Strategic Management

BY:
HABEEBUR RAHMAN MBA., M.Phil., (P.hD)
Asst.Prof.of BUSINESS ADMINISTRATION
ISLAMIAH COLLEGE (AUTONOMOUS) VANIYAMBADI
 Strategic Management
UNIT-1-Introduction
1. What do you mean by business?
The term business refers to buying and selling of goods and services to earn profit. So the
business includes three activities.

Production

Profit Selling

2. What are the branches of business?

The business has three branches
i. Industry
ii. Trade
iii. Commerce

Industry: The term industry is used to denote the conversion of raw materials into finished
goods and services. So industry is related with production activity.
Trade: The term trade means exchange of the produced goods and services for money to earn
profit. So the term trade is used to denote buying and selling activities.
Commerce: The term commerce means all the activities collected with the buying and selling of
commodities. It has various functions such as buying, selling, and transportation insurance and
banking etc.

3. What are the objective (or) characteristics of business?

The following are the objectives of business
i. Goal Oriented
ii. Creativity
iii. Complex in Nature
iv. Interdependence
v. Dynamism
vi. Diversity
vii. Socio-Economic System
 i. Goal Oriented: All the business have one common goal that is to earn profit. Only
because of this goal many people enter business and invest their savings as capital. The
goal of earning profit expands the business and creates lot of employment
opportunities.
ii. Creativity: The business house compete with each other in creating new products and
to maximize their profit. So, every business focus on invention and innovations
techniques.
iii. Complex in Nature: All the finished products have a long background history. The
raw materials are available in one country, the worker come from another country. The
industry is located in third country and the products are sold in different country. So all
the business activity are complex in nature.
iv. Interdependence: All the branches at business depend upon each other. For eg:
transport system bringing the raw materials and it also depend upon banking for getting
loan amount etc… So in business all activities are interdependence.
v. Dynamism: All the features of the business are dynamic in nature. The structure and
operation of a business is continuously changed according to the changes in the
environment.
vi. Diversity: The whole business system is diverse in nature and all the business unit are
not equal in size, design, operation, output and management.
vii. Socio-Economic System: All the business serve the society and all the people in the
society take part in the business in one way or other.

4. What are the levels of management (or) what are the business management level (or)
explain management of business briefly?
Business management may be defined as the process of planning, organizing, directing and
controlling all the factors of production.
There are three levels of management:
i. Top Level Management.
ii. Middle Level Management.
iii. Low Level Management.
Top Level Management: The top level management consists of the board of director, chairman or
managing director and assistant general manager. Top level management is responsible in setting
the objectives, goals, mission, vision and strategies at the organization. It can be explained from
the following charts.
Top Level Management
Board of Director

C.E.O (Chief Executive Officer)

M.D (Managing Director)

A.G.M (Assistant General Manager

Middle Level Management: Middle level management starts from department’s heads. The
department’s heads are purchase department, production department, sales department, finance
department and HR department etc… Each department is headed by a manager and all the manager
take collective decision. It can be explain in the following charts.
Middle level management

Purchase Dept Production Dept Sales Dept Finance Dept HR Dept

Purchase Manager Production Manager Sales Manager Finance Manager HR Manager

Low Level Management: The low level management consist of supervisors and workers. They
are directly involved in production activities. So, they don’t have time to part in decision making
activities. The following are the chart of low level management.
Low Level Management

Superiors

Workers

5. What do you mean by strategic management?

The strategic management is a set of managerial decisions and actions that determines the long-
run performance of corporation. It includes:
a) Environmental Scanning
b) Strategy Formulation
c) Strategy Implementation
d) Evaluation and Control
It focuses on integrating management, marketing, finance, production and human
resource management to achieve organizational goals.

6. Define strategic management?

Strategy management is the continuous planning, monitoring, analysis and
assessment of all that is necessary for an organization to meets its goals and objectives.
7. What are the objectives (or) importance (or) advantages of strategic management?
The following are the advantages of strategic management
i. Financial benefits.
ii. Clarity in objectives.
iii. Winning uncertainty.
iv. Workers satisfaction.
v. Growth of the organization.

Financial benefits: Under strategic management all the future financial difficulties are taken into
accounts while preparing the financial plans. So finance will be available without any interruption
even during critical periods. For e.g.: creation of reserves, maintaining outstanding capital etc… to
meet future financial needs.

Clarity in objectives: The strategic management clearly fixes the objective and the methods of
achieving the objectives so there will be no confusion about the objectives. All the employees will
understand that the management is very strong in its objectives and they have to work hard for
the achievement of the objectives.

Winning uncertainty: Strategic management insures a perfect future for the organization and its
workers. It prepares well in advance all the remedies (solutions) for future problems. So the
functions of the organizations will not be affected due to any reason.

Workers satisfaction: All the strategic arrangements made by the management create
confidence in the minds of the workers so they become assured about their employment and the
organization. It automatically leads to workers satisfaction in the organization.

Growth of the organization: The strategic ideas or techniques applied by the management
insurance the success of the organization. The targets are achieved, the profits are maximized
and it leads to the growth of organization.

8. What are the disadvantages or demerits or limitations of strategic management?

The following are the disadvantages of strategic managements.
i. Inelastic plans.
ii. Expensive.
iii. Time consuming.
iv. Confusion among workers.
Inelastic plans: Under strategic management lot of arrangements are made in advance for the
successful implementation of plan. So if the management decide to alter the plans it will be very
difficult under strategic management. So the management is under pressure to follow plans.
Expensive: In strategic management the services of various experts are obtains to introduce
various strategies. For getting this experts opinions the company has to spend lot of money for
providing fees and organizing various meeting.
Time Consuming: Strategic plans and other functions management cannot be achieved over night
and it needs a few weeks or few months to introduce strategic function in the organization. So the
decision management cannot act quickly during emergency or emergencies.
Confusion among workers: The workers at low levels and middle levels cannot understand the
various strategies of the management and sometimes differences of opinion may arise between the
management and the workers.

9. Explain strategic business unit briefly? (or) what are the functional areas of strategic
management ?
Strategic management divides the organization on the basis of strategic business unit
(SBU).Each SBU represents a product line. For eg: if an organization manufactures soap,
shampoo, biscuits, balms and pain killers. In this case the functional areas of this case the
functional areas of this case the functional areas of this organization will be divided into three
SBU’S on the basis of similarities of products the following diagram will explain the
functional areas of this organization.
B.O.D

M.D

G.M

A.G.M

(SBU- 1 (Soap, Shampoo) SBU-2 (Biscuits) SBU-3 (Painkiller, balm)

a)Purchase dept b)Sales dept c)Marketing dept

a)Purchase dept b)Sales dept c) Marketing dept

a)Purchase dept b)Sales dept c) Marketing dept

If an organization manufactures just one group of products the functional areas will not be divided
into strategic business unit (SBU), because there will be only one department. On the other hand if
the organization manufactures different groups of products then the strategic business unit (SBU)
will implement. Because there will be separate purchase and production department for separate
products.
 SWOT ANALYSIS
10. Explain SWOT analysis in detail?
Meaning of SWOT Analysis:-
SWOT means a Strategic Management Techniques which represents
the strength; weakness; opportunities; threats of an organizations in any area of the
management process. SWOT may be applied in planning; organizing; controlling and
directing.
SWOT may also be applied in function departments of the
organization such as productions marketing; finance etc…

SWOT analysis in detail:

S - Strength
W - Weakness
O - Opportunities
T - Threats

SWOT analysis mostly applied in marketing. In marketing SWOT is a major techniques which
helps the management to decide.
a) What product to be introduced
b) What is the marketing area
c) The price of the product
d) When to introduce the product
This can be understood easily by the following.
Strength:
The term strength represents the areas where our products is strong. For e.g.: a product may be
strong in its quality; price; or customers support. The study of strength helps the management to
develop the product; to match or overtake the strength of the competitors product: we may say that
the strength of Colgate toothpaste are
a) Brand value
b) Quality
c) Price

Weakness:
The second component analysis is weakness. Under This component the management makes a
self-study about its product. The study of weakness exposes the short comings of a product. These
weakness report helps the management to rectify the short comings and improve the products. For
eg: in a Colgate toothpaste we can find out a few weaknesses such as can find out a few
weaknesses such as
a) Unattractive packing
b) Leak of flavour
c) Use of animal fat etc…
Opportunities:
Before introducing or expanding a product in the market, a management has or chance for
its product in the market. This opportunities study involves the external factors such as
a) The demand for the product
b) The purchasing power of people
c) The existence of weakness in competitors’ product. For eg: in the case of Colgate
toothpaste, the opportunities will be market leadership, fixing low price to attract
customers, making attractive packaging etc…
Threat:
The term threat denotes that the existence of negative aspects in the market. A
product may be complete in all the aspects such as full strength, lack of weakness, full of
opportunities but still it may face some problem from the customer or market situation or from the
government. Such problems are called as threat.

Case Study:
11. Jet airways is operating 50 flights in domestic routes and all the flights are 10 years old.
The occupancy is 60%.
a) Prepare SWOT analysis for the improvement of jet airways?
SWOT analysis:
i. Strength
ii. Weakness
iii. Opportunities
iv. Threats

Strength:
Jet airways is a largest private agents in India. So it has strong goodwill among passengers.
Occupancy rate is more than 50% is considered safe for airlines, as jet airways has more than 60%
rate. Jet airways has 50 routers, it has full coverage of India.

Weakness:
There is no international route in jet airways and it is likely to affect the image of the
airlines. All the flights in jet airways are 10 years old and foreignness may not like to fly in old
planes.

Opportunities:
As jet airways has 50 router, it can attract lots of passenger if it reduces the fair. As it is a
largest private airlines, it can easily get license from the central government to operate
international flights. Jet airways has the scope to attract foreign tourist if it introduces new flights.
Threats:
The threats of jet airways is passengers may reject because it has 10 years old flights. If
other airlines introduce new flights, jet airways will suffer. Lack of foreign routes may affect the
good will the airways.
12. What do you mean by vision?
A vision statements describes the desired future position of the company.
It is an aspiration description of what an organization would like to achieve in the mid-term
or long-term future. It is intended to serve as a dear guide for choosing current and future courses
of action.
The following are the advantages of vision:
i. A good vision helps in the creation of a common identity and a shared sense purpose.
ii. Good vision of business undertaking represents good image among the public.
iii. Good vision are competitive, original and unique.
iv. It is only the vision of the business that faster long term thinking and definite future for
the business.
v. It fasters risk taking and also experimentation.

13. What is a mission?

A mission statement defines the company’s business, its objectives and its approach
to reach those objectives.
A mission statement has certain desirable components. An ideal mission statement
of business should define its customer product or services, markets, technology, philosophy
and self-concept.

The following are the characteristic of mission.

i. Mission of the firm should be very clear.
ii. It should be fairly feasible and conceivable. The expressions regarding purpose
shouldn’t be too high and unachievable and it should not demotivate the people.
iii. It should be clearly articulated.
iv. It should be relevant and appropriate to the organization in term of his history, culture
etc.
v. The mission statement should be positive.

14. What is objectives (or) goals (or) targets?

Objectives or goals or targets may be defined as “Those ends which the organization seeks
to achieve by its existence and operations”.
(Or)
A specific result that a person or system aims to achieve within a time frame and with
available resources.

15. What are the levels of strategy (or) elements of strategic management?
The following are the levels of strategy:
1. Corporate level strategy.
2. Business level strategy.
3. Functional level strategy.
 • Corporate level strategy:
Corporate level strategy involves the overall scope of the organization, its operation in structural or
financial terms and the allocation of its resources throughout its various business or divisions.
This level involves senior management in determining the key activities of the company.
At this level the strategic planner has to look ahead and decide which business the company
will be involved in for the future.
Corporate level strategy is the long-term strategy encompassing the entire organization.
Corporate level strategic management is defined as the overall character and mission of the
organization and the allocation of resources.
Corporate strategy encompasses a firm’s corporate action with the aim to achieve company’s
objective while achieving a competitive advantage.

• Business level strategy:

Business level strategy is also called as SBU level strategy or competitive strategy.
Each SBU sets its own strategy to make the best use of its resources. At such a level, strategy is
a comprehensive plan providing SBU’s, allocation of resources among functional areas and co-ordination
between them for making optimal contribution to the achievement of corporate level objectives.

(Or)
Generally business level strategy is concerned with decisions pertaining the products mix, market
segmentation and competitive advantage for strategic business unit (SBU).
(Or)
Business strategy deals with the competitive position of the specific SBU’s with respect to those
products or services which should be developed and the markets towards which they be aimed.

• Functional level strategy:

Functional level strategy is concerned with specific functions within the organization, such as marketing,
production, finance and HR etc.
Functional level strategic management is also called as operational strategy.
Functional level strategic management is the management of relatively narrow areas of activity, which are
vital, pervasive or continuing importance to the total organization.
Under functional level strategy, the strategic manager must make best strategies towards the development of
functional departments of functional departments and as well as the organization.
 UNIT-2

1. What are the Environment of strategic management? (or)

What are the factor influencing strategic management? (or)
What are the External Environment?

Environment of strategic management

I) Internal Environment II) External Environment

a. Factors Influencing Micro Macro

Business Decision
b. Marketing Resources a. Supplier a. Economic Environment
c. Mission, Vision, b. Customer b. Political Environment
Objectives c. competitors’ c. Legal Environment
d. BOD d. Socio-cultural Environment
e. Technological Environment
Internal Environment:
The environment factors which affect within the organization is called as internal environment. The
following are the internal environment which affect the strategic management.

a) Factors influencing business decision: The strategic manager needs to focus on those factors which
Influence business decisions. He needs to select the best alternative among available alternatives
towards the achievement of organizational goals.

b) Marketing resource: The strategic manager has to identify the available market resources within the
organization. His main objective is to do a strategic planning towards the product so that the product sales
can be maximized.

c) Mission, vision and objectives: The strategic manager needs to plan based on the mission, vision and
objectives of the organization. His main objective is to clearly determine the mission, vision and
objectives of the organization among employees.
External Environment:
The factors or environment which affects outside the organization is called as external
environment. It is classified into two types 1. Micro Environment 2. Macro Environment.
Micro Environment:
a) Supplier
A supplier is a person who supplies the resources or materials to an organization. The
organization needs to maintain a good relationship with the supplier.

b) Customer
A person who purchase the product from an organization is called as a customer. Every
organization needs to maintain a sound relationship with the customer.

c) Competitor
An organization which produces a similar to our product is called as competitor. Every organization have to
focus on competitor’s movement.

d) Board of directors
The BOD is the top-level management of the organization.
Every organization needs to follow the decisions of the top-level management.

Macro environment:
a) Economic Environment
The term economic environment is study about income of the society or individual or nation. The
income of the individual plays an important role towards buying a product.

b) Political environment
Every organization needs to follow the rules and regulations of the political parties who have
power to frame the rules and regulations. No organization can omit the rules and regulation of political
parties.

c) Legal environment
The rules and regulation framed by the government is called legal environment. Every
organization must follow rules mandatory.
d) Socio-cultural environment
The study about the population is called as social environment and the study about the behavior of
the society is called as cultural environment every organization needs to study the socio-cultural
environment before entering in the market.
e) Technological environment
The term technological environment refers to the study about the latest and modern technology.
Every organization must update the technology and train the employees of the organization based on
the modern technology.
 1. What are the process of strategic management?
The following are the process of strategic management.
• Formulation of objectives.
• Environment scanning.
• Evaluating organizational strength and weakness.
• Formulation of strategies.
• Implementation of strategies.
• Evaluation
• Formulation of objectives:
Formulation of objectives is an important process of strategic management. Under this process the
organization formulates the goals and objectives of the organization.

• Environmental scanning:
Every organization should focus on environmental scanning business environment or strategic
environment is classified into following types.
Environment of strategic management

I) Internal Environment II) External Environment

d. Factors Influencing Micro Macro

Business Decision
e. Marketing Resources a. Supplier a. Economic Environment
f. Mission, Vision, b. Customer b. Political Environment
Objectives c. competitors’ c. Legal Environment
d. BOD d. Socio-cultural Environment
e.Technological Environment
• Evaluating organizational strength and weaknesses:
Every organization should evaluate its strength and weaknesses before entering into the
potential market.

• Formulation of strategies:
Under this process the organization should formulate various strategy to a particular problem and
to identify the solutions for the problems.
• Implementation of strategy:
Under this process the organization should select and implement that strategies which are
beneficial to the organization for achieving its objectives.
• Evaluation:
Under this process the strategic manager should evaluate whether the implemented strategies
are accurate and beneficial or not.
 3. What do you mean by strategic decision making?
The term strategic decision making refers to the selection of useful strategies to be
implemented in the organization to achieve the objectives of the organization.

4. What are the process of strategic decision making?

The following are the process of strategic decision making
1. Problem awareness.
2. Problem diagnosis.
3. The development of solutions.
4. The selection of Solutions.
5. The implementation of solutions.
[

• Problem awareness:
Problem awareness is the process of strategic decision making. Whenever the problem arises
then the strategic manager needs to take suitable decision to find solutions for the problems.

• Problem diagnosis:
After identifying the problem the next step is problem diagnosis. Under this process the strategic
manager gets the opinion of the senior manager, executives and other managers about the solution of
the problem.

• The development of solution:

Under this process the strategic manager should develop various solutions to a problem. He
should discuss the solutions of the problems with top-level management of the organization.

• The selection of solutions:

After developing the solutions of a problem, the next step is to select a best solution to
the problem. This is very important process because it will lead to direct result of the organizational
problem.
• Implementation of the solutions:
Implementation of solutions is the last and important process of strategic decision making.
Under this process the selected solutions is to be implemented. If the solution is genuine and unique
then the organization will have very good impact towards the objectives of the organization.

Corporate strategy
1. What do you mean by corporate strategy (or) grand strategy (or) corporate level strategy or strategic
alternative?
Corporate strategy is also called as grand strategy. Corporate strategy is the direction, an
organization takes with the objectives of achieving business success in the long-term it is formulated by
top-level management of the organization.

2. Define corporate strategy?

Corporate strategy encompasses a firm’s corporate actions with the aim to achieve company
objectives while achieving a competitive advantage.
 3. What are the types of corporate strategy or levels of corporate strategy or what are the
strategic alternatives and explain in details?
The following are the types of corporate strategy
1. Stability strategy
2. Growth strategy
3. Retrenchment strategy
4. Combination or mixed strategy

• Stability strategy:
Stability strategy refers to a strategy by a company where the company stops the
expenditure or expansion. In other words stability strategy refers to a situation where company do not
venture into new markets or introduce new products.

• Growth strategy:
A growth strategy is one which management plans to develop its business and to achieve
organizational goals accurately. The following are the types of growth strategy.

Types of growth strategy

I)Internal or Intensive growth. II)External or Integrative growth

a. Horizontal growth. a. Merger

b. Vertical growth. b. Joint venture
c. Concentric growth. c. Acquisition
d. Conglometric growth. d. Amalgamation

• Retrenchment strategy:
A strategic option which involves in reduction of any existing product or service line along with
the level of objectives set below the past achievement is known as retrenchment strategy.
In other words a strategy used by corporation to reduce the diversity or the overall size of the
operation of the company is known as retrenchment strategy.
Retrenchment strategy is often used in order to cut expenses with the goals of becoming a more
financial stable business.
The following are the types of retrenchment strategy.
1. Turnaround strategy
2. Divestment strategy
3. Liquidation strategy
• Combination or mixed strategy:
Combination of any corporate strategy used by an organization in different business at the
same time or in the same business at different times with the objectives of achieving organizational
goals is called as combination strategy.
4. What do you mean by strategic planning?
Strategic planning is a process in which organizational leaders determine their visions for the
future and to determine their objective for the organization.

5. What are the process of strategic planning?

The following are the process of strategic planning
1. Mission
2. Objective
3. Situation analysis
4. Strategy formulation
5. Strategy implementation
6. Strategy control.

• Mission:
A mission statement defines the company business, its objectives and its approach to reach its
objectives.
A mission statement has some certain desirable components. An ideal mission statement
of business should define its customer’s product or services, markets, technology, philosophy and
self-concept.

• Objectives:
Objectives or goals or targets may be defined as those ends which organization seeks to
achieve by its existence and operations. The strategic manager has to focus on objectives of the
company while preparing strategic plans.

• Situation analysis:
Situation analysis refers to those analysis by which a strategic manager analyses the solutions
to a particular problem based on the situation.

• Strategy formulation:
A strategic manager should formulate various strategies to solve a problem which arises in the
organization.
• Strategy implementation:
After formulating various strategies the strategic manager needs to implement those strategies
which will lead to attain the objectives of the organization.
• Strategy control:
After implementing a strategy, the strategic manager needs to control the strategy and all the
levels of management towards the objectives of the organization.
 6. What do you mean by strategy formulation?
The strategy formulation refers to the process of selecting the most appropriate course of
actions for achieving the organizational goals.
7. What are the process of strategy formulation or what are the steps involved in strategic
formulation?
The following are the process of strategy formulation
1. Define the organization
2. Define the strategic mission
3. Define the strategic objectives
4. Define the competitive strategy
5. Implement strategies
6. Evaluation and control
• Define the organization:
The first step in strategy formulation is to identify the company’s customer, without a
strong customer base the organization will not be successful.
• Define the strategic mission:
The organization must prepare mission to accomplish its objectives.
• Define the strategic objectives:
Every organization must frame its short-term and long-term objectives. Objectives must be
simple and clear.
• Define the competitive strategy:
The next step in strategy formulation is to determine where the product fits into the market place.
Every organization must focus on competitor’s strategy to identify the opportunities and threats in
the competitive market.
• Implement strategy:
After selecting the best strategy, the organization needs to implement it.
• Evaluation and control:
After implementing the strategy, the strategic manager needs to evaluate and control it
frequently.

8. What do you mean by project life cycle?

A project life cycle is a work flow of activities defined in the systematic ways to gain
maximum benefits from the projects.
9. what are the phases of project life cycle?
The following are the phases of project life cycle.
1. Identification phase
2. Planning phase
3. Implementation phase
4. Closure phase
• Identification phase:
It is also called as identification phase. In this stage project objectives are identified and
requirements are clarified.
• Planning phase:
In project planning phase the scope of the project is defined more accurately.
• Implementation phase:
In this phase product or service is carried out according to plan and based on the situation.
• Closure phase:
In this stage product or service is been delivered to customers or a client for evaluation.
 10. What do you mean by portfolio management?
The term portfolio management refers to the different kinds of business or different kinds of
products an organization dealing.
For example: if an organization is involved in 3 different business such as, textile, chemical
and cool drinks business then it will be said that it is having 3 portfolio.
When an organization has a number of port folios, it becomes necessary to know which is the
best portfolio for further investment and which is the worst portfolio for divestment.

11. What do you mean by divestment?

Divestment means closing down of the organization due to unavoidable circumstances the
unavoidable circumstances may include very strong competition, product becoming outdated or
government regulations etc. So during such critical circumstances it is wise to close down the
business and shift to some other business.

12. Explain BCGmatrix in detail?

The term BCG refers to Boston consulting group. The BCG matrix helps to divide for further
investment and divestment in business.
It is classified into four categories.
1. Star
2. Question mark
3. Cow
4. Dog
Production Our market Results
market
Cosmetics:
High High Star
Cool drinks:
High Low Question mark?
Medicines:
low High Cow
Textile:
low Low Dog
• Star:
If our product is in a star market, it means that the market is very strong and there is
possibility for growth so, if the organization is willing it can make further investment in star portfolio.

• Question mark:
Question mark represents the doubtful conditions of our product but the market is strong. In
this stage the organization has two options
A: it can make investment in future.
B: the organization can leave the market.
 • Cow:
The cow market represents a standard demand for our products in a low market. This is the
market for the product is low, but our share is high.
In cow market there is no scope for growth of the market. So, the further investment is not
necessary and if required a part of the investment may be taken from the cow market for reinvestment
in star market.

• Dog:
Dog market represents a market conditions where the market is very small and the share of
our product is also small. So, there is no scope for development. Hence it is better advised that the
dog port folio is closed down and the capital is transferred to star market.

13. Explain general electric matrix in details? (GE matrix)

The term G.E matrix refers to general electric matrix. It was introduced by general
electric company of U.S.A in consultation with MCkansey consulting group.The G.E matrix was not
satisfied with B.C.G matrix divides the market into four groups namely
1. Star.
2. Question mark.
3. Cow.
4. Dog.
So G.E matrix divides the market into nine categories. It is also called as nine point matrix or
nine cell matrix.

The G.E matrix takes into account 3 aspects only

A. Market conditions
B. Industries strength
C. Our product strength

The market conditions is divided into 3 zones namely

1. Green color.
2. Yellow color.
3. Red color.
Green Green YELLOW

Green YELLOW Red

YELLOW Red Red

1. Green color - represents very good economic condition.

2. yellow color - represents medium economic condition.
3. Red color - represents poor economic condition.

As these 3 colors represent a signal light, it is also called as signal light matrix. By using all
these 3 aspects nine different market conditions are developed and depending upon our position in the
nine cells or matrix, we can invest on divest from the market. The following are the G.E matrix table.
 UNIT – 3 Generic Strategic Alternatives and
UNIT- 4 External Growth Strategy

1. what do you mean by generic strategy?

The term generic was derived from Gene. Gene means study about one’s personal
information or parts.
In business generic strategy is a study about the personal parts of an organization, which includes
the different products portfolio, SBU (strategic business unit), different functional departments and
about different branches.

2. What do you mean by growth strategy?

The strategic formulation of business development of an
organization is called as growth strategy. It is classified into 2 types
1. Internal or intensive growth.
2. External or integrative growth.

3.What are the different types of growth strategy?

The following are the types of growth strategy
Growth strategy

I) Internal or Intensive Strategy. II)External or integrative Strategy

1. Horizontal growth. 1. Merger

2. Vertical growth. 2. Joint venture
3. Concentric growth. 3. Acquisition
4. Conglomerate growth. 4. Amalgamation
I) internal growth strategy:
• Horizontal growth:
A horizontal growth is one which takes place within the products manufactured by the
organization. In short it is an expansion of the production of the existing product or market.
For example: if an organization manufacturing and selling detergent soap and powder, and it’s
extents it sales of the same detergent soap and powder in another state is called as horizontal growth.

• Vertical growth:
Vertical growth means manufacture of next stage products from existing product.
For example: if the organization producing soft drinks of 1 Litre bottle and the same organization
focusing on 2 Litres soft drink bottle is called as vertical growth.
 • Concentric growth:
Concentric growth means manufacturing a new product by utilizing the same machinery and
technology which is used for the manufacturing of existing product.
For example: an organization which packing and selling only tea powder may start the packing
and selling of coffee by using the same machinery.
• Conglomerate growth:
Under conglomerate growth the organization enters into the production of a new kind of
product without any relations with the existing products.
For example: an organization manufacturing detergent soaps and powder may enter into the
production of biscuits or chocolates etc. then it is called as conglomerate growth.

II) External or integrative growth:

• Merger:
Merger may be defined as merging or joining of one company with another company. The
bigger company in this transactions will be called as merger and the small company is called merged
company.
The name of the merged company will be removed and the name of the merger company will
be used as a common name.

• Joint-venture:
Joint venture may be defined as the combined activity of 2 different companies for completing
a specific project without losing their identity.
For example: If two companies Hero and Honda joins together to do a specific project, then it
is called as hero Honda company.
The advantage of joint venture is no company will lose their identity after the completion of
project the two companies may continue or dissolved the project.
• Acquisition:
Acquisition may be defined as the outright purchase of another
company by fixing a selling price.
Acquisition is classified into two types
1. Friendly acquisition.
2. Hostile acquisition.

Friendly acquisition:
If the seller is willing to sell his company then it is called as friendly acquisition.
Hostile acquisition:
If the owner of the company is not willing to sell his company and the buyer may approach
the stock market and buys majority of shares from the shares holders and automatically the buyer will
become the owner of the company. It is called hostile acquisition.

• Amalgamation:
In amalgamation also two or three companies joins together for doing a business but the
difference between merger and Amalgamation is under amalgamation all the companies lose their
identity and a new name is fixed for the amalgamation company.
For example: if three companies namely A, B and C joins together to do a common business and they
keep the name of the company as good luck limited company.
In merger only one company will lose its name but in amalgamation all the company will lose their
name.
4. What are the types of merger?
The following are the types of merger:
1. Horizontal merger.
2. Vertical merger.
3. Concentric merger.
4. Conglomerate merger.

• Horizontal merger:
Horizontal merger takes place when there is a combination of two or more organizations engaged
in certain aspects of the production or marketing processes.
For example: footwear company merging with another footwear company.

• Vertical merger:
When two companies are producing same goods, but are at different stages, then it is called as
vertical merger. For example: footwear company merging with leather tannery.
• Concentric merger:
Concentric merger takes place when there is a combination of two or more companies related
to each other in terms of customer functions or customer groups.
For example: a foot wear company merging with socks making company.

• Conglomerate merger:
Conglomerate merger takes place when there is a combination of two or more companies
which are unrelated to each other.
For example: footwear company merging with pharmacy company.

5. What are the features of joint venture?

The following are the features of joint venture
1. Joint venture is a short duration business.
2. The members of joint venture are known as co-ventures
3. Joint venture does not follow the accounting concepts called going concern.
4. In joint venture, profit and losses are shared in agreed percentage. If there is no agreement
regarding the distribution of shares, then they will share profit equally.
5. Joint venture is an agreement for polling of capital and business abilities to be employed in
some profitable ventures.

6. What are the advantages of joint venture?

The following are the advantages of joint venture
1. Accessing additional financial resources.
2. Sharing the economy risk with the co-venture.
3. Widening economic scope fast.
4. Tapping new methods, technology and approaches which will lead to more business.

7. What are the disadvantages of joint venture?

The following are the disadvantages of joint venture
1. Under joint venture two companies may share profit and it may lead to conflicts.
2. There will be problems in decision making process.
3. There will be lack of co-ordination between two companies.
4. There may be lack of industrial peace and harmony.
8. What do you mean by diversification or what is diversification strategy?
The term diversification strategy is a practice under which a firm enters an industry or market
which is different from its core business.
If the organization offers products which is different from the previous one, the attempt will
be known as diversification.
9. What are the reasons for diversification?
The following are the reasons for diversifications
1. Reducing risk of relying on only one income source.
2. Avoiding cyclical or seasonal fluctuations by producing goods and services by different
demand cycle.
3. Achieving a higher growth rate.
4. Countering a competitor by invading the competitor’s core industry or market.

10. What are the types of diversification?

Diversification is classified into two types
1. Concentric or synergistic diversification
2. Conglomerate diversification.
• Concentric or synergistic diversification:
When an organization takes up an activity in such a manner that is related to the existing
business is called as concentric diversification.
Concentric diversification means that the company expands its business by investing or
producing same or similar to the product which is producing at present.
For example: if the company producing a product nationally and it is focusing on selling it’s
product internationally.

• Conglomerate diversification:
When an organization produces a product which is unrelated to its existing product then it is
called as conglomerate diversification. The main objective of conglomerate diversification is expand
its business in different products and services.
For example: if a company manufacturing foot wear and it is focusing on to start hotel
industry.

11. What do you mean integration?

Integration actually means combining activities related to the present activity of a firm.

12. What are the types of integration?

Integration is classified into two types
1. Horizontal integration.
2. Vertical integration.

• Horizontal integration:
Horizontal integration is a process that takes place when an organization takes up the same
type of product at the same level of production or marketing processes.

• Vertical integration:
Vertical integration is the combination of technically distinct production, distribution and other
economic processes within the confines of single organization.
 13. What do you mean by organizational structure?
The term organizational structure refers to important elements of an organization which shows
the organizational departments and positions of the employees.

14. What are the types of organizational structure?

The following are the types of organizational structure.
1. Entrepreneurial structure.
2. Line and staff organizational structure.
3. Functional organizational structure.
4. Product organizational structure.
5. Regional organizational structure.

I. Entrepreneurial structure:
Owner

Employee
This is the most basic form of organizational structure where the organization is owned and
managed by one person. For supporting purpose he will appoint an employee.

II. Line and staff organizational structure:

Board Of Director

Managing Director

Manager

Production Sales Marketing Finance H.R

Dept. Dept. Dept. Dept. Dept.

Supervisor Supervisor Supervisor Supervisor Supervisor

Worker Worker Worker Worker Worker

Line and Staff Organization is a compromise of line organization. It is more complex than line concern.
Division of work and specialization takes place in line and staff organization. The whole organization is
divided into different functional areas to which staff specialists are attached.
 III. Functional organizational structure:
Board Of Director

Managing Director

Manager

Production Sales Marketing Finance H.R

Dept. Dept. Dept. Dept. Dept.
The functional organizational structure shows the relationship between one departments with
another department. Departments are namely production, sales, marketing, finance and HR.

IV. Product organizational structure:

Board Of Director

Managing Director

Manager

Soap Shampoo Biscuits Marketing Finance H.R

Dept. Dept. Dept.

Product Sales Product Sales Product Sales

Dept. Dept. Dept. Dept Dept. Dept.
The product organizational structure shows the position of a product and
department, when the organization produce more than one product.
 V. Regional organizational structure:
Board Of Director

Managing Director

Manager

South North East West

Regional Regional Regional Regional
Manager Manager Manager Manager

The regional organizational structure shows the relationship between the management and
different regional managers. The duties and responsibilities of one regional manager is different from
other regional manager. Hence the low level management remains the same.

15. What do you mean by strategic change?

(Or) Management change?
Change is unavoidable in all the organization. When a change takes place the
organization must be prepared to accept the change. The organization must adopt different
strategies to face the change in the organization.

16. How does the change can be applied under strategic management?
Generally change will always be permanent in every organization towards the decision
making or implementation of different strategies in an organization.
The strategic manager needs to analyze the strategies before implementation. The strategic manager
needs to consult with other functional departmental manager for applying any change in the organization.
17. What are the characteristics or importance of features of strategic change? Or management change?
The following are the features of strategic change.
1. Leadership.
2. Human factor.
3. Communication.
4. Organization.
5. Resource allocation.
• Leadership:
When a change takes place, it is the practice of every organization to appoint a new leader. A
new leader who is called as CEO (chief executive officer) will be knowing all the aspects of the
change. The existing CEO will be transferred to other areas.

• Human factor:
The term human factor refer to the staff members of the organization depending upon the size
of the change some staff members will be promoted, some of them will be transferred and some will
be newly appointed.

• Communication:
All the staff members must communicate about the changes taking place in the organization.
If they are not informed about the change, they will not co-operate with the management.

• Organization:
If the existing organizational structure is not suitable for the change, then the new leader must
prepare a new organizational structure to match the changes taking place.

• Resource allocation:
A change cannot takes place without spending money. So a leader must assess well in
advance the requirements of money for making the changes in the organization. He must accept
change only if sufficient resource is available.

18. What do you mean by strategic control?

Strategic control is concerned with the actions taking place on the basis of the strategies
applied.

19. What do you mean by strategic evaluation and control?

Strategic evaluation and control is a process of determining the effectiveness of a given
strategy in achieving the organizational objectives and taking corrective actions whenever required.
20. What are the types or kinds of strategic evaluation and control?
The following are the types of strategic evaluation and control.
1. Premise control.
2. Implementation control.
3. Surveillance control.
4. Special alert control.
• Premise control:
The term premise means assumptions and conditions based on which the strategy of a
company is formed. It is possible that in course of time the assumptions or conditions may disappear
or change and if it is not detected then it will spoil the whole strategy. So at regular intervals the
premised must be evaluated properly.
• Implementation control:
Implementation control is the second type of strategic evaluation and control. At this stage the
top level management verifies whether all the strategies are implemented according to the strategic
plans.
• Surveillance control:
Strategic management is mainly based on the study of internal and external environment. Any
changes in internal and external environment may affect the strategies of the organization so the
organization should analyze the environment regular.

• Special alert control:

Sudden and unexpected development like merger, joint venture, amalgamation and acquisition
may takes place in the external environment. The special alert group keeps a close contact with the
external environment through secret agents and informs company well in advance how to reacts.
 UNIT-5- IMPLEMENTATION OF STRATEGY

1. What do you mean by strategy implementation?

Strategic implementation refers to strategic action. Under implementation the ideas and decisions
are practically evaluated.
Strategy implementation consist of securing resources, organizing there resources and directly
the use of these resources within and outside the organization.

2. Define strategy implementation

Strategy implementation is defined as the implementation of policies and strategies concerned
with the design and management of system to achieve the best integration of people, processes and
resources to achieve organizational objectives.

3. What are the process of strategy implementation?

The following are the process of strategy implementation

i. Operationalizing
ii. Institutionalizing
iii. Evaluation and control

• Operationalizing:

Operationalizing the strategy helps the organization to focus on strategic actions. The
organization must follow the strategies based on its goals.

• Institutionalizing:

Under this process the strategic manager must evaluate the decisions before implementation. It is very
essential to a strategic manager to focus on forecasting before the actions

• Evaluation and Control:

Under this method the strategic manager needs to evaluate the strategies and control the strategy based
on actual planning. The strategic manager should have control on strategic implementation.
4. What are the steps involved in strategy implementation?
The following are the steps involved in strategy implementation.
i. Formulation of SBU strategy
ii. Leadership implementation
iii. Communicating the strategy
iv. Long-term objective
v. Resource allocation
• Formulation of SBU strategy:
The organization needs to formulate multi SBU strategy for the production of multiple products. The
SBU strategy process are under follows.

Corporate strategy
SBU Objective
SWOT Analysis
Strategic Analysis and Choice
Implementation
Evaluation and Control
• Leadership implementation:
Leadership implementation refers to the right person for the right job, these should be
responsible person for decision making process in an organization. Under this step the role of a
leader plays vital role for implementation of the strategy.
• Communication the strategy:
Under this step, a strategic manager needs to communicate the various ideas or strategies to
be followed in an organization with the other functional departments. Proper communication leads
to co-ordination among the employees of the organization, in effective communication may leads
to conflicts.
• Long-term objectives:
Long-term objectives indicate the long-term planning and positioning of the organization.
Generally the objectives of the organization will be profit maximization or rendering services to
the public.
• Resource allocation:
The strategy can be easily implemented when there is a proper allocation of resources.
The organization must provide relevant resources to the relevant department for functioning its
operations. The strategic manager must focus on resources allocation step for the
implementation of strategies in the organization.
 LEADERSHIP
5. Who is a Leader?
A person who plans, directs, organize and control the employees of the organization or
sub-ordinates or term is called as a leader.

6. What do you mean by strategic leader?

A person plans, directs, organize and control his
sub-ordinates or term in respect of finding a solution to the problem by implementing various
strategies is called is called is called as strategic leader.

7. What are the qualities of strategic leadership?

The following are the qualities of strategic leadership:
i. Expert
ii. Communicator
iii. Motivator
iv. Coordinator
v. Good organizer
vi. Father figures
• Expert:
A person must be expert and strategic to become a leader then only he can guide
the sub-ordinates. If he does not have relevant his sub-ordinates.

• Communication:
It is the duty of the leader to communicate all the necessary information of the
management to his sub-ordinates. Better communication leads to better co-ordinates in
the organization.

• Motivator:
Motivation may be defined as inducing or encouraging the employees to work hard
towards the achievement of objectives of the organization it is the duty of the strategic leader to
effectively motivate the workers.

• Coordinator:
A leader must maintain good relationship with his sub-ordinates. If a leader fails to co-operate
with his sub-ordinates then the objectives of the organization cannot be achieve easily.

• Good organizer:
The success of any organization depends upon its organizational structure is effective
then there will not be any conflicts among the workers is an organization.

• Father figure:
A father figure means the leader must be able to control the feelings of the workers. It may
also be defined as the attachment or affection developed by the leader due to his seniority.
8. What are the functions of a strategic leader?
The following are the functions of a strategic leader.
i. Planning
ii. Policy making
iii. Execution of plans and policies
iv. Controlling
v. Representing the group
vi. Settlement of disputes
vii. Answerability

• Planning:
Strategic leader has to prepare suitable plans for the effective functioning of his group or
team. Planning enables his followers to work for the achievement of objectives of the
organization.

• Policy making:
A strategic leader has to make good and effective policy to complete the work on time.
All this followers needs to understand the policies which is framed by him.

• Execution of plans and policies:

Preparing plans and formulating policies by itself will not serve any purpose.
Implementation of plans and policies is very important. A strategic leader has to execute plans
policies a properly.

• Controlling:
A strategic leader has to control all the departments’ activities which is certain to him.

• Representing the group:

A strategic leader has to represent his group both within and outside the organization. He
has to convey the feelings, sentiments and the stand of his group on important issues.

• Settlement of disputes:
A strategic leader has to settle any disputes arises between him and his group members.

• Answerability:
A strategic leader becomes answerable not only for his actions but also for his followers.
9. What are the kinds of strategic leadership styles?
The following are the kinds of strategic leadership styles.
i. Autocratic leadership.
ii. Democratic leadership.
iii. Laissez faire leadership.
iv. Functional leadership.
v. Institutional leadership.
vi. Paternalistic leadership.
• Autocratic leadership:
An autocratic leader wants his subordinates to work in the manner he wants. He tells
them what they should do, where, when and how. He does not let his followers to offer any
suggestion.
The automatic leader thinks that his followers are incapable of making decisions. To
secure performance from his subordinates, he may use coercive power.
The automatic leader does not have confidence in his sub ordinates. He thinks that are
basically lazy, they don’t have any aim and they dislike the work.

• Democratic leadership:
Democratic leadership is also called as participative leadership. A democratic leader does
not make unilateral or one-sided decisions. He provides scope for his follower to participate in the
decision making process.
A democratic leader allows his sub ordinates to discuss the problem and put-forth their
views freely. The final decision will be made after discussions. A democratic leader thinks that
his followers are capable of doing the work without any mistakes or problems.

• Laissez faire leadership:

The dictionary meaning of laissez faire is policy of non-interference. A laissez-faire
leader is also called as free rein leader. A laissez faire leader gives full freedom to his followers
to act. He does not frame any strict rules and regulations to his followers. He neither influences
the sub-ordinates decisions nor does he interfere in the process of decisions making. He does not
exercise the formal authority of a leader.
• Functional leadership:
A functional leader is one who is an expert in a particular field of activity. He has risen to
the position of a leader by virtue of certain special skills that he possesses. He always focus on
the completion of the given work.
The functional leader will be able to offer help to his sub-ordinates provided the sub-
ordinates approach for certain genuine job related problems. His expects the sub ordinates to
perform to his level and if the followers are not very serious about their work, he may demand
performance.
• Institutional leadership:
An institutional leader is one who has become a leader by virtue of his official position in the
organization. For eg: a person appointed as the general manager of a company.
An institutional leader is one who has become a leader by official position so he may not
expert in his field of activity. He may not provide proper guidance to his followers but he expect
performance from them.
• Paternalistic leadership:
A paternalistic leader takes care of his followers in such a way that the head of a family
takes care of the family members. He is mainly concerned with the well-being of his followers
and he is always ready to protect them. He may provide them with all the physical amenities
needed but he will not be able to guide them perform their job well but he expects performance
from them.
 Organizational climate:
1. What do you mean by organizational climate?
Organizational climate refers to a situation or working condition existing in an organization. It is
also referred to the situation faced by the worker inside the organization.
2. What are the types of organizational climate?
The following are the types of organizational climate.
i. College (or) University climate
ii. Executive climate
• College or University climate:
Under this type of organizational climate a management follows class room condition in the
work place. The workers are given more advices and the control is effective. This type of
organizational climate is suitable for low level and uneducated workers.
• Executive climate:
Under executive climate the organization follows “professional management and the sub
ordinates are given freedom to react. They can work according to their wish and they can give
their own ideas to the management. They are treated with more respect by the management. This
kind of organizational climate is more formal and it can be given to top level and middle level
employees of the organization.

3. What are the advantages of organizational climate?

The following are the advantages of organizational climate
i. Organizational climate ensures peaceful at atmosphere in organizational and
the trade union activities are avoided.
ii. The efficiency of workers increases and it result in higher production.
iii. Workers will not take frequent leave.
iv. The labour turn over will be less, so the training cost will be less.
v. The quality of production will be perfect and the wastage of raw materials will be
Minimum.
vi. The growth of the organization will be increases and the good will of the
organization will increases.

4. What are the impact of good organizational climate?

The following are the impact of good organizational climate.
i. There will be better co-ordination among employees of the organization.
ii. There will be organizational peace and harmony.
iii. These will be employees self-interest activities.
iv. These will be better motivational factors in an organization.
v. It leads to effective communication in an organization.
vi. It also leads to better decision making process.
vii. It also improve and focus on technological development factors.
viii. There will be better relationship between superior and sub-ordinates in an organization.
 Strategic Planning, Control and Implementation
1. What do you mean by strategic planning and control?
Strategic planning and control is very important component of the implementation
process. It involve in tracking monitoring and evaluation the effectiveness of the strategies that
have been implemented.
2. What are the process of strategies planning control and implementation?
The following are the process strategic planning control and implementation.
I. Planning
i. Corporate planning
ii. Division planning
II. Control
I. Measuring results
II. Taking
III. Implementation
1. Organizing.
2. Implementing.
3. Business planning.
4. Product planning

1. Planning:
i. Corporate planning:
The planning process which have been implemented for corporate for decision
making process is called as corporate planning.
ii. Division planning:
The planning process which have been made for various division (or)
departments of an organization is called as division planning.

2. Control:
i. Measuring results:
The implementation of strategies must be controlled and its results should be
measured appropriately.
ii. Taking corrective actions:
The organization must take corrective actions towards the implementation of
strategies.
3. Implementation:
i. Organizing :
The organizing must appoint right person for the right job, the strategic
planning process

ii. Implementing:
The strategic manager must implement the decisions whichever is taken under
the decision making process. He is also responsible for strategic implementing process.
iii. Business planning:
The planning process which have been made for trade practices and to achieve
strategies is called as strategic business planning.

iv. Product planning:

The implementation of strategies in different products to increase its sales
and to receive maximum order from the customers is called as strategies product
planning.
 ERP Enterprise Resource Planning
1. What is ERP?
The term ERP refers to enterprise resource planning. It is a business management
software that allows organization to use a system of integrated to manage the business.

2. What are the limitations of ERP?

The following are the limitations of ERP
i. It is more expensive.
ii. It forced change of processes.
iii. It is very complex in nature.
iv. Lack of trained people.
v. Flexibility of software system upgrades.
vi. Availability of internal technical knowledge and resources.
vii. Implementation of strategy and execution.
viii. Resistance to change.

3. What are the branches of ERP system?

The following are the branches of ERP system.
i. FRM finance resource management.
ii. MRP manufacturing resource planning.
iii. CRM customer relationship management.
iv. HRM human resource management.
v. SCM supply chain management.

4. What are the reasons for adopting ERP?

The following are the reasons for adopting ERP
i. To integrate financial information.
ii. To integrate customer order information.
iii. To standardize and speedup operations process.
iv. To reduce inventory.
v. To standardize HR information system.
vi. To maintain common data base.