INTRODUCTION TO STRATEGIC MANAGEMENT AND BUSINESS POLICY

The agenda for the meeting was I. II. III. IV. V. VI. VII. What is Strategic Management? Why Strategic Management? Goals of Strategic Management. Benefits of Strategic Management. Theories of Organizational Adaptation. Basic Model of Strategic Management. Strategic Decision Making.

Ill be explaining each topic one by one in the same sequence.

I.

What is Strategic Management?

In start of discussion we were asked to describe what strategic management is. The students expressed their point of view regarding this. Most of the opinions were confusing and were expressing a not a clear distinction between simple management and strategic management. Our facilitator helped us in differentiating between simple management and strategic management. one of the students made cleared this by differentiating them. It was told that strategic management involves the environmental scanning and in light of this formulating new mission and vision and formulating appropriate strategies for new set goals. The environmental scanning involves both the internal and external environment scanning. The internal environment scanning includes the reviewing policies, functions, structure of the organization etc., while the external environment scanning includes reviewing the marketing strategy i.e. 4 Ps, competitors strategies, broad external environment including economic situation, political, technological etc. Strategic management involves the creation of strategic fit between the organizations internal and external environment. Because both internal and external environment are in continuous change with passage of time so through strategic management new strategies are developed to cope with these circumstances. So strategic management do matching between the external and internal environment and to determine the organization business and nature of offering it deals with only the concerned environment i.e. the environment that is closely linked and have effect.

II.

Why Strategic Management?

Then we discussed why the organizations use the strategic management. The main points of the discussion are written down here. It provides long term direction to the organization. Provides sustainability in the competitive market. It makes the organization change effective and efficient according to the external environment. It helps in organizations efforts to retain customers. Its a proactive approach in nature; provide solutions to problems before their occurrence.

III.

Goals of Strategic Management

The goals which are pointed out by the group include. To develop the abilities of business professionalism so the organization can survive in changing world with confidence. To have competitive edge. Provides knowledge about the organization policy, business policy problems, understanding of corporate strategies. Develops attitude to be practical with market and customer, not a researcher. Provides an organization with environmental scanning skills.

IV.

Benefits of Strategic Management

Some of key benefits are It provides the clarity of the mission, vision, goals, objectives and strategies. It provides the clarity about the internal and external environment of the organization. Enables an origination to focus on future. Produce efficiency and effectiveness.

V.

Theories of Organizational Adaptation

Four different theories were discussed in the group discussion over understanding how an organization fit itself in its environment. these are i. Population Ecology ii. Institution Theory iii. Strategic Choice Perspective iv. Organizational Learning Theory i. Population Ecology According to this theory, when an organization get established its image in a specific market segment or niche then it unable to adapt changing conditions in the market. Then ultimately other firms working in the market properly changing themselves according to the market demand throw that organization out of the market. ii. Institution Theory This theory says that an organization is the follower and it change itself according to changing environment by imitating another organization which is successfully leading the environment by taking initiatives and being first mover. iii. Strategic Choice Perspective This theory proclaims that an organization not only change itself according to the environment but also is trend setter in the market. Because of its strategic decisions it has ability to bring in the market also and other organization follow it. So an organization is in dictating position here. iv. Organizational Learning Theory It is actually the extension of institution theory and strategic choice perspective. Here an organization not only change itself according to its environment in a defensive mode to survive but also take offensive measures by deploying its knowledge to improve the strategic fit between it and its environment. The theory believes in taking input from people at all the levels in strategic decision making.

VI.

Basic Model of Strategic Management

There are four steps in this model. a) Environmental Scanning b) Strategy Formulation c) Strategy Implementation d) Evaluation and Control a) Environmental Scanning It is actually the monitoring of the environment and you through this process get information regarding the internal and external environment of the company and disseminate it to the key personnel in the organization. The environmental analysis can be done by employing PEST analysis, financial analysis, and situational analysis etc. b) Strategy Formulation This involves step by step process. Mission/VisionObjectivesStrategiesActionable Policies First you redefined the current mission and vision statements. The difference between the mission and vision is that mission is the purpose of the organization existence, is the task, and is the present business and we focus on current customers. It answers the questions, who we are? What we do? Where are we now? Why we are in this business? What are the products/services currently offered? While the vision statement states what do we want to become, our desires and in this we focus on future customers. Then mission and vision statements of the companies like McDonalds, Avis, Microsoft, and PIA were shared in the class by the facilitator. Objectives are the end results of our efforts. We can say that these are the targets to be achieved, what is to be accomplished and where we want to be. Objective may be of both types major and minor, major objectives are those that directly affect an organization performance. Objectives may also be broad or specific in nature; broad objectives are basically vague and unclear. And goals are basically specific. Mission as compare to objective is broad and objective as compare to mission is specific. In mathematical terms we can say that mission is a set while objective is its subset. Strategy is a plan which is made in light of competitor plan. For this purpose we do environmental scanning and make a strategy. Strategy is such an element in company operations which can shape the company future. Strategic Ads for detergents and telecommunication sectors were shared. Policy is a broad guideline for managerial decision making. Policy is not action oriented but thinking oriented. Policy set the boundary limits for mangers what they can do and what they cant do because of their authority level. c) Strategy Implementation It involves: i. Procedures ii. Methods iii. Rule iv. Program v. Budgets i. Procedures

These are the systematic combination of the activities. These are the plans which guide in detail in exact manner how this activity to be accomplished. E.g. taking admission in the university. ii. Methods These are a type of plan even in more detail than procedure. A method will take one activity and explain it in detail. iii. Rule It is type of plan but in specific term, that what you can do and what you cant do. E.g. no parking here, no smoke area. Rules are backed by law, so their violation may lead to legal punishment. iv. Program It is also a type of plan but a comprehensive plan. It is the combination of the all including mission/vision, objectives, strategies, policies etc. procedure an method is a part of program. Programs are recurrent in nature, like M-Phil program, offered and done each year. v. Budgets A plan expressed in monetary/ numerical terms. This is time bound and normally expressed in fiscal annum terms. d) Evaluation and Control Because of difference in actual and desired outcomes and conditions, it is common to evaluation and taking corrective measures. This involves Monitoring the an error, fault, mistake in performance or in organization functions Indentifying deviation between actual and desired outcomes Finding out reasons Taking corrective action/remedial action Feedback, report back the performance VII. Strategic Decision Making Rare: Strategic decision making is normally uncommon and infrequent because of its time consumption and intellectual and financial cost. Consequential: Because this involves consumption of many resources like human, financial so it is consequential in nature. Directive: It set the precedent, pattern i.e. it set the examples for decision making in future.