Covering Strategic Management Concepts

2. CONTENTS
What is Strategy?
Features of Strategy
Levels of Strategy- corporate-level, business- level and
functional-level.
What is Strategic Management?
Process of Strategic Management

3. WHAT IS STRATEGY?
Strategy is a tactical course of action which is designed to achieve long
term objectives. It is an art and science of planning and marshalling
resources for their most efficient and effective use in a changing environment.
Strategy of a business enterprise consists of what management decides
about the future direction and scope of the business. It entails managerial
choice among alternative action programmes, competitive moves and
different business approaches to achieve enterprise objectives.
Strategy once formulated has long term implications. It is framed by top
management in an organization. In short, it may be called as the ‘game plan
of management’.

4. DEFINITION OF STRATEGYDefinition of Strategy
• As per Glueck,
Strategy is unified, comprehensive and integrated plan
relating the strategic advantages of the firm to the
challenges of the environment. It is designed to ensure that
the basic objectives of the enterprise are achieved.
• As per Alfred D. Chandler,
Strategy is “The determination of basic long-term goals and
objectives of an enterprise and the adoption of the courses
of action and the allocation of resources necessary for
carrying out these goals.”

5. FEATURES OF STRATEGY
• Top management responsibility
• Allocation of large amount of resources
• Impact on long term prosperity of the firm
• Future oriented
• Multi-functional or multi-business
consequences
• Consideration of factors in the external
environment

6. LEVELS OF STRATEGYLevels of Strategy

7. CORPORATE LEVEL STRATEGY
At this level, strategic decisions relate to organization-wide policies
and are taken care by top-level management (BOD) with a vision of
determining ‘Where the company wants to be?’
It has two main aspects- Formulation of Strategy (strategic planning)
and Strategy Implementation
The nature of strategy at this level tend to be value-oriented,
conceptual and than other levels.
There is also greater risk, cost and profit potential as well as greater
need of flexibility associated with this level.
Major financial policy decisions involving acquisition, diversification
and structural redesigning belong to this level.

8. BUSINESS LEVEL STRATEGY
Business-level strategy is more likely related to a unit within the
whole. It is concerned with competition in a market.
The concerns are about what products or services should be
developed and offered to which markets in order to meet customer
needs and organizational objectives.
At this level, multifunctional strategies developed at corporate level
are formulated and implemented for specific product market in which
the business operates. Thus, managers at this level translate general
directions and intent into concrete functional objectives.
Decisions at this level include policies involving new product
development, marketing mix, research & development, personnel,
etc.

9. FUNCTIONAL / OPERATION LEVEL STRATEGY
Functional strategy involves decision-making with respect to specific
functional areas- production, marketing, personnel, finance etc.
While corporate and business level strategies are concerned with “Doing
the right things”, functional strategies stress on “Doing things right”.
Operating level strategy is concerned with strategic approaches for
managing frontline operating units(like plants, sales, etc) and for
handling day to day tasks of strategic significance(like advertising
campaign, purchasing materials, inventory control, maintenance, etc.).
Thus, it focuses on how the different functions of the enterprise
contribute to the other levels of strategy.
Thus, functional level strategic management is the management of
relatively narrow areas of activity, which are of vital, pervasive or
continuing importance to the total organization.

10. STRATEGIC MANAGEMENT

11. STRATEGIC MANAGEMENT
Strategic management is a set of management decisions and actions
that determines the long-run performance of a corporation. It includes
environmental scanning, strategy formulation, strategy implementation
and evaluation and control to achieve the objectives of an organization.
The study of strategic management emphasizes the monitoring and
evaluating of external opportunities and threats in light of a
corporation’s strengths and weaknesses.
As per Fred R. David, strategic management is an art and science of
formulating, implementing and evaluating cross functional decisions
that enable an organization to achieve its objectives.
As per Channon, strategic management is defined as that set of
decisions and actions that result in formulating of strategy an its
implementation to achieve the objectives of the corporation.

12. CHARACTERISTICS
Conscious Process
Strategies is a product of the developed conscience and intellect that we humans
proudly possess and employ. Strategic management implies the usage of the brain
and the heart and is not a routine ever continuing process. It requires great skill and
experience to be carried out effectively and requires full application of one’s
conscience.
Requires Foresight
The future is uncertain. We cannot predict what will happen. However on the basis of
the information that is available to us we will be able to presume certain things about
the future.
Drives Innovation
The development of strategy is not a simple process and requires making the best out
of often very restrictive situations. This drives innovations and allows managers to
approach problems from different angles and solve problems more efficiently. After all
necessity is the mother of all inventions.

13. Dependent on Personal Qualities
The above two considerations make it amply clear that Strategic Management is
heavily dependent on the personal qualities of the managers like skills and
experience
Goal Oriented Process
The process of Strategic Management is a goal oriented process. The process is done
with the intention and goal of analyzing the various elements through SWOT analysis
Facilitates decision making
Strategic Management plays a integral role in making important decisions. Whenever a
manager has to make a decision he has to think about the bearing of such a decision on
the overall strategy and the business’ trajectory. Thus the strategies developed acts as a
guide to make efficient and accurate decisions.

14. Primary Process
Strategic Management is the primary process in any business. The strategies that the
business has to apply in its activities is developed at the initial stage itself and only after
the creation of the strategy that other processes commence by making the strategy as
its basis.
Pervasive Process
Strategic Management is a pervasive process seen in all levels of the business. The
core strategies are formulated for the entire business by the top level management and
strategies to efficiently achieve the overall goal so laid down by the top level
management is developed through the various lower business units.
Allows for Risk Management
Risk management can be considered as a subset or a specific form of strategic
management. Risk is the probability of a future loss and risk management involves
formulating various strategies to combat the risks making risk management a form or
variety of strategic management. Strategic management in this form allows for
identifying and eliminating the risks posed by various hazards to the business.

15. Others
• Strategic Management is the process of managing the total organization and
developing distinctive competencies.
• It is primary concerned with relating the organization with environment,
formulating strategies to adapt to that environment.
• It is a distinctive management process in which environment, market
conditions and activities of competitors are considered while choosing a
strategy.
• It is based on long term mission of the organization.
• It provides direction to others.
• It embodies all general management principles and practices.
• It is a process of environmental analysis, strategic formulation,
implementation, evaluation and control.

16. NEED AND IMPORTANCE
Planning: This is an essential management tool for any company. The main task in the
strategic planning process is predicting future trends that will help the business in
building In order to make this happen, strategic planning tools need to be used instead
of simple planning processes.
Forward thinking: Through a well thought out strategy, you will be able to draw up
clear, long term goals. These goals are important so that you have a distinct idea of
how to move forward which can prove beneficial for an organisation’s overall growth.
Resource allocation: The tough aspect of strategy management is that you are
pushed to make choices under pressure, often with limited resources. Strategy
management teaches you to ensure the company’s resources, in terms of products and
services, are used wisely and vested in the most promising opportunities. This is why a
good strategy manager will tell you that less is more, as long as it is the best.

17. Strengths and weaknesses: No one knows a business better than its
owner, who will be able to recognise the strengths and weaknesses of
their company. However, just being aware of the shortcomings and strong
points of a business is not enough. Strategic planning is employed to
bridge the gap between the capability void and the strength of a company.
Environmental impact: When running a business, you must know how
your business impacts the environment and vice-versa. Strategy
management involves being aware of the future potential shifts in the
market that may affect the business and its environmental impacts.
Courses in strategic business management

18. Increase in the Efficiency of the Employees: The officers and
experienced employees of all the three levels of re-engagement are
included in strategic management process. The necessary inter-process
in being done with them and for the success of strategy necessary
training is also given to them. By this there is a notable increase in
efficiency of employees and they get inspiration to work more.
Increase in Profitability: The profitability of a unit depends upon-the maximum
use of limited resources. Through strategically management process, the
managers cannot only make the maximum use of financial resources but also
they can use maximum man power to increase the overall productivity and
profitability of the unit. Importance of Strategic Management

19. Reduction in Fixed and Flexible Expense: The capital invested in the fixed
assets is a fixed capital. Instead of purchasing the fixed assets, the managers
may buy such assets on rent to decrease the fixed capital investment. In the
same way, the flexible expenses can also be reduced through collection
arrangement. Making changes in packing, of making changes in full, by
acceptance, the strategy of machinery resources in management etc.
Motivation to Group Activity: By taking strategic decisions through the group,
integration between group members increases on accepting various optional
strategies which result in to co-operation and unity. Not only that, but the
managers can also get the advantage of special strength of group members.
.

20. Reduction in cost of capital: It is a fact that the unit which is successful
in raising the capital of the lowest possible cost is almost eligible to face
the competition right from the beginning. After getting the estimate of
capital requirement the managers select the sources of capital from where
they can acquire the capital in a strategically manner. The strategic
management has been proved to be very useful to raise the estimated
capital at lowest possible rate, simple conditions for mortgage, return of
borrowed capital and conversion of borrowed capital into owner’s capital
Acceptance of Organizational Changes: Normally the employees do
not accept the changes made in the organization, because due to that
the change occurs in their roles also. As a result the necessity to giving
training of the new work to the employees arises. Not only that but
because of such changes many departments also have to be closed. In
these circumstances the problem of the safety of job arises. In strategic
management process the capability of employees is also considered. Not
only that, but for its development, efforts are made through training
programmed so no question arises for the employees for not accepting
the changes.

21. Increase in rate of return on investment: Due to the strategic management
there is a noble increase in the rate of return on investment made in the project.
On the basis of the information received through analysis of internal and external
environment the managers can increase the rate of return on investment by
making a maximum use of resources.
Prevention of Overlapping of Work: Due to the interaction with employees and
officers working at all the levels of the organization the question does not arise at
all for the distribution of one work to more than one employee or event he
overlapping work is also not possible. When the same activity is done by more
than one employee. At that time there is wastage of time and materials. The
problem of co-ordination also arises. With the help of strategic process, the
managers can prevent the overlapping of work.

22. Prevention of Organizational Gap: Out of the departmental activities organization if
any activity is not allotted to any employee, that activity is known as organizational
gap. If the allotment of any work is left out by mistake, then none of the employees
can be held responsible for it. In strategic management process, because of the
interacting process being done with each employee, all the employees are given
equal works and so there does not arise a questions of organizational gaps.
Increase in trading on equity: Trading on equity depends upon many factors.
Among on this, by making a maximum use of borrowed capital in a creative
manner through strategic management process, the profitability of the unit can be
increased and the equity share holders can be paid maximum dividend. If an
appropriate strategically arrangement is not made for the use of financial
resources, then its profitable use will not be successful and the interest on the
borrowed capital will also become burdensome. There is more information about
What is Risk Management in Business? Principles of Risk Management.

23. OTHER IMPORTANCE
is independent of the planning approach
is adaptable to support organizational processes
captures robust information about the strategic plan
maintains the linkages and dependencies between plan elements
provides a robust approach to managing the lifecycle
supports effective transitions between lifecycle phases
supports integrated risk management across plan elements
provides support for a dynamic planning & change management
provides monitoring and analysis of plan quality, health, and status
delivers robust information for strategic decision making
helps in getting competitive advantage
helps in innovation
Reduces risk

24. LIMITATIONS
Complex process
The strategic management includes various types of continuous process which
checks all type of major critical components. This includes the internal and
external environments, long term and short term goals, strategic control of the
company’s resources and last but not the least it also has to check the
organizational structure. This is a lengthy process because a change in one
component can affect all the factors.
Time taking process
In order to implement the strategic management, it is necessary that the top
management spends proper quality time in order to get the process right. The
managers have to spend a lot of time researching, preparing and informing the
employees about this new management. This type of long term and time-
consuming training and orientation would hamper the regular activities of the
company.

25. Tough Implementation
The experts mentioned that implementation is difficult because they have
to continuously strive to make the employees aware of the process and
benefits of this system.
Proper planning
When we say management systems then it calls for perfect planning.
This calls for proper practical planning. This is not possible by just one
person but it is a team effort. When these types of processes are to be
implemented then you need to sideline various regular decision-making
activities which would adversely affect the business in the long run.

26. Rigidity: There is a need for concept of moving balance among the
consideration
on which the strategy is based.
Inadequate Appreciation of Strategic Management: Managers are
inadequately aware about its contribution to the success & the way in which
Strategic Management (SM) can be undertaken

27. STRATEGIC
MANAGEMENT
PROCESS

29. ELABORATIVE EXPLANATION

30. STRATEGIC INTENT

31. STEP 1: STRATEGIC INTENT
Vision- Vision is the statement that expresses organization’s ultimate long-run
objectives. It is what the firm ultimately like to become. Vision once formulated is
for forever and long lasting for years to come. Vision is closely related with
strategic intent and is a forward thinking process. Eg- Microsoft- ’A computer
software on every desk and in every home’.
Mission- It tells who we are and what we do as well as what we’d like to become.
Mission of a business is the fundamental, unique purpose that sets it apart from
other firms of its kind and identifies the scope of its operations in product and
market terms. Eg- Microsoft- ‘Empower every person and every organization
on the planet to achieve more’.
Objectives- These are the end results of planned activity that state what is to be
accomplished by when and should be quantified if possible and their achievement
should result in the fulfillment of a corporation’s mission. Objectives state
specifically how the goals shall be achieved. Following are the areas for setting
objectives- profit objective, marketing objective, production objective, etc.

32. VISION
Vision statement provides direction and inspiration for organizational goal setting.
Vision is where you see your self at the end of the horizon OR milestone
therein. It is a single statement dream OR aspiration. Typically a vision has the
flavors of 'Being Most admired', 'Among the top league', 'Being known for
innovation', 'being largest and greatest' and so on.
Typically 'most profitable', 'Cheapest' etc. don’t figure in vision statement. Unlike
goals, vision is not SMART. It does not have mathematics OR timelines attached to
it.
Vision is a symbol, and a cause to which we want to bond the stakeholders,
(mostly employees and sometime share-holders). As they say, the people work
best, when they are working for a cause, than for a goal. Vision provides them that
cause.
Vision is long-term statement and typically generic & grand. Therefore a vision
statement does not change unless the company is getting into a totally different
kind of business.
Vision should never carry the 'how' part . For example ' To be the most admired
brand in Aviation Industry' is a fine vision statement, which can be spoiled by
extending it to' To be the most admired brand in the Aviation Industry by providing
world-class in-flight services'. The reason for not including 'how' is that 'how' may
keep on changing with time.

33. MISSION
Mission Statement
Mission of an organization is the purpose for which the organization is.
Mission is again a single statement, and carries the statement in verb.
Mission in one way is the road to achieve the vision. For example, for a
luxury products company, the vision could be 'To be among most
admired luxury brands in the world' and mission could be 'To add style
to the lives'

34. EXAMPLES OF VISION AND MISSION
TOYOTA
Vision
-Toyota aims to achieve long-term, stable growth economy, the local communities
it serves, and its stakeholders.
Mission
-Toyota seeks to create a more prosperous society through automotive
manufacturing.
IBM
Vision
Solutions for a small planet
Mission
At IBM, we strive to lead in the invention, development and manufacture of the
industry's most advanced information technologies, including computer systems,
software, storage systems and microelectronics.
We translate these advanced technologies into value for our customers through
our professional solutions, services and consulting businesses worldwide.

35. GOAL
A Goal is generally described as an effort directed towards an end.
The application of the term in project management is related to three
different target values such as performance, time and resources. To be
more specific, the project goal specifies the desired outcome
(performance), the specific end date (time) and the assigned amount
of resources (resources). Generally, a goal answers to “What” is the
main aim of the project and on many occasions projects may set more
than one goal.

36. OBJECTIVE
An Objective defines the tangible and measurable results of a project
that support the agreed goal and must meet the planned end time,
budget and quality restrictions. It commonly answers to “How”
something is to be done and the most effective way to set them is by
using the S.M.A.R.T. method. So, make sure to design SMART
performance objectives: Specific, Measurable, Achievable, Realistic and
Time bound.

37. THE DIFFERENCE BETWEEN GOALS AND
OBJECTIVES
Goals are broad; objectives are narrow.
Goals are general intentions; objectives are precise.
Goals are intangible; objectives are tangible.
Goals are abstract; objectives are concrete.
Goals can't be validated as is; objectives can be validated.

38. EXAMPLE

39. ETHICS
As a matter of fact it deals with certain standard of human conduct and
morals
one set of rules of morality, one code that of individual behaviour
in which the same rules apply to everyone alike.”
is the branch of philosophy which is the systematic study of selective choice,
of the standards of right and wrong

40. BUSNIESS ETHICS
• Business ethics concentrate on moral standard as they apply to business
policies, institutions and behaviour. It
is a specialised study of moral right or wrong. It is a form of applied ethics.
• Business ethics are nothing but the application of ethics in business. It
proves that business can be and have
been ethical and still make profits. Today more and more interest is being given to
the application of ethical
practices in business dealings and the ethical implications of business.

41. IMPORTANCE OF BUSINESS ETHICS
• Positive consequences: Business depends on the approval of the
society, acceptance of rules, mutual trusts and confidence. Prof. Robert Day
writes—“when ethical conduct is displayed, it puts some kind of trust and
confidence in relationship.” So business with ethics always leads to positive
consequences.
• Goodwill of the business and businessman: Good ethical behaviour
will increase the goodwill of both business as well as the businessman. Strong
public image is a symptom of success in the long run. On the other hand,
once an organisation’s image is tarnished it would have direct consequences on
sales, profits, morale or dayto-day running of the business.
• Protection— Both Sides: If ethical implications are there in
organisation; businessmen act more sincerely and the level of commitment
would be higher. Ethics protects people in dealing with each other. Prof. Robert
Daywrites “Good ethics is sound business insurance.”

42. • Self-satisfaction: In the dynamic world, businessmen are seeking self
satisfaction, mental relief, free from anxiety, release tension. To attain the inner
satisfaction certain people consider only good ethics can promote good business.As, a
businessman is first a member of the society than a businessman,so some do not
implement a decision which stands on unethical ground because it wouldn’t provide the
satisfaction to their sub-conscious mind.
• Encourage others: When a few people start following ethics side by side to
profit making, they encourage, motivate others and set examples for them. As Prof.
Learned and Associates writes— “Businessman who follows the ethical principles in
the conduct of business, motivates others also, to follow the same principles”.
Business Ethics
• Success and development: Ethical conduct of business leads to development
and series of success. Learned writes— ‘A sincere person who does hard work
becomes ethical and always succeed in his efforts but an
unethical person cannot’.
• New management: In the era of global economy, new principles are required
in new management. Prof. ‘Day’ writes that management cannot become a profession
so far as it does not follow good ethics. An important feature of a profession is that it
has a laid down code of conduct which remains on all the principles of “service to
humanity. So to run the good business in modern scenario you have to develop and
follow ethics

57. STRATEGY FORMULATION
Strategy formulation refers to the process of choosing the most appropriate
course of action for the realization of organizational goals and objectives
and thereby achieving the organizational vision. For choosing most
appropriate course of action, appraisal of organization and environmental is
done with the help of SWOT analysis.
Environmental Appraisal- The environment of any organization is "the aggregate
of all conditions, events and influences that surround and affect it". It is
dynamic and consists of External & Internal Environment . The external
environment includes all the factors outside the organization which provide
opportunities or pose threats to the organization. The internal environment
refers to all the factors within an organization which impart strengths or
cause weaknesses of a strategic nature.
Organizational Appraisal- It is the process of observing an organizational
internal environment to identify the strengths and weaknesses that may
influence the organization's ability to achieve goals. The analysis of
corporate capabilities and weaknesses becomes a pre-requisite for
successful formulation and reformulation of corporate strategies. This
analysis can be done at various levels: functional, divisional and corporate.

73. STRATEGY IMPLEMENTATION
Strategy implementation is the action stage of strategic management. It refers to
decisions that are made to install new strategy or reinforce existing strategy.
Designing structure, process & system- Strategy implementation includes the
making of decisions with regard to organizational structure, developing
budgets, programs and procedures in order to accomplish certain activities.
Functional Implementation- Functional implementation is carried out through
functional plan and policies in
five different areas- marketing, finance, operation, personnel and Information
management.
Behavioral Implementation- It denotes mobilizing employees and managers to
put and formulate strategies into action and require personal discipline,
commitment and sacrifice. It depends upon manager’s ability to motivate
employees.
Operationalizing strategy- It includes establishing annual objectives, devising
policies, and allocating resources.

74. STRATEGY EVALUATION & CONTROL
Strategy evaluation- It is the primary means to know when and why
particular strategies are not working well. It is the process in which
corporate activities and performance results are monitored so that
actual performance can be compared with desired performance. Thus
strategic evaluation activities include reviewing external and internal
factors that are the basis for current strategies.
Strategic control- In this step, organizations Determine what to control i.e.,
which objectives the organization hopes to accomplish, set control
standards, measure performance, Compare the actual with the
standard, determine the reasons for the deviations and finally taking
corrective actions and review the policies and activities if needed.