MODULE 1

Introduction of Strategic Management:

It is defined as the set of decisions and actions that result in the
formulation and implementation of plans designed to achieve a
companys objectives.

It comprises of 9 critical tasks
1. Formulate the companys mission, including its purpose,
philosophy, and goals.
2. Conduct an analysis that reflects companys internal conditions
& capabilities.
3. Access the companys external environment.
4. Analyze the companys options by matching its resources with
external environment.
5. Identify the most desirable options by evaluating each option
with companys mission.
6. Select a set of long-term objectives that will achieve most
desirable options.
Strategic Management
7. Develop the annual objectives and short term strategies that
are compatible with the long term objectives.
8. Implement the strategic choices by means of budgeted
resource allocations.
9. Evaluate the success of the strategic process as an input for
future decision making.

Evolution of Strategic Management:

According to 20
th
century 2 different type systems have evolved.

a. Positioning systems (long range planning, strategic planning,
strategic position management) which directs the firms thrust
in the environment.
b. Real time systems (strong signal issue management, weak
signal issue management, surprise management) which
responds one at a time to rapid and unpredicted
environmental developments.
The system can be grouped into 4 distinctive stages of evolution

a. Management by control of performance which was
adequate when change was slow.

b. Management by extrapolation when change accelerated,
but future could be predicted by extrapolation of past.

c. Management by anticipation when discontinuous began to
appear but change, while rapid, was still slow enough to
permit timely anticipation and response.

d. Management thorough flexible / rapid response which is
currently emerging, under conditions in which many significant
challenges develop too rapidly to permit timely anticipation.
EVOLUTION
HIERARCHY
Strategy can be formulated on
3 different levels

a. Corporate level.
b. Business level.
c. Functional/Department
level.


Corporate level:

It is fundamentally concerned with selection of businesses in which
company should compete and with development and
coordination of that portfolio of businesses.

It is concerned with

a. Reach defining the issues that are corporate responsibilities.
These might include identifying the goals, types of businesses in
which corporate should involved, way in which businesses
should me integrated and managed.

b. Competitive contact defining where the corporate
competition is to be localized.

c. Managing activities and business interrelationships corporate
strategy seeks to develop synergies by sharing and
coordinating staff and other resources.
d. Management Practices corporates decides how business units
are to be governed, through direct corporate intervention or
through more/less autonomous government.

Business Level:

At this level strategic issues are less about coordination of
operating units and more about developing and sustaining a
competitive advantage for goods and services that are produced.
At this level strategic formulation deals with

Positioning business against rivals.

Anticipating changes in demand and technologies and
adjusting strategy to accommodate them.

Influencing nature of competition through strategic actions such
as vertical integration and through political actions such as
lobbying.
Functional Level:

It is the level of operating divisions and departments. The strategic
issues and this level are related to business processes and value
chain.

Functional level strategies in marketing, finance, operations, HR
and R&D involve the development and coordination of resources
through which business unit level strategies can be executed
efficiently and effectively.

In organization they are involved in higher level strategies by
providing input into business level & corporate level strategy such
as providing information on resources on which higher level
strategies can be based.

Once it is developed the functional level translate it into discrete
action plans that each department/division must accomplish for
strategy to succeed.
STRATEGY FORMULATION
Strategy formulation is defined as the process of developing the
strategy.

It is the process of establishing the organizations mission, objectives
and choosing among alternative strategies.

Vision:

It presents a firms strategic intent designed to focus the energies
and resources of the company on achieving a desirable future. It is
sometimes developed to express the aspirations of the executive
leadership.

Mission:

It is a unique purpose that sets a company apart from others of its
type and identifies the scope of its operations in product market
and technology terms. It is a statement, not of measurable targets
but of attitude outlook and orientation.
Business:

It is an economic activity in which goods & services are exchanged
for one another or money on their perceived worth.

Every business requires some form of investment and sufficient
number of customers to whom its output can be sold at profit on
consistent basis.

Stakeholders:

A stakeholder is any individual or organization that is affected by
the activities of a business. They may have direct or indirect interest
in the business, and may be in contact with business on daily basis
or may just occasionally.

Stakeholders are those who can be affected by the business and
also can affect a business.
BUSINESS & STAKEHOLDERS
Company
Internal Stake-
Holders
External Stake-
Holders
Employees
Manager
Owners
Suppliers
Customers
Society
Government
Share Holders
Creditors
STAKE HOLDERS