Strategic management is a field that deals with the major intended and emergent initiatives taken by general

managers on behalf of owners, involving utilization of resources, to enhance the performance of rms in their
external environments.[1] It entails specifying the organization's mission, vision and objectives, developing
policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and
then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is
often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies
and leading management theorists have advocated that strategy needs to start with stakeholders expectations and
use a modified balanced scorecard which includes all stakeholders.
Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic
management provides overall direction to the enterprise and is closely related to the field of Organization Studies.
In the field of business administration it is useful to talk about "strategic alignment" between the organization and
its environment or "strategic consistency". According to Arieu (2007), "there is strategic consistency when the
actions of an organization are consistent with the expectations of management, and these in turn are with the
market and the context." Strategic management includes not only the management team but can also include the
Board of Directors and other stakeholders of the organization. It depends on the organizational structure.
Strategic management is an ongoing process that evaluates and controls the business and the industries in which
the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential
competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been
implemented and whether it has succeeded or needs replacement by a new strategy to meet changed
circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or
political environment.

Strategy formation
Strategic formation is a combination of three main processes which are as follows:

Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both
micro-environmental and macro-environmental.

Concurrent with this assessment, objectives are set. These objectives should be parallel to a time-line;
some are in the short-term and others on the long-term. This involves crafting vision statements (long
term view of a possible future), mission statements (the role that the organization gives itself in society),
overall corporate objectives (both financial and strategic), strategic business unit objectives (both
financial and strategic), and tactical objectives.

These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides
the details of how to achieve these objectives.

Strategy evaluation

Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT
analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of
the entity in business. This may require taking certain precautionary measures or even changing the entire
strategy.

In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic options are evaluated
against three key success criteria.

Suitability (would it work?)

Feasibility (can it be made to work?)

Acceptability (will they work it?)

Suitability
Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would
address the key strategic issues underlined by the organisation's strategic position.

Does it make economic sense?

Would the organization obtain economies of scale or economies of scope?

Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:

Ranking strategic options

Decision trees

Feasibility
Feasibility is concerned with whether the resources required to implement the strategy are available, can be
developed or obtained. Resources include funding, people, time and information.
Tools that can be used to evaluate feasibility include:

cash flow analysis and forecasting

break-even analysis

resource deployment analysis

Acceptability
Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees
and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions.

Return deals with the benefits expected by the stakeholders (financial and non-financial). For example,
shareholders would expect the increase of their wealth, employees would expect improvement in their
careers and customers would expect better value for money.

Risk deals with the probability and consequences of failure of a strategy (financial and non-financial).

Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders could
oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their
jobs, customers could have concerns over a merger with regards to quality and support.

Tools that can be used to evaluate acceptability include:

what-if analysis

stakeholder mapping

General approaches
In general terms, there are two main approaches, which are opposite but complement each other in some ways, to
strategic management:

The Industrial Organizational Approach

o based on economic theory deals with issues like competitive rivalry, resource allocation,
economies of scale
o assumptions rationality, self-discipline behaviour, profit maximization

The Sociological Approach

o deals primarily with human interactions
o Assumptions bounded rationality, satisfying behaviour, profit sub-optimality. An example of a
company that currently operates this way is Google. The stakeholder focused approach is an
example of this modern approach to strategy.

Strategic management techniques can be viewed as bottom-up, top-down, or collaborative processes. In the
bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up
the organization. This is often accomplished by a capital budgeting process. Proposals are assessed using
financial criteria such as return on investment or cost-benefit analysis. Cost underestimation and benefit
overestimation are major sources of error. The proposals that are approved form the substance of a new strategy,
all of which is done without a grand strategic design or a strategic architect. The top-down approach is the most
common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall
direction the company should take. Some organizations are starting to experiment with collaborative strategic
planning techniques that recognize the emergent nature of strategic decisions.
Strategic decisions should focus on Outcome, Time remaining, and current Value/priority. The outcome
comprises both the desired ending goal and the plan designed to reach that goal. Managing strategically requires
paying attention to the time remaining to reach a particular level or goal and adjusting the pace and options
accordingly. Value/priority relates to the shifting, relative concept of value-add. Strategic decisions should be
based on the understanding that the value-add of whatever you are managing is a constantly changing reference
point. An objective that begins with a high level of value-add may change due to influence of internal and
external factors. Strategic management by definition, is managing with a heads-up approach to outcome, time and
relative value, and actively making course corrections as needed.

The strategy hierarchy

In most (large) corporations there are several levels of management. Strategic management is the highest of these
levels in the sense that it is the broadest - applying to all parts of the firm - while also incorporating the longest
time horizon. It gives direction to corporate values, corporate culture, corporate goals, and corporate missions.
Under this broad corporate strategy there are typically business-level competitive strategies and functional unit
strategies.
Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers
the questions of "which businesses should we be in?" and "how does being in these businesses create synergy
and/or add to the competitive advantage of the corporation as a whole?" Business strategy refers to the
aggregated strategies of single business firm or a strategic business unit in a diversified corporation. According to
Michael Porter, a firm must formulate a business strategy that incorporates either cost leadership, differentiation
or focus in order to achieve a sustainable competitive advantage and long-term success in its chosen areas or
industries. Alternatively, according to W. Chan Kim and Rene Mauborgne, an organization can achieve high
growth and profits by creating a Blue Ocean Strategy that breaks the previous value-cost trade off by
simultaneously pursuing both differentiation and low cost.
Functional strategies include marketing strategies, new product development strategies, human resource
strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management
strategies. The emphasis is on short and medium term plans and is limited to the domain of each departments
functional responsibility. Each functional department attempts to do its part in meeting overall corporate
objectives, and hence to some extent their strategies are derived from broader corporate strategies.
Many companies feel that a functional organizational structure is not an efficient way to organize activities so
they have reengineered according to processes or SBUs. A strategic business unit is a semi-autonomous unit that
is usually responsible for its own budgeting, new product decisions, hiring decisions, and price setting. An SBU
is treated as an internal profit centre by corporate headquarters. A technology strategy, for example, although it is
focused on technology as a means of achieving an organization's overall objective(s), may include dimensions
that are beyond the scope of a single business unit, engineering organization or IT department.
An additional level of strategy called operational strategy was encouraged by Peter Drucker in his theory of
management by objectives (MBO). It is very narrow in focus and deals with day-to-day operational activities
such as scheduling criteria. It must operate within a budget but is not at liberty to adjust or create that budget.
Operational level strategies are informed by business level strategies which, in turn, are informed by corporate
level strategies.
Since the turn of the millennium, some firms have reverted to a simpler strategic structure driven by advances in
information technology. It is felt that knowledge management systems should be used to share information and
create common goals. Strategic divisions are thought to hamper this process. This notion of strategy has been
captured under the rubric of dynamic strategy, popularized by Carpenter and Sanders's textbook [1]. This work
builds on that of Brown and Eisenhart as well as Christensen and portrays firm strategy, both business and
corporate, as necessarily embracing ongoing strategic change, and the seamless integration of strategy
formulation and implementation. Such change and implementation are usually built into the strategy through the
staging and pacing facets.
Historical development of strategic management
Birth of strategic management

Strategic management as a discipline originated in the 1950s and 60s. Although there were numerous early
contributors to the literature, the most influential pioneers were Alfred D. Chandler, Philip Selznick, Igor Ansoff,
and Peter Drucker.
Alfred Chandler recognized the importance of coordinating the various aspects of management under one allencompassing strategy. Prior to this time the various functions of management were separate with little overall
coordination or strategy. Interactions between functions or between departments were typically handled by a
boundary position, that is, there were one or two managers that relayed information back and forth between two
departments. Chandler also stressed the importance of taking a long term perspective when looking to the future.
In his 1962 ground-breaking work Strategy and Structure, Chandler showed that a long-term coordinated strategy
was necessary to give a company structure, direction, and focus. He says it concisely, structure follows
strategy.[4]
In 1957, Philip Selznick introduced the idea of matching the organization's internal factors with external
environmental circumstances. This core idea was developed into what we now call SWOT analysis by Learned,
Andrews, and others at the Harvard Business School General Management Group. Strengths and weaknesses of
the firm are assessed in light of the opportunities and threats from the business environment.
Igor Ansoff built on Chandler's work by adding a range of strategic concepts and inventing a whole new
vocabulary. He developed a strategy grid that compared market penetration strategies, product development
strategies, market development strategies and horizontal and vertical integration and diversification strategies. He
felt that management could use these strategies to systematically prepare for future opportunities and challenges.
In his 1965 classic Corporate Strategy, he developed the gap analysis still used today in which we must
understand the gap between where we are currently and where we would like to be, then develop what he called
gap reducing actions
Peter Drucker was a prolific strategy theorist, author of dozens of management books, with a career spanning five
decades. His contributions to strategic management were many but two are most important. Firstly, he stressed
the importance of objectives. An organization without clear objectives is like a ship without a rudder. As early as
1954 he was developing a theory of management based on objectives. [7] This evolved into his theory of
management by objectives (MBO). According to Drucker, the procedure of setting objectives and monitoring
your progress towards them should permeate the entire organization, top to bottom. His other seminal
contribution was in predicting the importance of what today we would call intellectual capital. He predicted the
rise of what he called the knowledge worker and explained the consequences of this for management. He said
that knowledge work is non-hierarchical. Work would be carried out in teams with the person most
knowledgeable in the task at hand being the temporary leader.
Reasons why strategic plans fail
There are many reasons why strategic plans fail, especially:

Failure to execute by overcoming the four key organizational hurdles[90]

o Cognitive hurdle
o Motivational hurdle
o Resource hurdle
o Political hurdle

Failure to understand the customer

o Why do they buy
o Is there a real need for the product
o inadequate or incorrect marketing research

Inability to predict environmental reaction

o What will competitors do

Fighting brands

Price wars

o Will government intervene

Over-estimation of resource competence

o Can the staff, equipment, and processes handle the new strategy
o Failure to develop new employee and management skills

Failure to coordinate
o Reporting and control relationships not adequate
o Organizational structure not flexible enough

Failure to obtain senior management commitment

o Failure to get management involved right from the start
o Failure to obtain sufficient company resources to accomplish task

Failure to obtain employee commitment

o New strategy not well explained to employees
o No incentives given to workers to embrace the new strategy

Under-estimation of time requirements

o No critical path analysis done

Failure to follow the plan

o No follow through after initial planning

o No tracking of progress against plan

o No consequences for above

Failure to manage change

o Inadequate understanding of the internal resistance to change
o Lack of vision on the relationships between processes, technology and organization

Poor communications
o Insufficient information sharing among stakeholders
o Exclusion of stakeholders and delegates

The linearity trap

It is tempting to think that the elements of strategic management (i) reaching consensus on corporate objectives;
(ii) developing a plan for achieving the objectives; and (iii) marshalling and allocating the resources required to
implement the plan can be approached sequentially. It would be convenient, in other words, if one could deal
first with the noble question of ends, and then address the mundane question of means.
But in the world in which strategies have to be implemented, the three elements are interdependent. Means are as
likely to determine ends as ends are to determine means. [91] The objectives that an organization might wish to
pursue are limited by the range of feasible approaches to implementation. (There will usually be only a small
number of approaches that will not only be technically and administratively possible, but also satisfactory to the
full range of organizational stakeholders.) In turn, the range of feasible implementation approaches is determined
by the availability of resources.
And so, although participants in a typical strategy session may be asked to do blue sky thinking where they
pretend that the usual constraints resources, acceptability to stakeholders , administrative feasibility have been
lifted, the fact is that it rarely makes sense to divorce oneself from the environment in which a strategy will have
to be implemented. Its probably impossible to think in any meaningful way about strategy in an unconstrained
environment. Our brains cant process boundless possibilities, and the very idea of strategy only has meaning
in the context of challenges or obstacles to be overcome. Its at least as plausible to argue that acute awareness of
constraints is the very thing that stimulates creativity by forcing us to constantly reassess both means and ends in
light of circumstances.
The key question, then, is, "How can individuals, organizations and societies cope as well as possible with ...
issues too complex to be fully understood, given the fact that actions initiated on the basis of inadequate
understanding may lead to significant regret?"[92]
The answer is that the process of developing organizational strategy must be iterative. It involves toggling back
and forth between questions about objectives, implementation planning and resources. An initial idea about
corporate objectives may have to be altered if there is no feasible implementation plan that will meet with a
sufficient level of acceptance among the full range of stakeholders, or because the necessary resources are not
available, or both.
Even the most talented manager would no doubt agree that "comprehensive analysis is impossible" for complex
problems.[93] Formulation and implementation of strategy must thus occur side-by-side rather than sequentially,

because strategies are built on assumptions which, in the absence of perfect knowledge, will never be perfectly
correct. Strategic management is necessarily a "repetitive learning cycle [rather than] a linear progression towards
a clearly defined final destination."[94] While assumptions can and should be tested in advance, the ultimate test is
implementation. You will inevitably need to adjust corporate objectives and/or your approach to pursuing
outcomes and/or assumptions about required resources. Thus a strategy will get remade during implementation
because "humans rarely can proceed satisfactorily except by learning from experience; and modest probes,
serially modified on the basis of feedback, usually are the best method for such learning."[95]
It serves little purpose (other than to provide a false aura of certainty sometimes demanded by corporate
strategists and planners) to pretend to anticipate every possible consequence of a corporate decision, every
possible constraining or enabling factor, and every possible point of view. At the end of the day, what matters for
the purposes of strategic management is having a clear view based on the best available evidence and on
defensible assumptions of what it seems possible to accomplish within the constraints of a given set of
circumstances. As the situation changes, some opportunities for pursuing objectives will disappear and others
arise. Some implementation approaches will become impossible, while others, previously impossible or
unimagined, will become viable.
The essence of being strategic thus lies in a capacity for "intelligent trial-and error" rather than linear adherence
to finally honed and detailed strategic plans. Strategic management will add little valueindeed, it may well do
harmif organizational strategies are designed to be used as a detailed blueprints for managers. Strategy should
be seen, rather, as laying out the general path - but not the precise steps - by which an organization intends to
create value. Strategic management is a question of interpreting, and continuously reinterpreting, the possibilities
presented by shifting circumstances for advancing an organization's objectives. Doing so requires strategists to
think simultaneously about desired objectives, the best approach for achieving them, and the resources implied by
the chosen approach. It requires a frame of mind that admits of no boundary between means and ends.
It may not be as limiting as suggested in "The linearity trap" above. Strategic thinking/ identification takes place
within the gambit of organizational capacity and Industry dynamics. The two common approaches to strategic
analysis are value analysis and SWOT analysis. Yes Strategic analysis takes place within the constraints of
existing/potential organizational resources but it would not be appropriate to call it a trap. For e.g., SWOT tool
involves analysis of the organization's internal environment (Strengths & weaknesses) and its external
environment (opportunities & threats). The organization's strategy is built using its strengths to exploit
opportunities, while managing the risks arising from internal weakness and external threats. It further involves
contrasting its strengths & weaknesses to determine if the organization has enough strengths to offset its
weaknesses. Applying the same logic, at the external level, contrast is made between the externally existing
opportunities and threats to determine if the organization is capitalizing enough on opportunities to offset
emerging threats.

Purpose of organisation
The first step
in
strategy
formation
is
the
definition
of
organisational
purpose
or
mission-a
long term view of what the organisation is striving to become in future indicating the basic
thrust of the firm including its products, business and markets. This involves choice from among alternative
futures on the basis of scenario related with (say) societal changes, competitive reactions, regulatory changes,
and so on. The identification of a mission is the basis of awareness of a sense of purpose, the competitive
environment, and the degree to which the firms mission fits its capabilities and the opportunities which the
environment offers. The choice of mission is the broadest choice that an organisation is required to make.
Objectives and Goals:-

The terms objectives and goals are sometimes differentiated by analysts on the basis of generality and
specificity of what an organisation seeks to achieve, to become, and to attain. According to one viewpoint,
objectives are desired future positions or destinations stated in broad timeless statements, e.g., to ensure
consistently increasing earnings per share and to attain a satisfactory return on shareholders equity; goals are
specific, time-based paints of measurement that the organisation wants to meet in pursuit of its objectives. Goals,
according to this view, are to be stated specifically and as quantitatively as possible while objectives may be
stated in quantitative or qualitative terms. The emphasis in goals is on measurement of progress towards the
achievement of objectives. For instance, if a firm has an objective of achieving 15% return on investment, it may
establish goals indicating the revenue earnings and investments necessary to attain that objective; in addition it
may set specific hurdle rates required for the achievement of stated objectives.
Multiplicity of objectives
Profit maximization, as the single guiding objective of business enterprise, held ground for a
long time in the parts particularly in the economic literature on the theory of the firm. It is not
so now. On the contrary, it is widely recognised that enterprises need to have several objectives to survive and
prosper. This is due to several reasons. For one thing, the objective of profit maximization does not provide a
sound basis for evaluating management performance. According to Peter Drucker, exclusive emphasis on profit
may be dangerous to sound management. To emphasise only profit, for instance, misdirects managers to the
point where they may endanger survival of the business. To obtain profit today, they tend to undermine the future.
They may push the most easily saleable product lines and slight those that are the market for tomorrow. They
tend to short-change research, promotion and the other post ponable investments.
The second argument against profit maximisation objective is that it cannot fully explain the
observed business behaviour in the world today. Galbraith, while explaining the behaviour of
large corporations in the Unites States, has observed that the decision-making power in those
enterprises rests with the highly specialised group of professional managers (the techno structure rather than
the
traditional
entrepreneur.
The
goals
of
a
mature
corporation
are
thus
bound to reflect the goals of the members of the techno structure. For, so long as earnings are
above a certain minimum, the management has little to fear from the shareholders, remote,
powerless and unknown as they are. Executive rewards do not directly vary according to
profit. Thus, Galbraith emphasises that managements strive to achieve the following goals
which
are
consistent
with
the
self-interest
of
the
techno
structure,
viz.,
1. Minimum earnings considered necessary for preserving its autonomy and decision-making power;
2. Greatest possible rate of corporate growth which means more power and responsibility, promotion and
compensation;
3. Rising dividend rate; and technological virtuosity or innovation.

GOAL SETTING:Setting goals and objectives is the first step in the strategic planning process. Essentially, it
involves defining the desired relationship between the organisation and its environment. Hence, any change in either the
organisation or in its environment requires a review, and if necessary, alteration of the goals and objectives. As changes
occur in the organisation, in the environment, or in both, there is need for redefinition of goals although the most abstract
statement of goals may remain unchanged. Before attempting an analysis of the environmental influence on goal setting it
is,
however,
necessary
to
examine
how
goals
are
set
in
an
organisation.
In a formal sense, initial goals are set by the formal legal authority, e.g., the entrepreneur who
owns and runs an organisation, the head of the family in a family business, the promoters of a
company, the minister in charge in the case of a public undertaking etc. Similarly, reappraisal
of existing goals may be initiated by the top management, the chief executive or a group of
senior managers.

How goals are set:In practice, goals are set by way of a complicated power-play involving various individuals
and groups within and without the organisation and by reference to values which govern
behaviour in general and the specific behaviour of the relevant individuals and groups. Goal setting, in other
words, involves a process of reconciliation of diverse needs of interest groups coalitions of interests or
stakeholders in the organisation including the owners (shareholders), employees, suppliers, customers,
Government and others. The respective stakeholders often have conflicting objectives which management as the
strongest coalition of interests has to resolve. The process of reconciliation is a continuous one, for, conflicting
group interests cannot be resolved once and for all. The acceptable set of objectives which managements arrive at
is the result of bargaining between the various groups at a certain point of time. But then revisions take place and
incremental changes are made; the current set of objectives is derived by management so as to satisfy as far as
possible the Current demands of the interest groups in the light of the existing environment and aspirations of the
management about what the objectives ought to be.

CONFLICT
Meaning of Conflict
The term conflict has wide connotations. We often hear people saying, There is conflict in his mind, implying
thereby that an individual is in a state of dilemma and is seriously engaged in weighing the pros and cons of
possible behaviours but so far, has been unable to take a decision. It denotes his psychological state of mind
within or without the organisation. People also say, They have conflicting views. That is, there exists a
difference of opinion between the two persons or groups. It may be colleagues, superior-subordinates,
departments or labour and management. No less frequent is the phenomenon when two or more parties are
engaged
in
slowdowns
and
showdowns,
each
party
developing
strategies to meet the challenge of the other and get polarised into warring factions. We
say, They are in conflict. In fact, this is nothing but an advanced stage of an earlier situation, They have
conflicting
views.
In
any
case,
the
party
concerned
is
faced
with
the
problem of decision making. Hence, as March and Simon suggest, we use the term conflict in the sense of a
breakdown in the standard mechanisms of decision-making.

Conflict as a Powerful Process

Whenever people talk of conflict or say that conflict has developed, implication is that there is something
frightening. This notion prevails despite the fact that people know there is no
organisation which is altogether free from conflicts. Even non-profit and service organisations such as
educational institutions and hospitals having missionary zeal are not devoid of conflicts. Its inevitability is
recognised by an individual only when he himself is faced with a conflict situation. In all other cases, he refers to
it as bad and avoidable and regards it as failure of the party in conflict. The traditionalists or classicists had based
their thinking on this common notion. They contemplated an organisation structure that would not permit the
appearance of conflict. This could be achieved, according to them, through a detailed elaboration and
specification of authority, responsibility, accountability, policies, procedures, rules, etc. leaving no chance for
conflicts to develop. If for any reason conflict still develops, it should be immediately eliminated. Its source
should be rooted out and the evil should be nipped in the bud. The neo-classicists emphasised the understanding
of individual psychology, informal groups, development of informal leadership, a democratic-participative
leadership style, etc. so as to avoid conflicts and establish industrial harmony. According to them, the
characteristics of modern organisations are such that they militate against the goals of the individual and cause
dissatisfaction. Individuals are not mere ineit appendages to the machine and through the formation of informal
groups attempt to make up for the deficiencies of formal organisation. Hence, through power-equalisation
techniques, they have to be provided satisfaction on the job.
The Process of Conflict
In general, when conflict develops, it does not become an open conflict from the beginning. Initially, it rests in a
difference of opinion. When a particular point of view is not accepted by the part to which it has been offered as
an idea, the party offering it may not like it. The rejection of the idea when offered again may be viewed with
scorn. Now the party offering the idea may nurse a grievance against the other party. But if there is repeated
failure, it may cause frustration. If the frustrated party is in a position to challenge, it may adopt a tough posture.
Thus, if not checked immediately, it may gradually get transformed into an open conflict. The perceptions may
become rigid and goals may get fixed. Thus, the evolution of conflict takes place slowly and passes through
certain identifiable processes.
1. Latent conflict - when conflict-promoting conditions tend to appear. This may also be called as phase of
anticipation of conflict.
2. Perceived conflict - when people perceive that conflictual conditions exist. It may be
called as a phase of conscious but unexpressed differences. At times, perceptions may
be mistaken in the event of lack of effective communication or real conflict may be
denied through defensive behaviours.
3. Felt conflict - when people feel there is conflict. It is a phase of discussion.
4. Manifest conflict - when there is not only recognition or acknowledgement of conflict,
but also manifestation of conflict by overt or covert behaviours. It is a stage of open
dispute. The parties concerned are devising their own strategies to face each other.
5. Conflict aftermath- when there is outcome of conflict, the stage is set for subsequent
conflict episodes as a result of the outcome of conflict. The outcome may be win, lose or
compromise. If any party feels defeated, it may start preparations and be on the lookout for the next assault.
Diagnosing the Issue
For diagnosing the issue, it is necessary to understand what this conflict is about, why conflict has developed,
how far it has already gone or evolved. Therefore, the first step is to find out the nature of conflict. From the
previous discussion, it should be obvious that conflict may arise in relation to various things which Schmidt and
Tannenbaum broadly categorise into four like (i) facts; (ii) goals; (iii) methods; and (iv) values. In other words, a

problem may arise because the facts at the disposal of the two parties differ, their goals may differ, and difference
may exist regarding methods to be used for doing a particular task or their views about what is good, bad, right or
wrong differ. This classification may not compress all kinds of issues, but they are indicating of what generally
the problems are about. The person who is entrusted with the responsibility of handling conflict must find out
what the conflict is about. It is obvious that the next thing to know is why these differences between the two
parties have risen. The underlying factors which might have prompted these differences to crop up may be
informational, perceptual, role factors and the like. At times, the information available to the two parties is
different and therefore, they draw different conclusions. People also have diverse backgrounds. Their beliefs,
attitudes, values and cultural norms differ. Because of these background differences, the perceptions of the two
parties may differ. An individual could also play a number of roles in different groups as he is a member in
several groups at the same time. The roles of the same individual in different groups may clash with the role of
another individual. A superior may see the urgency of a particular job, whereas his subordinate may not do so. A
conflict may develop between the two. Once the problem is identified and what has caused the problem becomes
known, the stage which it has already reached can be properly understood. The next and very important step is to
develop a strategy to deal with the situation.
IMPLEMENTATION OF STRATEGY
Once a superior has made an assessment of the situation and is able to select a suitable conflict
handling mode, he may find that in some cases, such as absence of information at the disposal
of a particular individual, not much action is required on his part. He is simply to furnish that
information. But if this information is required by that particular individual on a continuous
basis, the superior may have to develop some system. Thus, depending upon the situation, a
superior is faced with, he has to choose his strategy, the implementation of which may involve, according to Katz,
one or more of the three following steps:
1. Marking the system work - The system is kept basically intact, but only some of the
elements
in
it
are
modified
to
make
the
current
arrangements
more
workable.
2. Developing additional machinery - Another alternative to modifying some of the elements in the system is to
alter
the
system
by
adding
or
replacing
elements.
3. Changing institutional structure to eliminate the cause of the conflict If even modifying the system is not
sufficient
to
reduce
conflict,
a
major
change
may
be
required
in
the organisation.
ORGANISATIONAL CULTURE
Organisational Culture refers to a system of shared meaning held by members that distinguishes the organisation
from other organisations. This system of shared meaning is, in closer examination, a set of key characteristics that
the organisation values. There are seven primary characteristics that, in aggregate, capture the essence of an
organisations culture.
1. Innovation and risk taking. The degree to which employees are encouraged to be innovative and take risks.
2. Attention to detail. The degree to which employees are expected to exhibit precision,
analysis, and attention to detail. 3. Outcome orientation. The degree to which management focuses on results or
outcomes rather than on the techniques and processes used to achieve these outcomes.
4. People orientation. The degree to which management decisions take into consideration the effect of outcomes
on people within the organisation.

5. Team orientation.
rather than individuals.
6. Aggressiveness.
than easy-going.

The

The

degree

degree

to

to

which

which

work

people

activities
are

are

aggressive

organised
and

around

teams

competitive

rather

7. Stability. The degree to which organisational activities emphasizes maintaining the

status quo in contrast to growth. Each of these characteristics exists on a continuum from low to high. Appraising
the organisation on these seven characteristics, then, gives a composite picture of the organisations culture. This
picture becomes the basis for feelings of shared understanding that members have about the organisation, how
things are done in it, and the way members are supposed to behave.
Strong vs. Weak Cultures
It has become increasingly popular to differentiate between strong and weak cultures. The argument here is that
strong culture have a greater impact on employees behaviour and are more directly related to reduced turnover.
In a strong culture, the organisations core values are both intensely held and widely shared. The more members
who accept the core values and the greater their commitment to those values is, the stronger the culture is.
Consistent
with
this
definition,
a
strong
culture
will
have
a great influence on the behaviour of its members because the higher degree of shrewdness
and intensity creates an internal climate of high behavioural control. One specific result of a
strong culture should be lower employee turnover. A strong culture demonstrates high agreement among
members about what the organisation stands for. Such unanimity of purpose builds cohesiveness, loyalty and
organisational commitment. These qualities, in turn, lessen employees propensity to leave the organisation.
Cultures Functions
Culture performs a number of functions within an organisation. First, it has a boundary-defining role; that is, it
creates distinctions between one organisation and others. Second, it conveys a sense of identity for organisation
members. Third, culture facilitates the generation of commitment to something larger than ones individual selfinterest. Fourth, it enhances social system stability.
The Concept of Organisational Goal:An organisational goal is something which an organisation seeks and something towards which its resources and
efforts are directed. It is an image of future, a destination an organisation wants to reach, and an aspiration which
the organisation wants to achieve. Organisational goals include the objectives, purposes, mission, standards,
quotas and targets which the organisation is striving for. A religious organisation may be formed with the purpose
of propagating a particular faith, a military organisation has defence of the nation as its purpose, an educational
institution may come up for providing education, a hospital for treating patients, and a business organisation may
like to earn profits. Along with this primary goal, an organisation has a number of secondary goals. A business
organisation has earning profit as its primary objective but it has a series of secondary purposes like satisfaction
of workers interests, satisfaction of customers interests etc. It makes inventions and innovations, contributes to
the revenues of the State, and promotes social interests as well. Besides, there is a hierarchy of goals, as every
level
in
the
organisation
has
a
goal
for itself and a lower-level goal serves the next higher level goal. For instance, for an auto unit manufacture of
automobiles, arrangement of finance and other resources for it, arrangement of finance through issue of shares or
borrowings, etc. are all part of a goal-hierarchy
FUNCTIONS OF ORGANISATIONAL GOAL The term goal has acquired a variety of meanings and is
used to connote different but related things. To what use the term goal is put may be clear from the discussion that
follows. The goals of an organisation provide legitimacy to its existence. The organisation has been created and
resources allocated to it with the said purpose in view. Therefore, its activities are directed towards the attainment

of these goals and so its activities are legitimate. For an auto unit, the manufacture of automobile is a legitimate
activity. Organisational performance is also judged in terms of these goals. The goals represent the standards,
quotas and targets to be achieved. And therefore, in order to examine the extent of organisational success, its
performance after measurement is set against these standards and targets. If a furniture unit has the target of
making 10 chairs per day and it succeeds in making only 8 chairs in a day, it has achieved its goal only to the
extent of 80% for the day. Every individual has a goal and in order to fulfil that goal he joins an organisation.
Individuals who come to join a particular organisation decide to work for the accomplishment of the
organisational purpose, implying thereby that they accept the goals of the organisation as their own. Individual
goals and organisational goals thus tend to reinforce each other and motivate people to contribute their best. Thus,
goals provide the motive force for an organisations activity and the interests of both organisation and the
individual are attempted to be satisfied. The motive for a business organisation is to make profit and for
individuals who work in the organisation, it is to satisfy their needs. Goals serve as the starting point for
organising organisational activity. Goals are to be accomplished through some means. If accomplishment of
overall goals is the responsibility of the highest level in the organisation, acquisition of the requisite means may
be assigned to be the responsibility of next lower level. This responsibility becomes a sub-goal at this level. In
order to achieve this sub-goal, sub-means are necessary. Obtaining these sub-means becomes the sub-goals of the
next lower level. In this way, a means-ends or ends-means chain develops and this analysis is continued until a
means decision can draw on the existing product or programmes available in the organisations environment.

ENVIRONMENTAL

INFLUENCE
OVER
ORGANISATIONAL
GOALS
No organisation functions in isolation. It has a large number of other
organisations in its environment. Every organisation constitutes an environment of the other organisation. Besides
this external environment, there is an internal environment. Every individual or group constitutes the environment
of the other individual group within the organisation. Individuals bring their own norms and values and
organisations impose their own. When interactions take place between different individuals or groups coupled
with organisational norms and values, mutual adjustments take place. Similarly, adjustments take place when one
organisation interacts with other organisations. Members of the organisation under consideration are also
members of other organisations in its environment. This fact further complicates the process. We must, however,

remember that a whole organisation does not have to interact with another whole organisation. Different parts or
groups or subsystem within the organisation interact with their relevant external environments outside the
organisation. For example, R&D department in a particular organisation will have R&D departments in similar
organisations as its external environment. It may have nothing to do with other group outside the organisation. As
organisations and their environments interact, one is likely to influence the other. One can visualise a continuum
of influence of which the two ends are: one in which organisational dominates the environment and the other in
which environment dominates the organisation. Dominance of organisation over environment is rare and the only
possible example which comes to mind is Standard Oil Trusts in America in the past or OPEC in modem times.
The examples of environment dominating the organisation are numerous. This is especially true of public
utilities. Take the case of DTC in Delhi. Its environment, i.e. society may decide between these two extremes
where there is partial dominance either by the organisation or by the environment depending upon their
respective strengths and weaknesses. In general, an individual organisation is influenced more by its environment
than it influences the environment.
The influence of environment over organisational goals, is therefore, considerable. Organisations, if they want to
survive, must adopt strategies for coming to terms with their environments. Thompson and McEwen suggest
strategies for dealing with the organisational environment as either competitive or cooperative. They provide a
measure of environmental control over organisations by providing for outsiders to enter into or limit
organisational decision process. The potential power of an outsider increases the earlier he enters into the
decision process. Various strategies for dealing with organisational environment-competition and three subtypes
of cooperative strategy, viz. bargaining, cooptation and coalition differ in this respect. All of these allow outsiders
to intervene and limit organisational decisions regarding goals, but the entry of outsiders in different strategies is
at different stages. This fact alone makes the difference in the degree of control. We will discuss each of these
separately.
1. Competition. Organisations compete among themselves for the same resources of society. The. Customer or
supplier-a third party-casts his vote in favour of a particular organisation by having interaction with it, by buying
its product or granting resources to it. This means no organisation whose objectives are not acceptable to society
or are not supported by society can without considering what society needs. This is how through competition,
environment diverts the resources of society to acceptable channels and avoids misallocation of resources by
elimination of inefficient and undesired organisations. Thus competition is one process whereby the
organisations choice of goals is partially controlled by the environment. It tends to prevent a unilateral or
arbitrary choice of organisational goals or to correct such a choice if one is made. Therefore, in order to deal with
its environment, organisation must develop its competitive strength which come from its flexibility to adapt itself
to environmental situation.
2. Bargaining. Bargaining is the process of arriving at an agreement between two or more organisations through
mutual give and take for exchange of goods or services. It is often witnessed between management and labour,
the university authorities and students, dealer and customer, etc. Whatever agreements are arrived at, they cannot
be taken as final for ever. In the face of changing environment, a periodic review of relationship is an important
means whereby each organisation, through negotiation, arrives at a decision about acceptable future behaviour of
the parties. Bargaining is a zero-sum game; to the extent one party gains, the other loses. It focuses on resources
rather than explicitly on goals. However, since no goals can be implemented without resources, cooperation or
support of the bargaining party becomes necessary and that reduces the probability of arbitrary, unilateral goalsetting. However, unlike competition, bargaining involves direct interaction with other-organisations in the
environment, rather than with a third party and therefore, invades the actual decision process.
3. Co-operation. Selznic defines co-operation as the process of absorbing new elements into the policydetermining structure of an organisation as a means of averting threats to its stability or. It is he process by which
power, or the burdens of power are shared. Organisations, because of their dependency on other organisations,
co-opt certain members who represent their interests. Such cooperated members may not take an active part, but

do keep a watch on happenings inside the organisation. They are in a position to determine the occasion for a goal
decision, to participate in analysing the existing situation, to consider alternative and discuss the consequences
thereof. Cooperation, thus makes still further inroads on the process of deciding goals. Besides, these members
bring to bear the benefit of their knowledge to the organisation they represent. Not only do they thereby protect
the interests of organisations they represent, but also help in avoiding decisions with undesirable consequences.
This helps integrate the diverse.
4. Coalition. It is a combination of two or more organisations who, without losing their respective identities,
work for a common purpose. Generally it arises when it is difficult for any individual organisation to undertake a
venture, say, the construction of a dam, so that it seeks the support of another-organisation and joins hands with
it. Thus, more than one party come together, decide terms and conditions of agreement and form a coalition. A
coalition works on the basis of a minimum common programme. When differences develop between members of
a coalition, even on a minimum common programme there is a threat to the existence of the coalition. When
members of a coalition pull in different directions, the coalition is likely to break down. But because there is
mutual interdependence, the fear of breakdown keeps the coalition together unless cleavages become serious. For
example, the Indian experience in recent times is a case in point. In many states, no one political party had a clear
majority to form a Government. Therefore, many parties having widely differing political philosophies joined
hands and formed a Government on the basis of a common programme. But soon after the formation of the
Government, different parties started pursuing their own philosophies and the coalition governments failed. Thus,
coalition appears to be an extreme form of the environmental conditioning of organisational goals. As the support
of other organisations is imperative, it avoids investment of resources in fruitless ventures if an organisation is
unable to find partners. Besides, a coalition requires a commitment for joint decision of future activities and thus,
places limits on unilateral or arbitrary decisions. Because of interdependency, no one part can set objectives or
take decisions without consulting others.

Reference
1. http://www.slideshare.net/prashantmehta371/chapter-2-business-policy-andstrategic-management
2. http://www.businessdictionary.com/definition/policies-and-procedures.html
3. http://www.businessdictionary.com/definition/policies-and-procedures.html
4. http://study.com/academy/lesson/what-is-conflict-management-definition-stylesstrategies.html
5. http://searchcio.techtarget.com/definition/organizational-goals

6. http://study.com/academy/lesson/what-is-organizational-culture-definitioncharacteristics.html
7. https://en.wikipedia.org/wiki/Goal_setting