STRATEGIC MANAGEMENT

Strategy def : Normann: Strategy is the art of creating value

A strategy can be defined as a step-by-step plan to achieve a goal.
Strategic management may be defined as a management activity that involves making decisions based on
various analyses and taking relevant action aimed at achieving long-term competitive advantage.
Strategic management is a set of managerial decisions and actions that determines the long term performance of
a corporation. Thus it includes environmental scanning, strategy formulation, strategy implementation, and
evaluation & control.
CHARACTERISTIC OF STRATEGIC MANAGEMENT
 It is an entrepreneurial function
 Changing Orientations
 Long term Nature
 Intellectual Process
 Continuous Process
IMPORTANCE OF STRATEGIC MANAGEMENT
 Strategic management takes into account the future and anticipates for it.
 A strategy is made on rational and logical manner, thus its efficiency and its success are ensured.
 Strategic management reduces frustration because it has been planned in such a way that it
follows a procedure.
 It brings growth in the organization because it seeks opportunities.
 With strategic management organizations can avoid confusion and they can work directionally.
 Strategic management also adds to the reputation of the organization because of consistency that
results from organizations success.
 Often companies draw to a close because of lack of proper strategy to run it. With strategic
management companies can foresee the events in future and that’s why they can remain stable in
the market.
ADVANTAGES OF STRATEGIC MANAGEMENT
1. Financial Benefits
2. Offsetting Uncertainty(prescribes the future course of action, provides a clue and provide the
organization enough time and capability to prepare and control)
3. Clarity in objectives and direction(not just profit as biz objective but clarify it so that it provides clear
direction to responsible people)
4. Organizational effectiveness (optimum utilization of available resources to achieve objective.)
5. Personnel satisfaction(definite prescription of roles are specified and reduce role conflict and role
ambiguity)
6. Improve ability to prevent problems
7. Improved quality of strategic decision through group interactions
8. Better employee incentive
9. Reduced gaps and overlaps in activities
10. Lesser reluctance to change.
DISADVANTAGES OF STRATEGIC MANAGEMENT
A costly exercise
Sense of frustration
Evading responsibility

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 STRATEGIC MANAGEMENT PROCESS
Determining the strategic position  Scanning the external environment
 Meeting stakeholders expenditure
 Utilizing resources and competencies
Choosing the strategy  Identifying the alternatives
 Evaluating the alternatives
 Selecting the strategy
Implementing the strategy  Modifying the organization structure and design
 Planning and allocating resources
 Managing strategic change
TYPES OF STRATEGY or levels
1. Corporate level Strategy
Is concerned with the strategic decision a business makes that affects the entire organization. Financial
performance merger and acquisition, hrm and the allocation of resource are part of corporate level strategy.
Highest level of strategic decision making and deals with issues involving
1. Resource mobilization
2. Mergers and acquisitions
3. Divestment
4. Corporate restructuring
2. Business level Strategy
Business strategy specifies the scope of that business in a way that links the strategy of the business to that of
the corporation as a whole and describes the basis on which that business unit will achive and maintain a
competitive advantage. Business strategy must fulfill the following condition they are:
 Describes the method of competition
 Define contribution of each product and function to the goal of the business
 Allocate resource among products and function
Ultimately business strategy must begin with the customer. Why a customer buy a particular product or services
 Low product or services cost
 High product or service quality
 Prompt product or service availability
 Distinguish product or service feature
3. Functional level Strategy
It means that a function or department of a business unit pursues a long term development plan, which is
congruent with and subordinate to the business strategy of the unit. The basic functions of a business are as
follows: development, marketing, production, administration and finance
It refers to a single functional operation and the activities involved there-in. Decisions adopted at this level is
usually tactical. It deals with a relatively restricted plan providing objectives for the specific function.
Eg- Marketing, HR, Finance, Research etc.
 Operational level Strategy
It comes below the functional level Strategy and involves various activities relating to the sub-function of a
major function. Functional level strategy in Marketing divided to operational level such as Marketing Research,
Sales and distribution, Sales Promotion etc.
4. Global Strategy
Focusing on increasing profitability by reducing cost is the prime objective of firms that purse a global
strategy. They adopt a low cost strategy and their research and development, marketing, and production

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activities are confined to just a small number of favorable location. The global strategy can be adopted when the
demand for local responsiveness is very less and the pressure for reducing cost is high.
STRATEGIC PLANNING
Strategic planning is an organizational management activity that is used to set priorities, focus energy and
resources, strengthen operations, ensure that employees and other stakeholders are working toward common
goals, establish agreement around intended outcomes/results, and assess and adjust the organization's direction
in response to a changing environment. It is a disciplined effort that produces fundamental decisions and actions
that shape and guide what an organization is, who it serves, what it does, and why it does it, with a focus on the
future.
TACTICAL PLANNING
A systematic determination and scheduling of the immediate or short-term activities required in achieving the
objectives of strategic planning. Tactical Planning is Short range planning that emphasizes the current
operations of various parts of the organization. Short Range is defined as a period of time extending about one
year or less in the future
COMPETITIVE ADVANTAGE
A superiority gained by an organization when it can provide the same value as its competitors but at a lower
price, or can charge higher prices by providing greater value through differentiation. Competitive advantage
results from matching core competencies to the opportunities. When a firm sustains profits that exceed the
average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of
business strategy is to achieve a sustainable competitive advantage. Michael Porter identified two basic types of
competitive advantage: Cost advantage, Differentiation advantage
MCKINSEY 7S FRAMEWORK
The 7-S framework of McKinsey is a Value Based Management (VBM) model that describes how one can
holistically and effectively organize a company. Together these factors determine the way in which a
corporation operates.

PORTFOLIO STRATEGY
A selection strategy with a view to pulling together investment with lowest average risk and highest return

STRATEGY FORMULATION
Strategy formulation is the process of establishing the organization's mission, objectives, and choosing among
alternative strategies.
Strategy formulation is the development of long range plans for the effective management of environmental
opportunities and threats in light of corporate strengths and weaknesses. It includes defining the corporate
mission, specifying achievable objectives, developing strategies and setting policy guidelines. It begins with
situational analysis.

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COMPONENTS OF STRATEGIC MANAGEMENT
 Vision of the company
 Mission of the company
 Profile of the company
 External environment
 Strategic analysis and choice
 Objectives Long term, short, annual
STRATEGIC CHOICES
Choice of final strategy or strategies from the alternative strategies available is the most critical and the most
difficult job in the strategic planning process
Glueck & Jauch “strategic choice is the decision which selects from among alternatives grand strategies
which will best meet the enterprise’s objective. The choice involves consideration of selection factor, evaluation
of the alternatives against these criteria and the actual choice.”
The decision to select from among the grand strategies, the strategy which will best meet the enterprise’s
objective
Strategic choice meant to combine long-term objective and generic and grand strategies in order to place the
firm in an optimal position in an external environment for achievement of the company mission.
PROCESS OF STRATEGIC CHOICE Objective factor Strategic
Focusing on Evaluating strategic Selection factor choice
strategic alternative alternatives Subjective factor

Factors influencing Strategic choice are:

 Role of past strategy
 Attitude towards risk
 Competitive reaction
 Degree of external dependence
 Values & preference
ROLE OF VISION AND MISSION STATEMENTS
MISSION
A Mission Statement defines the company's business, its objectives and its approach to reach those objectives.
A mission statement defines what an organization is, why it exists, and its reason for being.
Mission statements are documents that are intended to serve as a summary of a business's goals and values and
are usually intended as a means by which a business's ownership or management attempt to attach meaning to
an organization's operations beyond profit and loss statements.
Characteristics Of Effective Mission Statements.
 Simple, declarative statements
 Honest and realistic
 Communicates expectations and ethics
 Periodically updated
PROBLEMS OF MISSION STATEMENT
 Mission statement can be vague or too general to be meaningful. imprecision leads to conflicting
interpretations and lack of understanding
 It may be too specific
 Staff change, poor vertical communication within the organization and disinterest among some
employee may result in majority of the staff not knowing that the company has a mission statement

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  Today’s business world is changing so fast that no mission statement may be relevant more than a short
period of time
 Mission statements alone are not enough. These need to be followed by development of plans, strategy
and implementation
VISION
A Vision Statement describes the desired future position of the company. Elements of Mission and Vision
Statements are often combined to provide a statement of the company's purposes, goals and values.
An asp rational description of what an organization would like to achieve or accomplish in the mid-term or
long-term future. It is intended to serves as a clear guide for choosing current and future courses of action.
Vision of a company’s long-term goal and objective is referred to as the strategic intent
BENCHMARKING
Is a process of identifying, understanding and adopting outstanding practices from the same organization or
form other business to help improve performance
 It enables an organization to analyses where it stand In comparison to other organizations and where it
excels or lags behind
 It involves two thing first, what is to be compared, I.e., competitors, process, performance. Second
whom to compare with, i.e., competitors, organization from same industry, organization from outside
 It is a continuous process
Types of benchmarking
Product, process, functional, performance, strategic, competitive benchmarking
MERGER AND ACQUISITUION
Merger can be defined as the integration of two or more firms on a co-equal basis. In merger, the concerned
firms pool all their resources together to create a sustainable competitive advantage.
Acquisition refers to the process of gaining complete or partial control of a company by another company for
some strategic reason.
Rationale for merger and acquisition
 Increased market power
 Horizontal merger (a merger between two firms operating and competing in the same business activity)
 Vertical merger (when two firms in the same industry but in different stages in the value chain merger)
 Conglomerate merger( when two firms with unrelated activities merger )
CORPORATE RESTRUCUTING
Can be defined as a strategy by which a company changes its business or financial structure. It involves making
radical changes in the composition of business. Corporate restructuring can be defined as any change in the
business capacity or portfolio that is carried out by an inorganic route. Corporate restructuring is the process of
redesigning one or more aspects of a company. The process of reorganizing a company may be implemented
due to a number of different factors, such as positioning the company to be more competitive, survive a
currently adverse economic climate, or poise the corporation to move in an entirely new direction.
 Expansion
 Sell offs
 Change in ownership structure
ENVIROMENT ANALYSIS
Understanding the environment necessitates identifying the variables within a organization’s societal and task
environment.
PESTEL FRAMEWORK
Political environment:

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Politico-legal forces allocate power and provide laws and regulation that may constrain or protect the business.
The factors to be considered are:
The political system and its features like nature of the political system, ideological forces of the political parties
and sentries of power
The political structure, its goals and stability
Political process like party systems, elections, funding of elections and legislation in economic and industrial
matters and regulations
Economic environment:
The economic environment consists of macro level factors related to the means of production and distribution of
wealth that have an impact on the business of the organization.
• General economic conditions, Economic conditions of different segments of population, Trends in income
distribution and consumer spending patterns, Rate of growth of each sector of economy ,Interest rate/exchange
rate, Tax rates, Prices of materials/energy
Socio cultural environment:
Socio cultural environment are the forces that regulate the values, morals and customs of society. Important
factors to be considered are:
• Demographic characteristics, Social concerns, Social attitudes, Family structure and changes in it
• Role of women in society, position of children and adolescents in family and society
Technological environment:
The technological environment consists of the factors related to technology used in the production of goods and
services that have an impact on the business of an organization. Technological factors to be considered are:
• Source of technology like company, external and foreign sources, cost of technology acquisition,
collaboration and transfer of technology.
• Technological development, rate of change of technology and research and development
Environmental forecasting
Legal environment
INDUSTRY ANALYSIS
In order to have a better understanding of the external environment, analyzing the industry in detail is critical. In
conducting an industry analysis managers need to analyze seven aspects carefully
Industry environment:
Industries can be classified based on their settings/environment. Porter classified industries as fragmented,
emerging, matured, declining and global industries.
Industry structure:
Industry structure essentially means the underlying fundamental economic and technical forces of an industry,
such as number of players, market size, relative shares of the player, nature of the competition, differentiation
practiced by the various players in the industry, cost structure of the players etc.
Industry attractiveness:
The various determinants of industry attractiveness are industry potential, industry growth, industry
profitability, future pattern of the industry barriers and forces shaping the competition in the industry.
Industry performance:
Industry performance entails looking at production, sales, profitability and technological development.
Industry practices:
Industry practices refer to what a majority of the players do in the industry with respect to essential aspects of
the business such as distribution, pricing, promotion, methods of selling, service field support, R&D and legal
tactics.
Emerging trends and likely future:

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The emerging trends/likely future pattern of the industry can be discerned by analyzing issues such as the
product life cycle, stage of the industry, rate of growth, changes of buyer needs, innovation in product/process,
entry and exit of firms and emerging changes in the regulatory environment governing the industry.
GENERAL ENVIRONMENT SCANNING
If an organization understands the environment in which it operates, half of the problem is solved. This requires
an analysis of what is happening outside the organization and an evaluation of current resources (strength and
weaknesses) and an assessment of opportunities and threats present in the environment. Environment could be
classified as external and internal.
The external environment consists of variables that are outside the organization and not typically within the
short-run control of top management. They may be general forces and trends within the overall societal
environment, which consists of socio cultural, economic, technological, political and legal force.
The internal environment of a corporation consists of variables (strengths and weaknesses) that are within the
organization and are not usually within the short run control of top management. This includes the corporation's
culture, structure and resources. One of the widely used methods for internal analysis of the firms is Value
Chain analyses which assess the strengths and weaknesses that divide a business into a number of linked
activities, each of which may produce value to the customers.
TECHNIQUES FOR ENVIRONMENT SCANNING
QUEST
The QUEST (Quick environmental scanning techniques) is a four step process which uses scenario – writing for
scanning the environment and identify the strategic options. The Four steps involved in applying this technique
STEP 1 Internal strategists will observe and identify the major events and trends in the Industry
STEP 2 Speculate on a wide range of important ISSUES that might affect the future of their organization
STEP 3 preparing a report summarizing the major issues and their implications and 3-5 scenarios
incorporating the major themes of their discussion
STEP 4 Report and scenarios are reviewed by a group of strategists who identify feasible strategic options
to deal with the evolving environment
SWOT ANALYSIS
Strength:- skilled manpower, financial strength, good will, good customer service relation, top position in
market, high morale positive attitude employees
Weakness:- lack of facilities, loss of funds, poor brand image, absence of good managers, ineffective
management, poor marketing skill
Opportunities:- introduction of new technology, identification of new market segment, improvement of seller-
customer relationship
Threats:-slow market growth, entry of multinational companies, increase in buying power of key customers,
increase bargaining power of main suppliers, change in gov policy rule and regulation
VALUE CHAIN ANALYSIS
It is way of looking at a business as a chain of activities that convert inputs as final products as per the
requirements of customers. Value is defined as the amount buyers pay to a firms for their products or services. it
is measured by total revenue, which represents the price that the product of a firm commands and the volumes it
can sell. Model proposed by Michael Porter.

Inbound logistics include the receiving, warehousing, and inventory control of input materials.
Operations are the value-creating activities that transform the inputs into the final product.
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Outbound logistics are the activities required to get the finished product to the customer, including
warehousing, order fulfillment, etc.
Marketing & Sales are those activities associated with getting buyers to purchase the product, including
channel selection, advertising, pricing, etc.
Service activities are those that maintain and enhance the product's value including customer support, repair
services, etc.
EXPERIENCE CURVE
It suggests that as the total accumulated experience of a firm in the industry increases it incurs less cost for
producing a product. Under ideal condition, the profitability of each firm should function of its accumulated
experience in producing a particular product. The experience curve helps a company reduce cost due to volume
effect as well as learning effects

Unit cost

Accumulated output
Critical Success Factor (CSF):
CSF is” the limited number of areas in which results, if they are satisfactory, will ensure successful competitive
performance for the organization”. CFS are the factor that are necessary for improving the performance of an
organization. These factor are important for the successful implementation of a strategy.(the various CFS are:,
Money (it includes availability of funds, growth in revenue and profit margins of an organization)
Acquiring new customers and distributors (For future growth of an organization. This involves
advertising and sales promotion
Consumer satisfaction (needs and wants of the consumer. This involves market research)
Quality (this consist of using high quality of raw material for improving quality of product)
Strategic relationships(between organization merger and acquisition for successful working)
Employee attraction & retention
Sustainability (it improves the personal ability of an organization to successfully sustain the business)
CORE COMPETENCE
A unique ability of a company that cannot be easily imitated
Of a company is one of its special or unique internal competences. Core competence is not just a single strength
or skill or capability of a company. It is a interwoven resources, technology and skill or synergy culminating
into a special competence.
CORPORATE PROTFOLIO ANALYSIS OR PROTFOLIO ANALYSIS
Corporate Portfolio Analysis is used when an organization’s corporate strategy involves a number of
businesses. It is defined as a set of techniques which assist strategists to take strategic decisions with respect to
individual products of business for a company’s portfolio. This is mainly used for the purpose of competitive
analysis and corporate strategic planning in multiproduct and multi-business companies.
Techniques used for Corporate Portfolio Analysis are
1. BCG matrix
2. GE Nine – Cell Planning Grid
3. Hofer’s Product/ Market evolution
4. Shell’s Directional Policy Matrix (DPM) model
5. Ansoff Matrix
BCG MATRIX

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“BCG matrix (or growth-share matrix) is a corporate planning tool, which is used to portray firm’s brand
portfolio or SBUs on a quadrant along relative market share axis (horizontal axis) and speed of market growth
(vertical axis) axis.”
The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson of the Boston
Consulting Group in the early 1970's. It is based on the observation that a company's business units can be
classified into four categories based on combinations of market growth and market share relative to the largest
competitor, hence the name "growth-share".

Dogs - Dogs have low market share and a low growth rate and thus neither generate nor consume a large
amount of cash. However, dogs are cash traps because of the money tied up in a business that has little
potential. Such businesses are candidates for divestiture.
Question marks - Question marks are growing rapidly and thus consume large amounts of cash, but because
they have low market shares they do not generate much cash. The result is a large net cash consumption.
Question marks must be analyzed carefully in order to determine whether they are worth the investment
required to grow market share or may move to dog position
Stars - Stars generate large amounts of cash because of their strong relative market share, but also consume
large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets
out. If a star can maintain its large market share, it will become a cash cow when the market growth rate
declines. The portfolio of a diversified company always should have stars that will become the next cash cows
and ensure future cash generation.
Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market
growth rate, and thus generate more cash than they consume. Such business units should be "milked", extracting
the profits and investing as little cash as possible.
GE NINE – GENERAL ELECTRIC CELL PLANNING GRID (GEC)
Cost reduction and maintenance of quality can be bought about by effective operational strategies.
GE Matrix also called McKinsey Matrix is a strategic management tool for conducting portfolio analysis. The
portfolio which is analyzed with the matrix may include products, services or entire SBUs (strategic business
units) owned by the company.
This tool is very similar to the BCG Matrix and GE or McKinsey Matrix is a kind of extension of the BCG
Matrix (the multifactor portfolio analysis tool).
This allows the business user to easily analyze and compare business strength, market attractiveness, market
size, and market share for different strategic business units (SBUs) or different product offerings
The GE / McKinsey Matrix is actually divided into nine cells. These 9 cells represent the nine alternatives for
positioning of any SBU or product / service offering. Based on the strength of the business and its market
attractiveness each SBU will have a different position in the matrix.
Further, the market size and the current sales will distinguish each SBU. Based on clear understanding of all of
these factors decision makers are able to develop effective strategies.

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COMPETITIVE ANALYSIS
Competitive analysis involves taking stock of the number and nature of competitors presenting a direct or
indirect threat to a business. Competitive analysis can provide aspiring entrepreneurs with a clearer
understanding of the marketplace conditions in an industry they are considering breaking into, or help
established businesses refine their strategic directions.
It is a strategic technique used to evaluate outside competitors. The analysis seeks to identify weaknesses and
strengths that a company's competitors may have, and then use that information to improve efforts within the
company. An effective analysis will first obtain important information from competitors and then based on this
information predict how the competitor will react under certain circumstances.
In formulating business strategy, managers must consider the strategies of the firm's competitors.
Competitive analysis has two primary activities,
1) Identifying the existing and potential competitors
2) Understanding and evaluating competitors
SCENARIO ANALYSIS
It covers subjects like demographic, sociology, economics and psychology. It analyses the trends prevalent in
society, the technology available and likely to be developed, the political scene, the condition of the economy,
etc.. because all these may affect the issue being discussed.
IMPLEMENTATION OF STRATEGY
Strategy implementation remains a very complicated process as it can be termed as a very much linked factor.
It involves number of interrelated decisions, choices and a broad range of activities requiring synthesis of all
units’ levels and members.
Two modes of implementation
Differentiation
Differentiation involves: segmentation or division of the total strategic plan into its component parts.
Integration (required at 3 levels)
Functional level: i.e.(production, marketing), At the business level(product level), At the corporate level
PROJECT IMPLEMENTATION
Project implementation (or project execution) is the phase where visions and plans become reality. This is the logical
conclusion, after evaluating, deciding, visioning, planning, applying for funds and finding the financial resources of
a project.
PROCEDURAL IMPLEMENTATION
The procedural issues are associated with the ongoing administration of an enterprise. It is the process by which
managers assure that resources are obtain and used effectively and efficiently in the accomplishment of the
organizations objective.
BEHAVIOURAL IMPLEMENTATION
The five major issues involved in Behavior Implementation are: Leadership. Corporate Culture, Corporate policies &
use of power, Personal Values & Ethics, Social Responsibility
Strategic leadership: It can be defined as the leader’s ability to anticipate envision maintain flexibility to think
strategically and to work with the members of the team to initiate changes that will create a viable future for the
organization.
Role Strategic leadership
 Need for strategic leadership:
 The pace of events happening
 Knowledge work and knowledge workers are on the rise.
 Intellectual properties has started replacing physical properties.
 Leading and managing
 Developing a learning organization
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MANAGING RESISTANCE TO CHANGE
Overcoming use of barriers to change and effective use of power
• Building a shared responsibility:
• Developing a collective identity:
• Creating personal commitment:
Personal interests nested in present state of affairs.
Systematic barriers
Political barriers
Personal time constraints
STRATEGIC EVALUATION AND CONTROL
The final stage in strategic management is strategy evaluation and control. All strategies are subject to future
modification because internal and external factors are constantly changing. In the strategy evaluation and
control process managers determine whether the chosen strategy is achieving the organization's objectives. The
fundamental strategy evaluation and control activities are: reviewing internal and external factors that are the
bases for current strategies, measuring performance, and taking corrective actions.
Tools and techniques of evaluation
it can be analyzed during three stages
Pre-implementation
The major participant in this process has to play both pre-implementation and post implementation roles. Pre-
emptive measures are always better than reactive or corrective actions. To minimize the problems of strategic
implementation and possible strategic formulation implementation mismatch, it is advisable to use certain
evaluation criteria before implementation. For pre-implementation assessments of strategies, three inter related
evaluation criteria are generally use
1) Suitability
2) Acceptability
3) Feasibility
During implementation
Implementation process control
In most companies, evaluation and control are exercised during the strategy implementation process itself.
Many call these processes as strategic control. All strategy are based on certain assumptions may change or lose
their validity during the period between strategy formulation and its implementation and also during the period
of process of implementation. The first stage of strategic control is premise control. Its objective is to identify
key or critical assumptions, and during course of implementation, the objective is either to maintain consistency
of the assumptions or modify or to drop some of them or reformulate the strategy, if changes of assumptions
warrant this. Through strategic surveillance, a company can keep control over organizational factors, industry
factors and major environmental factors. Implementation control is focused on the actual process of
implementation. The implementation processes consist of programs, projects, actions, etc., relating to different
functional and operational areas. Special Alert Control: This control is a subset of the other types of controls. This is a
rapid but thorough review of the entire strategy in the light of sudden and unexpected events. Unforeseen events trigger
immediate reassessment of strategy. Many firms have ‘crisis teams’ in place to respond and coordinate the activities
through the period of crisis. These reviews often lead to contingency plans
Post implementation
This evaluation shows the actual performance of company vis-à-vis targets set in the plan this also became an
assessment of strategy – to what extent it has succeeds or failed evaluation of performance is generally done
through various quantitative criteria
CRITICAL SUCCESS FACTOR

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Identification of CSF helps in analyzing the suitability of a strategy. In fact any strategy, to be successful, must
start with identification of CSF or key success factors. CSFs are those factors or aspects or strategy in which a
company must excel to outperform competitors, and there are underline core competences in specific activities
of the company which are concomitant with CSFs. it highlights the important relationship between resources,
competences and the choice of strategy which are vital for assessing performance
BALANCED SCORE CARD
Strategic management is a disciplined process that requires both top-down support and bottom-up participation.
For most lower-level employees, financial performance measures are generally too aggregated and too far
removed from their actions to provide useful guidance or feedback on their decisions. Management needs measures
that more directly and accurately relate to outcomes that they can influence. The Balanced Scorecard (BSC) moves
beyond the traditional goals of income, cash flow and financial ratios. It adds process performance measurements around
issues like continuous improvement, supply chain management, and customer satisfaction. BSC offers two significant
improvements over traditional financial or even non-financial measures of performance. It identifies the four related core
processes that are critical to nearly all organizations and all levels within organizations:
DUPOND CONTROL MODEL
It is a timeless and elegant model of financial analysis. That has being used by analyst and educators for almost a century.
Most academic or professional books on financial analysis use some form of the dupond model to provide insight in to the
growth in earnings. The growth in earnings also influences the value of stock. According to the model, the growth in
earnings depends on the earnings retained and re invested in the firm. The rate of return on equity also influences the
growth rate
Growth rate = retention rate * return on equity = RR*ROE
MICHALE PORTER'S APPROACH TO SM
porter 1985 sated that there are four generic strategic options available to companies they are
 cost leadership
 focused cost leadership
 differentiation
 focused differentiation

basis of product performance

cost leadership superior performance

mass market Cost leadership differentiation

mkt
coverage focused cost focused differentiation
niche market leadership

matrix of Michael
differentiation
A differentiation strategy is appropriate where the target customer segment is not price-sensitive, the market is
competitive or saturated, customers have very specific needs which are possibly under-served, and the firm has
unique resources and capabilities which enable it to satisfy these needs in ways that are difficult to copy. These
could include patents or other Intellectual Property (IP), unique technical expertise (e.g. Apple's design skills or
Pixar's animation prowess), talented personnel (e.g. a sports team's star players or a brokerage firm's star
traders), or innovative processes.
cost leadership
strategy based on exploiting some accepts of the production process, which can be executed a cost significantly
lower than that of competitors. there can be various source of this cost advantages , lower input cost
focused cost leadership
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exploits the same advantages as cost leadership strategy but the company occupies as specific niche or niches
serving only a part of the total market
focused differentiation
which is typically a strategy of smaller and most specialized companies is also based on superior performance
the only difference is that in this strategy, a company specialized in serving the needs of a specific market or
markets

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