MBA (IV) Sem

STRATEGIC
MANAGEMENT
SILKY JANGLANI
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BUSINESS POLICY:
Business policy is the study of functions and
responsibilities of management, the problems and
decisions that determine the direction of the organization.
Christensen.

Historical evolution of Business policy

1930s
Ad Hoc
Policy
making

1940s
Planned
Policy
formulation

1960s

1980s

Strategy

Strategic
management

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Business Policy:
Strategic Management in India:

Pre-liberalization
Strategic management
in Govt. control

Transition Phase
1990s

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Post-liberalization
2000-2010
Mergers &
Acquisitions

Business Policy:

Nature of Business policy:

1. It is the study of functions and responsibilities of senior
management related to organizational problems.
2. It determines future course of action.
3. It defines the character and identity of an organization.
4. It is concerned with mobilization of resources to help an
organization achieve its goals..

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Business Policy:

Purpose of Business policy:

1. It integrates knowledge & experience gained in various
functional areas of management.
2. It deals with constraints and complexities of real-life
business.
3. It helps to bring long-term view of the environment.
4. It helps to understand the linkage within sub-systems
of the organization..

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Business Policy:
Importance of Business policy:
1. For learning purpose: It integrates the knowledge &
experience. It cuts the narrow financial boundaries. It
makes the study of management more meaningful.
2. For understanding business environment: To understand
how policies are formulated. It makes the task of policy
implementation simpler.
3. For Understanding the organization: It presents a basic
framework for understanding strategic decision-making.
4. For personal development: To understand the impact of
policies on position. To understand the senior managers
viewpoint. To identify growth areas for development..

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STRATEGY:
Strategy (Strategos= direction of military force).
What is strategy?

1. Determination of basic long-term goals & objectives of an

enterprise and adoption of course of action and allocation of
resources to carry out these goals.
Alfred Chandler (1962)

2.Pattern of objectives, purpose, goals and major policies & plans

to achieve these goals to define the current and desired policies
of the organization.
Andrews (1965)
3.It is the common thread among the organizations activities and
product-markets that defines the nature of business.
Igor Ansoff (1965)..

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What is Strategy?
4. It is a unified, comprehensive and integrated plan designed to
assure that the basic objectives of enterprise are achieved.
William Glueck (1972)

5. It is a pattern in a stream of decision and actions.

Henry Mintzberg (1987)

6. Developing and communicating the companys unique position,

making trade-offs and creating a fit among activities.
Michael E. Porter (1996)..

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Levels of Strategy:
Corporate level
strategy

CORPORATE OFFICE

Strategic Business Unit

A

HRM

Marketing

SBU
B

Finance

SBU
C

Production

Business
level
strategy

Systems
Functional
level
strategy

SBU is a business unit within the overall corporate identity which is

distinguishable from other business.
When companies become large, they are composed of a number of
businesses (or SBUs). Eg
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STRATEGIC MANAGEMENT:
What is strategic management?

1. It is a stream of decisions and actions which leads to strategy

development to achieve corporate objectives.
William Glueck

2.It is the formulation and implementation of plans and carrying

out of activities relating to important matters of the
organization.
Sharplin.
3. It is a process through which organizations analyze and learn
from their internal & external environment, establish strategic
direction, create strategies to help achieve goals and execute
them. Harrison & St. John..

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Process of Strategic management:

Phases of Strategic Management:
Establish
strategic
Intent

Strategic
evaluation

Implement
strategies

Formulate
strategies
Strategic
control

Establish
strategic
Intent

SWOT
analysis

Strategic
alternatives

Strategic
Analysis
& choice

Strategic
implementation

Strategic
evaluation

Strategic control

Working model of Strategic

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Model of Strategic Management Process:

Establish strategic intent:
Vision, Mission, objectives,
Business definition

strategic
control

Formulate strategies:
Environmental appraisal,
organizational appraisal, SWOT analysis,
Corporate & business level strategies,
Strategic choice, strategic plan.
Implement strategies:
Project, procedure, resource allocation,
Structural, behavioral, functional
and operational implementation.
Strategic evaluation

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VISION:
1st level of Strategic Intent

VISION: It is a position that a company would like to

achieve in the distant future (10-15 years). It is a powerful
motivator to action.
Vision of Walt Disney: To make others happy.
It is a category of intentions that are broad, all-inclusive and
foreward-thinking.

Why vision is needed?

a. Good visions are inspiring.
b. Good visions help in creation of a common identity and a
shared sense of purpose.
c. Good visions are competitive, original and unique.
d. It promotes risk-taking and experimentation.
e. It promotes long-term thinking IO
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MISSION:
2nd level of Strategic Intent

Vision is a foreward-thinking view of what an organization

wants to be. Mission is what an organization is and why it
exists.
Mission is a statement that defines the role an organization
plays in a society.
Eg: A newspaper & TV news editor: mission- information.

It is the purpose or reason for the organizations existence..

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MISSION:
2nd level of Strategic Intent

Characteristics of Mission:
1. It should be feasible.
2. It should be precise; not too narrow & broad.
3. It should be clear.
4. It should be motivating.
5. It should be distinctive; unique from competitors.
6. It should indicate how objectives are to be achieved...

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Goals & Objectives:

Goals & Objectives represent a future state or an outcome of
efforts put at present. Objectives are the ends that state how goals
will be achieved.
Goals are generalized & qualitative. Objectives are concrete,
measurable and specific.
Objectives make the goals operational.
Roles of Objectives:
1. Objectives
define
the
organizations
relation
environment.
2. It helps an organization to achieve its vision & mission.
3. It provides the basis for strategic decision-making.
4. It provides the standards of performance appraisal

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Goals & Objectives:

Characteristics of objectives:
1. It should be understandable.
2. It should be concrete and specific.
3. It should be related to a time-frame.
4. It should be measurable.
5. It should be challenging.
6. It should be set within limits..

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Role of Top Management in Strategic Management

Role of CEO/ GM/ MD/ President:
Prime responsibility for strategic management.
1. He is the chief architect, strategist, organization builder
and coordinator.
2. He sets the mission of organization.
3. He decides organization objectives and goals.
4. He formulates and implements strategy.
5. He manages external environmental and relationships.
6. He is communicator of organizational purpose,
motivator and mentor.
7. He checks progress to avoid deviation from path..

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Role of Top Management in Strategic Management

Role of Board of Directors:
Board of Directors include owners, shareholders,
controllers, MD, Govt., financial institutions, employee
representatives etc.
Role:
1. They set the vision and strategic direction.
2. They establish objectives and strategy.
3. They guide the senior managers in setting and achieving

objectives, reviewing organizational performance and

evaluation.
4. They monitor the progress.
5. They take corrective action when required..

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