Introduction to strategic management by AijazAryan

1. UNIT- 1
INTRODUCTION TO STRATEGIC MANAGEMENT
Aijaz Ahmed Rather
I.K Gujral P.T University

2. UNDERSTANDING STRATEGY
 THE CONCEPT OF STRATEGY
 The term ‘strategy’ is derived from a Greek word
strategos, which means generalship- the actual
direction of military force.
 Literally, the word strategy means the art of general.
 In business terms strategy can mean a number of
things. A strategy could be:
 A plan or a course of action or a set of decision rules
 The pattern of organization's activities which are derived
from the policies, objectives and goals
 Pursuing those activities which move an organization
from its current position to a desired future state
 Concerned with resources necessary for implementing a
plan
 actual coordination of a firm’s goals and actions

3. UNDERSTANDING STRATEGY
 In simple terms, a strategy is the means to
achieve objectives.
 Strategy refers to the actions taken by a manager to ensure
that the organization is better off than its competitors or is able
to fend off competitive actions from competitors.

4. NATURE, SCOPE & IMPORTANCE OF STRATEGY
 Most significant concepts to have emerged in the subject of management
studies in the recent past.
 Critical input to organizational success
 A handy tool to deal with the uncertainties that organizations face
 Helps to reduce the ambiguity
 Provides a solid foundation as a theory to conduct business
 A convenient way to structure the many variables that operate in the
organizational context
 Aids thinkers and practitioners in formulating their thoughts in an ordered
manner and to apply them in practice

5. UNDERSTANDING STRATEGIC MANAGEMENT/ BUSINESS
POLICY
 Strategic Management means
 drafting,
 implementing and
 evaluating cross functional decisions
 that will enable an organization to achieve its
long term objectives.

6. DEFINITION OF STRATEGIC MANAGEMENT/ BUSINESS
POLICY
 According to Dr. A Kazmi, strategic
management is defined as “the dynamic
process of formulation, implementation,
evaluation and control of strategies to realize
organization's strategic intent.”

7. NATURE, SCOPE & IMPORTANCE OF STRATEGIC
MANAGEMENT
 Strategic management is a dynamic process
 It not a one time, static process.
 It is a continual and evolving process
 Managers can perform these activities in any
order contingent upon the situation they face
at a particular time.

8. STRATEGIC DECISION- MAKING
 The primary task of the senior
management
 The process of strategic decision making:
 Objectives to be achieved are determined
 Alternative ways of achieveing the objectives
are identified
 Each alternative is evaluated in terms of its
objective- achieving ability
 The best alternative is chosen
 The end result is the decision or a set of
decisions to be implemented.

9. PROBLEMS IN STRATEGIC DECISION- MAKING
 It cannot be analyzed and explained easily
 Decision makers are unable to describe the exact
manner in which strategic decisions are made
 Problems related to objective- setting
 Identification of all possible alternatives is a difficult
task
 How to test the objective- achieving ability of each
alternative is easy said than done
 Choosing the best alternative is a difficult task
 Strategic tasks are complex and varied
These problems are faced by all managers

10. ISSUES IN STRATEGIC DECISION- MAKING
1. Criteria for decision- making: objectives serve as criteria for decision-
making. The other three criteria for decision making are maximization,
satisficing and incrementalism.
2. Rationality in decision- making- Rationality means exercising a choice
from among alternative courses of action in such a way that it leads to
the achievement of objectives in the best possible manner.
3. Creativity in decision- making- to be creative, a decision must be
original and different. A creative strategic decision making process may
considerably affect the search for alternatives where novel and untried
means may be looked for and adopted to achieve objectives in an
exceptional manner.

11. ISSUES IN STRATEGIC DECISION- MAKING
4. Variability in decision- making- it is a common observation that, given a
similar set of situations, two decision makers may reach at totally
different conclusions. Every situation is unique and there are no set
formulas that can be applied in strategic decision- making.
5. Person- related factors in decision- making- age, education,
intelligence, personal values, cognitive styles, risk taking ability,
creativity play a critical role in strategic decision- making.
6. Individual vs group decision- making- person- related factors lead to
differences among decision- makers. These differences matter in
strategic decision- making. Individuals as chief executives or
entrepreneurs play the most important role as strategic decision-
makers. But as the organisation grows bigger and complex, individuals
come together in groups as decision makers.

12. Establishment of
strategic intent
Formulation of
strategies
Implementation of
strategies
Strategic
evaluation
THE STRATEGIC MANAGEMENT
PROCESS

13. THE STRATEGIC MANAGEMENT PROCESS
1. Establishing the strategic intent: strategic intent is the hierarchy of
objectives that an organisation sets for itself. Within this, there are vision,
mission, business definition and objectives.
2. Formulation of strategies: concerned with devising of a strategy or a few
strategies. This phase is also called strategic planning. This is an analytical
phase in which strategists think, analyze and plan strategies.
3. Implementation of strategies: it is termed as “putting into action” phase. The
formulated strategies are implemented through a series of administrative
and managerial actions.
4. Strategic evaluation: it involves assessing how appropriately the strategies
were formulated and how effectively they were implemented. Depending on
the outcome of assessment, actions could be taken ranging from fine-
tuning implementation to drastic reformulation of strategies.

14. MODEL OF STRATEGIC
MANAGEMENT PROCESS
Strategic Intent
vision
mission
Business Definition
Business Model
Objectives
Strategy Formulation
•Environmental Appraisal
•Organizational Appraisal
SWOT Analysis
Corporate Level Strategies
Business Level Strategies
Strategic analysis & choice
Strategic Plan
Strategy
Implementation
Project
Procedural
Resource
allocation
Structural
Behavioral &
operational
Strategic
Evaluation
Strategic Control

15. ELEMENTS IN STRATEGIC MANAGEMENT PROCESS
 Establishing strategic intent
 Creating & communicating vision
 Designing a mission statement
 Defining the business
 Adopting the business model
 Setting objectives
 Formulating strategies
 Performing environmental appraisal
 Doing organisational appraisal
 Formulating corporate- level strategies
 Formulating business level strategies
 Undertaking strategic analysis
 Exercising strategic choice
 Preparing strategic plan

16. ELEMENTS IN STRATEGIC MANAGEMENT PROCESS
 Implementation of Strategies
 Activating strategies
 Designing structures, systems and
processes
 Managing behavioral implementation
 Managing functional implementation
 Operationalising strategies
 Performing strategic evaluation and
control
 Performing strategic evaluation
 Exercising strategic control
 Reformulating strategies

17. LEVELS AT WHICH STRATEGY OPERATES

18. DIFFERENT LEVELS OF STRATEGY
Corporate
office
SBU A SBU B
Finance Marketing Operations HRM Information
SBU C
LEVELS OF MANAGEMENT LEVELS OF STRATEGY
CORPORATE LEVEL
CORPORATE
SBU
FUNCTIONAL
BUSINESS
LEVEL
FUNCTIONAL
LEVEL

19. CORPORATE- LEVEL STRATEGY
 Occupies the highest level of strategic
decision- making and covers actions dealing
with the objective of the firm, acquisition &
allocation of resources and coordination of
strategies of various SBUs* for optimal
performance.
 Plan of action covering the various functions
that are performed by different SBUs.
 Such decisions are made by top
management of the organization.

20. STRATEGIC BUSINESS UNIT
 According to Sharplin an SBU is, “any part of a business
organisation which is treated separately for strategic
management purpose.”
 Many big companies, being under the same top
management, are working in different business lines with
regard to either products/ services, markets or technology.
 For such companies, a single strategy in neither adequate
nor appropriate.
 Different units are segregated where each unit is performing
a common set of activities.
 These divisions may be called profit centres or strategic
business units (SBUs).

21. STRATEGIC BUSINESS UNIT
 Generally, SBUs are involved in a single line of
business.
 The different levels of strategy could be at the
corporate level, the SBU level and the at the
functional level.

22. SBU LEVEL STRATEGY
 Each SBU sets it own strategies to make the
best use of its resources (its competitive
advantages) given the environment it faces.
 At such a level, strategy is a comprehensive
plan providing objectives for SBUs, allocation
of resources among functional areas and
coordination between them for making
optimal contribution to the achievement of
corporate- level objectives.

23. FUNCTIONAL STRATEGY
 Relatively restricted plan, providing objectives for a specific
function.
 Relates to a single functional operation & the activities involved
therein.
 Decisions at this level within the organisation are often described
as tactical.
 Such decisions are guided and constrained by some overall
strategic considerations.
 It deals with relatively restricted plan providing objectives for
specific function, allocation of resources among different
operations within tat functional area and coordination between
them for optimal contribution to the achievement of the SBU and
corporate- level objectives.

24. CHARACTERISTICS OF STRATEGIC DECISIONS AT
DIFFERENT LEVELS
DIMENSION LEVEL OF STRATEGY
CORPORATE BUSINESS FUNCTIONAL
Type of decision Conceptual Mixed Operational
Impact Critical Major minor
Risk involved Very high Medium Low
Profit potential High Medium Low
Time horizon Long range Medium range Short range
Flexibility High Medium Low

25. ROLE OF STRATEGISTS
 Strategists are the individuals who are
involved in the strategic management
process. Several levels of management may
be involved in strategic decision making.
However, the people responsible for major
strategic decisions are the board of director,
president, the chief executive officer, the
chief operating officer, and the division
managers.

26. ROLE OF STRATEGISTS
 Strategists are individuals or groups who
are primarily involved in the formulation,
implementation and evaluation of
strategy. There are various kinds of
strategists like managers, board of
directors, chief executive officers,
entrepreneurs, senior management,
SBU-level executives, corporate planning
staff, consultants, middle level managers,
executive assistants.

27. ROLE OF STRATEGISTS
 They are responsible for governance of an organization, technology
collaboration, new product development and senior management
appointments.
 They guide the senior management in setting and accomplishing objectives,
review and evaluate organization performance.
 The chief executive officer is answerable for all aspects of strategic
management from the formulation to the evaluation of strategy.
 They play a major role in strategic decision making and provide the direction
for the organization so that it can achieve its purpose.
 They assist in setting the mission of the organization.
 They are responsible for deciding the objectives, formulating and
implementing the strategy.


28. ROLE OF STRATEGISTS
 Entrepreneurs are strategist who starts a new business, initiator, searches
for change, respond to it and exploits its as an opportunity.
 By their nature, entrepreneurs play a proactive role. They are implementers
and evaluators of strategies.
 A strategist must be a soothsayer or seer who helps his team to imagine the
future world within which they will be competing.
 They begin by reading the palm of the organisation and also identify its
competencies and unique strengths.
 They then use imaginative thinking to help the team to visualise the future
within which the business will operate.
 A strategist should also be a sculptor like an artist ‘who carves a form’ out of
raw materials.

29. ROLE OF STRATEGISTS
 The strategist changes systems, structures, rewards, alliances, products and
services to ensure that everything supports the organisational purpose.
 They help individual employees to discover their inimitable personal
purpose.
 Then they show them how to channel their energy and talent towards living
their purpose, whilst acting in ways that support the company’s goal.


30. THANK YOU