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Module – I
1) Dictionary meaning is, - a plan for achieving a major goal, planning & directing the
whole operation of an event. The planning & directing of military activity in a war. A
plan for achieving Major Goal.
3) Top management’s plans to attain outcomes consistent with the organization’s mission
and goals.
Strategic Management:
2) That set of decisions and actions which leads to the development of an effective
strategy or strategies to help achieve corporate objectives. It is designed to ensure that
the basic objectives of the enterprise are achieved.
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1 As the environment changes, companies may change their vision and objectives,
structure, portfolio of business, markets and competitive strategies. The economic
liberalization and the concomitant (associated) wide opening up of business opportunities
and increase in competition have in fact made strategic management a buzz word among
the Indian corporate.
2. The task of Strategic Management is to identify the new and different businesses,
technologies and markets which the company should try to create long range It always
reminds us the present business, should we abandon?
3. Without competitors, there would be no need for strategy, for the sole purpose of
strategic planning to enable the company to gain, as efficiently as possible, a sustainable
edge over it’s competitors (rivals)
4. Changes in one stage of the strategic management process will inevitably affect other
stages as well. After a planned strategy is implemented, for example often requires
modification as environmental or organizational conditions change, or as top
management’s ability to interpret these changes improve. Hence, these steps are
interrelated; they should be treated as an integrated, ongoing process.
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8. Strategic management would enable a company to meet competition more
effectively.
9. Strategic management makes the management dynamic, appropriate to the
environment and result and future oriented.
10. Studies show that companies with strategic management are more effective than
others, generally.
Intended Strategy: The original strategy, the top management plans and intends to
implement
Hence,, the original strategy may be realized with desirable or undesirable results, or it
may be modified as changes in the firm or environment become known.
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5. Possible future changes in the proposed strategy (i.e. strategic control) are
evaluated before the strategy is adopted.
1. Keeping track of the latest developments in the field of strategic management and
disseminating such information to the strategists.
2. Supplying data inputs and analytical support needed for strategic management.
3. Environmental analysis.
4. Identifying new business opportunities.
5. Helping to establish a planning system.
6. Formulating guidelines for preparing plans.
7. Coordinating divisional plans.
8. Assisting to evaluate and control strategies.
Strategic Management requires huge data of external world to plan accurately. Hence
Consultants are approached such as McKinsey, Anderson Consulting, Price Water
Cooper, Deloite, Tata Consultancy Services, Arthur D Little, Earnest & Young etc.
The strategic management is a broader term than strategy and is a process that includes
top management’s analysis of the environment in which the organization operates prior to
formulating a strategy, as well as the plan for implementation and control of the strategy.
1. External Analysis Analyze the opportunities and threats or constraints that exist in
the organization’s external environment, including industry and macro-
environmental forces. (external world)
2. Internal Analysis: Analyze the organization’s strengths and weakness in its
internal environment. (within the organization)
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3. Mission & Direction: Reassess the organization’s mission and it’s goal in the
light of the previous two steps. (review)
4. Strategy Formulation: Formulate strategies that build and sustain competitive
advantage by; matching the organization’s strengths and weaknesses with the
environment’s opportunities and threats.
5. Strategy Implementation: Implement the strategies that have been developed.
6. Strategic Control: Engage in strategic control activities when the strategies are
not producing the desired outcomes.
Changes in one stage of the strategic management process will inevitably affect other
stages as well. After a planned strategy is implemented, for example often requires
modification as environmental or organization conditions change, or as top management’s
ability to interpret these changes improve. Hence because these steps are interrelated,
they should be treated as n integrated ongoing process.
Basically the process involves three phases (1) Formulation (2) Implementation and (3)
Evaluation & Control.
Strategic Planning
Tactical Planning
Refers to short-range planning that is oriented towards operations and is concerned with
specific and short-range details.
Formal Planning
Systematic & Regular Planning department/cells manned by people with knowledge and
experience in “different aspects and dimensions of planning” at organizational level.
Informal Planning:
Is common with small enterprises, and sometime with one man dominated not so small
enterprises, is often done in a casual way.
Policy:
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Is a broad, general guide to action which compels or directs goal attainment. Policies do
not normally dictate what action should be taken, but they do provide the boundaries
within the objectives must be pursued. Thus, policies serve to channel and guide the
implementation of strategies. Actions should be in line with the policy and not vice-
versa.
LEVELS OF STRATEGY
1. Corporate/Enterprise Strategy
Is the organization’s plan for establishing the desired relationship with other social
institutions and stockholder group and maintaining the overall character of the
organization. The mission statement may reflect the enterprise strategy. It seeks to
answer the question “what do we stand for?”
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3. Functional Strategy
For different functional areas like production, finance, personnel, marketing etc. In other
words, the functional-level strategic management is the management of relatively narrow
areas of activity which are of vital, pervasive, or continuing importance to the total
organization.
Core Competence
According to Prahalad and Hamel, Core Competencies are the collective learning in an
organization especially how to co-ordinate diverse production schemes and integrate
multiple streams of technologies.
The firm’s key capabilities and collective learning skills that are fundamental to its
strategy, performance and long term profitability. Are those where it outperforms
competitors and that are difficult to imitate.
The Mission statement reflects on the Company’s Strategy which is nothing but the
organization’s plan for establishing the desired relationship with other social institutions
and stockholder group and maintaining the overall character of the organization. The
Business Model is the translation of the strategy into the operational procedure to achieve
the objective.
Business model is evolved through consultations and brain storming with a matured
experience. A plan thus drawn covering every intricate details is called as Business
Model. The business model is to be implemented through operational group and closely
monitored. Business Model is also a means of communication to stake holders. It is the
economic mechanism by which a business hopes to sell in goods or services and generate
profit. The business model changes due to Time, Technology and quality of foreseeing.
As such, some business models may not prove successful at first, but with minor changes
may become successful in a future period.
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Crafting Strategy helps to understand the idea at the point of execution. . As the
execution of Strategy in process, different hurdles are coming in the way due to change in
environment expected and happening. During such occasions, Crafting Strategy is the
right approach. It helps to understand the situation and arrives with solutions to
overcome the hurdles. Sometimes, you have to discontinue a product or service to face
the threat. May be to get the best advantage of the given situation also. The Crafting
Strategy works as a safe-guard at the point of execution. It offers,
1. Manage stability.
2. Detect discontinuity – Environments do not change regularly, nor are they always
turbulent. Some changes are more important than others.
Rational Model
Strategic Decisions
Strategic Decisions and decision making are the core of strategic management. Strategic
decisions rules over the operational decisions. A decision is a choice of course of action
out of the several alternatives. A decision represents a judgment: a final resolution of a
conflict of needs, means or goals, and a commitment of action in face of uncertainty,
complexity and even irrationality
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Strategic decisions pertain to the fundamental questions in what business the firm should
be in and how it should be in, considering the strengths and weaknesses of the firm and
the environmental threats and opportunities.
Strategic decisions have a long term horizon and are non repetitive, centralized, taken by
top level management and are concerned with the allocation of the total resources among
product – market opportunities. It comprises of,
(1). A systematic, comprehensive analysis of internal attributes and factors external to the
organization. (2) It is long-term and future-oriented. – based on past and present. (3) It is
opportunistic always seeking to take advantage of favorable situation that occur outside
the organization. (4) Out of the choices, go for a “win-win” situation as far as possible.
HDFC BANK
TCS
GODREJ
Vision; Deliver superior stakeholder value, Household and Personal care, Enduring
Trust and Relentless Innovation, Passion and Entrepreneurial Spirit.
DABUR
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M-1
ADDITIONAL INFORMATION
1. Corporate Mission
The mission spells out what the ambitions of the firm are, where exactly it seeks to reach
and what it would like to be in the future. It is a blue print of firm’s business, products
and markets. It offers clarity for strategic planning It is an expression of the growth
ambition of the firm as it visualizes the future. Mission amplifies what brings the firm to
this business or why it is there, what existence it seeks and what purpose it seeks to
achieve as business firm. It is a open document although made by the Management. It
visualizes the ambition, visionary zeal, value, beliefs, specification to the business. It
directs the entire planning, guides formulation of all objectives, communicates the
corporate vision to everyone. Firms gain useful insights by agitating the mission afresh
Example:
3.Corporate Objectives
The objective defines the main task here is to decide the extent of growth the firm wants
to achieve. The firm examines its present level of performance, its achievable level of
performance over the planning period, say 5 years and its aspiration level of performance.
It addresses the question: given its strengths, competitive advantage, resources on one
hand and the business opportunities emerging in the environment on the other, what level
of growth it should aim at. In addition to growth, there are certain other key determinants
of corporate success which apply to all firms: profitability, productivity, technology,
competitive positions, human resources, technology leadership, social responsibility and
corporate image. The objectives are measurable and time bound manner.
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