Professional Documents
Culture Documents
UNIT-1
Introduction:
The word strategy came from the Greek word ‘strategos’ means a “general”.
In olden days strategy literally meant the art and science of directing military forces
during the war.
In simple strategy means rule for making decisions
Definition:
Ohame:
“strategy can be defined as the determination of the basic long term goals and
objectives of an enterprise and the adoption of courses of action and the allocation of
resources necessary for carrying out these goals”
Strategic management is that set of managerial decisions and actions that determines
the .long run performance of a corporation.
Policy Strategy
1. It is theoretical nature Practical in nature
► Corporate strategy
► Business or competitive strategy
► Operational or Functional strategy
Strategic Management as a Process
► Decision making
► Achieving performance
► Growth
► High results
► Reduction of complexity
► Social responsibility
► Customer satisfaction
► Development of Human resources
► Adoptability to change
► Cost control
► Profitability
► Ability to compete
Demerits
Mission
Vision
Vision statement present the values, philosophies and aspirations, that
guide organizational action. In fact it motivates and inspires the current
and future employees of the organization. it gives a better idea to
outsiders about organization.
Ex: Motoroal (visions of quality) Dedication to quality is a way of life
at our company.
Hero Honda: "Excellence in quality is the core value of Hero Honda's
philosophy.
TVs Motor co. “quality is a way of life”.
Tata steel “We aspire to be the Global Steel Industry benchmark for
Value Creation and Corporate Citizenship”
III UNIT
What is Mission:
Mission is the purpose for which organization is established. Mission includes both a
statement of organizations philosophy and purpose. The first step of strategic choice
is depends on well defined mission statement or organizational purpose. The mission
may be described as the scope of the operation in terms of nature of business
What are objectives
Objectives are defined as ends which the organization seeks to achieve by its
existence and operation. Objectives may be internal or external objectives internal
objectives are those which define how much is expected to be achieved with the
resources that the organization commands. It includes Goals and policies
a).Goal : Goals are specific and time based points of measurement goals are
determined by the owner In case of large scale companies CEO will determine the
goals for its firm.
b).Policies: A policy is a definition of common purposes the process of strategic
choice sometimes encompasses the formulation of important policies. Policies help to
insure that all units of an organization operate under the same ground rules they also
facilitate co ordination and communication between various organization units.
Formulation of Strategies
Strategies can be formulated after clear diagnosing the environment which includes
external or internal factors Each strategy with sub strategies and alternative strategies
should be available to top mgt thus top mgt always mentor the administration with
strategies which can be adopted for time to time.
a)Corporate Strategy; Corporate level strategy is concerned with the overall
direction and scope of an organization and how value will be added to the different
business units of th organization It includes decisions taken regarding Mergers, take
over Turnaround strategies etc
b)Business strategy:
It can be thought of as a second level strategy It is about how to compete successfully
in particular markets. The concerns are there fore about how advantage over
competitors can be achieved what new opportunities can be identified or created in
the markets which products should be developed in which market etc
c)Functional strategy
These are detailed actions plans to achieve short term objectives and establish
competitive advantage
Functional strategies identity the specific, immediate actions that must be undertaken
in functional areas such as operations, finance, marketing, HR etc
d) Global Strategy
In a global strategy a co. treats the whole world as one market and one source of
supply. This will often involve the global integration of manufacturing and one
common global brand. A global strategy is based on the assumption that customer
needs are similar worldwide. So firms following a global strategy offer standardized
products and services world wide. Competitive strategy is centralized and controlled
to a large extent by the corporate office they locate manufacturing, R&D and
marketing activities in only a few locations ex: Coke , Pepsi, ford, Hollywood movies
etc.
Strategic Choice:
Stragtegic choice is nothing but selection of best strategy The main problem before
strategist is to choose from many alternatives which will suit for the achievement of
organizational goals. Strategic choice is nothing but decision-making. Decision
making consists of setting of aim, goal and objectives. Finding differenct alternatives
for each decision and seldction of best alternative is the primary concern of strategic
choice.
The above diagram illustrates that there is inter relationship between objective factors,
subjective factors and decision factors Thus the strategist will select his choice. for ex
two options re available like A cost reduction and B improvement in advertisement if
strategy A is better than that of strategy B select strategy A otherwise select strategy
B
Def: W.F Glueck and L.R.Jauch “the decision to select from among the grand
strategies considered the strategy which will best meet the enterprises objectives. The
decision involves focusing on a few alternatives, considering the selection factors,
evaluating the alternatives against these criteria, and making the actual choice”
Steps for strategic choice:
Alternatives First step is the determination of alternatives for the problems of
organization The strategist should always try to find all possible alternatives and
select the best alternatives This can be done with the help of GAP analysis (finding
gap between present performance and desired performance).
Selection factors: Second step is to find selection factors. These will help to analyze
and examine alternatives. These factors may be objective or subjective. Objectives
factors requires analytical skills where as subjective factors are based on one’s
personal choice
Evaluation applying of these factors to evaluate alternatives is the imp. Step.
Evaluation process reduces the burden of strategic while selecting best strategy.
Making strategic choice :decision of making in accordance with the conditions of the
organization is the final step. A plan of action or blue print is make which describes
strategies to be adopted by the organization.
IV Unit
Every strategist will have several alternatives for the implementation in the
organization . These may be treated as Corporate Portfolio analysis. It is a set of
Techniques evolved during 1960s one of the most popular aids to developing
corporate strategy is Portfolio analysis.
In Portfolio analysis top management views its product lines and business Units are
a series of Investment from which it expects a profitable return. A study of the
performance of the 200 largest US Corporation found that Co,s which are actively
managed their business portfolios through acquisitions and divestitures created
substantially more share holder value.
Techniques which are used in portfolio analysis are BCG and GE nine cell matrix.
Structure
Structure means the organizational structure of the company. The design of
organizational structure is a critical task of top management. Organizational structure
refers to the relatively more durable organizational arrangements and relationships It
prescribes the formal relationships among various positions and activities,
communication channels, roles to b e performed by various members of an
organization.
Systems
‘Systems’ mean the procedure that make the organization work. They include the
rules, regulations and procedures, both formal and informal, that complement the
organizational structure. Systems include production planning and control systems,
cost accounting procedures, capital budgeting systems, performance evaluation
systems etc.
Style
Style means the way the company conducts its business. Top managers in
organizations can use style to bring about change, organizations differ from each
other in their styles of working. The style of an organization, according to the
Mckinsey framework, becomes evident through the patterns of actions taken by the
top management team over a period of time.
Staff
Staff refers to the pool of people who need to be developed, challenged and
encouraged. It should be ensured that the staff has the potential to contribute to the
achievement of goals.
• Selecting meritorious people for specific organizational positions.
• Developing abilities and skills in them, to take up challenging assignments.
Motivating them to give their best to achieve strategic goals.
Skills
Skills are the most crucial attributes or capabilities of an organization. Skills in
the 7s frame work can be considered as an equivalent of distinctive competencies”
for ex:IBM for its customer service.
Strategy
It is the long term direction and scope of an organization. It is the route that the
company has chosen to acheve competitive success.
Strategic Control
Strategic controls take into account the changing assumptions tht determine a strategy,
continually evaluate the strategy as it is being implemented, and take the necessary
steps to adjust the strategy to the new requirements. Strategic control is similar to the
continuous evaluation system used in academic institutions and differs from the end
of the term examination system used in traditional setups.
Premise control: - This is necessary to identify the key premises or assumptions and
keep track of any change in them can affect the strategy to a large extent. Premise
control is necessary to identify the key assumptions and keep track of any change in
them so as to assess their impact on strategy and its implementation. It serves the
purpose of continually testing the assumptions to find out whether they are still valid
or not.
Implementation control:- Strategies are meant to implemented by the management.
However they should be controlled and regulated implementation control is milestone
reviews, through which critical points in strategy implementation are identified in
terms of events, major resource allocation, or time. The implementation control may
be put into practice through identification and monitoring of strategic thrusts such as
an assessment of the marketing diversification.