Strategic Management

Introduction
• Environment can be defined as the surroundings in which a
business is born, grows, matures and declines
• An environment exhibits the following characteristics –
o Real – it is as real and alive as the business itself,
o Complex – factors, events, conditions are related & interactive
o Uncertain – cannot be predicted, totally random,
o Dynamic – constantly changing,
o Multi-faceted – variety of views, totally subjective in nature
o Integral – inseparable part of any organization.
• Businesses have to respond to such hostile environment in
pursuit of their aims and objectives.
What is Strategy ??
• The word ‘strategy’ has evolved in the context of ‘war’ and
deception of enemy.
• Modern day business is no less than a ‘war’, with cut-throat
competition and survival of the fittest and the smartest.
• Strategy is “a unified, comprehensive and integrated plan
designed to assure that the basic objectives of the enterprise are
achieved” – William Glueck
• “Determination of basic long-term goals
and objectives of an enterprise and the
allocation of resources necessary to carry
out these goals” – Alfred Chandler
What is Strategy ?? contd..
• Strategy is consciously considered and flexibly designed
scheme of action –
– to achieve effectiveness,
– to mobilize resources,
– to direct efforts and behaviour,
– to handle events and problems,
– to perceive and utilize opportunities, and
– to meet challenges and threats to survival and success.
• Corporate strategy is a set of goals, priorities, combinations
and the sequence and timing of decision making.
Strategy – Characteristics
• Generally long-term in nature,
• Action oriented, very specific,
• Integrated,
• Flexible and dynamic,
• Formulated by the top management,
• Middle and lower management involvement in the formation,
• Purpose is to cope up with competition and complex issues,
• Basis are the main goals and objectives of the organization,
• Concerned with locating opportunities and threats and seizing
the initiative, and
• Decision making is organized, analyzed, and justified.
Levels of Corporate Strategies
Corporate Multi business
Level Corporation

Business Strategic Strategic Strategic

Level Business Unit 1 Business Unit 2 Business Unit 3

Functional Research and Human

Manufacturing Marketing Finance
Level Development Resources
Types of Corporate Strategies
 Corporate level strategy (formulated by the top management) is
an overall plan for the entire organization.
 Business level strategy seeks to determine how an organization
should compete in each of its dept. (strategic business units).
 Functional-level strategies support the business-level strategy
i.e., marketing, human resources, R&D, and finance all support
the business-level strategy
 According to Glueck and Jauch, four major types of corporate
strategies – Stability, Growth, Retrenchment, and
Combination.
(Same are discussed in separate module)
Strategic Management
 Glueck – Strategic Management can be defined as a set of
decisions, actions resulting in formulations & implementation
of strategies designed to achieve the objectives of enterprise.
 Hofer – ‘The process which deals with the fundamental
organizational renewal and growth with the development of
strategies, structures and systems, necessary to achieve such
renewal and growth’.
 It is concerned with making and implementing decisions about
the organization’s future directions. These activities form the
most important part of top management’s job.
Strategic Management – Importance
• Higher organizational performance
• Strategic management is important is because it can make a difference
in how well an organization performs
• Requires that managers examine and adapt to business environment
changes
• Organizations of all types and sizes face continually changing
situations.
• Coordinates diverse organizational units to focus on organizational
goals
• Organizations are composed of diverse divisions, units, functions, and
work activities that need to be coordinated
• Key to the managerial decision-making process
– Strategic management is involved in many of the decisions that
managers make during the course of business.
Phases in Strategic Management
 Strategic Management can be defined as the set of decisions
and action job.
 Deciding the company direction (goals and objectives),
 Develop means and methods (strategy) of accomplishing the goals,
 Utilize the company resources (implementation) towards achievement
of goals,
 Taking corrective actions (revision) and reach the goals.
External Analysis
• opportunities
• threats

Identify the
organization's Formulate Implement Evaluate
SWOT Analysis
current mission, goals, Strategies Strategies Results
and strategies

Internal Analysis
• strengths
• weaknesses
SM model – phases in SM
1) Environmental Analysis 3) Strategy Formulation
 Processing scenarios  Perform environment appraisal (ETOP)
 Analysis of current trends  Doing organizational evaluation (SWOT)
 Corporate-level strategy
2) Establish Goals
 Business-level strategy
 Creating vision
 Undertake strategic analysis
 Design mission
 Evaluate various alternatives
 Define business
 Formulate strategies
 Setting objectives
 Prepare strategic plan of action
4) Implementation of Strategies
 Activating strategies
5) Strategic Evaluation & Control
 Designing structure and systems
 Perform strategic evaluation
 Behavioural studies
 Exercise control over operations
 Functional-level strategies
 Re-formulating strategies, if required.
 Make the strategies operational
Benefits of Strategic Management
 Financial benefits – improved financial performance in terms
of profits and growth. Specialized professional developed.
 Enhanced capability of problem prevention – being proactive
and also quick to respond in cases of problems.
 Improved quality of decisions – better decision making due to
extensive analysis, interaction amongst departments etc.
 Greater employee motivation – participation of employees in
planning process for better understanding the company policies
 Reduction in commutation gaps – auth. & responsibilities
 Minimum resistance to change – participation helps to reduce
the resistance to change, better understanding.