1. PRINCIPLES OF MANAGEMENT
UNIT-II
PLANNING
STRATEGIC MANAGEMENT
Presented by:
KAVIYA.T
15102032
III-EEE-A

2. Content
 Strategy
 Strategy in planning
 process
 Characteristics of strategy
 Strategic Formulation Process
 Stages in strategy
 Types of strategy
 Implementing strategy

3. Strategy
 According to Koontz, "Strategies must often denote a
general programme of action and deployment of
emphasis and resources to attain comprehensive
objectives".
 Strategies are plans made in the light of the plans of the
competitors because a modern business institution
operates in a competitive environment.

4. Perfect strategy
 A perfect strategy can be built only on perfect
knowledge of the plans of others in the industry. This
may be done by the management of a firm putting itself
in the place of a rival firm and trying to estimate their
plans.

5. Strategy in planning
 When an organization has a long-term purpose,
articulated in clear goals and objectives, and these goals
and objectives can be rolled up into a coherent plan of
action, then we would say that the organization has a
strategy.
 when correctly formulated and communicated, strategy
provides leaders and employees with a clear set of
guidelines for their daily actions.

6. Contd…
 strategy is so critical to the principles of management
we are learning about.
 strategy is about making choices
like,
What do I do today?
What shouldn’t I be doing?
What should my organization be doing?
What should it stop doing?

7. Mission and Vision
External
audit
Long-term
objective
Internal
audit
Generate
evaluate
and select
strategy
Implement
strategy
mgt issues
Implement
strategies
marketing,
Finance
Measure&
evaluate
performance
Strategic management process

8. Characteristics of strategy
 It is the right combination of different factors.
 It relates the business organization to the environment.
 It is an action to meet a particular challenge, to solve
particular problems or to attain desired objectives.
 Strategy is a means to an end and not an end in itself.
 It is formulated at the top management level.
 It involves assumption of certain calculated risks.

9. Strategic formulation process
 Input to the Organization
 Industry Analysis
 Enterprise Profile
 Orientation, Values, and Vision of Executives
 Mission (Purpose), Major Objectives, and Strategic
Intent
 Present and Future External Environment

10. Contd….
 Internal Environment:
 Development of Alternative Strategies
 Evaluation and Choice of Strategies
 Medium/Short Range Planning, Implementation
through Reengineering the Organization Structure,
Leadership and Control
 Consistency Testing and Contingency Planning

11. Stages in strategic management

12. Strategic Objectives and
Analysis
 The first step is to define the vision, mission, and values
statements of the organization.
 This is done in combination with the external analysis of
the business environment (PESTEL) and internal
analysis of the organization (SWOT).
 An organization’s statements may evolve as information
is discovered that affects a company’s ability to operate
in the external environment.

13. Strategic Formulation
 Identify if the organization needs to find additional
resources and how to obtain them. Formulate targeted
plans to achieve the goals. Prioritize the tactics most
important to achieving the objectives. Continue to scan
the external environment for changes that would affect
the chances of achieving the strategic goals

14. Strategic Implementation
 Sometimes referred to as strategic execution, this stage
is when the planning stops and the action begins. The
best plans won’t make up for sloppy implementation.
Everyone in the organization should be aware of his or
her particular assignments, responsibilities and
authority.

15. Strategic Evaluation and
Control
 Performance measurements (determined by the nature of
the goal) will help determine if key milestones are being
met. If actual results vary from the strategic plan,
corrective actions will need to be taken. If necessary,
reexamine the goals or the measurement criteria

16. Types of strategy
 According to Michel Porter, the strategies can be
classified into three types.
 They are
a) Cost leadership strategy
b) Differentiation strategy
c) Focus strategy

17. Cost Leadership Strategy
 This generic strategy calls for being the low cost
producer in an industry for a given level of quality. The
firm sells its products either at average industry prices
to earn a profit higher than that of rivals, or below the
average industry prices to gain market share.
 In the event of a price war, the firm can maintain some
profitability while the competition suffers losses.

18. Internal strength
 Access to the capital required
 Skill in designing products for efficient manufacturing
 High level of expertise in manufacturing process
engineering
 Efficient distribution channels.

19. Differentiation Strategy
 A differentiation strategy calls for the development of a
product or service that offers unique attributes that are
valued by customers and that customers perceive to be
better than or different from the products of the
competition

20. Internal strength
 Access to leading scientific research.
 Highly skilled and creative product development team.
 Strong sales team with the ability to successfully
communicate the perceived strengths of the product.
 Corporate reputation for quality and innovation

21. Focus Strategy
 The focus strategy concentrates on a narrow segment
and within that segment attempts to achieve either a
cost advantage or differentiation.
 The premise is that the needs of the group can be better
serviced by focusing entirely on it

22. Implementing strategy
 Implementation is initiated in three stages:
1. Identification of annual objectives
2. Development of specific functional strategies
3. Development and communication of concise
policies to guide decisions.