvement at subordinate levels heightens the motivation of each employee. Gaps and overlaps are taken care of because of group activity. Resistance to change is reduced since part of group making choices.

Risks of strat. Mgmt.

Managers must have proper training to visualize and avoid pitfalls of looking up daily operations Time required in strategic formulations must be controlled. Plans,goals,objectives must be realistic,otherwise resultant would be not only losses but demotivating for all levels of employees.

Contd
Subordinates may expect involvement in everything and expect rewards which may not be practical or possible every time. Hence,senior mgmt must take care of such issues and sensitize managers who are taking part in such activities to minimize such consequences.

Model of Strategic management process