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Business Management Prepared by: Jamal Chapter 4

STRATEGIC MANAGEMENT -THE TRADITIONAL APPROACH


Strategy: A course of action including the specification of resources required to meet a specific objective Tactics: the deployment of resources to execute an agreed strategy Policy: a general statement providing guidelines for management of decision making Strategy Management: the development, implementation and control of agreed strategies. It involves: Analysis, Choice and Implementation: Levels of Strategy in an Organization: Corporate Strategy: is concerned with what type of business the org is in. Most general level of strategy Aspects of corporate strategy: Scope of Activities: Strategy impact upon the whole org. All parts of the org should support the strategy. Environment: Counter threats and exploit opportunities from the environment Resources: Strategy involves choice about allocating or obtaining corporate resources Values: The value system of people with power in the org influences its strategy Timescale: Corporate strategy have a long term impact Complexity: Corporate strategy involves uncertainty about the future and integrating the operations of the org and change Business Strategy: It is concerned with how each strategic business unit attempts to achieve its mission within its chosen area of activity. Functional Strategies: Concerned with how the various functions of the org (marketing, admin, finance etc), contributes to the achievement of the corporate & competitive strategies. MAKING STRATEGIES: RATIONAL PLANNING MODEL (RPM) Rational planning model suggests that strategy is about to the achievement of goals & objectives. Define mission, goals & objectives Analysis of the environment of the org and its internal position Generation of alternative options to satisfy objectives Choice of preferred option, based on rational and objective criteria of evaluation STAGES OF RPM: Strategic Analysis Strategic Choice Implementation & Control of Strategy 1. Strategic Analysis: Stages Define Mission/ vision Goals & Objectives Description Mission- reason for existence Vision- where the org intend to be in future Goal- gives general sense of direction Objective- more specific and Technique Mission/ Vision statement Stake holder analysis Set measures like profitability, time scale etc

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Business Management Prepared by: Jamal Chapter 4

Goals & Objectives

Environmental analysis Position Audit or Situation Analysis Corporate Appraisal GAP Analysis

quantifiable Goal- gives general sense of direction Objective- more specific and quantifiable Identify opps and threats Identify strength & weaknesses, resources etc Draw together strength weaknesses, opps and threats. Compare actual outcome with the given objectives

Stake holder analysis Set measures like profitability, time scale etc PEST is the BEST Scenario building Resource audit Value chain Product life cycle SWOT Analysis GAP Analysis

2.

Strategic Choice: Stage Strategic Option Generation Strategic Evaluation option

Description Generate new ideas

Evaluated ideas on the basis of Acceptability Suitability Feasibility

Technique Scenario building Brain Storming Porters generic strategies choice Stakeholder analysis Risk Analysis Decision trees, probability technique Ranking modal Scoring technique Technique Critical success factors outsourcing Activity schedule Budgets Project management IT system developing methodologies

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Implementation & Control of Strategy Stage Description Resource planning Allocation of resources Operational plans Daily routine task

Org structure Culture Change

and

Functional Strategies

Controls

Designing the org to implement the strategy Departmentation Implement changes Force field analysis Unfreeze change- refreeze Negotiation HRM Personnel planning Production TQM Marketing Appraisal scheme Finance Segmentation Marketing Mix Review performance & amend Feed forward & Feedback performance indicator Balanced scorecard Compare with Budgets Disadvantages of RPM

Advantages of RPM

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Business Management Prepared by: Jamal Chapter 4

Helps in identifying and managing risk Encourage creativity by tapping the ideas Forces decision making- to cope with changes Better control Enforce consistency at all levels Time Horizon Coordination b/w SBU Clarifies objectives Proper allocation of resources & responsibilities

Practical failure in adapting this formal process of planning Carried out mostly once in a year- ignoring day to day problems Reduce initiatives as once plan formally locked, no body thinks about new ideas Internal Politics-among different dept and managers. Exaggerates power- managers have inherent limits to control the behavior of the org

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