1 Introduction to Strategic Management

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Presentation by-: Ashutosh Tiwari ME+MBAJayant Nasa ME+MBA

Azad Singh Patel MLE+MRM


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THE BASICS

Strategic Management is all about identification anddescription of the strategies that managers can carry soas to achieve better performance and a competitiveadvantage for their organization.

An organization is said to have competitive advantageif its profitability is higher than the averageprofitability for all companies in its industry.

Strategic management can also be defined as a bundleof decisions and acts which a manager undertakes andwhich decides the result of the firmsperformance.


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THE BASICS

The managers must have a thorough knowledge andanalysis of the general and competitive organizationalenvironment so as to take right decisions.

They should conduct a SWOT Analysis (Strengths,

Weaknesses, Opportunities, and Threats), i.e.1. They must make best possible utilization of strengths

2. They should minimize the organizational weaknesses

3. They must make use of arising opportunities from the

business environment4. They shouldnt ignore the threats.

Strategic management is nothing but planning for bothpredictable as well as unfeasible contingencies.


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THE BASICS

Strategic Management is applicable to both smallas wellas large organizations as even the smallest organizationface competition and, by formulating and implementing

appropriate strategies, they can attain sustainablecompetitive advantage.

It is a way in which strategists set the objectives andproceed about attaining them.

It deals with making and implementing decisions aboutfuture direction of an organization.

It helps us to identify the direction in which anorganization is moving.


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WHAT STRATEGIC

MANAGEMENT DOES?Strategic management is a continuous process that-:

1. Evaluates and controls the businesses and theindustries in which an organization is involved

2. Evaluates its competitors and setsgoals and strategiesto meet all existing and potential competitors

3. Re-evaluates strategies on a regular basis to determinehow they have been implementedand whether theywere successfulor do theyneed replacement.


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IMPACT ON EMPLOYEES

Strategic Management gives a broader perspective to theemployeesof an organization and they can better understandhow their job fits into the entire organizational plan and how itis co-related to other organizational members.

The employees become more trustworthy, more committedand more satisfied as they can co-relate themselves very well

with each organizational task.

They can understand the reaction of environmental changes onthe organization and the probable response of the

organization. Thus the employees can judge the impact of such changes on

their own job and can face the changes in a better way.

The managers and employees need to be both effective as wellas efficient.


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MAJOR ROLES OF

STRATEGIC MANAGEMENT

To incorporate variousfunctional areas of the

organization completely. To ensure these functional areas harmonize and

get togetherwell.

To keep a continuous eye on thegoals andobjectives of the organization.


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WHAT IS STRATEGY?

The word strategy is derived from the Greek wordstratgos; stratus (meaning army) and ago(meaning leading/moving).

Strategy is an action that managers take to attain oneor more of the organizations goals.

Strategy can also be defined as A general direction setfor the company and its various components toachieve a desired state in the future. Strategy

results from the detailed strategic planning process.A strategy is all about integrating organizational

activities and utilizing and allocating the scarceresources within the organizational environment so as

to meet the present objectives.


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MORE ON STRATEGY

While planning a strategy it is essential to consider thatdecisions are not taken in a vacuum and that any act taken by afirm is likely to be met by a reaction from those affected,competitors, customers, employees or suppliers.

Strategy can also be defined as knowledge of thegoals, theuncertainty of events and the need to take into considerationthe likely or actual behaviour of others.

It is the blueprint of organizational decisions that:

1. shows its objectives/goals and plans for achieving the goals

2. reduces the key policies

3. defines the business the company is to carry on, the type ofeconomic and human organization it wants to be, and thecontribution it plans to make to its shareholders, customers and

society at large.


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FEATURES OF STRATEGY

1. Strategy is significant because it is not possible to foresee thefuture. The firms must be ready to deal with the uncertainevents which constitute the business environment.

2. Strategy deals with long term developments rather thanroutine operations, i.e. it deals with probability of

innovations or new products, new methods of productions,or new markets to be developed in future.

3. Strategy is created to take into account the probablebehaviour ofcustomers and competitors.

4. Strategy is a well defined roadmap of an organization. Itdefines the overall mission, vision and direction of anorganization. Its objective is to maximize an organizationsstrengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between where we

are and where we want to be.


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Private Organizations

Joint Venture

partners and

Alliances

Governments

Supply Chain

Associates

Local Communities

and Citizens

Regulatory

Authorities

Unions

Investors,Shareholders and

Lenders

Customers and Users

Employees

THE CORPORATION


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STRATEGY STATEMENT

The strategy statement of a firm sets the firms long-termstrategic direction and broad policy directions.

It gives the firm a clear sense of direction and a blueprint for the

firms activities for the upcoming years.

The main constituents of strategic statements are as follows:

Mission

Vision Goals

Objectives


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MISSION

Mission is the statement of the role by which an organizationintends to serve its stakeholders.

It describes why an organization is operating and thus providesaframeworkwithin which strategies are formulated.

It describes what the organization does (present capabilities),who all it serves (stakeholders) and what makes an organizationunique (reason for existence).

Examples: Microsofts missionis To help people and businesses throughout

the world to realize their full potential. Wal-Marts missionis To give ordinary folk the chance to buy the

same thing as rich people.

Mission statements always exist at top level of an organization,

but may also be made for various organizational levels.


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FEATURES OF MISSION

Mission must befeasible and attainable. It should be possibleto achieve it.

Mission should be clearenough so that any action can betaken.

It should be inspiring for the management, staff and society atlarge.

It should beprecise enough, i.e., it should be neither too broadnor too narrow.

It should be unique and distinctive to leave an impact ineveryones mind.

It should be analytical, i.e., it should analyse the keycomponents of the strategy.

It should be credible, i.e., all stakeholders should be able to

believe it.


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VISION

Vision identifies where the organization wants or intends to bein future or where it should be to best meet the needs of thestakeholders.

A vision is the potential to view things ahead of themselves. Itanswers the question where we want to be.

Examples:

Microsofts visionis To empower people through great software,any time, any place, or any device.

Wal-Marts visionis To become worldwide leader in retailing.

A vision statement is for the organization and its members,unlike the mission statement which is for the customers/clients.

It incorporates a shared understanding about the nature andaim of the organizationand utilizes this understanding todirect and guide the organization towards a better purpose.


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FEATURES OF VISION

It must be unambiguous.

It must be clear.

It must harmonizewith organizations culture and values.

The dreams and aspirations must be rational/realistic.

Vision statements should be short so that they are easier tomemorize.


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GOALS

A goal is a desired future state or objective that an organizationtries to achieve. Goals specify in particular what must be done ifan organization is to attain mission or vision.

Goals make mission more prominent and concrete. Theyco-

ordinate and integrate various functional and departmentalareas in an organization.

Well-made goals have following features-:

These areprecise and measurable.

These look after critical and significant issues.

These are realistic and challenging.

These must be achieved within a specific time frame.

These include bothfinancialas well as non-financial

components.


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OBJECTIVES

Objectives are defined as goals that organization wants toachieve over a period of time.

These are the foundation of planning.

Formulation of objectives is the task of top levelmanagement.

Effective objectives have following features :-

These are not single for an organization, but multiple.

Objectives should be both short-termas well as long-term. Objectives must respond and react to changes in

environment, i.e., they must be flexible.

These must be feasible, realistic and operational.


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STRATEGIC MANAGEMENT PROCESS

The strategic management process is defined as theprocess by which managers make a choice of a set ofstrategies for the organization that will enable it to

achieve better performance.

Components of Strategic Management Process


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ENVIRONMENTAL SCANNING

Environmental scanning refers to a process ofcollecting, scrutinizing and providing information forstrategic purposes.

It helps in analysing the internal and externalfactors influencing an organization.

After executing the environmental analysis process,management should evaluate it on a continuous basisand strive to improve it.


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CORPORATION

RESOURCE BASE

Investors: Shareowners & Lenders

Customers

& Users

Employees

INDUSTRY STRUCTURE

SOCIAL POLITICAL ARENA

Unions

Regulatory

Authorities

Supply Chain

Associates

Joint Venture

partners

& Alliances

Private

OrganizationsLocal communities

& Citizens

Governments


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STRATEGY FORMULATION

Strategy formulation is the process ofdeciding bestcourse of action for accomplishing organizational

objectives and hence achieving organizationalpurpose.

After conducting environment scanning, managers

formulate corporate, business and functionalstrategies.


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STRATEGY IMPLEMENTATION

Strategy implementation implies making thestrategy work as intendedor putting the

organizations chosen strategy into action.

Strategy implementation includes:-

designing the organizations structure

distributing resources developing decision making process

managing human resources.


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STRATEGY EVALUATION

Strategy evaluation is the final step of strategymanagement process.

The key strategy evaluation activities are: appraising internal and external factors that are the root

of present strategies

measuring performance

taking remedial / corrective actions.

Evaluation makes sure that the organizational strategyas well as its implementation meets theorganizational objectives.


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THANKYOU

1 Introduction to Strategic Management

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