Commonwealth Executive MBA (CEMBA)

School of Business
Bangladesh Open University

Final Assignment (3rd Assignment)

Course Title: Strategic Management

Course Code: SCOM 3610
Student Name: Md. Abu Zafar Samsuddin
Student ID: 152-71-812-068
Semester 182 (3rd Level) – Batch 2020
Study Centre: Dhaka Regional Centre
Contact No: +8801713452830
E-mail: zafarcu88@gmail.com
1a. Why is environmental analysis important to set organizations’ strategy? What are the
logical steps of environmental analysis?

Definition: The environmental analysis is, carried out to determine various environmental factors
and their potential impact on a company. On the basis, of a corresponding environmental
analysis, companies are better able to assess their future market opportunities and risks. Overall,
an environmental analysis may also serve to assess market attractiveness.

Environmental analysis important to set organizations’ strategy because it offers the following
benefits

(i) Environmental analysis makes managers aware of the linkage between an organization and
its environment and keeps them alert and informed.
(ii) Environmental analysis helps the company to identify the threats and opportunities before it.
It serves as an early warning signal allowing the company to develop appropriate responses.
(iii) Through environmental analysis, an organization can gain understanding of how the
industry’s environment is, being transformed.
(iv) The environment changes so fast that an organization’s equilibrium with its environmental
may be disturbed quickly. With the help of environmental analysis, the organization can know
the causes of disequilibrium. Suitable changes can make to create the new equilibrium.
(v)Environmental analysis is essential for the formulation of right strategies and for
modification of existing strategies as and when necessary.

The Process of Environmental Analysis/Scanning consists of the following steps:

 Environmental Scanning: It means the process of analyzing the environment for identifying
the factors, which may influence the business. Environmental Scanning alerts an
organization to potentially significant forces in the external environment, so that suitable
strategic initiatives may be, taken before the organization reaches to a critical situation.
 Environmental Monitoring: At this stage, the information from the relevant environment is
collected. Once this information is collected, adequate data is gathered so as, to find out the
patterns and trends of the environment. Further Monitoring is a follow up and deeper
analysis of environmental forces. Several techniques such as company records, spying,
publication and verbal talks with the customers, employees, dealers and suppliers are the
main sources of collecting data.
 Environmental Forecasting: Environmental Forecasting is the process of estimating the
events of future based on the analysis of past records and present behavior. Further, it is
necessary to analyze or anticipate the future events before any strategic plans are
formulated. Forecasts are made for economic, social and political factors. Several
techniques such as Time series, Graph method, Delphi method etc. are used for this
purpose.
 Assessment Or Diagnosis: At this stage, Environmental factors are assessed in terms of
their impact on the organization. Some factors in the environment may entail an
opportunity while others may pose a threat yo the organization. For this purpose, SWOT
analysis and ETOP analysis are used.

1|Page
1b) According to Michael Porter, when the suppliers and customers bargaining power is
stronger and when their bargaining power is weaker?

The Bargaining Power of Suppliers, one of the forces in Porter’s Five Forces Industry Analysis
Framework, is the mirror image of the bargaining power of buyers and refers to the pressure that
suppliers can put on companies by raising their prices, lowering their quality, or reducing the
availability of their products. This framework is a standard part of business strategy.

When the Bargaining Power of Suppliers High/Strong and customers are weaker?

 Switching costs of buyers are high

 Threat of forward integration is high
 Small number of suppliers relative to buyers
 Low dependence of a supplier’s sale on a particular buyer
 Switching costs of suppliers are low
 Substitutes are unavailable
 Buyer relies heavily on sales from suppliers
When the Bargaining Power of Suppliers Low/Weak and customers are higher?

 Switching costs of buyers are low

 Threat of forward integration is low
 Large number of suppliers relative to buyers
 High dependence of a supplier’s sale on a particular buyer
 Switching costs of suppliers are high
 Substitutes are available
 Buyer does not rely heavily on sales from suppliers

1c) What are the steps of SWOT analysis? How SWOT analysis of an organization
lead to strategy formulation?

The details of the steps involved in the SWOT analysis.

Step-1: External Environmental Analysis
• Identify the key political, economic, social-cultural, demographic, natural/ecological and
technological forces that are most likely to affect the organization.
• Monitor information on the environmental forces.
• Select the method to be used in forecasting these forces.
• Forecast the trends in these forces.
• Identify the market opportunities on the basis of the forecasts of these forces.
• Identifying the threats to a company’s future profitability.

2|Page
Step-2: Competitive Analysis
• Analyze the industry structure.
• Analyze the nature of competition.
• Identify and analyze individual competitors.
• Identify key strengths and weaknesses of the company as compared to those of
competitors.
• Identifying company’s market opportunities
• Identify threats and opportunities based on industry competitiveness.

Step-3: Internal Environmental Analysis

• Identify the areas for analysis (such as financial position, product position, etc.)
• Analyze each of the selected areas.
• Identifying company’s internal strengths and resource capabilities.
• Identifying company’s internal weaknesses and resource deficiencies.
• Evaluate the strengths and weaknesses for their strategy-making implications.

Step-4: Concluding SWOT Analysis

• Assess the attractiveness of organization’s situation based on identified strengths,
weaknesses, opportunities and threats.
• Draw conclusions regarding the need for strategic action.

SWOT analysis of an organization lead to strategy formulation by following ways,: Strengths,

weaknesses, opportunities and threats point to the need for strategic action. Managers need to –

a) undertake actions to protect/improve the company’s strengths,

b) initiate efforts to overcome the weaknesses,
c) pursue market opportunities well-suited to the company’s resource capabilities, and
d) Take actions to defend against external threats to the company’s business.

1d. Prepare a SWOT analysis of the organization where you are working.

Currently I am working on Square Toiletries Limited (STL) & STL is the leading Bangladeshi
manufacturer of toiletries and cosmetics products operating international quality products. Now
here below describe the SWOT analysis of Square Toiletries Limited (STL).

Strength Weakness
 Quality of products is exceptional  products is limited
 Manufacturing sector is highly automated  Retailers are not satisfied with the company
offering
 World class technology is used in factory
 It has a great distribution channels
throughout the country.

3|Page
 Reasonable price of products.
Opportunity Threats
 Toiletries industry is highly profitable  Many multinational companies are there in
market
 Demand of various types of toiletries
products is increasing.  People prefer foreign branded products
rather than local companies products
 High chance to become multinational
company  Increasing the cost of raw materials
 Disposable income of people is increasing  Competition increases

 People are getting highly conscious about

the best quality product.

The company is in strong situation as its strength and opportunities are more than threats and
weakness.

2a. What are the different forms and levels of strategy? Present the different types of
generic strategies mentioned by Thompsons and his associates.

Strategies exist at several levels in any organization - ranging from the overall business (or group
of businesses) through to individuals working in it.

 Corporate Strategy - is concerned with the overall purpose and scope of the business to
meet stakeholder expectations. This is a crucial level since it is heavily influenced by
investors in the business and acts to guide strategic decision-making throughout the
business. Corporate strategy is often stated explicitly in a "mission statement".
 Business Unit Strategy - is concerned more with how a business competes successfully
in a particular market. It concerns strategic decisions about choice of products, meeting
needs of customers, gaining advantage over competitors, exploiting or creating new
opportunities etc.
 Operational Strategy - is concerned with how each part of the business is organized to
deliver the corporate and business-unit level strategic direction. Operational strategy
therefore focuses on issues of resources, processes, people etc.

Different types of generic strategies mentioned by Thompsons and his associates are as
follows:
 Strategic Alliance Strategy: Strategic alliances are cooperative agreements between
two or more firms to help each other in business activities for mutual benefits. The
strategic allies (i.e., partner firms) do not have formal ownership ties. They rather work
cooperatively under an agreement. Strategic alliances are formed by companies to
achieve win-win outcomes (none of the parties loose; rather all gain). Strategic alliances

4|Page
 create a good ground for the allies to perform joint research, share technology and
improve products.
 Joint Venture Strategy: joint ventures refer to creating a new organization by two or
more companies. Joint venture involves an equity arrangement between two or more
independent enterprises that results in the creation of a new organizational entity. The
partner-companies own the newly created firm. To form a joint venture, at least two firms
must agree to jointly, establish a new firm.
 Merger Strategy: Merger takes place when two or more organizations merge together
and their operations are absorbed by a new company. A merger is a strategy through
which two firms agree to integrate their operations on a relatively co-equal basis because
they have resources and capabilities that together may create a stronger competitive
advantage.
 Acquisition Strategy: An acquisition occurs when one company purchases (or acquires)
another company. It is a strategy through which one firm buys a controlling or 100
percent interest in another firm by making the acquired firm a subsidiary business within
its portfolio.
 Vertical Integration Strategy: Vertical integration strategy involves extending present
business in two possible directions – (a) Forward Integration moves the organization into
distributing its own products; and (b) Backward Integration moves an organization into
supplying some or all of the products used in producing its present products. Vertical
integration is, popularly known as vertical linkage in our country.
 Horizontal Integration Strategy: Horizontal integration is a competitive strategy that
can create economies of scale, increase market power over distributors and suppliers,
increase product differentiation and help businesses expand their market or enter new
markets. By merging two businesses, they may be able to produce more revenue than
they would have been able to do independently.
 Outsourcing Strategy: Outsourcing strategy refers to a strategy of procuring raw
materials or parts and components from vendor/suppliers or having any value chain
activities performed by outsiders. When a firm adopts outsourcing strategy, it relies on
outside vendors to supply products, support services or functional activities. A firm may
outsource production, assembling, marketing, delivery, accounting and finance,
warehousing or any other function to other business firms who can do them cost
effectively or better than the firm itself.
 Growth Strategy: A company may adopt a growth strategy when it wants to expand its
market and thereby profitability. Usually this strategy is undertaken when a company has
enough resources to expand business and is capable to manage the new complicacies and
risks involved with expansion.
 Stable-Growth Strategy: A stable growth strategy is characterized as follows:
Organization is satisfied with its past performance and decides to continue to pursue the
same or similar objectives. Organization continues to serve its customers with same
products or services.
 Offensive Strategy: An offensive strategy consists of a company’s actions directed
against the market leaders to secure competitive advantage.
 Defensive Strategy: A defensive strategy consists of a company’s actions directed for
protecting its competitive advantage.

5|Page
  First-Mover Strategy: Being the first-mover means the firm is the first to initiate a
strategic move.

2b) As a manger of your company, if you are asked to undertake and execute strategy
in your business, which business level strategy would you follow? Why?

There are three business level of strategy such as Cost Leadership, Differentiation and Focus. As
a manager of a company, I would like to follow and execute the Cost Leadership strategy
because of the following reasons:
 Cost Leadership is the mechanism of establishing a competitive advantage by having the
lowest cost of operation in the industry. This strategy is especially beneficial in a market
where the price is an important factor.
 The primary objective of a firm aiming to attain cost leadership is to become the lowest
cost producer in comparison to the competitors. This is usually achieved by large scale
production which enables the firm to attain economies of scale or by innovating the
production process.
 Acquiring quality raw materials at the lowest price is the basic goal of a cost leadership
strategy.
 When the product produced by all companies in the industry are essentially same. That is,
the brand differences from company to company are minor. The products are
standardized and are readily available.
 When a large number of buyers are price-sensitive, and they want to buy products at the
lowest possible price.
 When it becomes difficult to differentiate products from those of competitors due to the
nature of the product. It means that very few ways are available to the company to
differentiate the products and that is why, it is wise for it to follow low-cost strategy.
Buyers become sensitive to price differences when product-to-product differences are
negligible. In such a situation, they will go for the lowest price.
 When buyer’s costs in switching from one brand to another brand of another company are
low or even zero. If buyers purchase another brand and this switching from the previous
brand does not involve any additional cost (such as transportation or repair) they are
likely to opt for the lower-priced brand.

6|Page
  When buyers are large and have significant power to negotiate pricing-related terms and
conditions.
 When price-competition among is very tough. Low-cost strategy helps producers to
compete effectively based on the price.
 When the company is in a position to use the lower-cost edge to attract price-sensitive
buyers in great enough numbers to influence total profits.
 Overcoming threats from competitors
 Encountering threats from substitute products
 Overcoming threats from the entry of potential competitors

2c) When organizations should go for differentiation strategy? How differentiated can
be achieved?

Differentiation strategy refers to making a company’s product different from the similar
products of the competitors. This strategy is associated with product differentiation (and service
differentiation)..
A firm go for differentiation when perceive,
 Existence of several ways for differentiation.
 Buyers’ perception of differentiation as having value.
 Diversity in buyers’ needs.
 Pursuing different differentiation approaches by various competitors.
 Rapid technological change and innovation.
 Competition revolving around rapidly evolving product features.

Attaining Differentiation
A firm can incorporate the following measures to attain differentiation:

 Differences in quality  Responsiveness to customers

 Innovation & creativity
 Unique taste
 Multiple features
 Special features
 Wide selection (one stop
shopping)
 Responding to customers’ psychological
desires
 Wide choice of customers
 Prestige and distinctiveness
 Full range service/ Product reliability
 Availability of spare parts

7|Page
2d. what are the different types of focus strategy? In which market situation focus strategy
if suitable and what are the reasons for failure of focus strategy?
Focus strategy concerns itself with the identification of a niche- market and launching a unique
product or service in that market. A niche-market is a narrow segment of a total market.

The focus strategy has two variants, cost focus and differentiation focus.

 Focused low-cost strategy is the strategy of entering into a niche market at low cost with
a unique type of product that has a special need among the customers in the niche market.

 Focused-differentiation strategy is the strategy of operating business with a

differentiated product in a chosen niche market

Favorable Market Situation for Focus Strategy:

Competitors’ apathy/unwillingness Inability/ unwillingness of competitor’s to serve

Profitable niche niche market
High Growth potentials Availability of different niche in the industry
No risk of segment overcoming Consumer’s distinctive preferences
Focuser’s competitive ability Company’s farsightedness/ foresight

Reasons for Failure of Focus Strategy: Managers should have a clear idea about these risks so
that they can consider them before deciding on the adoption of a niche strategy. Several risks are
associated with a focus strategy. These risks originate mainly from more appealing products by
rivals, shifting of product-preferences of customers, high attractiveness of the niche-market,
Universality of customers’ needs, Fear of low attractiveness, and Price war.

3a) what is a complementary strategy? Briefly present some complementary strategies

that can be chosen by company.

A complementary strategy can be, defined as any organizing activity, which recruits external
elements to reduce cognitive loads
Different options for complementary strategies are as follows:
 Strategic Alliance Strategy: Strategic alliances are cooperative agreements between
two or more firms to help each other in business activities for mutual benefits. The
strategic allies (i.e., partner firms) do not have formal ownership ties. They rather work
cooperatively under an agreement. Strategic alliances are formed by companies to
achieve win-win outcomes (none of the parties loose; rather all gain). Strategic alliances
create a good ground for the allies to perform joint research, share technology and
improve products.

8|Page
  Joint Venture Strategy: joint ventures refer to creating a new organization by two or
more companies. Joint venture involves an equity arrangement between two or more
independent enterprises that results in the creation of a new organizational entity. The
partner-companies own the newly created firm. To form a joint venture, at least two firms
must agree to jointly establish a new firm.
 Merger Strategy: Merger takes place when two or more organizations merge together
and their operations are absorbed by a new company. A merger is a strategy through
which two firms agree to integrate their operations on a relatively co-equal basis because
they have resources and capabilities that together may create a stronger competitive
advantage.
 Acquisition Strategy: An acquisition occurs when one company purchases (or acquires)
another company. It is a strategy through which one firm buys a controlling or 100
percent interest in another firm by making the acquired firm a subsidiary business within
its portfolio.
 Vertical Integration Strategy: Vertical integration strategy involves extending present
business in two possible directions – (a) Forward Integration moves the organization into
distributing its own products; and (b) Backward Integration moves an organization into
supplying some or all of the products used in producing its present products. Vertical
integration is popularly known as vertical linkage in our country.
 Horizontal Integration Strategy: Horizontal integration is a competitive strategy that
can create economies of scale, increase market power over distributors and suppliers,
increase product differentiation and help businesses expand their market or enter new
markets. By merging two businesses, they may be able to produce more revenue than
they would have been able to do independently.

3b. Explain four different types of market and their characteristics.

The four basic types of market structures first: perfect competition, monopolistic competition,
oligopoly, and monopoly. Each of them has its own set of characteristics and assumptions, which
in turn affect the decision making of firms and the profits they can make.

 1] Perfect Competition
In a perfect competition market structure, there are a large number of buyers and seller’s & large
number of small firms compete against each other. In this scenario, a single firm does not have
any significant market power. So all the firms in such a market are price takers.
Perfect competition market assumptions are as follows,
1. The products on the market are homogeneous, i.e. they are completely identical
2. All firms only have the motive of profit maximization
3. There is free entry and exit from the market, i.e. there are no barriers
4. And there is no concept of consumer preference
5. Buyers have complete information about the product
6. Firms are price takers
Agricultural markets are the closest representation of perfectly competitive markets.

9|Page
  Monopolistic Competition:
In monopolistic competition, there are still a large number of buyers as well as sellers. However,
they all do not sell homogeneous products. The products are similar but all sellers sell slightly
differentiated products. Monopolistic competition market assumptions are as follows,

1. Product differentiation: In monopolistic competition, all brands try to create product

differentiation to add an element of monopoly over the competing products
2. There are many producers and many consumers in the market, and no business has total
control over the market price. Freedom of Entry and Exit.
3. Producers have a degree of control over price.
4. There are few barriers to entry and exit.
Restaurant business is the example of monopolistic business

 Oligopoly Competition
In this type of market, there are only a few numbers of firm or seller but the large number of
customer. Oligopoly competition assumptions are as follows,
1. Interdependence: Interdependent means, if one firm changes its business or production
behavior then that will affect the other firm’s activity
2. Oligopoly is a market in which there are few sellers
3. there is strong competition among various sellers
4. Barriers to entry to and Oligopolistic industry arise due to- Huge investment requirement,
most advantage by the existing firm, Brand loyalty, Price cutting.
Example Cable Television Services, Entertainment (Music and Film), Airlines, Mass Media,
Pharmaceuticals, Computers & Software, Cellular Phone Services
 Monopoly
A monopoly refers to a market structure where a single firm controls the entire market. In this
scenario, the firm has the highest level of market power, as consumers do not have any
alternatives. Monopoly competition assumptions are as follows,
1. Under monopoly, the firm has full control over the supply of a product. The elasticity of
demand is zero for the products.
2. There is a single seller or a producer of a particular product, and there is no difference
between the firm and the industry. The firm is itself an industry.
3. The firms can influence the price of a product and hence, these are price makers, not the
price takers.
4. There are no close substitutes for a monopolist’s product.
Examples: Microsoft and Windows, local natural gas company.

10 | P a g e
3c) Explain the matching Strategy for Market Leader, Runner-up Industry and Weak
Firms.

The possible strategic approaches for the runner-up firms are as follows:

(a) Offensive Strategy: This strategy is useful to a market-challenger runner-up firm. The firm
wishing to build a competitive advantage may adopt offensive strategy through:
 Innovating products;
 Building a good brand image;
 Introducing better products ahead of the competitors;
 Forming strategic alliances with the key intermediaries;
 Establishing a long-term business relationship with the marketers of complimentary
products; and
 Devising ways to reduce costs.

(b) Growth Strategy: Another viable strategy for a market-challenger is to follow the strategy
of growing through acquiring other similar firms. This helps expand the market share.

(c) Market-Niche Strategy or Focus Strategy: A runner-up firm may look for a vacant-niche
market. The niche market that has been, bypassed. or neglected by the market leaders is suitable
for the runner-up firms. However, in order to be viable, the niche should have enough member of
customers to be profitable, reasonable growth potential, difficult for large firms to serve (for this
or that reason), and appropriate to the resources of the firm.

(d) Specialist Focus Strategy: A runner-up firm can employ specialist focus strategy to build
competitive advantage through leadership in a specific area or product or technology. For
example, a firm may concentrate on producing only glass sheets for window. Another form may
specialize in ‘transparent ball pen’.
(e) Content-Follower Strategy: The firms that follow the paths of market leaders are content-
followers. They simply imitate what the leaders do. They do not challenge the leaders rather
follow them. They do not imitate any trend-setting moves. They react and respond to the leaders’
actions. They are defensive, never offensive. In Dhaka city, the homemade bread marketers are
generally content-followers.

(f) Distinctive Image Strategy: Runner-up firms may opt for such strategies that would make
them distinctive in the market. They can be distinctive for lower price, high quality with good
price, extraordinary customer service, unusually creative advertising, etc.

Matching Strategy in Weak Firms

The firms that are competitively weak or plagued by crisis conditions may follow any of the
following strategies:
a. Turnaround Strategy: Weak firms may launch an offensive turnaround strategy
(based on low cost or unique differentiation) to improve their market position. Before
formulating this strategy, managers need to identify the causes of poor performance
of the company. There can be a wide array of causes such as high costs, resources

11 | P a g e
 constraints, inefficiency and ineffectiveness of managers/employees, debt-burden,
weak economy of the country, inappropriately implemented strategies in the past or
natural disaster. After proper identification of the causes, if it appears that the
company is worth rescuing, then the company can go for turnaround strategy to get
the business out of crisis. Actions may include; revising existing strategy, devising
ways for cost reduction, or selling some assets for cash to save the remaining part of
the business. Some crisis-ridden companies may require a combination of these
efforts.
b. Defensive Strategy: Some weak companies use ‘fortify and defend’ strategy to
protect their current market positions. The objectives of this strategy are to keep the
sales volume at current level, maintain the present market share, sustain the existing
profitability and protect the current competitive position.
c. Liquidation Strategy: When turnaround or defensive strategy is not pragmatic or
due to reasons beyond the control of the management, it is better to go for closing the
business and liquidate the assets. Such a strategy is the last resort when hopeless
situations prevail in the company.
d. End-Game Strategy: Weak companies also can employ end-game strategies. Such
strategies entail undertaking actions to maximize short-term cash flows and gradually
to exit the market. An end-game strategy is suitable under certain situation. and-game
strategy is suitable under certain situation.

3d) Make a comparison between offensive strategy and defensive strategy. Mention the
advantages and disadvantages of first-mover strategy.

Offensive strategy: Offensive strategy is a type of corporate strategy that consists of actively
trying to pursue changes within the industry. Companies that are managed as offensive
competitive generally invest heavily in technology and Research and Development (R&D) in an
effort to stay ahead of the competition. For example, a company using an offensive marketing
strategy may seek to target an established industry leader’s shaky product safety record by
emphasizing the safety of its own products.

Objectives of offensive strategies:

 To maximize the sales

 To destabilize the current market leader
 To acquire market share

Defensive strategies: Defensive strategies are management tools that can be used to fend off an
attack from a potential competitor. Think of it as a battleground: You have to protect your share
of the market in order to keep your customers happy and your profits stable. Defending your
business strategy is about knowing the market you’re best equipped to operate in and about
knowing when to widen your appeal to enter into new markets. The established company simply
uses its defensive marketing to reinforce customer confidence in its products and swat the
newcomer away.

12 | P a g e
 Objectives of Defensive strategies:

 To maintain the existing market share and to maximize profitability

 To safeguard the existing levels of competitive advantage
 To keep up top position in local and existing markets.

Companies pursuing offensive strategies directly target competitors from which they want to
capture market share. In contrast to offensive strategies – which are aimed to attack your market
competition – defensive strategies are about holding onto what you have and about using your
competitive advantage to keep competitors at bay. Defensive strategies are used to discourage or
turn back an offensive strategy on the part of the competitor.

First-Mover Advantages:
Several advantages emerge when a firm takes a strategic move as the first-mover. The first-
mover becomes the pioneer and thus pioneering helps the firm to:
 build reputation in the marketplace;
 attract buyers to the products and the firm;
 produce an absolute cost advantage over the competitors because of its early
commitments to supplies of raw materials, new technologies and distribution channels’
 create a pool of loyal customers who are likely to repeat purchasers of products of the
firm; and
 discourage potential new entrants to refrain from entering into the market.

First-Mover Disadvantages/Late-Mover Advantages:

 It is highly costly to become the first-mover, because the firm has to create demand in the
market for the product and so it needs to spend huge amount of money for promotion.
 It may invite serious adverse effects on operations of the firm if the industry is such that
there are frequent changes in technology, such as in the software industry or in the
communications industry. In such a situation, the late-movers gain the advantage of using
latest technology.
 The late-movers can copy/imitate the technical-how easily and eventually may be able to
oust the first-mover from the market.
 The late-movers may become so powerful because of their ability to bypass the first-
mover in developing skills and technology that they can snatch-away the customers of the
first-mover.

13 | P a g e
4a) Define strategy and strategic management. What are the subject matters strategy deals
with? Why strategy is important for organizations?

Johnson and Scholes (Exploring Corporate Strategy) define strategy as follows: "Strategy is the
direction and scope of an organization over the long-term: which achieves advantage for the
organization through its configuration of resources within a challenging environment, to meet the
needs of markets and to fulfill stakeholder expectations".

Strategic Management: a set of managerial decisions and actions that determines the long-run
performance of a corporation. It includes the following issues-

 Internal and external environment scanning

 Strategy formulation
 Strategy implementation
 Evaluation and control

Strategy deals with:

Direction, market, advantages, resources, environment and stakeholders
 Where is the business trying to get to in the long-term (direction)
 Which markets should a business compete in and what kinds of activities are involved in
such markets? (markets; scope)
 How can the business perform better than the competition in those markets?
(Advantage)?
 What resources (skills, assets, finance, relationships, technical competence, and facilities)
are required in order to be able to compete? (Resources)?
 What external, environmental factors affect the businesses' ability to compete?
(Environment)?
 What are the values and expectations of those who have power in and around the
business? (stakeholders)

Importance of strategy for organization.

 Through a dedicated strategic plan, organizations can get valuable insights on market
trends, consumer segments, as well as product and service offerings, which may
affect their success.
 Clarifies opportunities and threats allowing for better decisions;
 Provides an opportunity for people to contribute their ideas and have input in the
decision-making process;
 Provides a basis for measuring performance;
 Helps to drive innovation through the organization.
 Strategy helps long term planning; the main job of Strategy is to prepare you for a 3-
year or 5 year or even a 10-20 year plan in some cases.
 Strategy helps in preparation for different markets and products and find out the niche
market
 Strategy helps to Optimize the cost and increases profits
 Strategy protects the organization against a sudden change in environment

14 | P a g e
4b. graphically explain the basic elements/ steps of strategic management model.

Here below graphically represent the strategic management model.

Environmental Scanning: is the monitoring, evaluating and disseminating of information from

the external and internal environments to key people within the organization
Strategy Formulation- the development of long-range plans for the effective management of
environmental opportunities and threats in light of organizational strengths and weaknesses.
Strategy Implementation- the process by which strategies and policies are put into action
through the development of: Programs, Budgets & Procedures.
Strategy Evaluation: the process in which corporate activities and performance results are,
monitored so that actual performance can be, compared to desired performance

4c) Mention the benefits of strategic management. Explain the strategic decision
making process.
Benefits of Strategic Management/ Why strategic management
 Providing better guidance to the entire organization.
 Making manager more alert to the winds of change, new opportunities and threatening
developments in the organization’s external environment.
15 | P a g e
  Providing managers with a rationale for evaluating competing budget requests for
investment capital and new employees
 Helping to unify the numerous strategy-related decisions by managers across the
organization
 Creating a more proactive management posture.
 Clearer sense of strategic vision for the firm
 Sharper focus on what is strategically important
 Improved understanding of a rapidly changing environment
 Additional Benefits of Strategic Management:
 Improved organizational performance
 Achieves a match between the organization’s environment and its strategy, structure and
processes
 Important in unstable environments
 Strategic thinking
 Organizational learning

Strategic Decision making process:

 Evaluate current performance results
 Review corporate governance
 Scan and assess the external environment
 Scan and assess the internal corporate environment
 Analyze strategic (SWOT) factors
 Generate, evaluate and select the best alternative strategy
 Implement selected strategies
 Evaluate implemented strategies

16 | P a g e
4d. what the company strategy look for? What challenges faces by organization to set their
strategy?

Company strategy look for,

Challenges/ Complexity of Strategic Management:

Strategic Management is the process through which managers undertake efforts to ensure long-
term adaptation of their organization to its environment. It is not a simple process, it is complex
in nature. Its complexity may be attributed mainly to three reasons:
 Strategic Management involves taking decisions about future. As future is uncertain, it is
impossible to a manager to be sure about future. Therefore, Strategic Management
involves a high degree of uncertainty.
 Managers in different departments in an organization have different priorities. They must
reach an agreement to ensure an integrated approach. Strategic Management needs an
integrated approach which is difficult to achieve.
 Strategic Management involves different changes in the organization. It needs changes in
organizational cultures, leadership, organizational structure, reward system, etc. all this
make strategic management complex.

17 | P a g e