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Introduction: The term strategic management has been traditionally used. New title
such as business policy, corporate strategy and policy, corporate policies is
essentially and extensively used which means more less the same concept.
1) Due to increase in the competition, in 1960’s there was a demand for critical
look at the bane corrupt of business.
2) The environment played an important role in the business.
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3) The relationship of business with the environment lead to the concept of
strategy.
4) In early sixties, this helped the management to manage between the
business and the environment.
5) In early eighties, as many companies were globalised which lead to the
competition of the rivals access the world.
6) Japanese companies along with other Asian companies unleashed a force
across the world and posed a threat for the US and European companies,
which led to the current thinking.
7) Strategic management focused on 2 aspects: -
• Strategic process of business.
• Responsibilities of strategic management.
8) Unlike others, in this phase the role of senior management is vital and of
utmost importance. Their role was important in decision-making like -
8) All these actions and decision had a long-term impact on the company and
its future operations, which was the result of senior management decision-
making.
9) Strategic management is both about the present and future course of action,
which was the prime responsibility senior management.
Strategic Management is
I. The study of function and responsibilities of senior management
II. A crucial problem that affects success in total enterprise.
III. The decision that determine the direction of the organization and shape of its
future
IV. Identity and molding of its character
V. Mobilisation and their allocation of the resources.
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IV. Managers need to begin by gaining an understanding of the business
environment and to in control.
Conclusion
Thus we can say the purpose of strategic management is manifold. To be
successful in the business one should possess/have holistic approach and should
know to integrate the knowledge gained in various functional area of management.
By having generalistic approach, a senior manager can understand the complex
inter linkages operating within the organisation and should have systematic
approach in decision-making in relation with the changes which takes place in the
environment.
Q2. What is strategy? At what levels is it formulated?
INTRODUCTION: -
STRATEGY:
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1. Before making a decision managers have to look into the course of deciding
since
Strategy involves situations like
LEVELS OF STRATEGY:
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1. When a company performs different business/ has portfolio of products, the
company will organize itself in the form of strategic business units (SBU’s).
2. In order to segregate different units each performing a common set of
activities, many companies are organized on the basis of operating
divisions/decisions. These are known as strategic business units.
CORPORATE LEVEL
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2) It’s how the company perceives itself in its role towards the society/ even
countries in terms of vision/ mission statement/ a set of needs that strives to
fulfill corporate level strategies are then derived from the societal strategy.
MISSION/VISION LEVEL
CORPORATE LEVEL
OPERATIONAL LEVEL
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Corporate level is divided from the societal level strategy of a corporation
S.B.U Level are put in to action under the corporate level strategy.
Functional Strategies operate under SBU Level.
Operational Level is derived from functional level strategies
Conclusion:
3) What are the Issues in Strategic Decision Making? Explain the role
of Various Strategies.
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Various Roles of Strategic Management.
Role of C.E.O: Chief Executive Officer is the most important Strategist and
responsible for all aspects from formulations/Implementation to review of Strategic
Management. He is the leader, motivator & Builder who forms a link between
company and the board of directors and responsible for managing the external
environment and its relationship.
Role Of Entrepreneur: They are independent in thought and action and they set /
start up a new business. A Company can promote the entrepreneurial spirit and this
can be internal attitude of an organization. They provide a sense of direction and
are active in implementation.
Role of Senior Management: They are answerable to B.O.Directors & The C.E.O
as they would look after Strategic Management a responsible of certain areas /
parts of terms.
Role of SBU – Level Executives: They Co-ordinate with other SBU’s & with Senior
Management. They are more focused on their product / burners line.
They are more on the implementation role.
Role of Consultant: Often Consultants may be hired for a specified new business
or Expertise even to get an unbiased opinion on the business & the Strategy.
Role of Middle Level Managers: They form an important link in strategizing &
Implementation. They are not actively involved in formulation of Strategies and
they are developed to be the future management.
Conclusion: These are the issues in strategic decision-making and the role in
Strategic Management.
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4) What is Strategic Management Process? Explain each step briefly.
IMPLEMENT/ FEEDBACK/CONTROL
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From the above block diagram it states that Strategic Management is a process,
which leads to the formulation of Strategy/ Set of Strategies & managing thru
Organisational System for the achievement of Vision, Mission Goals and
Objectives.
STRENGTHS/WEAKNESS/CORE COMPETENCIES
Strengths: it’s always in relation to the environment. It’s an unborn capacity, which
needs to fulfill two conditions.
1) Requirement for success.
2) It gives the Strategic Advantage.
It has strengths more than the competitor; it could gain more than the Competitor.
E.g. Superior research where new products & Innovations are required.
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Weakness: It’s something required for success is missing/inherent inadequacy. It
gives strategic disadvantage to the Organisation.
E.g. Over dependence on a single product line in a mature market.
Introduction: for an effective strategic intent one has to develop effective strategy,
rather than focusing at the resourcefulness of Competition & their pace at which
they are building competencies one has to focus on existing position.
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Strategic Intent is something more than the unfettered ambition. It’s not a soft
target. According to Prahlad & Gray
Stretch: To Achieve strategic intent one has to stretch forward and has to look at
the resourcefulness instead of looking at resources. One has to make use of
Innovation and resources. Stretch leads to leverage.
Fit: Strategic fit is the traditional way of looking at strategy. Strategic fit is
conservative and seems to be more realistic but u may not be aware of the
potential. Under stretch & leverage Strategic extent could be impossible, idealistic
but under fit strategic something far beyond possibilities and look at the potential
possibilities.
Conclusion.
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Thus Strategic intent is what the organization strives for e.g. Canon wanted to beat
Xerox. It’s an obsession to an organization & it is to win at all levels of the
organization, sustaining that obsession is in quest for global leadership.
Objectives:
a) Objectives are the ends that specify how the goals shall be achieved.
b) They are concrete and specific and they are in contrast with the goals.
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c) Objectives make the goals operational and tend to Quantitative in
specifications.
d) Objectives are set in a way that what the organisation has to achieve for its
employees, shareholders, customers etc.,
e) Objectives are in relation with the environment. They are the brains of
Strategic Decision Making.
f) They are framed in line with the vision/mission of the organization and it
helps to pursue them.
g) Objectives are invariably Quantitative and provide clear measures and
standards for performance.
h) It helps to see whether the Organisation is in right track or not.
i) Objectives should be concrete, specific, and understandable & should have
clearly defined time frame.
j) It must be measurable, actionable, challenging but controllable.
k) There must be co-relation with other objectives.
l) While setting objectives these are the factors to be evaluated. It should be
specific at the level, which it is being set. It should not be either too narrow
or too broad.
m) There need to be multiplicity of objectives.
n) It should be formulated at different time frames like short term, medium
term, and long term & should be linked & consistent.
o) Since its in relation with the environment it needs to check whether they are
fulfilling the needs of customers, share holders etc.,
p) It should be In reality with the organizational resources and internal
constraints, including policies & lower relationship.
Introduction : -
Environment means the surrounding. It includes both internal and external objects,
factors & influences under which someone/something exist.
Environment :
Environment – Changes:
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2) The Efficiency of the company comes at the expenses of the efficiency of the
company as a whole.
3) It requires co-operation & Co-ordination within the organization.
4) Few Companies are rigid, non-competitive, inefficient and losing money
because they are not able to adjust themselves with the changing
environment.
5) In 1776 Adam Smith described in his book, “The Wealth of Nations.” The
Principle of division of labour for increasing the productivity and there by
reducing the cost of goods. American Companies became best in the world
after applying the principles.
6) But in today’s world, nothing is constant or predictable & these principles
don’t work.
7) Market growth, customer demand, the rate of technological change, and
nature of competition keeps changing.
8) The three forces that drives company are
Customers
Competition &
Change.
Customers : Earlier days, Customers had little choice they used to buy the product
that was offered to them. These days customers come with more specifications and
they demand for customized products and they want individual attention. Hence
customers have upper hands these days. It’s difficult for an organization to survive
in the long run unless they satisfy customers needs.
Competition : As many companies emerges, the competition rises. They offer good
quality of products at lesser price and consumers prefer such products. Earlier the
company could get into market with an acceptable product/service at the best price
would go to sell. But these days customers prefer high quality at lowest price. The
Company, which offers these at best price, goes high quality and best service
becomes standard of all the competitors.
Changes : Changes has become both pervasive and persistent because companies
face a greater competitors and each one introduces a product and service
innovation to the market with the globalisation of the economy. Hence the
companies need to move fast in pace with the changing environment otherwise it’s
difficult to move.
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Q8) Explain the process of SWOT analysis? Elaborate what you would
study in the environment?
INTRODUCTION
SWOT ANALYSIS:
The internal environment refers to all factors within the control of and within the
organization. These factors may impart strengths that can be utilised by the
organization or cause weakness, which becomes threat to the organization.
S – Strength O- Opportunity
W – Weakness T – Threats
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2) Lack of capabilities for the development of new product, which is potentially
risky for a company during the time of crisis.
OPPORTUNITY: can be accomplished and can help to consolidate and strengthen the
organization. It’s a favorable condition for an organization in its environment.
E.g. Due to better GDP growth a company provides increase in demand for the
products/services. It helps in strengthening its position.
THREATS: when the opportunities are not utilized properly it can cause problem to
the to the organization which causes threat. It is unfavorable condition for the
organization. It causes risk/damage to an organization.
E.g. Due to opening up of economy, the emergence of multinational companies,
which are stronger and has good resources, offers stiff competition to the existing
companies in an industry.
CONCLUSION
Environment to be studied
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Q9. What are the core competencies and organization capabilities?
CORE COMPENTENCIES:
1) An organization with its resources and the capacity of converting the
resources in to outputs and the behaviour of there (i.e. capability and
resources) develops certain strength and weakness, which their combined
lead to synergistic effects.
2) Synergy – Total (is greater) sum of the parts. In terms of organizational
competencies it manifest themselves in advantages over competition.
3) Competencies develop over a period of time.
4) It’s a fine art of competing with its rivals over a period of time and it uses
these competencies to exceed well. The capability of using these
competencies to exceed well turns them into core competence.
5) Core competencies have joined greater currency and popularity as per C.K
Prahaled and Gary Hamel. It’s a portfolio of products/services/different
business.
6) In short run competencies for a company is derived from the price
performance and in longer run it’s the ability to build at lower cost and
speedily than others.
7) A diversified company is like a large tree. What are not easily visible and
apparent – are the core products and leaves, flowers, fruits are the end
product.
8) Root is akin to “Core Competence”.
9) Core competence is communication, collective learning and co-ordination of
diverse production skills and deep involvement and commitment to work and
delivery of value across all levels and functions.
10) Core competencies are the glue that binds existing business and guide
market entries instead of market attractiveness.
11) Core competencies can be identified by conducting 3 tests i.e provides
potential access to wide variety of markets and significant contributions to
the benefit of the end product difficult for competitors to imitate.
12) Building competencies are not sharing costs by SBU’ (or) out pending rivals
on R and D
13) By not building competencies in emerging markets you may lose the chance
of competing in existing markets.
It’s important to maintain the competencies even it not active in the market.
ORGANISATIONAL CAPABILITY: -
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1) It’s the inherent capacity of an organization to use its strengths and
overcome weakness to exploit opportunities and face threats in the external
environment.
2) It’s comparable & it’s very difficult to measure the capability of an
organization.
3) Strategist would like to know what capacity exist within the organization &
what potentials should be developed so that opportunities can be exploited &
how it can face threats.
4) Organisational capability includes Financial, Marketing, Operations,
Personnel, and Information Management & General Management.
Financial Capability:
1) Source of Funds – How well the company can raise funds, their cost &
availability.
2) Management & use of funds – how optimally it utilizes the funds where and
how they are used.
3) Factor governing marketing capability are the from P’s i.e. Product, Price
Place & Promotion related factors how it generates systematically.
4) Factors influencing personal capability are R & D System, production &
Control Systems.
5) Factors leading to personal Capability are industrial & personnel relations,
organizational & employees Characteristics.
6) Factors that lead to information management capability are integrative,
systematic & supportive factors.
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Q.10)
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