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STRATEGIC MANAGEMENT

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MEANING & DEFINITION

What is strategic management?
l
Strategic Management can be defined as
“the art and science of formulating,
implementing and evaluating cross-functional
decisions that enable an organization to
achieve its objective.”

Definition: l
“The on-going process of formulating,
implementing and controlling broad plans guide
the organization in achieving the strategic
goods given its internal and external

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INTERPRETATION

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IMPORTANCE OF STRATEGIC
MANAGEMENT
l Globalization: The survival for
business

l E-Commerce: A business tool

l Earthenvironment has become a

major strategic issue

l Strategic management – A route to

success

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STAGES OF SM
l The strategic management process consists of
three stages:
l Strategy Formulation (strategy planning)
l Strategy Implementations
l Strategy Evaluation

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THREE ASPECTS OF
STRATEGIC FORMULATION
l Corporate Level Strategy: In this
aspect of strategy, we are concerned
with broad decisions about the total
organization's scope and direction.
l It is useful to think of three components
of corporate level strategy:
(a) growth or directional strategy
(b) portfolio strategy
(c) parenting strategy

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Global Corporate Strategies

High
Transnational
Globalization Strategy
Strategy • Seeks to balance global
• Treats world as a efficiencies and local
single global market responsiveness
• Standardizes global
Need for Global Integration

• Combines standardization
products/advertising
and customization for
strategies
product/advertising
strategies

Export
Strategy Multi-domestic Strategy
• Handles markets
•Domestically focused independently for each
•Exports a few country
domestically produced • Adapts product/advertising
products to selected to local tastes and needs
countries
Low
Low Need for National Responsiveness High
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Global Strategy
l Globalization = product design and
advertising strategies are standardized
around the world
l Multi-domestic = adapt product and
promotion for each country
l Transnational = combine both globalization
and national responsiveness

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l Competitive Strategy (often called Business

Level Strategy): This involves deciding how
the company will compete within each line of
business (LOB) or strategic business unit
(SBU).

l Functional Strategy: These more localized

and shorter-horizon strategies deal with how
each functional area and unit will carry out its
functional activities to be effective and
maximize resource productivity.

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Tools for Putting Strategy into
Action
Environment
Organization
Leadership
Persuasion

Motivation

Structural Design
Organization Chart Human Resources
Strategy

Teams
Recruitment/selection Performance
Centralization
nDecentralization, Transfers/promotions
nFacilities, task design Training
Information and Control Systems

Pay, reward system

Budget allocations

Information systems

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Portfolio Strategy
l Mix of business
units and product BCG Matrix
Exhibit
8.5
lines that fit
together in a
logical way to
provide synergy
and competitive
advantage

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Scan External Identify Strategic

Environment – Factors –
National, Opportunities,
Global Threats Implement
Strategy via
Evaluate Formulate Changes in:
Current Define new Strategy – Leadership
Mission, Goals, SWOT Mission Corporate, culture,
Strategies Goals, Grand Business, Structure, HR,
Strategy Functional Information &
control
Scan Internal systems
Identify Strategic
Environment – Core
Factors –
Competence,
Strengths,
Synergy, Value
Weaknesses
Creation

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conclusion

l In order to formulate Business functions

strategy is to be formulated as well as
implemented with the right approach
l Management is basically managing the
strategies and making them function.
l Strategic management of an
organization leads to the benefits as well
as growth of the organization.

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