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M.Com II (S.M)

Chapter 2
The Strategic Management Process
Q. 1 : Describe various stages in the strategic management process or [components of
smp] (1998, 2001, 2003, 2005, 2006)
OR
Explain in detail model of strategic management process.
Ans.: Introduction :
Strategic management process is an intellectual process of executive. In that
to achieve the mission of the business, the long term & short term objectives are
being fixed. For its success, through the process of forecasting the external factors
affecting the business are being studied & on its basis to achieve objectives various
plans are considered to select the proper plan in a strategic manner & its effective
implementation is done. It is not true to say that the idea of strategic management is
acceptable by the large units or industrials units. Any type of business unit can fight
against the business risk through the strategic management.
The matter must be specially noted that the idea of strategic management is
based on the study & estimates of environment along with the changes in
environment. It is necessary to make changes enve. in strategy also. If this does not
happen then strategy is failed.

Process of strategic management process :

Different experts has explained strategic management in different ways. Even
though if it is considered according to analytical approach, they can be noted as
follows.
Companys Mission
Company Profile

External Environment

Strategic Analysis & Choice

Policy

Long Term Objective

Grand Strategy

Procedur
e

Annual Objectives

Operational Strategy

Method

Institutional Structure of Strategy

Control & Evaluation

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Components of the strategic management model :

The components of strategic management model are considered as follows.
Company mission :
It is the unique process which helps the firms to distinguish itself from other
similar type of firms & it clarifies the scope of its operation. It shows the business
philosophy. Implies image company want to project, reflects the firms self concept.
Indicates the principle product or service areas. Primary customers needs which the
company well attempt to satisfy.
During its clarification of its mission. What company wants to do for
customers, employees, shareholders, society & nation, this matter is clarified. By this
the company gets warm welcome from all the group of the society.
Company profile :
For preparing company profile, company has to do internal analysis for
determing its performance capabilities on the basis of existing or accessible
resources. It provides information on regarding quality & quantity of financial human
& physical resources available to the company. It helps in assessing the internal
strength & weakness of the firm. It compares the part achievement with current
capability to find out future capabilities of the business. It provides information
regarding its promoters, main plant, technology, production, marketing, finance,
SWOT, research & development etc.
Internal environment :
In the strategic management process, these exists the idea of maximum use
of resources in limited time & in a particular direction. For this, the analysis of
internal environment becomes necessary. In it matters like present production
capacity, employees, training & development programme, research activity,
organization, co-ordination & control facilities etc. are included. The analysis of
internal environment is necessary to decide like what type ? & How many changed &
for what matters ? are to be made in the firm.
External environment :
External environment is not under the control of executives. Still to achieve
the companys objectives, they play an important role. Due to this, Analysis of
external environment becomes compulsory. According to James M. Atter back It is
important that the idea of changes in environment for formulation of strategy
should come first. It becomes late then the organization is thrown out against the
competitiors. external environment includes mainly the economic, social & national
factors affecting the company. Beside this, it also includes the factors like markets
competitive situation, information regarding customers, supply of raw material.
Supply of skill & unskill employees, position of competitors, position of capital
market etc.

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Strategic Choice :
The information collected about the external factors through the forecasting
process & by taking the base of internal environment in which scheme the company
can invert. For this all possible aspects are considered. After considering aspects
which are more proper mission are considered. This type of selection is said to be
strategic selection.
While doing the strategic selection, executives select the factors like
profitability, development, stability, changeability, stage of production life cycle, risk
factor, organization, interest of customers & fashion etc.
Long Term Objectives :
Long term objectives are defined as the results a business seeks to achieve
over a specified period of time, typically five years. To achieve long term prosperity,
strategic planners establish long term objectives in areas of profitability,
productivity, competitive position, employee development, technological leadership,
public responsibilities etc. These or any other long term objectives should be
acceptable flexible, measurable, motivating, suitable, understandable and
achievable. Objectives are statement of what is expected from pursuing a given set
of business activities.
Grand Strategy :
They are defined as comprehensive, general plan of action guiding major
actions designs to achieve long term objectives. It is a statement which indicates
how the objectives of business activity are to be achieved. They are the medium of
instrument to reach the destination i.e. objectives. There are various kinds of grand
strategy such as concentration, market development, vertical integration, joint
venture, turnaround etc. A firm can adopt single or combination of grand strategy.
Besides this for which activity how much investment is needed, this also can be
know from grand strategy.
Annual Objectives :
The results an organization seeks to achieve within one year period are annual
objectives. They translate the long term objectives into current targets. They are
derived from long term objectives, but differ in time frame, forces, specificity and
measurement. For annual objective to be effective in strategy implementations, they
must be integrated and co-ordinate. They must also be consistent, measurable, and
prioritized.
Functional Strategies :
Within the general frame work of the grand strategy, each distinctive
business unit of division needs a specific and integrative plan of action. Functional
Operating Strategies are statement of means used to achieve annual objectives.
Generally an operating strategy is developed for each set of annual objectives. For
e.g. one functional strategy for achieving objectives of marketing department, one
for fianc department etc.

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Policies :
They are designed to guide the thinking, decisions, and actions of managers
and their subordinates in implementing the organisations strategy. Policies are
often referred to as Standard Operating Procedures and serve to increase
managerial effectiveness by standardizing many routine decisions and to limit the
discretion of managers and subordinates in implementation of operating strategies.
Institutional structure of strategy :
Annual objectives, functional strategies and policies are means to
communicate what must be done to implement the overall strategy. They make the
strategy operational but the strategy must also be institutionalized i.e. it must
spread over the day to day life of the company so that it could be effectively
implemented.
Successful implementation of strategy requires effective management and
integration of three elements for institutional structure of the strategy such as
1.
Structure
2.
Leadership
3.
Culture
Control & Evaluation :
The strategic plan is an intellectual process based on the estimates. The
future estimates regarding various external environment are never true completely
because these environments are uncontrollable. By this the results received from the
implementation of straty are compared with the decided targets & variances are
being found out. Where the mistakes & problems are seen, there through the
necessary improvement steps the activities are being improved.
For this purpose interpretation is done & necessary reformative activities are
being undertaken.

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