Strategic Management

STRATEGIC MANAGEMENT
Meaning and Nature of Strategic Management
CONTENTS
01. Importance and Relevance
02. Characteristics of Strategic Management
03. The Strategic Management Process
04. Relationship between Corporate Strategy and Business Model
1
DEFINITION:
Strategy
- is a blueprint indicating an organization’s courses of action to
achieve the desired objectives.
- a plan for achieving a major goal, planning & directing the whole
operation of an event.
- an integrated approach to reach a goal.
- top management’s long term plans to attain outcomes consistent
with the organization’s mission and goals.
2
DEFINITION:
Strategic Management (managing or competing for future)

is also known as Business Policy or Corporate Strategy or
Corporate Planning. It refers to those set of management
measures taken with a view to ensuring the survival and success
of an enterprise in a competitive environment.
It is that set of decisions and actions which leads to the

development of an effective strategy or strategies to help
achieve corporate objectives. It is designed to ensure that the
basic objectives of the enterprise are achieved.
3

Determination of the basic long-term goals and objectives of an
enterprise and adoption of course of action and allocation of
resources necessary to carry out these goals.
It is a continuous process of determining the mission and goals

of an organization within the context of its external environment
and it’s internal strengths and weaknesses, formulating and
implementing strategies, and exerting strategic control to
ensure that the organization’s strategies are successful in
attaining its goals.
4

is a continuous, iterative, and cross-functional process of
matching an organization’s goals and resources with the
opportunities presented by its environment to gain competitive
advantage.
Since it involves long term, future-oriented, complex decision

making, and requires considerable resources, top management’s
active participation is absolutely essential.
5
Level of Management Management Function Nature of Function
Top Strategic broad and creative
Middle somewhat detailed

somewhat creative
Supervisor specific, detailed

Operational
6
Strategic Management involves effective decision-making and
activities in an organization that:
(1) have wide ramifications,
(2) have a long time perspective, and
(3) use critical resources towards perceived opportunities
or threats in a changing environment.
7
• As the environment changes, companies may change their

vision and objectives, structure, portfolio of business, markets
and competitive strategies. The economic liberalization and the
simultaneous wide opening up of business opportunities and
increase in competition have made SM a buzz word in the Indian
corporate world.
• The task of Strategic Management is to identify new and

different businesses, technologies and markets which the
company should try to create in the long term.
8
• Without competitors, there would be no need for strategy, for

the sole purpose of strategic planning is to enable the company
to gain, as efficiently as possible, a sustainable edge over its
competitors.
• Changes in one stage of the strategic management process will

inevitably affect other. After a planned strategy is implemented,
it could require modification as environmental or organizational
conditions change, or as top management’s ability to interpret
these changes improve. Hence, these steps are interrelated;
they should be treated as an integrated, ongoing process.
9
• SM provides clear objectives and direction for employees.
• It helps systemize business decision and improves

communication, coordination, and allocation of resources and
helps managers to have complete understanding of the
organization and to have a holistic approach to business
problems/issues.
• SM allows organizations to anticipate changing environmental
conditions.
• Businesses that perform SM are found to be more effective.
10
Intended Strategy
Un-realized Strategy
Divergent Strategy
Emergent Strategy
Realized Strategy
11
Benefits and Relevance of SM

1. Strategic management helps to envision an organization’s
future, formulate mission and make objectives clear. This is
clear from the fact that determination of mission and objectives
is the first step in the strategic management process.
2. It may be noted that the new growth and competitive

environment created by liberalization prompted many Indian
companies to evaluate and modify their mission and objectives
or to ponder over a mission for the company where one did not
exist.
12

3. The articulation of the mission and objectives and the
formulation of a strategy for their accomplishment help people
in the organization understand what the organization stands for,
what is the development path charted out, what are the planned
results over a period of time, etc.
4. It makes people realize what are they working for, what is

expected of each SBU, division, functional department and
the employees.
13

5. Strategic Management facilitates better delegation, co-
ordination, monitoring, performance evaluation, and control.
6. The identification of the strengths and weaknesses may help an

organization to take measures to overcome/minimize the
weaknesses and reinforce the strengths.
7. The SWOT analysis, which is a part of the strategic

management, helps a company to adopt suitable strategies for
exploiting opportunities and combating threats. It also helps
the company to drop those businesses where it would not be
successful or which do not meet the objectives.
14

8. It constantly monitors the environment and makes modifications
of the strategy as and when required so that the plans are made
more realistic and effective.
9. It enables a company to be proactive rather than reactive in

order to meet its competition more effectively and efficiently.
10. It makes the management dynamic, appropriate to the

environment and result- and future-oriented.
11. Studies show that companies with SM are effective than

others, generally.
15

12. It enhances problem-preventing capabilities as it promotes
interaction between at all levels.
13. It leads to increased employee productivity, reduced resistance

to change, and a clear understanding of performance-reward
relationship.
14. It allows for identification, prioritization, and exploitation of

opportunities.
16
Risks of SM
1. Conditions may vary so fast that managers are unable to do any
planning, especially long term planning.
2. The time spent by managers on the SM process may have a

negative impact on their operational responsibilities.
3. If the formulators of strategy are not involved in its

implementation, they may shirk their responsibility for the
decisions reached.
4. Strategic managers must be trained to anticipate and respond to

the disappointment of participating subordinates over unattained
expectations.
17
Challenges of SM
1. Technological Advances and Obsolescence
2. Product/Service Innovation and Development
3. Global Issues (due to economic liberation/expansion/contraction)
4. Quality Issues (TQM)
5. Social Issues
18
Hierarchy of Objectives
Promoters’ Vision and Value
Stock Holders’ Expectations Environmental Factors
Mission
Corporate
Objectives
SBU Objectives
Departmental
Objectives
Divisional Objectives
Individual Objectives
19
Corporate Strategy
SBU 1 SBU 1 SBU 1

Strategy Strategy Strategy
Operation Marketing Financial Personnel

Strategies Strategies Strategies Strategies
Corporate, Business, and Functional Level Strategies

20
Corporate Strategy
Operation Marketing Financial Personnel

Strategies Strategies Strategies Strategies
Corporate and Functional Level Strategies in a single business

21
Corporate-level Strategy
- framed by BoD, CxOs
- responsible for the firm’s financial performance, enhancing brand
image, and fulfilling of CSRs
- develops strategies for the entire organization
- enhances the organization’s image and fulfills its overall social
responsibilities
- defines the vision, mission, and goals of the organization;
determines what business it should be in; allocates resources
among different businesses; and promotes leadership for the
organization.
- provides a link between strategic managers and share holders.
22
Corporate-level Strategy (contd…)
- exploits the firm’s distinctive competencies by adopting a
portfolio approach to the management of its business.
- are more value oriented, more conceptual, and less concrete
than decisions at business/functional levels.
- characterized by greater risk, cost, and profit potential; greater
need for flexibility; and longer time horizons.
Examples: choice of businesses, dividend policies, sources of LT
financing, priorities for growth, etc.
23
Business-level Strategy
- framed by business and corporate managers
- translates the directions generated at the corporate level into
concrete objectives and strategies for the SBU or individual
business divisions
- determines how the organization will compete in the selected
product-market arena; and, identifies and secures the most
promising market segment within that arena
24
Business-level Strategy (contd…)
- bridges decisions at the corporate and functional levels
- less costly, risky, and profitable than corporate-level decisions
but are more costly, risky, and profitable than functional-level
decisions
Examples: plant location decisions, market segmentation,
geographic coverage, distribution channels, etc.
25
Functional-level Strategy
- framed by finance, production, HR, product development, etc.
- directed at improving the effectiveness of operations within the
organization
- develops annual objectives and ST strategies in related functions
- implements and executes the organization’s strategic plans
- addresses issues such as the efficiency and effectiveness of
production, product development, manufacturing, HR, marketing
systems, quality of customer service, etc.
26
Functional-level Strategy (contd…)
- ensures the success of products and services in increasing the
organization’s market share and share holders’ wealth
- implements the overall strategy of the organization taken at the
corporate and business levels
- involve action-oriented operational issues and are relatively
short term and low risk
- incur moderate costs (being dependent on available resources),
are adaptable to ongoing activities, and can be implemented
with minimal cooperation
27
Functional-level Strategy (contd…)
- decisions are relatively concrete and quantifiable; therefore,

they receive critical attention and analysis even though their
comparative profit potential is low
Examples: decisions on generic vs brand name labelling, basic vs

applied R&D, high vs low inventory levels, close or open or loose
supervision
Global-level Strategy: addresses how the organization can expand

its operations outside the home country to grow and prosper in a
world where competitive advantage is determined at global levels.
28
Dimensions of Strategic Decisions
1. Strategic issues require top management decisions.
2. Require considerable amounts of the organization’s resources.
3. Affects the organization’s LT prosperity.
4. Are future oriented
5. Usually have multi-functional or multi-business consequences.
6. Require considering the organization’s environment.
29
1. Formulation of the organization’s vision, mission, goals,

objectives, and targets.
2. Analysis of its internal conditions and capabilities (strengths and

weaknesses).
3. Assessment of its external environment, including competitive

and general contextual factors (opportunities and threats).
4. Analysis of its options by matching its goals and resources with

the external environment.
30
5. Determination of its LT objectives and grand strategies.
6. Identification of the most desirable/alternative strategies and

their evaluation in the light of the LT objectives and grand
strategy.
7. Choice of the strategy.
8. Development of annual objectives and ST strategies that are

compatible with the selected strategy.
31
9. Implementation of the strategic choices by means of budgeted

resource allocation.
10. Evaluation of the success of the strategic process as an input for

further decision making.
32
Characteristics of a Winning Strategy
1. A thorough understanding of the organization’s competitive

environment in which it competes.
2. Simple vision, mission, and goals consistent with the

organization’s strategy.
3. Complete understanding of the organization’s resources and how

they translate into strengths and weaknesses.
4. Good planning for implementing the chosen strategy with

complete specifications.
5. Proper evaluation and control of possible future changes in the

proposed strategy.
33
Strategic Leaders:
1. Use their knowledge, enthusiasm, and energy in proving strategic
leadership for their team members in order to develop a high-
performing organization.
2. Strategic leadership represents the ability of a manager to
articulate a strategic vision and motivate people to buy into that
vision.
34
Good Strategic Leaders:
1. possess vision, eloquence, and consistency
2. actively participate and are continuously committed
3. use power astutely
4. are well-informed
5. have willingness to delegate and empower
6. possess high levels of EI.
35
Techniques for improving decision making
1. Devil’s Advocacy
Generate an Devil’s Advocate

Final Plan
Expert Plan criticizes
2. Dialectic Enquiry
Expert Plan 1
(thesis)
Debate
Final Plan
(synthesis)
Expert Plan 2
- Definitions
- Recommended courses of action
(anti-thesis)
- Assumptions
36
Developing a winning strategy requires:
1. keeping track of the latest developments in the field and
disseminating this information to the strategists.
2. supplying data inputs and analytical support needed for SM.
3. environmental analysis
4. identifying new business opportunities
5. helping to establish an efficient and effective planning system.
6. coordinating divisional plans.
7. assisting to evaluate and control strategies.
37
3. The SM Process
Defining Organizational Vision, Mission, Goals, Objectives, & Targets
External Environment Analysis (OT) SWOT Internal Environment Analysis (SW)
Setting LT Objectives
Identifying Alternate Strategies
Choice of Strategy
Strategy Formulation
Strategy Implementation
Implementation of Strategy
and Control
Strategy Evaluation and Control
Feedback
38
Business Model
- is the basic profit-generating idea of an organization.
- is the economic mechanism by which a business hopes to sell its
goods and services and generate profit.
- is evolved through consultations and brain storming and covers
all intricate details of the business. It is implemented by the
operational group.
- is the translation of strategies into an operational procedure to
achieve organizational goals and objectives.
- can change due to time, technology, and perceptions of the
future.
- some business models may prove successful at first but with
minor changes can become successful in future.
39
4. Relationship between company’s strategy & its business model
Connect the Corporate Strategy to the Business Model
40
Definitions
Competitive Advantage – The firm’s ability to enjoy strategy benefits

as compared to its competitors in the market due to a match
between its distinctive competencies and CSFs within its industry
(that enables it to outperform its competitors).
Sustained Competitive Advantage – The firm’s ability to enjoy

continuous strategic benefits over an extended period of time.
Comparative Advantage – The idea that certain products can be

produced more cheaply or at a higher quality in particular countries
due to advantages in labour costs and/or technology.
41
Definitions (contd…)
Core Competence
- The firm’s key capabilities and collective learning skills that
are fundamental to its strategy, performance, and LT profitability.
- Unique and enduring strength of a firm for generating
competitive advantage; this strength cannot be easily emulated
by its competitors.
- It represents accumulated knowledge and skills that are difficult
to imitate and by which it outperforms its competitors.
- It can lead to competitive advantage only if the constituent
knowledge, skills, and technologies are creatively harmonized and
quickly reconfigured to respond to new opportunities.
42
Questions
1. What are the strengths & weaknesses of formal strategic planning?
2. Discuss the accuracy of the statement: “Formal strategic planning
systems are irrelevant for firms competing in high-technology
industries where the pace of change is so rapid that plans are
routinely made obsolete by unforeseen events.”
3. What is the difference between intended strategy and realized
strategy? Why is this distinction important?
4. Does the CEO alone make strategic decisions for a firm? Explain.
5. What are the pitfalls in the strategic management process?
6. What is strategic management? Explain.
7. Explain the (six) identifiable dimensions in strategic decisions?
43
Questions (contd…)
8. The decision making hierarchy of business firms typically contains

3 levels. What are they? Discuss.
9. What are the major limitations of a strategic model?
10.With the help of a strategic model, briefly explain the steps in
strategic management planning.
11.What is meant by competitive advantage?
12.Distinguish between business strategy and business model.
13.Write a note on the techniques of improving the strategic
management process.
14.How do you explain the success of a firm that does not use a
formal strategic planning process?
44
Questions (contd…)
15. What are the components of a strategic management model?

16. Discuss the statement, ”Businesses that perform strategic
management are found to be more effective.”
45

Strategic Management

Diunggah oleh

Informasi Dokumen

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Strategic Management

Diunggah oleh

Hak Cipta:

Format Tersedia

STRATEGIC MANAGEMENT

Meaning and Nature of Strategic Management

01. Importance and Relevance

02. Characteristics of Strategic Management

03. The Strategic Management Process

04. Relationship between Corporate Strategy and Business Model

1. Importance and Relevance

- is a blueprint indicating an organization’s courses of action to

achieve the desired objectives.

- an integrated approach to reach a goal.

- top management’s long term plans to attain outcomes consistent

with the organization’s mission and goals.

1. Importance and Relevance