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STRATEGIC MANAGEMENT-UNIT-I 2011

STRATEGIC MANAGEMENT-BA6211

Unit -1
Strategy and process

Conceptual framework for strategic management, the concept of strategy and the strategy formation process-
Stakeholders in business-Vision, Mission and Purpose-Business Definition, Objectives and Goals-case study.

Concept of strategy: the term strategy is derived from the Greek word ‘strategos’, which means generalship- the actual
direction of military force as distinct from the policy governing its development.
The word strategy literally means the art of general.

Definition: According to Igor Ansoff, “strategy is the common thread among the organizations activities and product
markets that defines the essential nature of business that the organization was or planned to be in future”

Elements of strategy-Goals, Scope, Competitive advantage, Logic

Importance of strategy:
 It help to give company direction, without strategies incorporating objectives, companies would be aimless.
 People working in the organization able to know about the effective managerial behavior.
 Towards strategy company can able to utilize the resource like- money, machine, material, method and men.
 It helps to co-ordinate all the strategy.
 Well planned strategy also facilitates optimal resource allocation.
 Documentation strategies also permit corporate level strategies to compare the course of action by various
businesses.
 Programming all the organizational activities in advance.

Meaning of strategic management:

Strategic management involves all the analysis of internal capabilities and external environment of the organization in
order to effectively and efficiently uses the resources to meet the organizational objectives.

Definition: According to Lloyd L. Byars, “Strategic management is concerned with making decisions about the
organizations future direction and implementing those decisions.

According to Arthur Sharplin, “Strategic management is the formulation and implementation of plans and carrying out the
activities relating to matters which are of vital, pervasive or continuing importance of the total organization.

Characteristics of Strategic management:

1. Strategic issues warrant top management decisions
2. Strategic issues involves the allocation of large amount of resources
3. Strategic issues are likely to have impinging impact on the long term prosperity of the firm
4. Strategic issues are future oriented
5. Strategic issues have consequences of multi business
6. Strategic issues warrant due weight age to the firm’s External environment
7. Strategic management is a process
8. Strategic management stresses both efficiency and effectiveness

K.SARULATHA MBA., M.PHIL

MBA DEPARTMENT,
SUDHARSAN ENGINEERING COLLEGE, PDK
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STRATEGIC MANAGEMENT-UNIT-I 2011

Scope of Strategic management

1. Subject matter of management- Formulation, Implementation and control
2. Functional area of Strategic management-listed below
a. Strategic and business policy - strategy, concepts, characteristics, functions, business policies and its types.
b. Strategic management overview- management nature, scope, characteristics, process, components and
limitations
c. Strategic environment- internal and external environment(PESTEL)
d. Types of strategy- grand strategy, stability strategy, expansion strategy, retrenchment strategy & combination
strategy
e. Value chain concept and analysis-analysis of organization, Industry, company, strategic and choice
f. Intetgration, diversification, merger and acquisitions-all has vertical horizontal
g. Strategic change management- strategic change, power and conflicts
h. Training strategy – it use of marketing variables and strategy of product development, marketing mix and
customer and channel
i. Implementation and control-corporate culture, leadership, cultural guiding and evaluating strategy
j. Current issues of Strategic management- strategic audit management technology.

Function of strategic management

 Provides perspective- which give equal importance to present and future opportunities.
 Provides mechanism – characterized by the number of cultural, social, political, technological, competitive and
economic forces exiting in different countries.
 Techniques to manage changes- it offers way of thinking, a discipline and technique to management changes.
 Provides approach to problem solving –overcome difficulties and overcome competition, deployment of
limited resources.
 Provide direction- in which organization should progress.
 Focus attention on changes in organization- changes in organization set up, administration of organizational
processes affecting behavior and development of leadership.

Conceptual framework for strategic management/ strategic management process

Strategic intent Strategic formulation Strategy implementation

Vision Environmental appraisal Project implementation

Mission organizational appraisal Procedural implementation
Business SWOT analysis Resource allocation Strategic
Definition Corporate Level Strategies Structural implementation evolution
Business Model Business Level Strategies Behavioral implementation
Objective Strategic analysis and Functional implementation &
choice Operational implementation
Strategic plan

Strategic

K.SARULATHA MBA., M.PHIL

MBA DEPARTMENT,
SUDHARSAN ENGINEERING COLLEGE, PDK
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STRATEGIC MANAGEMENT-UNIT-I 2011

DIMENSION OF STRATEGIC MANAGEMENT

Top management decisions on strategic issues: Establishing vision, stating of corporate objectives,
strategic thrust, comprehensive corporate philosophy & values-key area in which top mgmt of org take
decisions.

Strategic issues for sharing of concern and resource: needs of certain customer, use of common upgrade
technologies, deployment of people, physical assets or money from internal or external resource.

Strategic issues likely to have long term impact: Decisions for implementing the course of action.

Strategic directions are futuristic: It for Future, Forecast in-turns based on available data on trends.

Strategic have multi-functional and multi-business effect: many strategic decisions on product mix,
competitive edge, org. structure etc. all functions are classified as strategic business units (SBUs). Decisions
will take by top level regarding resource allocation-personnel, finance etc.

Strategic are defined based on study of environment: The organization culture is based on internal and
external.

Approaches of strategic management:

1) Formal structure approach: systematic procedures and planning programmes are set. Strategic planning is
assign to experienced planners.
a) Diagnostic phase- To identify the company aims & objectives. Fully embodied with elaborate SWOT analysis.
b) Direction phase- it is laid down to choose the best strategies from alternatives
c) Implementation phase- it deals with the implementation of process.
2) Entrepreneurial approach: Interest to earn maximum returns from investments. Diagnosing his best capacity,
select course of action to get maximum benefits.
3) Incremental approach-
4) Intuitive-Anticipatory approach-It largely build-up on forecasting the future by the promoter or chief executive
on which strategy decisions are made accordingly.
5) Adaptive approach-Change in Environment has impacts on time.

Benefits of Strategic Management

Strategic directions are futuristic

Strategies having multi-functional and multi-business effects
Strategies are defined based on study of the environment
Allocation of resource and improve co-ordination
Frame work of operational planning

K.SARULATHA MBA., M.PHIL

MBA DEPARTMENT,
SUDHARSAN ENGINEERING COLLEGE, PDK
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STRATEGIC MANAGEMENT-UNIT-I 2011

Limitations of strategic management

Lack of accuracy- Future is unpredictable

Danger of rigidity- Budgets estimation may vary according to the policy and business operations.
Internal resistance- Preparation of plan does not serve the purpose
Difficult Exercise- complex, cumbersome and complicate exercises.
Costly Exercise- internal and external environment may change the cost predictions.
Limitation of implementation: various problems in implementing strategy.

Stake holders in Business: Stake holders are the individuals and groups who can affect by the strategic outcomes
achieved and who have enforceable claims on a firms performance. Stake holders can support the effective strategic
management of an organization.

Stake holder’s relationship management Stake holders can be divided into:

1. Internal Stakeholders
 Shareholders
 Employees
 Managers
 Directors
2. External Stakeholders
 Customers
 Suppliers
 Government
 Banks/creditors
 Trade unions
 Mass Media
Stake holder’s Analysis:
 Identify the stake holders.
 Identify the stake holder’s expectations interests and concerns
 Identify the claims stakeholders are likely to make on the organization
 Identify the stakeholders who are most important from the organizations perspective.
 Identify the strategic challenges involved in managing the stakeholder relationship.
Stake holders model of responsible firm behavior and firm performanc
Environmental analysis

Key stakeholders

Strategic intelligence

Balanced strategies

Excellent stakeholder relationship

Performance outcomes

K.SARULATHA MBA., M.PHIL

MBA DEPARTMENT,
SUDHARSAN ENGINEERING COLLEGE, PDK
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STRATEGIC MANAGEMENT-UNIT-I 2011

Vision
A vision statement is sometimes called a picture of your company in the future. Vision statement is your inspiration; it
is the dream of what you want your company to accomplish.

Features of strategic vision

1. Mental exercise
2. Selects the target market
3. Constitutes organizations objectives and focus
4. Reflects future plans
5. Dynamic and flexible
6. Comprehensive
7. time-bound

Meaning for Goal: Goal denotes what an organization hopes to accomplish in a future period of time.

Meaning for Objectives: Objectives are the ends that state specifically how the goals shall be achieved. They are
concrete and specific in contrast to goals that are generalized.

Role of Objectives:
anizations relationship with its environment.

Characteristics of Objectives:

Definition for Business: A company should define its business in terms of three dimensions: 1. Who is being satisfied
(what customer groups) 2. What is being satisfied (what customer needs) 3. How customer needs are being satisfied
(by what skills, knowledge or distinctive competencies)

K.SARULATHA MBA., M.PHIL

MBA DEPARTMENT,
SUDHARSAN ENGINEERING COLLEGE, PDK
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