3. Strategic Management
1. Introduction &Concept of Strategy
2. Need of Strategy
3. Dimensions of Strategy
4. Levels of Strategy
5. Strategic Management
6. Strategic Management Process
7. Benefits of Strategic Planning
6. What does Strategy mean?
“ art of general”
- form Fr. Strategie, from Gk. Strategia “ office or
command of a general”, from strategos “general,”
from stratos “multitude, army, expedition”
7. Introduction &Concept of
Strategy is an action that managers take to attain one
or more of the organization’s goals.
Strategy is a well defined roadmap of an
organization. It defines the overall mission, vision
and direction of an organization.
A strategy is all about integrating organizational
activities and utilizing and allocating the scarce
resources within the organizational environment so
as to meet the present objectives.
8. While planning a strategy it is essential to
consider that decisions are not taken in a
vacuum and that any act taken by a firm is
likely to be met by a reaction from those
affected, competitors, customers, employees
9. What does Strategy mean today?
- A plan, method, or series of maneuvers
stratagems for obtaining a specific goal or
10. Need of Strategy
1. Gives Direction
2. Facilitate Overall Effectiveness
3. Co-ordinate Activities
4. Facilitate optimal Resource Allocation
5. Helps in comparing Courses of Action
6. Programme all organizational Activities
15. CORPORATE LEVEL STRATEGY
Top Management’s overall plan
for the entire organization and
Corporate level strategy
occupies the heights level of
16. Forms of Corporate Level Strategy
1. Growth:- Expansion into new products and
2. Stability:- Maintenance of the status of the
3. Retrenchment/Renewal:- Redirection of the
firm into new markets.
17. Corporate Level Strategy
1. Growth Strategy
-Seeking to increase the
organization’s business by
expansion into new products
18. Two types of Growth Strategies:
The company concentrates more resources on the
product line to increase its participation in the value
chain of the product.The two main types of
Concentration strategies are:-
Types of Growth Strategies
19. Vertical Integration:
1. Backward vertical Integration
2. ForwardVertical Integration
Diversification: A company is diversified when it is
in two or more lines of business operating in distinct
and diverse market environments.
Types of Growth
20. Types of Growth Strategies
1. Related Diversification:
Some similar factors can be used by
diversification. For e.g. A tea company starts
producing other food products to take advantage of
its distribution network etc.
2. Unrelated Diversification:
Company enters entirely different product-market
21. Why to Pursue Growth?
1. Growth is necessary for survival in future
2. Growth offers large scale of operation
3. Growth strategy is taken up because
motivation to do so
4. Intangible advantage of growth
22. Corporate Level Strategy
2. Stability Strategy:
In simple words, stability strategy
refers to the company’s policy of
continuing the same business
and with the same objectives.
23. WHY TO PURSUE THE STABILLITY
1. It is less risky
2. The environmental faced is relatively stable.
3. Expansion may be perceived as being threatening.
25. Corporate Level Strategy
are pursued when a company’s
product lines are performing poorly
as a result of finding itself in a weak
competitive position or a general
decline in industry or markets.
27. Business Level Strategy
A strategy that seeks to determine
how an organization should compete
in each of its SBUs (strategic business
At Business-level ALLOCATION
of re- sources among Functional-level
an COORDINATE with the Corporate
level to the ACHIEVEMENT of the
Corporate level OBJECTIVES.
28. Business Level Strategy
1. Cost leadership: Attaining, and then using the
lowest total cost basis as a competitive advantage.
2. Differentiation: Using product features or services
to distinguish the firm’s offerings from its
3. Market focus: Concentrating competitively on a
specific market segment.
29. Functional Level Strategy
Focus is on improving the effectiveness of
operations within a company.
Which is done by:
C. Materials management
D. Research and development
E. Human resources
31. Strategic Management
Strategic management is an art and science of
formulating, implementing and evaluating cross
functional decisions that enable an organization to
achieve its objectives. - Fred R. David
33. Step1: Strategic Intent
Vision- Vision is the statement that expresses organization’s
ultimate long-run objectives. E.g- Microsoft- ’A computer
software on every desk and in every home’.
Mission- A Mission Statement defines the company’s
business, its objectives and its approach to reach those
objectives. E.g- Microsoft- ‘Empower every person and
every organization on the planet to achieve more’.
Objectives- Objectives state specifically how the goals shall
be achieved. Following are the areas for setting objectives-
profit objective, marketing objective, production objective,
34. Step2: Strategy Formulation
Strategy formulation refers to the process of choosing the most
appropriate course of action for the realization of organizational
goals and objectives.
1. Environmental Appraisal- It is dynamic and consists of
External & Internal Environment .
2. 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
36. Step4: Strategy Evaluation & Control
Strategy evaluation- It is the process in which corporate
activities and performance results are monitored so that actual
performance can be compared with desired performance.
Strategic control- In this step, organizations determine what to
control i.e., which objectives the organization hopes to
accomplish, set control standards, & measure performance,
37. Benefits of Strategic Planning
1) Framework for Developing the operating Budget
2) Management Development Tool
3) Mechanism to Force Managers to Think Long-
4) Frame for Short-Run Actions
39. Origin of 7s Framework
It was first mentioned in “The Art of Japanese
Management” by Richard Pascale & Anthony Athos
They have been investigating how Japanese
Industry has been so successful.
At around the same time that Tom Peters & Robert
Waterman were exploring what made a company
The 7s model was born at a meeting of these four
40. What is it?
Its a management model that describes 7 factors to
organize a company in an holistic & effective way.
Managers should take into account all 7 of these
factors, to be sure of successful implementation of a
41. The 7s Framework
The model is most often used as a tool to assess and monitor
changes in the internal situation of an organization.
42. Why shared values in the middle of the
Placing Shared Values in the middle of the model
emphasizes that these values are central to the
development of all the other critical elements.
The company's structure, strategy, systems, style,
staff and skills all stem from why the organization
was originally created, and what it stands for.
43. The 7s Elements
The seven interdependent factors are categorized as
either "hard" or "soft" elements.
Hard" elements are easier to define or identify.
Management can directly influence them.
44. Soft Elements
"Soft" elements, on the other hand, can be more
difficult to describe.
These soft elements are as important as the hard
elements if the organization is going to be successful.
These are: Shared Values, Skills, Style & Staff.
45. 7s - 1 - Strategy
The plan devised to maintain and build competitive
Advantage over the competition.
7s - 2 - Structure
The way the organization is structured and who reports to
A successful organization may make temporary structural
changes to cope with specific strategic tasks without abandoning
basic structural divisions throughout the organization
7s - 3 - Systems
The daily activities and procedures that staff members engage
in to get the job done.
46. 7s - 4 - Shared Values
Called "super ordinate goals" when the model was first
These are the core values of the company that are
evidenced in the corporate culture and the general work
7s - 5 - Style
The style of leadership adopted in the Organization.
7s - 6 - Staff
The employees and their general capabilities.
Successful organizations view people as resources who should
be carefully nurtured, developed, guarded, and allocated.
47. 7s - 7 - Skill
The actual skills and competencies of the
employees working for the company.
Refer to those activities organizations do best and for
which they are known.
Eg. Du Pont is known for research. P&G for product
management. ITT for financial controls. HP for
innovation and quality.
48. Advantage of 7’s Model
Determines how best to implement a
Guides organizational change.
Combines rational and hard elements
with emotional and soft elements.
Managers must act on all Ss in parallel and all Ss
50. STRATEGIC VISION
Your VISION defines how you want your business to
be seen externally — by clients, suppliers, investors
and even competitors. It's what you constantly strive to
attain, and it becomes your reason for being.
51. Strategic Vision
KOTTER description of something (an organization,
corporate culture, a business, a technology, an
activity) in the future. The definition itself is
comprehensive and states clearly the futuristic
DHL :- Customers trust DHL as the preferred global
express and logistics partner, leading the industry in
terms of quality, profitability and market share.
McDonald:-McDonald's vision is to be the world's
best quick service restaurant experience. Being the
best means providing outstanding quality, service,
cleanliness, and value, so that we make every
customer in every restaurant smile.
54. Corporate Mission
It tells who we are and what we do as well as what
we’d like to become.
E.g- Microsoft- ‘Empower every person and every
organization on the planet to achieve more’.
Mission is a statement which defines the role that
an organization plays in a society.
57. Mission Statement
Your MISSION is what you intend to become or
accomplish. It should be challenging but achievable.
A well-written mission statement demonstrates that
you understand your business, have defined your
unique focus, and can articulate your objectives
concisely to yourself and others.
1. Mary Kay Cosmetics "To give unlimited
opportunity to women.“
2. Google's mission is “to organize the world's
information and make it universally accessible
Objectives represent a managerial commitment to
achieve specified results in a specified period, of
They clearly spell out the quantity and quality of
performance to be achieved, the time period,
the process and the person who is responsible for
the achievement of the objectives.
61. Characteristics of good Objective
1. Objectives should be understandable.
2. Objectives should be Concrete &Specific.
3. Objectives should be related to time frame.
4. Objectives should be Measurable & Controllable.
5. Objectives should be Challenging.
6. Objectives should Correlate with each other.
7. Objectives should be Set within Constraints.
8. Objectives have hierarchy.
9. Social sanction
10. Organizational objectives should can be changed.
Goal is defined as an “intermediate result to be
achieved by a certain time as part of the grand
plan . A plan can, therefore have many goals.”
Goals should be measurable, quantitative,
challenging, realistic, consistent and prioritized.
1. Issues of goal :Short-term goals and objectives
should be left to lower level managers to identify, plan and
achieve issues like lowering of cost and improving quality
should be included in goals of middle level managers.
2. Should be well constructed, realistic and
challenging: Challenging goals motivates managers
to be innovative, creative and ambitious in
improving operations, marketing, sales, etc.
3. Specific Time Period: In which a given goal is to be
65. Difference b/w goal and objectives
Basics Goals Objectives
1.Meaning The purpose toward which an
endeavor is directed.
Something that one's efforts
or actions are intended to
attain or accomplish;
2.Example I want to achieve success in the
field of genetic research and do
what no one has ever done.
I want to complete this thesis
on genetic research by the end
of this month.
3.Action Generic action, or better
still, an outcome towards
which we strive.
Specific action - the
attainment of the
4.Measure Goals may not be strictly
measurable or tangible Must be measurable and
67. Social Responsibility
Social Responsibility of business simply means
Social commitment of business towards different
Social responsibility is the obligation of the
decision makers to take actions which protect and
improve the welfare of the society as a whole along
with their own interests. - Howard R. Bowen
68. Need for the Social Responsibility of
Impact of its own Operations.
Long life of business
Fair Pricing & Market dynamics
Demand & Supply of goods & services
Taxation & compliances towards Government
Financial Support to Social & Cultural
Support to Social causes like Poverty,
Education, HealthCare, Environment
Renewable Energy etc.
69. Social Responsibility towards different
71. Responsibility towards Stakeholders/
Return on Investment
Full and Factual Information
Proper conduct of Shareholders Meetings
Good Public Image
Manipulation of Share Prices
Maintain Solvency and Prestige
72. Responsibility towards Employees/Workers
Harmonious Employer-Employee Relation
Job Security, Promotion & career opportunity
Division of Labor & recognition to trade unions
Good Working Conditions
Protect Health & Provide Safety Measures
Fair Remuneration and allowances
Proper personal policies, education & training
Code of conduct & proper grievance procedures
Workers Participation in Management
Opportunities for development
73. Responsibility towards
Supply as per demand
Charging Fair price
Honest Advertisement/ Advertisement ethics
After Sales Service
Reply to Complaints/ Customer Service Cell
Good Quality Products & Services
Avoid Monopolistic Competition
Avoid Unethical Trade Practices
74. Responsibility towards
1. Maintaining a healthy and cooperative in-ter
business relationship between different
2. Mgt. Should provide accurate and relevant
information to. creditors and suppliers.
1. Payment of price of materials, interest on
borrowings, other charges should be prompt
75. Responsibility towards Government
Observance of Law and Order
Payment of Taxes
Avoid Unethical Practices
Advice to Government
Help in Emergencies
Respecting Rules & Regulations
Implementation of Socio-economic programmes
76. Responsibility towards
1. To help the weaker and backward sections of the
2. To preserve and promote social and cultural values
3. To generate employment
4. To protect the environment to conserve natural
resources and wildlife
5. To promote sports and culture
6. To provide assistance in the field of developmental
research on education, medical science, technology
78. Arguments for Social Responsibility
1. Changed Public Expectations of Business.
2. Better environment for Business.
3. Public Image
4. Avoidance of Government Regulation.
5. Balance of Responsibility with Power.
6. Business has Resources
7. Let business Try
8. Moral Responsibility
9. Duty of Gratitude
10. Citizenship Argument
11. Prevention is better than cure
79. Arguments against Social
1. Profit Maximization
2. Society has to Pay Cost
3. Lack of Social Skills
4. Business has enough power
5. Social overhead cost
6. Lack of Accountability
7. Lack of broad support
8. Less efficient use of resources
9. Lack of Social skills
81. Business Ethics
Ethics is a set of rules that define right and wrong
Business ethics is the application of general ethical ideas
to business. -Frederick & Lawrence
7 Principles of Admirable Business Ethics:
a. Be trustful
b. Keep an open mind
c. Meet obligations
d. Have clear documents
e. Be respectful
f. Become Community Involved
82. Importance of Business Ethics
1. High ethical performance also protects the
individuals who work in business.
2. Promoting the ethical behavior is to protect
business from abuse by unethical employees or
A social audit is a way of measuring, understanding,
reporting and ultimately improving an organization’s
social ðical performance.
A social audit helps to narrow gaps between
vision/goal & reality, between efficiency&
84. Characteristics of SocialAudit
1. Wide coverage
2. Measure social performance
3. Systematic evaluation
4. Supplement to Social responsibility
5. Acts as a guide
6. Subjective in nature
7. Voluntary in character