Strategic

Management-
Overview,
Hierarchy

Presented By:
Dr. Rajdeep Singh Khanuja
Assistant Professor
Session: 1 NIFT Bhopal
 Defining Strategic Management

Strategic management
the art and science of formulating,
implementing, and evaluating cross-
functional decisions that enable an
organization to achieve its objectives

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Copyright 2013 Pearson Education
 Defining Strategic Management

Strategic management is used

synonymously with the term strategic
planning.
Sometimes the term strategic
management is used to refer to strategy
formulation, implementation, and
evaluation, with strategic planning
referring only to strategy formulation.

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Copyright 2013 Pearson Education
 Defining Strategic Management

A strategic plan is a companys game

plan.
A strategic plan results from tough
managerial choices among numerous
good alternatives, and it signals
commitment to specific markets, policies,
procedures, and operations.

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Copyright 2013 Pearson Education
 THE STRATEGIC MANAGEMENT
PROCESS

The process consists of three main stages:

Strategy Formulation
Strategy Implementation
Strategy Evaluation
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Define Perform Establi Formula Implemen Evaluat

vision situatio sh te t e and
and nal objecti strateg strategi correct
mission analysis ves ies es

Strategy Formulation Strategy Strategy

Implementation Evaluation
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Strategy Formulation
It involves designing and developing strategies to
achieve the firms mission and vision.
Strategy formulation entails identifying the firms
external opportunities and threats, determining the
firms internal strengths and weaknesses and
establishing objectives to achieve the firms mission
and vision.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Strategy formulation
Identifying the companys mission and vision in the
starting point for strategic management process.
The mission and vision statements set the direction for
where the company is going.
In order to achieve the organizations mission, would
need to operationalize the mission statement into
strategic objectives.
Objectives are concrete goals the organization aims
to achieve in pursuing its basic mission.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Strategy formulation
Before organization establish its objectives, it
must perform situation analysis.
Situation Analysis
Scanning and evaluating the organizations internal
and external environment this provides the
critical information to establish the organizations
objectives.
Also use to identify the organizations opportunities
and threats.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Strategy formulation
An organization can develop alternative
strategies once the organization had a
clear picture of its environment.
Strategy formulation involves designing
and developing the company strategies.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)

Strategy Implementation
Strategy implementation means executing the
strategies or when business strategies are translated
into action.
It includes allocating resources to execute the
formulated strategies, preparing budgets, and
developing and utilizing information systems and
employees.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)
Strategy Evaluation
The final stage in the strategic management process
The firms managers seek to determine which strategies
worked and which were not successful.
Involves:
Reviewing external and internal factors that form the basis
of the current strategies
Measuring performance against objectives
Taking corrective action if the strategies formulated did not
results in the objectives being met or not in line with the
actual goals, the strategy should be modified or
reformulated.
 THE STRATEGIC MANAGEMENT
PROCESS (cont.)
Changes in the environment or a change in any
of the steps in the strategies management
process could mean a change in any or all of the
components.
For example,
an introduction of a new product by a major
competitor may result in a change in the
organizations existing product line and this
may affect the organizations mission and
vision.
Key Terms in Strategic Management

Competitive Strategists
advantage the individuals
anything that a who are most
firm does responsible for the
especially well success or failure
compared to rival of an organization
firms

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The Strategic-Management Model

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Benefits of Strategic Management

Historically, the principal benefit of

strategic management has been to help
organizations formulate better strategies
through the use of a more systematic,
logical, and rational approach to strategic
choice

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Benefits of Strategic Management

Communication is a key to successful

strategic management
Through dialogue and participation,
managers and employees become
committed to supporting the organization

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 Financial Benefits

Businesses using strategic-management

concepts show significant improvement in
sales, profitability, and productivity
compared to firms without systematic
planning activities
High-performing firms seem to make more
informed decisions with good anticipation of
both short- and long-term consequences

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 Nonfinancial Benefits

It allows for identification, prioritization,

and exploitation of opportunities.
It provides an objective view of
management problems.
It represents a framework for improved
coordination and control of activities.
It minimizes the effects of adverse
conditions and changes.
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 Nonfinancial Benefits

It allows major decisions to better support

established objectives.
It allows more effective allocation of time
and resources to identified opportunities.
It allows fewer resources and less time to be
devoted to correcting erroneous or ad hoc
decisions.
It creates a framework for internal
communication among personnel.
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 Why Some Firms Do No
Strategic Planning
Lack of knowledge in strategic planning
Poor reward structures
Waste of time
Too expensive
Laziness
Content with success

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 Why Some Firms Do No
Strategic Planning
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown

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 Pitfalls in Strategic Planning

Using strategic planning to gain control over

decisions and resources
Doing strategic planning only to satisfy
accreditation or regulatory requirements
Too hastily moving from mission development to
strategy formulation
Failing to communicate the plan to employees,
who continue working in the dark
Top managers making many intuitive decisions
that conflict with the formal plan
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 Pitfalls in Strategic Planning

Top managers not actively supporting the

strategic-planning process
Failing to use plans as a standard for measuring
performance
Delegating planning to a planner rather than
involving all managers
Failing to involve key employees in all phases of
planning
Failing to create a collaborative climate supportive
of change
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Thank You

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