Strategic management

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Content
Introduction
Strategic Choice- A Definition
Process of Strategic Choice
Subjective Factors in Strategic Choice
Contingency Strategies
Strategic Plan
Introduction
Organizations continually face the challenge
of exercising choice among alternatives.
Strategic choice is an inalienable part of the
decision making process. The process of
strategic choice is essentially a decision
making process.
STRATEGIC CHOICE
The decision to select from among the grand
strategies considered, the strategy which
will best meet the enterprises objective. The
decision involves focusing on a few
alternatives considering the selection
factors, evaluating the alternatives against
these criteria and making the actual choice.
- Prof. Azhar Kazmi

Process of strategic choice
Choosing from the strategic alternative
Evaluating the strategic alternative
Analyzing the strategic alternative
Focusing on strategic alternative
Focusing on strategic alternatives
Focusing on alternative could be done by
visualizing the future state and working
backwards. This done through gap analysis.
GAP Analysis

GAP ANALYSIS = Projected Performance Desired
Performance

Gap Analysis For Focusing on Strategic
Alternatives

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Present
performance
Desired
performance
Performance
gap
TIME
T1 T2
Strategic Alternative
At the corporate level:
1. Expansion Strategy
2. Stability Strategy
3. Retrenchment Strategy
4. Combination Strategy
Expansion Strategy
If the performance GAP is large due to
expected environmental opportunity,
Expansion Strategy would be seem to be a
feasible alternative.

Stability Strategy
If the Performance Gap is narrow then
Stability Strategy would be seem to be a
feasible alternative.
Retrenchment Strategy
If the performance GAP is large due to Past
and expected bad performance then
Retrenchment Strategy would be seem to
be a feasible alternative.
Combination Strategy

In the complex scenario, where the multiple
reason for the performance GAP then
Combination Strategy would be seem to be a
feasible alternative.
Strategic Alternatives
At the business level:

Organization need to think alternative ways
of competing.

Choice is essentially between positioning
the business as being low-cost,
differentiated or focused.
Strategic Alternatives
At the business level:

It needs to understand the conditions of the
industrys risk and benefit of each
competitive positioning before making a
choice.

By reverting business definition (Page 40-
44),
(3 dimensions)
Customer group
Customer functions and
Alternative technologies.
Analyzing the strategies Alternatives
An analysis has to rely on certain factors.
These factors are termed as selection factors.

The Objective Factors- Based on analytical
techniques and hard facts or data.

The Subjective Factors- Based on ones
personal judgment, collective or descriptive
factors.
Evaluating the strategic Alternatives
Evaluation of strategic alternatives basically
involves bringing together the analysis done
on the basis of the objective and subjective
factors.
To observe what is important, both the factors
have to be consider together.
Choosing From Among the
Strategic Alternative
This is the final step of making the strategic
choice. One or more strategies have to be
chosen for implementation. Also a blue
print has to be made that will describe the
strategy and the condition under which
they operates.
Subjective Factors in Strategic
Choice
Subjective factors are essentially intuitive and
descriptive in nature. Here no cut and dried
analytical models can be used. It consider
many of the issues that can not probably
should not be dealt within the application of
analytical models.
Subjective Factors in Strategic
Choice
Consideration for Government Policies.
Perception of critical success factors (CSFs)
and distinctive competencies.
Commitment to past strategic actions.
Strategists decision styles and attitude to risk.
Internal Political Considerations.
Timing and Competitor Considerations.
Consideration for Government Policies
Strategies within organizations are aware of
the crucial role the Government plays in
setting down politics and priorities. In fact
Government policies are the deciding factor
which impact on the future prospects of
companies.
Perception of critical success factors and
distinctive competencies
For consider several strategic alternatives,
strategist could be guided by the distinctive
competencies that the organization possesses
and the CSFs that ensure success in any industry.

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Commitment to past strategic actions
Past strategic action shows that they move in
an incremental fashion. By this strategist are
more likely to start from where the
organization is, and work up in the way that
had been adopted by it to reach where it was.
Strategists decision styles and attitude to risk
The decision style adopted by strategist,
particularly by CEO and their attitude to risk is a
determining subjective factors in strategic
choice.
Internal Political Considerations.
When strategy formulation is viewed as a
political process, strategist are viewed as a
coalition of interest. A dominant CEO is able to
affect strategic choice a decisively.
Timing and Competitor Considerations
When to exercise a strategic choice?
When a particular strategic choice is to be
made?
For what time period is a strategic choice to
be made?
What are the competitor action?
Webster Dictionary
Inalienable: you are emphasizing
that they have a right to it which
can not be changed or taken
away.
Internal Political Consideration

Here it means, Inter-relationship and power
structure and balance.

The political behavioral in organisation is
perfectly naturally legitimate politics and
power are neither good nor bad. They are
natural.
Critical success factor (CSF)
This is the term for an element that is
necessary for an organization or project to
achieve its mission. CSF are those few things
that must go well to ensure success for a
manager or an organization, and, therefore,
they represent those managerial or enterprise
area, that must be given special and continual
attention to bring about high performance.
CSFs include issues vital to an organization's
current operating activities and to its future
success.
Source- Wikipedia
Distinctive competence
Distinctive competence of a firm refers to a
set of activities or capabilities that a company
is able to perform better than its competitors
and which gives it an advantage over them.
Distinctive competence can lie in different
area such as technology, marketing activities,
or management capability.
Source- Wikipedia
Decision making process
Because it consists of:
Setting objectives
Generating alternatives.
Choosing one or more alternatives.
Finally implementing the chosen alternatives.
Intuitive
Webster: It feels that it is true although it have
no evidence or proof of it.
Oxford: having or, perceived by intuition.
Contingency strategies
This strategy is formulate in advance to deal
with uncertainties that are a natural part of
business. There are few approach to help
companies to develop and implement this
strategy i.e. model of contingency planning
process:
Identifying contingency events;
Establishing the trigger points and;
Developing strategies and tactics.
Strategic Plan
Strategic plan (also called a corporate, group
or perspective plan), is a document which
provides information regarding the differences
elements of strategic management and the
manner in which an organization and its
strategist propose to put the strategies into
action. Basic steps in a strategic planning
process are as follows:
Step One - Getting Ready
An organization that determines it is indeed
ready to begin strategic planning must perform
five tasks to pave the way for an organized
process:

Identify specific issues or choices that the planning
process should address.

Clarify roles (who does what in the process).

Create a Planning Committee.

Develop an organizational profile.

Identify the information that must be collected to
help make sound decisions.

Step Two - Articulating Mission and
Vision
It is like an introductory paragraph. a mission
statement must communicate the essence of an
organization to the reader. It describes an
organization in terms of its:

Purpose - why the organization exists, and what it
seeks to accomplish.

Business - the main method or activity through which
the organization tries it fulfil this purpose.

Values - the principles or beliefs that guide an
organization's members as they pursue the
organization's purpose.
Step Three - Assessing the Situation
Once an organization has committed to why
it exists and what it does, it must take a
clear-eyed look at:
- Its current situation.
- Part of strategic planning, thinking, and
management is an awareness of resources
and
- An eye to the future environment, so that
an organization can successfully respond to
changes in the environment.

Step Three - Assessing the Situation
- Situation assessment (means obtaining
current information about the organization's
strengths, weaknesses, and performance
information) that will highlight the critical
issues that the organization faces and that its
strategic plan must address.
Step Four - Developing Strategies,
Goals, and Objectives
Once an organization's mission has been
affirmed and its critical issues identified, it
is time to figure out what to do about
them. The broad approaches to be taken
and the general and specific results to be
sought (the goals and objectives). This
strategies may come from individual
inspiration, group discussion, formal
decision-making techniques, and so on.

Step Five - Completing the Written
Plan
The mission has been articulated, the critical
issues identified, and the goals and strategies
agreed upon. This step essentially involves
putting all that down on paper!

Format for a Strategic Plan
1. INTRODUCTION
1.1 Background and organizational profile
2. MISSION STATEMENT
2.1 Vision
2.2 Mission
2.3 Values
3. ASSESSING THE SITUATION
3.1 Introduction
3.2 Review of Past Performance
3.3 Strengths, Weaknesses, Opportunities and Threats
Analysis
3.4 Critical Issues

Format for a Strategic Plan
4. STRATEGIES, GOALS AND OBJECTIVES
4.1 Approaches to be taken (Strategies)
4.2 General and specific results (Goals and Objectives)
5. IMPLEMENTATION STRATEGY
5.1 Implementation of the strategies
5.2 Action Planning (activities, budget & financing etc.)

*Source- IGNOU Book

References
Strategic Management and Business Policy-
-Prof. Azhar Kazmi
Strategic management (IGNOU Books)
www.wikipedia.com
www.google.com


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