UNIT-1

Unit 1- An Overview of Strategic Management

• Concept, evolution of Strategic Management as a discipline,

characteristics of Strategic Management, defining Strategy the
objectives of strategic Management, Strategic decision making.
• School of thought on Strategy formation, Strategy formulation,
Stakeholders in business, vision mission and purpose, goals and
objectives of business organization.

Unit 2 - Environmental Appraisal

• Concept, environment appraisal, importance of environmental

appraisal, Strategic analysis and choice, environmental threat
and opportunity profile (ETOP), organizational capability profile,
strategic advantage profile, corporate portfolio analysis.
• SWOT analysis, Porter’s five forces model of competition, MC
Kinsey’s 7s framework, GE nine cell model, distinctive
competitiveness, selection of matrix.

Unit 3 - Corporate level Strategies

• Grand strategies, stability strategies, expansion strategies,

retrenchment strategies.
• Combination strategies restructuring of business, issues related
with all these strategies.
Unit 4 - Strategic implementation

• Issues in implementation, Project implementation, procedural

implementation, resource allocation budgets, Organization
structure matching structure and strategy, behavioral issues.
• Leadership style, Corporate culture, Values, Power, Social
responsibilities, ethics, building a capable organization,
functional issues, functional plans and policies, financial,
marketing operations and personnel plans and policies.

Unit 5 - Strategy Evaluation

• Importance, symptoms of malfunctioning of strategy,

organization anarchies, operations control and strategic control.
• Measurement of performance, analyzing variances, role of
organizational systems in Evaluation.

Unit 6- Strategic Analysis and Choice.

• Process of Strategic Choice, corporate-level Strategic analysis,

business- level Strategic Analysis, Subjective factors in Strategic
Choice, Contingency Strategic, Strategic plan.

Unit 7- New Business Models

• Strategic for Internet economy, shaping, characteristics, of E-

Commerce Environment.
• E- Commerce Business Model and Strategies for traditional
business, Key success factors in E- Commerce.

Unit 1 - An Overview of Strategic Management

Strategy- Meaning

➢ Strategy is determination of long term goals and objectives of an

enterprise and the adoption of all the course of action and
allocation of resources necessary for carrying out these goals.

The Word “Strategic” is derived from Greek Word “Strategos”,

stratus (meaning Army) and “Ago” (Leading or moving).

Strategy is an action that manager takes to attain One or more

of the organizational goal. It is also defined as “A general direction
set for the Company to achieve a desired goal”.

Types of Strategy

➢ Strategies can be formulated at 3- different levels they are:-

1 Corporate Strategy

2 Business Strategy

3 Functional Strategy
Fig: Types of Strategy

1. Corporate Strategy
➢ It is hierarchically the highest strategy plan of the Organization,
which defines the corporate overall goals and directions and the
way in which it will be achieved.
It is a long term, clearly defined vision of the direction of a
company or organization.
 It is fundamentally concern with the selection of business in
which company should compete and co- ordinate to achieve its
organizational goals.
e.g.- It Includes pursuing specific and new product areas or
entering new distribution channels. Diversification is a form of
corporate strategy.
Corporate Strategy
Business Business Business Business
Strategy Strategy Strategy Strategy

Competitive Competitive Competitive Competitive

advantage advantage advantage advantage
Corporate strategy takes a portfolio approach to strategic decision
making by looking across all of a firm’s business to determine how
to create the most value.

There are several important components of corporate strategy that

Leaders of organization focus on. The main tasks of corporate
strategy are:-

(i) Allocation of resources.

(ii) Organizational Design.
(iii) Portfolio Management.
(iv) Strategic trade off.

(i) Allocation of (ii) Organisational

resources Design.

Corporate
Strategy
 (iii) Portfolio (iv) Strategic
Management. trade off.

(i) Allocation of Resources.

➢ It focus on two resources i.e. people and Capital.
• People- Identifying core competencies and ensuring the firm.
• Ensuring an appropriate supply of talent is available to all
business.
• Capital- Allocating across, business so it earn the highest risk
adjustment return.
• Analyzing External opportunities (Merger and Acquisition)
(ii) Organizational Design - It involves ensuring the firms have the
necessary corporate structure and related system in place to
create the maximum amount of value.

Key factors related to Organizational Design.

a) Head Office (Centralized Vs decentralized)
➢ Determining how much autonomy to give business units.
b) Organizational structure.
➢ (Reporting)
(iii) Portfolio Management - It looks at the way business units
complement each other, their correlation, and decide where
the firm will ‘play’ (i.e. what business it will or won’t enter)
➢ Managing risk
➢ Creating strategic option by seeding new opportunities that
could be heavily invested in if appropriate.
➢ Monitoring the competitive, landscape.
(iv) Strategic Tradeoffs - One of the most challenging aspects of
corporate strategy is balancing the tradeoffs between risk and
return across the firm.
* Below are the main factors to consider for strategic trade
off.
a) Managing risk.
b) Generating return.
c) Incentives.

2. Business strategy
➢ A strategy business unit may be a division product line or
other profit centre that can be planned independently from
other business.

Business level strategy determines how the business’

resources will be spend. For large companies, each business
unit will have its own business level strategy based upon
services, products, divisions or multiple related departments.

The goals are to differentiate the business from competition

and create specific objective and initiatives.

* At the business level strategy formulation deals with-

(i) Positioning the business against rival
(ii) Anticipating changes in demand and technology.
(iii) Influencing the nature of competition through strategic action
such as vertical Integration and through political action.
3. Functional strategy
- Functional level strategy applies at the department level and
ensures that the corporate level strategy and business level
strategy are implemented in the day-to-day operation of the
company.
It concentrates on achieving specific objectives.

From an organizational perspective, functional level concerns

managers, charged with business functions such as marketing,
Human Resource (HR), Information & Technology (IT)

Goals and Objectives

➢ A Goals describe what you want to achieve. In other words,
they are the desired outcome or the final result.

Goals are broad, since they reflect the general intention.

e.g.- I will have my own website by the end of this year.

➢ I will get the highest marks in strategic Management.
➢ I will retire by the age of 75.
All the above goals tell or explain that what people want to
achieve but, they don’t reveal how that outcome will be
achieved.
Objectives

➢ Objectives are the specific and concrete plans. It can be broken

into several objectives.
 e.g.- Continuing with same e.g. i.e. to develop my own website by
the end of this year, the objective will be-
➢ Learn how to setup a website.
➢ Select a suitable website building platform.
➢ Choose a domain name and register it.

* Difference between Goal and objective

Goal Objective

(i) Goals are the final result or It is specific result that helps
outcome of an endeavor. to achieve the final goal.

(ii) It is what you want to It is how you are going to

achieve. achieve the goal.

(iii) It is broader than objectives. Objectives are narrow than

goals.

(iv) Goals may not be Objectives are measurable.

measurable.

(v) Have a longer time frame. Have a short time frame

❖ Essential Characteristics of Vision statement.

1. A vision should unite the organization and provide stable,

transcendent goals.

2. It should be clearly defined and communicated.

3. The vision should avoid using jargon and buzz words and
should be understandable.

4. An Effective vision statement sets an abstract yet challenging

goals.

5. A vision statement should clearly define the very purpose of

organization’s Existence.

6. Good vision statements are long term describing the

organizations desired future focus.

❖ Essential Characteristics of Mission Statement

1. They must be short.
2. They must be unique.
3. Create Expectation- A good mission statement embraces
the Expectation of a target audience for something they
truly crave.
eg- To provide custore best service.
4. They must be Realistic.
5. They are positive.
6. They are Adaptable.
7. Mission Statement are Expressed to target.

❖ Process of Writing a Mission Statement (Mission formulation)

1. Establish the basic Parameters.

2. Collect and assemble possible ideas for inclusion.

3. Determine the limits.

4. Set the priorities of each statement.

5. Carefully express each of the ideas.

6. Add Explanatory Statement.

7. Establish the document appearances.

8. Gain final approval.

* Difference between Mission and Vision

Point of Mission Vision

Comparison
(i) Meaning It is a statement The ultimate goal to
indicating the be achieved.
activities to be
pursued for
accomplishing a goal.

(ii) Purpose To Prove guidance or To inspire people to

road map for achieving contribute toward
goal. attaining the goal.

(iii) Benefits to It helps in recognizing Helps to understand,

employees. what exactly they are why they are doing a
doing. particular task.
(iv) Benefits to Companies recognize The Company
Organization what it should do in understand what to
the present. achieve in future.

(v) Flexibility It changes as per the Generally, it remains

situation. constant or fixed.

(vi) Focus It focuses on present It focuses on future

i.e. today i.e. tomorrow
(vii) Time It has longer time It has longer time
Duration period. Duration.
(viii) Scope Narrow Scope It has wide Scope

Strategic Management

Meaning

Strategic Management is the process of Identifying, evaluating and

implementing strategies in order to meet the Organizational
Objectives.

It is an out and science of formulating implementing and evaluating

cross- functional decisions that enables an organization to achieve
its objective.

Definition:-
1. According to Glueck, “ Strategic Management is a stream of
decisions and actions which leads to development of an
effective strategy or strategies to help in achieving corporate
objectives”.
2. According to Sharplin, “Strategic Management is formulation
and implementation of plans and carrying out of activities
relating to the matters which are of vital importance to the
organization.”
3. According to Pearce and Robbinson, “Strategic Management is
the set of decisions and actions resulting in the formulation
and implementation of plans designed to achieve
Organization's goals.
Features and Characteristics of Strategic Management

(i) It is a systematic phenomenon.

(ii) It is concern with long term direction of an organization.
(iii) It is multi- disciplinary in nature.
(iv) It is oriented towards future.
(v) It takes into account both external & internal
Environment.
(vi) By its structure it is hierarchical in nature.

Corporate level

Business level

Functional level

(vii) By relationship it is Dynamic (continuous changes.)

 (viii) It involves major risk.

* Role of Strategic Manager.

(i) Role as an Entrepreneur, risk taker.

(ii) Role as an efficient resource allocator.

(iii) Role as a monitor or scanner of the environment.

(iv) Role as a Disturbance handler.

* Objective of strategic Management

1. To exploit and create new opportunities for future or

tomorrow.
2. To provide conceptual frame work.
3. To put on organizational into a competitive position.
4. To monitor and scan the business environment.
5. To monitor and respond to the demand of key, (*State holders).
6. To find, Attract and retain (maintain or keep) customer.
7. To sustain a competitive position in the market.
8. Maximum utilization of resources
9. To find the solution of Business related problems.
10. To develop the skill of strategic decision making.
11. To develop a creative and innovative attitude.

Strategic Management Process

➢ Strategic Management Process is a continuous culture of

appraisal that a business adopts to outdo the competitors. It
is also define as the process by which strategic manager make
such choice of set off strategies for the organization that will
enable it to achieve better performance.

There are various models of strategic Management process.

(SMP), the right model depends on various factor such as :-

(i) The existing culture of the organization.

(ii) Market dominance of the organization.
(iii) Leadership style. * (autocratic, democratic, Laissez-faire
style, etc.)
(iv) The Organization experience in creating and
Implementing (SMP) Strategic Magt. Process.
(v) Industry and competition.
(vi) Strategic Magt. Process is a continuous process that
appraises the business and Industries in which the
organization is involve.

Importance of Strategic Management Process

- The primary purpose of SMP is to help the organizational to

achieve a sustainable (Long term period), Strategic
competition in the market, It focuses on assessing
opportunities and threats.

It also helps in finding strength & weaknesses for the very

survival, growth and expansion.

Following are the Importance of SMP

It helps a business:-
 a) Acting as a reference for any major decision of the
organization.
b) Guiding and providing a right guidance to the business.
c) Preparing the business for any potential challenges and in
exploring opportunities.
d) It helps a business or an organizational in coping
(*overcome) with the competition in a dynamic
Environment.
e) It also helps a business to survive in an uncertain market.
f) It helps in identifying and maximizing the organization’s
competitive advantage & core competencies.

Strategic Management Process has the following steps.

Following are the various stages of Strategic Management process:-

Goal Setting - This is essentially clarifying the organization’s vision.

The vision will include short-term and long-term objectives, the
processes by which they can be accomplished and the persons
responsible for implementing each task that culminates in the set
goal.

Analysis:- It involves gathering the data and information that is

relevant to accomplishing the set goals. It also covers understanding
the needs of the business in the market data and examining any
internal and external data they may affect the organization’s goals.

Environmental Scanning:-

Environmental Scanning refers to a process of collecting,

scrutinizing and providing information for Strategic process. It
helps in analyzing the internal and external factors influencing an
organization.

➢ Internal factors are within the organization.

➢ External Factors are outside of the organization.

Such as- Legal and political Environment socio-cultural factors,

Economic Factors, Technological factors, Natural factors, etc.

Strategy Formulation:-

A business will only succeed if it has the resources required to reach

the goals set in the first step. The process of formulating a strategy
to achieve this may involves identifying which external resources
the business need to succeed, and which goals must be prioritized.
 ➢ Strategy Formulation is the process of deciding best course
of action for accomplishing organizational objectives and
hence achieving organizational purpose. After conducting
environmental scanning, managers formulate corporate,
Business and Functional Strategies.

Strategy Implementation

Since the purpose of strategic management process is to propel on

organization is to its objectives, an implementation plan must be
put in place before the process is considered viable. Everyone in the
organization must understand the process and know what their
duties and responsibilities are in order to fit in with the
organizations overall goal.

➢ It implies making the strategy work as intended or putting

the organization’s choosen strategy into action.
➢ Strategy Implementation includes designing the
organization’s structure distributing resources, developing
decision making process, and managing human resources.

Strategy Evaluation:-

It is the final step of strategic management process. The Key

Strategy evaluation activities are- Appraising internal and External
factors that are the root of present strategies, measuring
performance, and taking remedial or corrective actions.

➢ Evaluation makes sure that the organization strategy as well

as its implementation meets the organizational objectives.
 ➢ The Evaluation and control actions for the Strategic
Management process include performance appraisal as well
constant review of both internal and external issues.
➢ In order for a business effort to have the most impact on a
business bottom line, Strategic management process must be
employed. This will also go a long way in helping a business to
survive stiff competition in the market.

Conclusion:- These components are steps that are carried, in

chronological orders, when creating a new strategic management
plan. Present businesses that have already created a strategic
management plan will revert to these steps as per the situations
requirement, so as to make essential changes.

Components of Strategic Management Process

Environmental Strategy Strategy Strategy

Scanning Formulation Implementation Evaluation

Fig- Components of strategic Management Process.