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International Strategic management Module- I Strategic Management Strategic management is that set of managerial decisions and actions that determines the long run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic planning), strategy implementation, and evaluation and control. The study of strategic management therefore emphasizes the monitoring and evaluating external opportunities and threats in the light of a corporations internal strengths and weaknesses in order to generate and implement a new strategic direction for an organization. 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 objectives. Strategic management focuses on integrating management, marketing, human resource, finance, production, operations research, computer information systems to achieve organizational objectives. If a strategy allows an organization to match its resources and capabilities to the needs of the external environment in order to achieve competitive advantage, the process of bringing about the strategy is the strategic management. All organization set goals they want to achieve. Strategic management is about analyzing the situation facing the organization, and on the basis of this analysis, formulating a strategy and finally implementing that strategy. The end result is for the organization to achieve competitive advantage over its rivals in the industry. In formulating strategy, an organization must also consider how that strategy should be implemented Strategic Management is the continuous process of determining the mission and goals of an organization within the context of its external environment and its internal strengths and weaknesses, formulating and implementing strategies, and exerting strategic control to ensure that organizations strategies are successful in attaining its goals. Traditionally, Strategic Management begins with developing a vision, mission, goals and objectives. However today, by and large, a top

down method is adopted by most companies, although in certain cases the bottom up approach is also essential. In top- down approach, top management drives strategy for the middle and junior management to implement. In the bottom-up approach, strategies are conceived at the field, operational and functional levels and presented to the top management. This is followed by SWOT analysis wherein the firm looks at the external environment, namely political, economical sociological, cultural, environmental and legal, relevant to organizational goals. Similarly, an in-depth analysis of internal factors on resources and competency is critical. This would help to identify the gaps and work on them so that the organizational goals are met. Contemporary strategic management thinkers also lay a lot of stress on resource based strategy deployment as a source of acquisition and allocation are immensely relevant in a cost-conscious, competitive, time-bound world.

. Stages of Strategic Management Strategic Management Process consists of three stages i.e. (1) Strategy Formulation, (2) Strategy Implementation and (3) Strategy Evaluation & Control 1. Strategy Formulation includes developing (1) a vision and mission, (2) identifying an organizations external opportunities and threats, (3) determining internal strengths and weaknesses, (4) establishing long term objectives, (5) generating alternative strategies and (6) choosing particular strategies to pursue Strategy formulation issues include deciding what new business to enter , what business to abandon, how to allocate resources, whether to expand operations or diversify, whether to enter international markets, whether to merge or form a joint venture and how to avoid a hostile takeover 2. Strategy Implementation requires a firm to establish annual objectives, devise policies, motivate employees and allocate resources so that formulated strategies can be executed Strategy Implementation includes developing a strategy- supportive culture, creating an effective organizational structure,, redirecting marketing efforts, preparing budgets, developing and utilizing
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information systems ,and linking employee compensation to organizational performance, Strategy implementation often is called the action stage of the strategic management. Implementation strategy means mobilizing managers and employees to put formulated strategies into actions. Successful Strategy implementation hinges upon managers ability to motivate employees, which is more an art than science. Interpersonal skills are especially critical for strategy implementation. Strategies formulated but not implemented serves no useful purpose. 3. Strategy Evaluation & Control is the third stage in strategic management. Managers desperately need to know when particular strategy is not working well and take corrective action or modification: strategy evaluation is the primary means for obtaining this information and control is to take corrective action or modification of strategy according to the changes occurred in external or internal environment. All strategies are subject to future modifications because external and internal factors are constantly changing. Three fundamental strategy evaluation activities are (1) reviewing external and internal factors that are the bases for current strategies,(2) measuring performance and, (3) taking corrective actions. Strategy evaluation is needed because success today is no guarantee for success tomorrow. Strategy Formulation, Implementation and Evaluation activities occur at three hierarchical levels in a large organization viz.(1) corporate,(2) divisional or strategic business unit and (3) functional levels. Most small businesses do not have divisions or strategic business unit; they have corporate and functional levels. Managers and employees at all levels should be actively involved in strategic management process and activities. Peter Drucker*(Management, Tasks, Responsibilities and Practices) says that prime task of strategic management is thinking through overall mission of a business: that is of asking the question, What is our Business? This leads to the setting of objectives, the development of strategies, and the making of todays decisions for tomorrows results. This clearly must be done by a part of the organization that can see the entire business; that can balance objectives and the needs of today against the needs of tomorrow; and that can allocate resources of men and money to key results.

Adapting To Change The Strategic Management is based on the belief that organizations should continually monitor internal and external events so that timely changes can be made as needed. Changes are occurring continuously in the external and internal environment, for example, terrorism, economic recession, the aging population, the Enron Scandal, merger mania. To survive all organizations must be capable of identifying and adapting to change. The Strategic Management process is aimed at allowing organizations to adapt effectively to change over the in long run. Key Terms in Strategic Management Strategy is the means by which long term objectives will be achieved. Strategy is concerned with the long term objectives of an organization A Strategy of a corporation is a comprehensive plan stating how the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantages. Strategy is moving from where you are to where you want to be in the future- through sustainable competitive advantage. Competitive Advantage: Strategic Management is all about gaining and maintaining competitive advantage. This term can be well defined as anything that a firm does especially well compare to rival firms. When a firm can do something that rival firms cannot do, or owns something that rival firm desire, that can represent a competitive advantage. Getting and keeping competitive advantage is essential for long term success in an organization. Strategists are those individuals who are responsible for the success or failure of an organization. Strategists have various job titles such as Chief Executive Officer, President, Chairman, Managing Director, and Director. Strategies help an organization, gather, analyze and organize information. They track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance, spot emerging market opportunities, identify business threats, and develop creative action plan.

Vision and Mission Statements Many organizations today develop a vision statement that answers the question What do we want to become? A Vision or Strategic Intent is the desired future state of the organization. It is an aspiration around which a strategist, perhaps the Chief Executive, might seek to focus the attention and energies of the members of the organization. Developing a vision statement is often considered the first step in strategic management process, preceding even development of a mission statement. Most of the vision statements are in single or double sentences. Mission Statements are enduring statements of purpose that distinguish one business from other similar firms. An organizations mission is the purpose or reason for the organizations existence. A mission statement identifies the scope of a firms operations in product and market terms. It addresses the basic question that faces all strategies What is our business? A clear mission statement describes the values and priorities of an organization as to how it does business and treats its employees. Developing mission statement compels the strategists to think about the nature and scope of present operations and to assess the potential attractiveness of future markets and activities. A mission statement broadly charts the future direction of an organization. External Opportunities and Threats External opportunities and external threats refer to economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could significantly benefit or harm an organization in the future. Opportunities and Threats are largely beyond the single corporation-thus the world external. The wireless revolution, biotechnology, the population shifts, changing work values and attitudes, space exploration, recyclable packages, fast technological changes, Laws and Government Regulations, increased competition from domestic and foreign companies, national catastrophe are examples of opportunities or threats for companies. Internal Strengths and weaknesses Internal strengths and internal weaknesses are organizations controllable activities that are performed especially well or poorly. They arise in management, human resources, marketing, finance, accounting, production operations, research and development, and management information system activities of a business.
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Identifying and evaluating organizational strengths and weakness in the functional areas of business is an essential strategic management activity. Organizations strive to pursue strategies that capitalize on internal strengths and eliminate internal weaknesses. Objectives and Goals Objectives are the end results of planned activity. They state what is to be accomplished by when and should be quantified wherever possible. The achievement of corporate objectives should result in the fulfillment of the companys vision and mission. The term goal is often confused with objective. In contrast to objective, a goal is an open ended statement of one wishes to accomplish with no quantification of what is to be achieved and no timeframe for completion. Long term objectives Objectives can be defined as specific results that an organization seeks to achieve in pursuing its basic mission. Long term means more than one year. Objectives are essential for organizational success because they state direction; aid in evaluation, create synergy, reveal priorities; focus coordination; and provide a basis for effective planning, organizing, motivating and controlling. Objectives should be challenging, measurable, consistent, reasonable, and clear. In a multidimensional firm, objectives should be established for the overall company and for each division. Annual Objectives Annual objectives are short term milestone that an organization must achieve to reach the long term objectives. Like long term objectives, annual objectives should be measurable, quantitative, challenging, realistic, consistent and prioritized. They should be established at the corporate, divisional and functional levels in a large organization. Annual objectives should be stated in terms of human resource, marketing, finance/ accounting, production/ operations, research and development and management development systems accomplishments. Annual objectives represent the basis for allocating resources. Policies Policies are the means by which objectives will be achieved. Policies include guidelines, rules and procedures established to support efforts to achieve stated objectives. Speed is a critical necessity for success in todays competitive, global marketplace. One way to enhance speed and responsiveness is to allow decisions to be made whenever possible at the lowest level in organizations. Policies are guides to decision making. Policies often increase managerial effectiveness by standardizing routine
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decisions and empowering or expanding the discretions of managers and subordinates in implementing business strategies. Emergent Strategies: Sometimes some organizations begin implementing strategies before they clearly articulate mission, goals or objectives In these case, strategy implementation actually precedes strategy formulation. Strategies that unfold in these ways are called Emergent Strategies. Intended strategy: The original strategy top management plans and intends to implement. Realized Strategy: The strategy top management really implements is called realized strategy. Corporate Governance is the system by which the business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board, managers and other stakeholders, and spells out rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the company objectives are set and the means of attaining those objectives and monitoring performance. OECD, April, 1999. Corporate Governance is a system of structuring, operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors, employees, customers and suppliers with the legal and regulatory requirements, apart from meeting environmental and local community needs. It leads to building of a legal, commercial and institutional framework. It also demarcates the boundaries within which these functions are to be performed. Corporate Governance ensures that long term strategic objectives and plans are established and the proper management structures (Organization, System and People) is in place to achieve those objectives, while at the same time making sure that the structure functions to maintain the corporations integrity, reputation and responsibility to its various constituencies. (National Association of Corporate Directors) A corporation is a mechanism established to allow different parties to contribute capital, expertise and labor for their mutual benefit. The investor or shareholder participates in the profits of the enterprise without taking responsibility of operations. Management runs the company without being personally responsible for providing funds. The corporation is fundamentally run by the Board of Directors as the representatives of shareholders. The corporate governance refers to the
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relationship amongst these three groups, board of directors, management and shareholders in determining the direction and performance of the organization. Sarbanes Oxley Act 2002: In response to the many corporate scandals uncovered since 2000, the US Congress passed the Sarbanes- Oxley Act in June 2002. The act was designed to protect Shareholders from the excess and failed oversight that characterized failures at Enron, Tyco, WorldCom, Adelphia Communications, Qwest, and Global Crossing among other prominent companies. Several essential elements of Sarbanes-Oxley Act were designed to formalize greater board independence and oversight. For example, the act required that all directors serving on the audit committee should be independent of the company and receive no fee other than his services as director. The board may no longer grant loan to corporate officers and staff. The act also established formal procedures for individuals known as whistle blower to report incidents of questionable accounting and auditing. Companies are prohibited from taking action against anyone reporting wrongdoing. Both CEO and CFO must certify corporations financial information. The act banned auditors from providing both external and internal audit services of the same company. The act also required that the companys audit committee, nominating committee and compensation committee be formed entirely by independent directors. Corporate Social Responsibility The concept of Corporate Social Responsibility proposes that corporation has responsibilities to society that extend beyond making a profit. Actually, it refers to the expectation that business firms should serve to society and the financial interests of shareholders. Strategic decision is often more than just the corporation, A decision to retrench by closing some plants and discontinuing product lines, for example, affects not only the firms workforce but also the communities where the plants are located and the customer with no other source for discontinued product. Such situations raise questions of the appropriateness of certain missions, objectives and strategies of business corporations. Managers must be able to deal with these conflicting interests in an ethical manner to formulate a viable strategic plan. There are three principal reasons why the managers should be concerned about the socially responsible behaviors of their firms. First a companys
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right to exist depends on the responsiveness to the external environment. Second, federal, state, and local governments threaten increased regulation if business does not evolve to meet changing social standards. Third, a responsive corporate social policy may enhance a firms long term viability. Long term profit maximization is linked to Corporate Social Responsibility. The degree to which social responsibility is relevant in strategic decision making is widely debated. Adam Smith and Milton Friedman, in arguing a return to a laissez faire world wide economy with a minimum of government, argues against the concept of social responsibility. If a businessperson act responsibly by cutting the price of the firms product to prevent inflation , or by making expenditures to reduce pollution , or by hiring the hard core unemployed , that person , according to Friedman , is spending the stockholders money for a general social interest . Friedman thus referred to the social responsibility of business as a fundamentally subversive doctrine and stated that there is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud

Carrolls four responsibilities of business

Archie Carroll proposes that the managers of business organizations have four responsibilities: 1. Economic responsibilities: are to produce goods and services of value to society so that the firm may repay its creditors and stockholders. 2. Legal responsibilities: are defined by governments in laws that management is expected to obey. 3. Ethical responsibility: are to follow the generally held believes about how one should act in a society.
4. Discretionary responsibilities: are the purely voluntary obligations a

corporation assumes, for example, philanthropic contributions, training the hard-core unemployed, or providing day care centers .The difference between ethical and discretionary responsibilities is that

few people expect an organization to fulfill discretionary responsibilities, whereas many expect an organization to fulfill ethical ones. Robert Owen, UK, showed that organization could be efficient and equally responsible to the society. In early part of nineteenth century, British entrepreneurs concentrated on self and co-operations. In North America, education was given prime importance. Most of the North American entrepreneurs were associated with educational institutions. There was realization of the importance of creation of wealth and the responsibilities of the organizations to the society in which they operate. Business is expected to create wealth and employment and to provide conducive environment to the society its long time survival. The value and ethical standards that a company adopts are the long term assets of the organization. There are a number of tasks that a business has to fulfill to the society. These include the financial task, political task, environment task, adaptive task, economic task and social task. An organizations stance on social responsibility can be a critical factor in making strategic decisions. Today, society also expects business to help preserve environment, to sale safe products, to treat their employees equitably and to be truthful with their customers. Prospective customers have become more interested in learning about a companys social and philanthropic activities before making purchase decisions. Evidence suggests that companies following business ethics, good corporate governance, and their obligations to the society honestly have good value and reputation in the minds of the public and they take purchase decision on the basis of these factors.

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Role of Ethics in Decision Making Ethics is defined as the consensually accepted standard of behaviour of people in society, occupation, business, trade or profession. Following Carolls work, if business people do not act ethically, government will be forced to pass laws regulating their actions- and usually increasing their costs. For self interest and for other reasons, managers should be ethical in their decision making. One way to do that is by encouraging code of ethics. A code of ethics is a set of principles of conduct within an organization that guide decision making and behavior. The purpose of the code is to provide members and other interested persons with guidelines for making ethical choices in the conduct of their work. Professional integrity is the cornerstone of many employees' credibility. Member of an organization adopt a code of ethics to share a dedication to ethical behavior and adopt this code to declare the organizations principles and standards of practice. Example of Code Of Ethics

Colgate-Palmolive The Colgate-Palmolive code of ethics is a long document, but is broken down into individual areas of conduct. The code is intended as a guide to all daily business interactions and is used in conjunction with the company's business practice guidelines. The code covers 10 areas, including: Our Relationship with Each Other; Our Relationship with the Company; Our Relationship with Consumers; Our Relationship with Government and the Law; Our Relationship with Society and Our Relationship with the Environment. A Code of Ethics expects how an organization expects its employees to behave while on job. It clarifies company expectations of employee conduct in various situations and makes clear that company expects its people to recognize the ethical dimensions in decisions and actions. A Company that wants to improve its employees ethical
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behaviour should not only develop a comprehensive code, but also communicate the code in its training programs, performance appraisal systems, in policies and procedures and through its own actions. General Electric and General Dynamic were first companies to establish corporate codes. In most organizations top management takes the initiatives for developing the corporate code. Certain guidelines must be followed when developing the corporate codes: A starting point for developing a code of ethics is to consider the three basic approaches to ethical behavior:
Utilitarian Approach: This

approach proposes that actions and plans should be judged by their consequences. People should therefore behave in such a way that will produce the greatest benefit to the society and produce the least harm or the lowest cost. Universalistic Theory: Moral standards are applied to the intent of an action and decision; the principle is that everyone should act to ensure decisions would be reached by others. Individual Rights Approach: This approach proposes that human beings have certain fundamental rights and should be respected in all decisions. A particular decision or behaviour should be avoided if it interfere with the rights of others. Justice approach: This approach proposes that decision makers be equitable, fair and impartial in distribution of costs and benefits to individuals or groups. It follows the principles of distributive justice and fairness. Development and Implementation includes the following :Development of the code Identification of Key behaviours: Organizations should identify the key behaviours that maximize the long term owner value.

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Review by the key members of the organization; Key members including the members of the legal department should review the code. Communicate the code: The code must be sent to each and every employee.

Implementation of the code: After developing the code, it is important for the company to implement it. Ferrell and Fraedrich are of the opinion that the implementation of strategies for making a corporate code is no different from implementing other type of business strategies. The approach they proposed for implementing corporate code was based on four aspects:(1) Organization Structure, (2) Coordination, (3) Motivation and (4) Communication Update: Codes should be updated at least once in a year to ensure that they are in accordance with both the company , laws of the countrys and Government regulations. Ethical organization: Organizations to be called ethical should possess ethical behaviour. Ethical behaviour is an outcome of the companys ideal policies, statements and guidelines. Judging the Ethical Nature of an Organization: It is difficult to judge whether an organization is ethical or not. Three theories provide a frame work for judging the ethical nature of an organization: 1. The theory of corporate moral excellence 2. Ethics and stake holders theory 3. Ethics and corporate governance

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According to the first theory, ethical organization is one that is based on moral values. The moral values guide the behaviour of the employees in their day to day activities. Corporate values can be classified as:(1) Espoused values and (2) Value in Practice Espoused values refer to a companys statements and code of ethics. They describe the organizations purpose and ethical perspective. Ethical perspectives are aimed at guiding the members who are responsible for leading and directing the organization. Espoused values in many situations differ from value in practice. For example, if an organizations mission statement states that, Customer is the king, but in practice that organization pays little attention to the customer service. Clearly, there is a difference between Espoused values and Value in practice. Organization can align its Value in practice to its Espoused values if it wishes to be an ethical organization. According to the second theory, an ethical organization is one whose managers act in a responsible manner by paying attention to the needs and rights of all the stakeholders. The primary purpose of the management in any organization is to maximize the share holders value. The secondary purpose is to consider the interests and benefits of all other stake holders while taking managerial decisions. Hence, the behaviour of the management towards its stakeholders plays crucial roles in building ethical organization. The third theory states the governance practices adopted by the organization to ensure right, fair, proper and just decisions and actions plays a major role in building ethical organization. These practices affect the stakeholders in that they focuses on the business relationship with employees, customers, stockholders, creditors, suppliers and members of the society in which it operates.

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If an organization develops a corporate code to guide the behaviour of its employees, and if the companys espoused and value in practice are aligned, then the organization can be termed as ethical organization. Cavanagh proposes that the managers solve ethical problems by asking the three following questions regarding an act or a decision:1. 2. 3. 4. Utility: Does it optimize the satisfaction of all stakeholders? Rights: Does it respects the rights of individuals involved? Justice; Is it consistent with the canons of justice? Legal: Does it comply with the legal framework?

Need For Ethics In Business All businesses exist and operate within society and, therefore, they should contribute to the welfare of the society. To survive in the market, business should gain loyal customers and perform social responsibility. To create and maintain proper image in the minds of the public are very important for the business. Thus, business, either big or small, must operate on ethical grounds and discharge social obligations to survive in the long run.

Strategic Position

Expectatio n and Purposes Developme Business Corporate The Strategic nt level Level Environme Choices directions strategies Strategies nt &methods The Strategic 16 Position Resources Managing Strategy and Enabling Organizing Change into action competenc e

A model of the elements of strategic management The Strategic Position is concerned with the impact on strategy of the external environment, internal resources and competencies and influence
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of stakeholders. The sorts of questions it raises are central to future strategy. What changes are going on in the environment and how they will affect the organization and its activity? What are the resources and competencies of the organization and can these provide special advantages or yield new opportunities? What is that those people and

groups associated with the organization- managers, shareholders or owners, unions and others who are the stakeholders in the organization- aspire to, and how do these affect what is expected for the future development of the organization. These are described briefly below: (a)The Environment: The organization exists in the context of a complex commercial, political, economic, social, technological, environmental and legal world. Environment changes constantly and it makes complex for many organizations. Changes in the environment may give rise to opportunities for some companies and threats for some companies. (b)The Resources and Competences: the resources and competencies of the organization make up its strategic capabilities. One way of thinking capabilities of an organization is to consider its strength and weaknesses. However, competencies that provide real advantage to the organization are the core competencies. They are the activities, know how, skills and behaviour, which in combination provide advantages for that organization which others find difficult to imitate. (c) There are a number of influences on an organizations purpose. The issue of Corporate Governance is important. Here the question is, who should the organization primarily serve and how should the managers be held responsible for this. The expectations of different stakeholders affect purpose and what will be seen as acceptable in terms of strategies advocated by the management. Which views prevail will depend on which group has the greatest power. Cultural influences from within organization and from the environment around it also influence the strategy an organization follows. Together, a
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consideration of environment, strategic capability, the expectations and the purpose within the culture and political frame work of the organization provides a basis for understanding the strategic position of the organization. Such an understanding needs to take the future into account. Assessing the magnitude of strategic changes and the ability of the organization to effect such changes is important aspect of organizations strategic position.

Evolution Of Strategic Management Concept of long range planning later developed as strategic management(GE and Boston consulting Group) Bruce Henderson of Boston Consulting Group concluded that institutive strategies cannot be continued successfully if:(1 ) the corporation becomes large, (2) the layers of management increase and (3) the environment changes substantially. The increasing risk of error, costly mistakes, and economic ruin are causing todays professional managers to take strategic management seriously in order to keep the companies competitive in an increasingly volatile environment.
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 Strategic Management within a company generally evolves through four sequential phases of development (1) Basic Financial Planning: Seeking better operational control by trying to meet annual budgets (2) Forecast based planning: Seeking more effective planning for growth by trying to predict future beyond next year (3) Externally oriented planning( strategic planning):- Seeking increased responsiveness to markets and competition by trying to think strategically (4) Strategic management: Seeking a competitive advantage by considering implementation, evaluation and control when formulating strategy General Electric Company, one of the pioneers of strategic planning, led the transition from strategic planning to strategic management during the 1980s. By 1990s, most of the companies around the world had also begun the conversion from strategic planning to strategic management. The Strategic Management Process Businesses vary in the processes they use to formulate and direct their strategic planning activities. Sophisticated planners like General Electric, Proctor & Gamble have developed more detailed processes than less formal planners of similar sizes. General strategic Planning Process Model is as follows:Company Vision, Mission and Social Responsibility | -------------------------------------------| | External Environment Internal Environment | | .. | Strategy Formulation Strategic Analysis and Choices 1. Creating competitive advantage at business level 2. Building values in multi business companies | .
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| | Long Term Objectives Generic and Grand strategies | | | Implement Strategies Management Issues, HRM, Marketing, Finance | ...... | Measure and Evaluate Performance | Restructuring, Reengineering and Refocusing organization | Strategic control and continuous improvement Components Of Strategic Planning Model 1. Companys Vision and Mission 2. Internal Analysis 3. External Environment 4. Strategic Analysis and Choice Strategic choice is the evaluation of alternative strategies and selection of best alternative. Simultaneous assessment of the external environment and the company profile enables a firm to identify range of possibly attractive interactive opportunities. These opportunities are possible avenues for investment. However, they must be screened through the criterion of the company mission to generate a possible and desired opportunities. This screening process results in the selection of options from which a strategic choice is made. The process is meant to provide the combination of long term objectives and generic and grand strategies that optimally position the firm in its external environment to achieve the company mission. Strategic Choices involve understanding and underlying bases for future strategy at both corporate and business level. At the highest level in the organization there are issues of corporate level strategy. There are strategic choices in terms how the organization seeks to compete at the business level.

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There is mounting evidence that when an organization is facing a dynamic environment, the best strategic decisions are not arrived at through consensus when everyone agrees on one alternative. They actually involve a certain amount of heated disagreement, and even conflict. Many diverse opinions are presented, participants trust in one anothers abilities and competences, and conflict is task oriented and not personal. One approach is to appoint someone as Devils Advocate, a person or group assigned to identify potential pitfalls and problem with a proposed alternative. Another approach would be to appoint someone as a person or group to present the advantages of particular alternative and a second person or group to present the disadvantages of the same alternative in a debate. The idea is combining two conflicting views- the thesis and the antithesis- into a synthesis. This method is called Dialectical Enquiry. 5. Long Term Objectives 6. Generic and Grand Strategies Many businesses explicitly and all implicitly adopt one or more generic strategies characterizing their competitive orientation in the marketplace. Low cost, differentiation or focus strategies define the three fundamental options. Enlightened managers seek to create ways their firm possesses both low cost and differentiation competitive advantages as part of their overall generic strategy. They usually combines these capabilities with a comprehensive, general plan of major actions through which their firm intends to achieve its long term objectives in a dynamic environment. Grand Strategy means how the objectives are to be achieved. Although every grand strategy is, in fact, an unique package of long term strategies,14 basic objectives can be identified viz concentration, market development, product development,, innovation, horizontal integration, joint venture, strategic alliances, consortia, concentric diversification, conglomerate diversification, turnaround, divestiture and liquidation. Action Plan and Short Term Objectives Action plan translate generic and grand strategies into actions by incorporating four elements. First, they identify specific functional tactics and actions to be undertaken in the next week, month or quarter as part of the businesss effort to build competitive advantage. The second element is a clear time frame for completion. Third, action plan create accountability by identifying who is responsible for each action in the plan. Fourth, each action in an action plan has one or more specific, immediate objectives that are identified as outcomes that action plan should generate.
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Functional Tactics Within general framework created by the businesss generic and grand strategies, each business function needs to identify and undertake activities unique to the functions that help build sustainable competitive advantage. Managers in each business function develop tactics that delineate the functional activities in their part of business and usually include them as a core part of their action plan. Functional tactics are detailed statements of the means or activities that will be used for short term objectives and establish competitive advantage. Strategy Into Action Translating strategy into action is concerned with ensuring that strategies are working in practice. A strategy is not just a good idea, a statement or a plan. It is only meaningful, when it is actually being carried out. This occurs in following manners:

Structuring an organization to support successful performance. This includes structures, organizational processes, boundaries and relationships. Enabling success through the way in which separate resource areas of an organization support strategies and the extent to which the new strategies are built on the particular resource and competence. Strategy often involves change and the organizations must manage change processes to achieve the organizational objectives Getting the work of the business done efficiently and effectively so as to make the strategy successful. An internal focus to organize the company to accomplish the mission To address the question of leadership and values in the organization to achieve the objectives Restructuring the company by downsizing, rightsizing, reengineering to achieve the strategic results

Strategic Control and Continuous Improvement. Strategic control is concerned with tracking a strategy as it is being implemented, detecting problems or changes in its underlying premises, and making necessary adjustments. In contrast to post action control, strategic

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control seeks to guide action on behalf of the generic or grand strategies as they are taking place and when the end results are still several years away. Continuous improvement provides a way for the managers to provide a form of strategic control that allows their organization to respond more proactively and timely to rapid development in hundreds of areas that influence a businesss success.

Types of Strategy
Balanced Scorecard Basics
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950s and the work of French process engineers (who created the Tableau de Bord literally, a "dashboard" of performance measures) in the early part of the 20th century. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The new balanced scorecard transforms an organizations strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies. This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an

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enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Adapted from Robert S. Kaplan and David P. Norton, Using the Balanced Scorecard as a Strategic Management System, Harvard Business Review (January-February 1996): 76.

Perspectives
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives: The Learning & Growth Perspective This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In

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any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems." The Business Process Perspective This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants. The Customer Perspective Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups. The Financial Perspective Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Levels of Strategy Strategies exist at number of levels in an organization. There are at least three levels of organizational strategies, viz Corporate, Business and operational. In large firms, there are actually four levels of strategies, Corporate, Business/ Divisional, Functional and Operational. Corporate Level Strategy is concerned with the overall purpose and scope of the organization. This could include issues of geographical
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coverage, diversity of product/ services or business units, and how resources are to be allocated between the different parts of the organization. The corporate centre needed to play a crucial role in determining how the organization should be structured, how resources should be allocated in setting targets and reviewing performance. The corporate centre should also be asking whether there other ways in which they can add value to the separate business units within the company. It may be that a new corporate brand should be created. Corporate level strategy is concerned with the expectations of the owners- the shareholders. It may well take the form in an explicit or implicit statement of mission that reflects such expectations. The Second Level can be thought of in terms of Divisional or Business Unit Strategy, which is about how to compete successfully in particular markets. The concerns are, therefore, about how advantage over competitors can be achieved; what new opportunities can be identified or created in markets; which products or services should be developed in which markets and the extent of which these meet customer needs in such a way as to achieve the objectives of the organization- perhaps long term profitability or market share growth. So, whereas corporate strategy involves decisions about the organization as a whole, strategic decisions here need to be related to a Strategic Business Unit (SBU). A Strategic Business Unit is a part of an organization for which there is a distinct external market for goods and services that is different from another SBU. The third level of strategy is Functional strategy. It relates to various functions like, Marketing, HR, Finance, Information Technology etc The management functions involve strategic decisions to make the best opportunities and identify avenues for growth. For example, a Finance Manager has to necessarily take decision on funding opportunities etc. Similarly, a Human Resource Manager has to take a number of strategic initiatives such as leadership development, change management, succession planning, compensation strategy, competence development etc. The Human Resource Management Strategy attempts to find the best fit between the people and the organization. It address the issues of whether a company or business unit should hire a a large number of low skilled employees who receive low pay, The production and operations management function involves a number of strategic issues. These issues could be the finding of location of
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facility, determining the capacity and selecting the technology and equipment. Each of these decisions involves careful analysis of different scenarios that may emerge and managerial involvement in business options that could be relevant to a chosen technology or production function. The marketing function has certain perspectives such as strategic pricing, market focus, and product mix. Though advertising and promotions have long-term impact and involve a substantial cost, there is debate over whether these are tactical or strategic decisions. It has now been established that advertising and promotions are strategic in nature, as they involve long term orientation, even though their execution may have a short- term focus. The fourth level of strategy is at the operating end of an organization. Here there are Operational Strategies which are concerned with how are the component parts of an organization deliver effectively the corporate and business level strategies in terms of resources, processes and people Operational Strategies determines how and where a product or service is to be manufactured, the level of vertical integration, and the deployment of physical resources and relationship with suppliers. How Can Managers Make Better Strategic Decisions Evaluate current performance results in terms of (a)Return on investment, profitability and so forth, (b)The current strategic position of the company (vision, mission, objectives, strategies and policies) Review corporate governance i.e. the performance of the companys board of directors and top management. Scan the external environment to locate strategic factors:(a) Societal, task (b) Select strategic factors- (i) Opportunities, (ii) Threat Scan the internal corporate environment to determine:(a) Structure, culture and resources factors (b) Select strategic factors, Strengths and Weakness . Analyze strategic factors (SWOT) to :(a) Pinpoint problem areas (b)Review and revise mission and objectives as necessary (a) Generate and Evaluate Strategic Alternatives
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(b) Select and Recommend best Alternative Implement Selected Strategies through programs, budgets, procedures, process. Evaluate implemented strategies through reviews, feedback systems and control activities to ensure that no or minimum deviation from the plans. This rational approach to strategic management has been used successfully by many progressive companies in India and abroad.

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