Strategic Management: SNR Degree College, Jigani

STRATEGIC MANAGEMENT
VI SEM BBA
STUDY MATERIAL 2020-21
SNR DEGREE COLLEGE,JIGANI Page 1

SYLLABUS : STRATEGIC MANAGEMENT
Objective: The objective of this subject is to expose the students to the various strategic issues
such as strategic planning, implementation and evaluation etc.
UNIT – 1: INTRODUCTION TO STRATEGIC MANAGEMENT 10HRS

Introduction-Meaning And Definition-Need-Process of strategic management-Strategic
decision Making- Business ethics –Strategic Management.
UNIT – 2 : ENVIRONMENTAL APPRAISAL 12HRS

The concept of Environment – The Company and its Environment – Scanning the Environment
, Technological, Social, Cultural, Demographic, Political, Legal and Other Environment Forces,
SWOT Analysis- Competitive Advantage – Value chain Analysis..
UNIT – 3 : STRATEGIC PLANNING 12HRS

Strategic Planning process- Strategic Plans during recession, recovery, boom and depression –
Stability Strategy – Expansion Strategy – Merger Strategy – Retrenchment Strategy –
Restructure Strategy – Levels of Strategy – Corporate Level Strategy – Business Level Strategy
and Functional Level Strategy – Competitive Analysis –Porter’s Five Forces Model.
UNIT -4 : IMPLEMENTATION OF STRATEGY 14HRS

Aspects of Strategy Implementation- Project Manipulation –Procedural Implementation –
Structural Implementation – Structural Considerations - Organizational Design and Change –
Organizational Systems. Behavioral Implementation – Leadership Implementation – Corporate
Culture – Corporate Policies and Use of Power. Functional and Operational Implementation -
Functional Strategies – Functional Plans and Policies. Financial – Marketing – OPERATIONAL
and Personnel dimensions of Functional Plan and Policies- integration of Functional Plans and
Policies.
UNIT 5 : STRATEGY EVALUATION 08HRS

Strategy Evaluation and Control – Operational Control – Overview of Management Control –
Focus on Key Result Areas.

Unit : I strategic Management:-

Meaning:
“A strategy is an action that manager take to attain one or more of the organizations goal”
Definition:
“Strategy is the determination of basic log terms goals on an enterprise and the adoption
of course action and allocation of resources for carrying out these goals “Chandler”.
Meaning of Strategic Management:
“Strategic Management can be defined as “The art and science of formatting, implementing
and evaluating cross functional decisions that enables organizations to achieve its
objectives”.
Need for strategic management:
1. Due to change
2. It provides guidelines
3. Better performance
4. Improved allocation of resources
5. Competition advantages
6. Provides holistic approach
7. Improved integration
8. Systematized business decisions
9. Strategic management sets the major directions of the organizations that is mission on
the organizations.
10. The strategic management is the major vehicle for implementation major changes in
the organizations must take.
11. It co-ordinates and integrates business activities.
12. It strengthens the competitive position of the company.
13. It works to words achieving the performance targets
14. It satisfy the stakeholders of the firms i.e. customers, investors, management,
government, creditors, suppliers, etc.
15. Strategic management always for casting the future by the managers and workers.
16. It always works towards long range of company.
Benefits of the strategic management:-
1. It is a pro-active approach:
Strategic management helps on organization to be proactive rather than reactive. Strategic
management evaluates opportunities and threats outside. Strategic management helps in
formulating machine and making objectives clear.
2. Facilitates better delegation:

Strategic Management helps in better delegation and co-ordination. Executives working a t

the lower levels can formulate their respective functional and operational strategies within
the broad frame work of the organization strategy.
3. Exploring opportunities :
Strategic management helps a company to adapt suitable strategies for exploiting
opportunities and fight threats .It will also helps the company to drop those businesses
which are not successful.
4. Assist realistic and effective plan:
Strategic Management will help the company to have constant watch on the environment
to identify changes and to modify the strategy as and when required. These leads to
formulation of realistic and effective plans .
5. To gain competitive advantages:
Strategic management enables a company to meet competitions more effectively. Careful
understanding of changes in external environment including competition helps the policy
makers to frame policies to explore and exploit opportunities for the organization benefits.
6. Minimize the weakness:
Every organization will have both strengths and weakness. Prudent strategy maker converts
these weaknesses into strength by reinforcing appropriate strategies.
7. It promotes employees participation:
Top level Management formulates overall objectives and develops corporate strategy
based on the objectives to be accomplished. Operational and functional policies are
formulated by the executives working at the bottom line. This turn helps in employees
participation to a greater extent.
8. It boosts profits:
Number of research studies has suggested that a well designed strategic management can
boost profits. Strategic management helps to identifying, evaluating and adopting best
course of action from out of alternatives available.
9. Systemic approach for management decisions:
Well designed strategic management adopts system approach to problem solving. It
concentrates on functional areas of the organization. It enables co-ordination and
integration between these functional areas. Strategic management designs appropriate
authority and responsibility for each functional area. This leads to systematic allocation of
organizational resources based on priority and urgency.
10.Empowerment of employee.
Strategic Management helps the organization to achieve commitment helps managers and
employees to become more creative and innovative. This process results in employee
empowerment which in turn increases organizational effectiveness.
Limitations of Strategic Management:-
1. Strategic management decisions are certain assumption these assumptions are not
valid, the plans could not be realistic

2. Strategic management is a means to achieve organizational mission or objectives, if the

mission or objectives are unrealistic.
3. Sometime it argument that strategic management makes an organization over ambition.
It leads to failure.
4. Sometime it argues that strategic management use to SWOT analysis as a powerful tool
for making strategy. If the SWOT analysis is not right the strategic management will
failure.
5. Strategic management decisions are based on environmental factors.
6. The success of strategic management is depending not only on the strategy formulation
but also strategy on effective implementation.
7. Strategic management provides for flexibility. It means that strategy will be review and
modified based on the change in environment .People may ready to adopt changes
frequently.
8. Strategic planning is complex and difficult task with required people with vision,
commitment and expertise for threw proper implementation appropriate system must
also exist.
9. It is also argued that strategic management is a costly exercise.
Reasons for failure of strategic management:-
1. Strategy is concerned with future course of action and future being uncertain due to
various reasons definite strategy may not be determined.
2. The business cycles, Government roles, Competitors role etc makes strategy planners
weak and faces them to change strategy very often. Frequent changes indicate poor
planning and Management looses faith in strategy program.
3. Risk involved in the implementation strategy is more. since strategy involves long range
of plans which is like to errorless.
4. Success of strategy depends and joint effort and co-operation of the people in the
organization of people in the organization and in practice.
5. Presence of bureaucratic
6. Strategic decisions lack psychological social and political dimensions.
7. Scarce resources for implementing strategic decisions.
8. Lack of objectivity in the formulating strategic decisions.
9. Like minded or close minded people involved in strategy implement it leads to failure of
strategy.
10. Conflicts between Managers goals and company goals additional impediment it leads to
failure of strategy
11. To communicate a strategy requires as much trouble and time has to consume it.
12. Under changing circumstances strategy becomes obsolete and under it suitable
modified.
13. Frequent changes in the strategy also lead to the failure of the strategic management.

Strategic Decision Making:

Strategic decision are basically concerned with the selection of product mix which a
company intends to produce and markets in which it will sells it products.
Decision making is the core planning it is defined as “ the selection of a course of action from
among alternatives”
Features of Strategic Decision Making:
1. Strategic decisions are concerned with organizational activities.
2. Matching the organizational activities to its environment
3. Matching the organization activities to its resources
4. Allocation and Reallocation of organization resources.
5. Decisions are also affected by value system
6. Strategic decisions operational decisions.
7. Strategic decisions determined a long run direction of the company.
8. Competitive orientation
Decision Making Process:
1. Identification of Problems or determining the objectives to be accomplished

2. Environmental Scanning
3. Developing possible Alternatives
4. Analyzing each Alternative
5. Selecting the Best alternative
6. Executing the selected alternative

Strategic Management Process:

Strategic Management Decision involves 4 basic elements:
1.Environmental Scanning
2.Strategy Formulation
3.Strategy Implementation
4.Strategy Evaluation and Control
1. Environmental Scanning:
Environmental scanning is the process of analyzing the factors of internal and external
environment. The simplest way to conduct environmental scanning is through SWOT
( Strength, Weakness, Opportunities, Threat) Analysis . In this Strength and Weakness are the
variables of internal environmental factors. Whereas Opportunities and threat are the
elements of External environment over which organization does not have any control.
2. Strategy Formulation:
Strategy formulation includes developing a Vision and Mission, identifying an organization’s
external opportunities and threats and determining internal strengths and weakness.
3. Strategy Implementation:
Strategy implementation means mustering employees and managers to put formulated
strategies into action. Strategy implementation is frequently called as the action stage of
Strategic Management. Strategy implementation includes developing a strategy
4. Strategy Evolution and control:

Strategy Evaluation and control is the process in which corporate activities and performance
results are monitored with an intention of comparing actual performance with desired
performance. Managers at all levels use the information collected to take corrective action .
The Evaluation and control function complete the strategic management model. Based on
performance result, Management may need to make adjustments in its strategy Formulation,
Implementation both.

Role of strategists or CEOs

I. Interpersonal Role
1.Figurehead Role:
Mangers perform the duties of a ceremonial nature as head of the organization .Duties of inter
personal role include routine, involving little serious communication and less important
decisions. However they are important for the smooth functioning of an organization or
department.
2. Leader Role:
The manager as in charge/department coordinates the work of others and leads his
subordinates. Formal authority provides greater potential power to exercise and get the things
done.
3. Liaison Role:
As the leader of the organization, manager has to perform the functions of Motivation,
Communication, Encouraging team spirit and the like. Further he has to coordinate the
activities of all his subordinates which involves the activity of Liaison.
II .Informational Role
1 . Monitor Role:
As a result of the network of contacts, the manager gets the information by scanning his
environment, Subordinates, peers, and superiors. Managers mostly collect the information in
verbal form often as gossip, hearsay, speculation and through grapevine Channels.
2. Disseminator Role:
Manager disseminates the information; he collects from different sources and through various
means. He passes some of the privileged information directly to his subordinates Who
otherwise have no access to it .
3.Spokesman Role:
The Manager has to keep his superior informed every development in his unit. Who in turn
inform the insiders and outsiders . Directors and shareholders must be informed about the
financial performance , customer must be informed about the new product developments,
quality maintenance,
III. Decisional Roles:

1. Entrepreneurial Role:
As an entrepreneur the manger is a creator and innovator. he seeks to improve his
department , adapt to the changing projects and initiates the developmental projects.
2.Disturbance Handler Role:
The disturbance handler role presents the manager as the voluntarily responding the
pressure. Pressures of the situation are severe and highly demand attention of the manager
and as such as the manger cannot ignore the situation for example, Worker Strike, Declining

sales, bankruptcy of major customer etc.The Manager should have enough time in handling
disturbance carefully, skillfully and effectively.
3. Resource Allocator Role:
The manager should have an open door policy and allow the subordinates to express their
opinions and share their opinions and share their experiences. This process helps both the
manager and his subordinates in making effective decisions. The manager should empower his
subordinates by delegating his authority and power.
4. Negotiator Role:
Managers spend considerable time in the task of negotiations. He negotiates with the
subordinates for improved commitment and loyalty, with the peers for cooperation,
coordination and integrations with workers and their unions regarding conditions of
employment, commitment, and productivity. With the government about providing facilities
for business expansion.etc
Key Concepts Of Strategic Management:

1. Objectives
According to Appleby” Objectives are goals, they are aims which management wishes to
achieve”
Nature:/Characteristics of Objectives
1. Objectives should be understandable
2. Objectives should be related to time frame
3. Objectives should be specific
4. Objective must be realistic
5. Objective should be mutually consistent throughout the organization
6. Objectives should be capable of being measured.
7. Objective makes the people to the full participation of people
8. Objectives should not be rigid. Should be flexible.
Vision statement:
Vision statements of an organization are statement of its future. Ie where the organization
needs to be headed . It presents the values, philosophies and aspiration that guide
organizational action. It provides clear decision making criteria.
Mission statement
A mission statement is an enduring statement of purpose that distinguishes one business from
other similar firms. Defines where the organization is going now, basically describing the
purpose, why this organization exists.
2. Policy
“A Business policy is an implied overall guide setting up boundaries that supply the general
limits and direction in which managerial action will take place”
Ex: 1.Marketing Policy 2.Financial policy3.Personnel policy 4.Personnel policy etc.

3.Strategy :A strategy is a set of decisions made to meet objectives. it is an action plan by

using it organizational goal can be reached easily.A strategy is unified, comprehensive and
integrated plan relating to the strategic advantage of the firm. To the challenges of the
environment . It is designed to ensure that the basic objectives of the enterprise are achieved.
5. Rules: Rule is a set of actions must be followed by every member of the organization. Rules
are statements that specific action to be taken or not to be taken in a given situation.
6. Procedures: According to George R terry” A procedure is a series of related tasks that make
up the chronological sequences and established way of performing the work to be
accomplished.”
COMPONENTS OR AREAS OF SOCIAL RESPONSIBILITY

Meaning:
The social responsibilities of business is refers to such decision and activities of the business
firm which provide for the welfare of the society as a whole along with the earning of the
profit for the firm.
Definition:
According to prof .Andrews “Social Responsibility means the intelligent and objective
concern for the welfare of the society that restraints, individuals and corporate behavior
from ultimately destructive activities”
I. Social responsibilities towards owners of the enterprise:
1. Payment of fair rate of Dividend regularly.
2. Maximization of the net present value of Business
3. Ensuring the full participation of owners in the management.
4. Supplying of accurate and comprehensive report giving full information.
5. Disclosing of financial information and clarifying doubts.
6. Asses ability for getting information relating to the company.
II. Social Responsibility towards workers:
1. Job security with the fair wages, Bonus, Profit sharing.
2. Fair promotional practices.
3. Equal opportunity for growth and development with the organization.
4. Facilities for training and opportunities to the workers for improving their skills.
5. Encouraging participation with management of the company.
6. Providing Employee welfare and social security measures and better working conditions
7. Protecting the workers from the occupational hazards.
8. Encouraging the development of good trade union leadership.
9. Changing the attitude of the management towards workers.

III. Social responsibilities towards consumers or customer

1. Ensuring availability of products in a right quality at right place at the right time.
2. Charging reasonable prices for its products.
3. Using correct measures.
4. Providing goods after sales services.
5. Avoiding the restricted trade practices and other undesirable methods to exploit the
customers.
6. Encouraging the information of association to the consumer’s satisfaction and welfare.
IV. Social responsibility towards society:
1. Providing goods and services efficiently and contributing to economic wellbeing of the
society
2. Optimizing the use of resources
3. Providing public amenities and avoiding the condition of slums and congestions.
4. Adapted anti-pollution measures.
5. Participating in the social welfare programmes.
6. Ensuring that the gains of improved production of the enterprises are shared by all the
consistence of the society.
V. Social responsibilities towards the Government:

1. Strictly observing to provisions of the various laws and enhancements.
2. Extending full support to the Government in its efforts to solve the national problems
such as Unemployment, Food problems, Inflation, Regional imbalance in the economical
development.
BUSINESS ETHICS
It is the set of morals and code for conduct, attitude and beliefs concerning what is right or
wrong, Good or Bad or In other words ethics refers to the code of conduct in the Business.
Ethics refers to the code (law) of conduct that guides an individual in dealing with others. Or
According to davis and Fedrick Ethics refers to the rules and principles that define right and
wrong conduct.
Reasons for Ethics:
1. Ethics corresponds to basic human needs.
2. Values create creditability with the public.
3. Values give management creditability with the employees.
4. Values help better decision making.
5. Ethics and profit are interred related.
6. Law alone cannot protect society; Ethics can increase awareness of customer-public.
7. Regulatory bodies act as watch dog for compliance with respect to ethical behavior of
organizations.

8. Code of corporate governance for directors of company.

9. Ethics involve the fundamental definition of what is good or bad, right or wrong should
be done, what should be avoided.
Examples of Ethics:
1.To sell unadulterated and good quality goods to consumers.
2. To use proper weights and measures.
3. To charge reasonable or fair prices .
4. To make only reasonable profit.
5. To ensure regular supply of goods.
6. To give fair treatment to workers or employees.
7. To maintain proper and correct books of accounts and pay taxes to government regularly
and promptly.
8. Not to observe the corrupt practices and not to corrupt public servants for getting favours.
9. Not to defraud the customers
10. Not to misbehave with Employees
11. Not to misbehave with customers.
12 . Not to pollute the atmosphere or environment.
Social Responsibility for Economic Growth

Organizations must not concentrates only on the principle of Profit Maximization.
Consideration of economic growth of the society is vital. Organizations must be utilize
available opportunities in the environment for the economic development of the society.
1. Optimum utilization of the Resources
2. Producing goods and services efficiently and contributing to the economic well being of
society.
3. Providing public amenities and avoiding the conditions of slum and congestion
4. Maintaining environmental ecology and adopting anti pollution measures.
5. Participating in social welfare Programmmes such as adapting villages, providing Medical
facilities, sanctioning educational scholarship etc
6. Ensuring that gains of improved production of the enterprise are shared by all the
constituents of the society.viz Management, Shareholders, Workers and Consumers.
7. Helping the weaker sections by providing the opportunity for growth.
8. Encouraging voluntary organizations and agencies engaged in improvement of weaker
sections
9. Producing goods to meet the needs of the various sections of the society.
10. Encouraging development of small business, import substitution and self reliance and
dispersal of economic activity.

Social Audit
The term social audit means an assessment of how well a company has discharged its
social obligations .It is a systematic and comprehensive evaluation of an organizations social
performance as distinguished from its economic performance.
Scope and objectives of Social Audit
1.Ethical issues : ethics are contemporary standards of principles or conducts that govern the
actions and behavior of individuals within the organization.
2.Equal opportunity in employment and a fair justice system in the organization . it should be
based on Merit and ability not the basis on Sex, Religion, or race etc.
3.Quality of Work life issue pertains to several on the job areas besides demand for safe,
healthy and human work environment.
4. It is the duty of Business to make available to the consumer items of daily needs in right
quantity, at a right time , price and of the right quality.
5.Environmental Protection
Benefits of Social Audit:

1. To monitor the social and ethical impact and performance of the organization.
2. To provide a basis for shaping management strategy in a socially responsible and
accountable way and inform marketing and other strategies.
3. TO facilitate organizational learning about how to improve social performance
4. To facilitate the strategic management of institutions.
5. To inform the community, public, other organizations and institutions in the allocations of
their resources.

UNIT II ENVIRONMENTAL SCANNING
Business Environment” According to Keith Davis “Business Environment is the aggregate of

condition events and influences that surround and effect business”
The term Environment refers to the surroundings and circumstances which influence a
Business Unit.
According to WF Glueck and Lawrance R jauch “ The Environment includes factors outside
the firm which can lead to opportunities for or threats to the firm. Although there are many
factors the most important of these factors are socio economic, technological, supplier,
competitors and Government.
Environmental Scanning:
Environmental scanning is the monitoring and disseminating of information from the

external and internal environments to key people within the organization.
According to Abell” Environment appraisal is the identification, measurement and

assessment of environmental impacts.
Need for Environmental Scanning:
1. Environmental scanning provides information about the environment about the favorite
opportunities and impending threats.
2. Systematic Analysis helps managers to predict the future and more adjustment to meet
the uncertainty.
3. Environmental scanning gives a clear idea about the existing competitors, their current
operations and future plans.
4. It helps to identification of internal weakness of the organization.
5. It also helps in understanding the claims and the expectations of the society.
6. It helps the organization to determine input –output relationship.
Various components of External Environment:
1. Political Environment
2. Economic Environment
3. Socio- Cultural Environment

4. Technological Environment
5. Legal Environment
6. Natural Environment
7. International Environment
8. Demographic Environment
1. Political Environment:
Political environment simply refers to the way a country is being run in terms of politics. The
political environment includes all laws , government agencies and lobbying groups that
influence or restrict individuals or organization.
1. Political system 5. Monopoly controls

2. Political Risk 6.Legislations
3. Political ideologies 7. Trading Policies
4. Indicators of political instability 8. Government term and changes
2. Economic Environment:
Economic forces refer to economic conditions. They comprised business booms and
depressions, shortages, price level, Money supply, Rate of interest, purchasing power of the
people, take home pay of the people, spending pattern of the people, etc.
Economic Environmental Factors:
1. National Income , per capita income

2. Economic policy
3. Production and distribution of income and wealth
4. Tax policies and Taxation
5. Privatization ,FDI
6. Inflation and deflation
7. Balance of Payment and Balance of Trade
8. Business cycles
3.Socio cultural environment:
Socio cultural environment refers to a set of beliefs, customs, practices, norms and behavior
that exists within a society which describes relationship to themselves and others.

1. Changes in life styles 6.Demographies

2. Family structures 7.Brand ,Company , Technology Image
3. Attitudes and values 8.Ethnic / Religious factors
4. Household patterns 9.Consumer Buying Patterns
5. Social mobility 10.customs beliefs, and Literacy Rates
4. Technological Environment:
Technological environment means the advancement in the field of technology which

influences business by new inventions of production and other innovation in techniques to
perform the business operations and product development.
1. Degree of automation
2. Emerging technologies
3. R&D activities
4. Technology transfer
5. Use of IT and communication
5.Legal Environment:
Legal Environment Provides a frame work on laws , regulations and Government policies
relating to legal or regulatory set up. Various regulations and law influences marketing plans.
1. International law
2. Employment law
3. Company law
4. Health and safety law
5. Regional Legislation.
6.Environmenatal factors:
Natural environment refers to combination of natural resources which used by business as
inputs and affect their marketing activities.
1. Geographical Location 2. Availability of resources

3. Access to natural resources 4. Concern for environment
5. Increased energy cost. 6. Environmental Impact
7. Environmental Legislation 8. Waste disposal
9. Environmental pollution and Control 10. Ecological Balance system
Demographic Environment:

Demographic factors like Size, growth rate, age composition, sex composition etc of the
population, common family size, education level ,language, cast ,religion etc will have a
profound influence on business organization.
International Environment:
International Market influences the growth of Domestic companies, especially export oriented
industries. A fourable export market enables business firm to develop a good foreign Market
for its products and strengthen its domestic position. It helps
1. Optimum use of resources
2. Providing international quality products
3. Large scale production
4. Meeting the international demand
5. Maintaining the good relationships between countries.
6. Advanced Research and Development
Competitive Environment:
In recent years degree of competition is increasingly tremendously. Competitor’s action and
responses to the existing Environment must be carefully analyzed.
1. Organisation must have constant watch on the actions and reactions of the competitors.
2.The information to collected regarding competitors include no of Product lines, Product
differentiation, Price, Quality, Market Share, Advertising ,Location, services.
3. Organisation can gain competitive edge over its competitors by adopting new technologies
and using substitutes.
4. Adoption of new technology also helps the organization to reduce cost of operation
Increasing profit . Customer services.
Environmental scanning techniques
1.SWOT ANALYSYS 2.ETOP analysis 3.PEST analysis 4.Quest analysis
SWOT analysis: SWOT analysis helps an organization to match its strengths and weakness with
opportunities and threats operating in the environment.
STRENGTHS:
Strengths are internal capabilities of an organization which can be used to gain competitive
advantage over its competitors. It also includes ability of the organization to perform certain
activities better than its competitors.

 Physical assets like building , plant and machinery, financial resources, strategic location
of the plant, raw materials ,distribution Network.
 Human Assets like Good intellectual capital, talented R&D People
 Good Accounting Policies , Strategy Planning system and HR practices
 High quality manufacturing ,Brand image Committed and talented Sales force
1. Strong Brand Image 2 Quality products
3. Excellent distribution network 4. Strong R&D
5. Good Inventory management 6.Economics of scale
7. Modern technology 8. Motivated employees
9. Good industrial relations 10. Good after sales services
11. Motivated sales team 12.Breadth of product line
13. Location facilities 14.Outsourcing support
15. Effective cost control 16. Tax concession
17. Top management capabilities
WEAKNESSES:
Limitation or constrains which tend to decrease the competencies of the organization
particularly in comparison to its competitors. Weakness may exist due to non-availability of a
particular resource with the organization.
 Lack of physical, Human, organizational assets that are critical to survival of the
organization.
 Lack of appropriate skill in utilizing Resources
 Lack of Strategic direction for the company
1. Poor brand image 2.poor quality products
3. Poor distribution network 4.Weak R&D facilities
5. Poor inventory management 6. Low credit rating
7. poor morale of employees 8. Inefficient brand
9. Inaccessible location 10. Poor receivable
11. Excess manpower 12. Poor reserves
13. Uneconomical size of operations 14. Outdated technology
15. Increasing cost of production 16. Inefficient management
17. Poor industrial relations.
OPPORTUNITIES:
Major favourable conditions (core competencies) in the organization which help on
organization strengthen its position. Opportunities are those favourable situations the
company is equipped to capture.

 Emergence of new customer segments in the market

 Change in customer buying habits and potentials
 Changes in technological ,Social, Legal and Economic environment
1. Import relaxations 2. Large, growing markets
3. Growing urban income and population 4. Growth of consumerism
5.De-licensing 6. Liberation of FDI 7.Export incentives
THREATS:
Major unfavourable conditions in the organization which may pose a risk or damage the firm’s
Position in comparison to its competitors . An organization threats are those factors in a
company environment that the firm is not equipped to handle.
 Entry of new competitors with better business models
 Change in technology for which organization is not affordable
 Change in customer habit for which organization is not in a position to respond quickly,
which may shift their customers to their competitors.
1. Political instability 2. Religious battles 3.Terrorists attack
4.Terrorists attack 5.High attrition rate
ETOP Analysis
Environmental Threat and Opportunities profile (ETOP)is an important technique which is
widely needed in environmental Diagnosis.
The environmental threat and opportunities profile is a systematic evaluation of
environmental factors weighted by the by the significance of each factor for the company.
QUEST Analysis
Quick Environmental Scanning Technique is an important technique which alsoused to scan
the Environment.

UNIT III STRATEGIC PLANNING
Strategic planning is a systematic and disciplined exercise to formulate strategy. It is

more comprehensive as it concentrates on the whole organization. Strategic planning is a
forward looking exercise which determines the future posture of the enterprise.
Strategic planning is an organization’s process of defining its strategy, or direction and

making decisions on allocating its resources to pursue this strategy, including its capital and
people.
According to Alfred chandler” Strategic planning is concerned with the determination

of the basic long term goals and objectives of an enterprise and the adoption of courses of
action and allocation of resources necessary for carrying out these goals.
Strategic planning process:
I. Strategic formulation
a) Mission and Objectives
b)SWOT analysis/ Environmental scanning
c) Strategy alternatives
d) Evaluation and choice
4. Strategy Implementation
5. Strategy evaluation and control
1.Mission and objectives:

A mission statement reveals the long term vision of the organization in terms of What it
wants to be and whom it wants to serve.
A mission statement tells you what the company is now. It concentrates on present, it
defines the customers, critical process and it informs you about the desired level of
performance.
Objectives may be defined as “ those ends which organization seeks to achieve by its
existence and operations.
A vision statement : outlines what a company wants to be . it concentrates on future, it
is a source of inspiration ,it provides clear decision making criteria.

Mission: Defines where the organization is going now, basically describing the purpose,
why this organization exists.
Values: Main values protected by the organization during the progression, reflecting the
organization’s culture and priorities.
Example: Ford Motor Company:
Vision: To become the world’s leading company for automotive products and services.
Mission: We are a global , diverse family with a proud heritage, passionately committed
to providing outstanding products and services.
Values: We do the right thing for our people, Our environment and our society but
above all for our customers.
2. Environmental Scanning/ SWOT analysis:
Environmental scanning is the process of analyzing the factors of internal and external
environment. The simplest way to conduct environmental scanning is through SWOT
(Strength, Weakness, Opportunities, Threat) Analysis . In this Strength and Weakness are the
variables of internal environmental factors. Whereas Opportunities and threat are the
elements of External environment over which organization does not have any control.
2. Strategy Formulation:
Strategy formulation includes developing a Vision and Mission, identifying an organization’s
external opportunities and threats and determining internal strengths and weakness.
3. Strategy Implementation:
Strategy implementation means mustering employees and managers to put formulated
strategies into action. Strategy implementation is frequently called as the action stage of
Strategic Management . Strategy implementation includes developing a strategy
4. Strategy Evolution and control:
Strategy Evaluation and control is the process in which corporate activities and performance
results are monitored with an intention of comparing actual performance with desired
performance. Managers at all levels use the information collected to take corrective action .
The Evaluation and control function complete the strategic management model. Based
on performance result, Management may need to make adjustments in its strategy
Formulation, Implementation both.

Strategic plan During Recession, depression and Recovery:
Strategic plan during recession:
1. To get basic right

2. Cut costs
3. Careful cash flow management
4. Hold on to existing customers
5. Diversify product and customer base
6. Deliver excellent customer service
Strategic plan during Depression:
1. Business restructuring
2. Working Partnership
3. Mergers
4. Eliminate Waste.
5. Focus on functional activities
Strategic plan during recovery:
1.To ensure restoring of essential services.

2. To normalize the operations.
3 To ensure business continuity
4 . To ensure key employees to resume work .
5 . To communicate various stake holders.

Classification of strategies:
I .Corporate level strategy

1. Stability strategy:
2. Expansion Strategies or Growth Strategy
3. Merger Strategy
4. Combination Strategy
5 .Retrenchment strategy
6 .Restructure strategy/ Combination Strategy
1. Stability Strategy:
A Stability strategy or status quo or neutral strategy or stable growth policy is one which aims
at maintaining the existing Business course without any significant variations and additions.
Stability strategy sometimes is referred to as neutral strategy. Stability strategy is a strategy

adopted when the organization wishes to maintain the existing level of the Business
operations.
Reasons for stability Strategy:
1. The company is doing fairly well and it hopes to maintain the same in future
2. Private company may not like to expand its existing business as it may lead to
dilution of control or supervision may not be effectively possible
3. The company may not have resources and capabilities
4. The company may not want to take risks of growth and expansion
5. There is a feeling that doing the same business is always better and safe.
6. The company which possess core competency in the existing business does not take
the risk of losing its attention towards its diversification.
7. Some executives maintain with the stability strategy due to inertia for change.
8. Sometimes firms may find that the cost of growth is more than the benefits of the
same.
2.Expansion Strategy:
Growth strategy is adopted is adopted when the organization wishes to expand the existing
Business or enter into a new Business.. Under Growth strategy the organization tries to
achieve high growth in terms of Market share , Sales turnover volume and rate of profit etc.
Every organization tries to grow and stay dynamic.

Reasons for growth Strategy:

1. The present business is perceived as having as having no future.
2. The present business is not stable or unpredictable in Nature
3. The present business does not fully utilize the available resources and capabilities.
4. There is need for spreading business risks.
5. Some firms have a tendency to imitate the growth strategies of other competitors.
6. Growth strategy in most of the cases is adapted to increase the market share
7. Organizations go for expansion to increase its existing profits.
8. Emergence of new opportunities sometimes motivate the organization to exploit these new
opportunities.
Merger Strategy:
A merger strategy occurs when two or more organizations join to avoid competition to gain
advantage of economies of large scale operations and to capitalize resources and capabilities
of the joining the organization.
Advantages:
1. It helps in elimination or reduction of competition
2. It helps in gaining advantages of economies of large scale operation.
3. It helps in growth of the amalgamating firm.
4. It increases financial strength of the amalgamated firm.
5. It helps in diversification of Business
6. It avoids gestation period of establishing new Business.
7. Some time cost of acquisition may work out to be economical than establishing a new
business unit
8. It helps in achieving synergy
9. It helps in the gaining tax benefits.
10. It helps in procuring resources needed quickly.
Dis- Advantages of Merger:
1. Merger may results into the acquisition of old plant, outdated technology.
2. It must be remembered here that when a business unit is taken over , its problems also
taken over.
3. Sometimes mergers may lead to financial and other problems
4. If there is no proper synergy between the companies combined together merger may
turn out to be failure.
5. Executives of acquired firm may get low status , low level authority and power.

6. Mergers will lead to concentration of economic power, monopolistic conditions, political

power. Higher prices. Etc.
Takeovers or Acquisitions strategy
Acquisitions are also called as takeovers. In simple words one company takes over the control
of another company. Subsequently the acquired company operates as a separate division or
subsidy.
Examples: 1. Mangalore oil refineries and petrochemicals Ltd(MPRL) was takeover by ONGC
2.Ranbaxy acquired Vorin Laboratories.
Advantages:
1. Takeovers ensure management accountability
2. Takeovers provide easy growth opportunities
3. They create mobility of resources from one activity to another
4. They avoid gestation periods and problems involved in new projects
5. They provide the chance of survival to the sick units and provides alternatives to the
disinvestment theory.
Dis- advantages:
1. Professionalization of management may be replaced by money power.

2. Takeovers do not create any real assets to the society.
3. They result in monopoly and concentration of economic power.
4. Interest of the minority shareholders are not protected .
5. They are determinately to the society.
Retrenchment Strategy:
Retrenchment strategy is adopted when the organization has weak competitive positioning
some or all of its product lines resulting in poor performance of the company. Retrenchment
Strategies include Turnaround strategy, Divestment strategy, transformation strategy and
Liquidation strategy.
Reasons for Adopting Retrenchment Strategies:
1. Prevalence of Poor Economic conditions.

2. Competitive pressure may also cause firms to curtail their operations.
3. Operating and production inefficiencies may also cause to follow this strategy.

4. Inability of the firm to implement latest technology.

5. The company is not doing well.
6. The company is not met the objectives and there is a pressure from shareholders,
customers are others to improve the performance.
7. The External environment poses threats and internal strengths are insufficient to face
the threats.
1. Turn Around strategy:
Improving internal efficiency can be done by adopting turnaround strategy. The aim of
Turnaround strategy is to transform the organization into a learner and more effective
business. Turnaround means reverse the negative Trend.
Following are the actions suggested for turn-around:
1. Change in the top management
2. Quick cost reduction
3. Better internal control
4. Building creditability
5. Neutralizing external pressure
6. Identification of activities giving quick results
7. Liquidation of assets which are not in use to generate cash.
8. Developing an appropriate market strategy
9. Modification of Product Mix
10. Financial Restructuring
11. Retrenching Excess Employees
12. Increase sales by aggressive marketing and intensives advertising
13. Restructuring Pricing System.
1. DIVESTMENT STRATEGY:
Divestment strategy involves the sale of those units or part of Business the no longer
contribute for the development of the organization.
Reasons for the Divestment:
1. Negative cash flow generated by particular unit causing bad financial implication on the
overall activities of the organization.
2. If an acquired business is proved to be a big mismatch.
3. If technological up gradation is not affordable or possible.

4. If the organization finds some other business more profitable than existing one.
5. If the organization feels that it has over grown and become unmanageable.
6. If the company feels that there is severe competition to the unit and which cannot be
fought back.
Liquidation Strategy:
Liquidation strategy is the act of closing down the activities of a business unit by selling its
assets . Management decides to liquidate the business when the organization is making heavy
loss in the past many years and if the business unit is not closed now company may lose its
invested Capital.
Reasons for Adopting Liquidation Strategy:
1. Partnership firms and small business organizations liquidate when one or more
partners/shareholders want to withdraw from the Business.
2. When sole trader wants to withdraw or retire or take up another job.
3. Liquidation may also occur when a firm is worth more as closed down than surviving.
Restructure strategy/ Combination Strategy:
Restructure strategy involves expansion or contraction of the portfolio or changes in the
ownership pattern and control. Restructuring is important for growth and expansion of the
companies and its necessary to prevent a unit from becoming sick.
Selling unhealthy business divisions and placing the remaining divisions under the right track
of careful financial controls is an additional restructuring that is often used.
BUSINESS LEVEL STRATEGY:

The term business strategy or business level strategy refers to the managerial game plan for a
single business. It is mirrored in the pattern of approaches and moves, crafted by management
to produce successful performance in one specific line of business.
1 .Strategic Business Unit:
SBU means” any part of a business organization which is treated separately for strategic
Management purposes. Thus SBUs are divisions or groups of divisions or Groups of divisions
composed of independent product market segments. These units are primarily assigned
responsibility and authority of Management of their own functional areas.
Advantages of SBU:
1. Reduction of the corporate headquarter span of control.
2. This structure permits better coordination between divisons with similar missions,
products, markets and technologies.

3. It allows strategic management to be done at the most relevant level within the total
enterprise.
4. It helps to allocate corporate resources to areas with greatest growth opportunities.
5. Business units are organized based on the strategically relevant method.
DIS advantages:
1.The first disadvantage is that corporate headquarters becomes more distant from the
division
2.Conflicts between the strategic Business unit managers for graeter share of corporate can
become dysfunctional.
3.Corporate portfolio analysis becomes complicated one in this structure.
COST LEADERSHIP:
Cost leadership is a strategy which emphasis low costs , low prices and high volumes to attract
customers.
The important reasons are:

1. Method of Manufacturing 2. Type of Technology
3. Waste control 4. Bargaining capacity of the company
5. Size of Operation 6. Method of Buying
7. Location factors.
8. Channel selected for distribution and procurement
9. Application of Activity based costing ,JIT etc 10. Use of Substitutes .
11. Level of experience and expertise of the people in the organization etc.
Advantages of COST Leadership:
1. A cost leader is the best position to compete offensively on the basis of price.
2. A cost leader is the better positioned to use low price to induce its customers not to
switch to rival brands or substitutes.
3. A cost leader can use price cuts of its own to make it harder for a new rival to win the
customers.
4. A low cost leader‘s ability to set the industry’s price/floor and still earn a profit erects
protective barriers around its market position.
5. Cost leader makes higher profits than its competitors.

DECENTRALISATION
Decentralization is the systematic and consistent delegation of authority to the levels where
the workers performed.
Decentralization implies delegation of authority and responsibility to the lower levels of

the organization.
Decentralization involves three important aspects:
1.Assignment of tasks
2.Grant of Authority
3.Creation of accountability
ADVANTAGES:
1. Light burden on top management.

2. Higher status of lower level managers.
3. Democratic management
4. Initiatives encouraged.
5. Superior decision making.
6. Quick decision making.
7. Decentralization contributes to the diversification of activities and products.
8. Cordial relationship among employees can be maintained.
Diversification strategy:
The diversification strategy is one by which the firm attains a growth level with the
addition of new products or services internally to the existing product or service line.

Porters five force model of competition.
1. Threats of new entrants 2.Bargaining power of suppliers

Economies of scale supplier concentration
Absolute cost advantages Number of buyers
Brand Identity Switching costs
Access to distribution Substitute raw materials
Switching costs threat of forward integration
Govt policy Government Policy
3.Bargaining power of customers 4.Industry competitors
Buyers concentration degree of rivalry

No of suppliers No of competitors
Switching costs Industry growth
Substitute products Asset intensity
Threat of backward integration product differentiation ,Exit barriers
5.Threat of substitutes products
Functional similarities
Price trend
Performance trend
Product identity

UNIT IV STRATEGY IMPLEMENTATION

Strategy implementation is the process by which strategies and policies are put to action
through the development of programmes, budgets ,and procedures.
Strategy implementation is concerned with the design and management of systems to

achieve the best integration of people, structure, processes and resources in reaching
organizational purposes.
Importance of Strategy implementation:
1. The job of strategy execution is to convert strategic plans into actions and good
results.
2. The implementation process typically affects every part of the firm from the biggest
operating unit to the smallest frontline work group.
3. Executing strategy is action oriented ,making things happen task, that test the
manger’s ability to direct organizational changes, Motivate people, achieve the
continues improvement in business processes, create a strategy supportive
corporate culture and meet the organizational targets.
4. The best policies and plans do not produce results until they are translated in to
action.
5. Many Strategies fail to produce desired results because of the failure in proper
implementation of the selected strategy.
6. All the designed polices and strategies should be effectively communicated in
measurable terms. Mere designing a strategy is not enough it is to be effectively
communicated to the lower levels.
7. Necessary resources both monetary and nonmonetary are to be provided to the
concerned departments for implementation.
8. Strategy implementation is the administration task which ensures that the strategy
formulated is executed in the right direction to achieve objectives stated at the
strategy formulation stage.
9. Success of an organization is dependent on how the strategy is implemented rather
than how policy is formulated.

Aspects of Strategy Implementation :

3. Objectives
According to Appleby” Objectives are goals, they are aims which management wishes to
achieve”
4. Policy
“A Business policy is an implied overall guide setting up boundaries that supply the general
limits and direction in which managerial action will take place”
Ex: 1.Marketing Policy 2.Financial policy3.Personnel policy 4.Personnel policy etc.
3.Strategy :
A strategy is a set of decisions made to meet objectives. it is an action plan by using it
organizational goal can be reached easily. A strategy is unified, comprehensive and integrated
plan relating to the strategic advantage of the firm. To the challenges of the environment . It is
designed to ensure that the basic objectives of the enterprise are achieved.
4. Rules:
Rule is a set of actions must be followed by every member of the organization. Rules are
statements that specific action to be taken or not to be taken in a given situation.
5. Procedures:
According to George R terry” A procedure is a series of related tasks that make up the
chronological sequences and established way of performing the work to be accomplished.”
6. Programmes:
Programmes are prescribed plans which lays down the operation will be carried out to
accomplish a given work. A programmer is drawn in conformity with objectives and consists of
steps to taken to achieve tasks
7. Budget:
Budget is a financial statement and a quantitative management prepared prayer to definite
period of time of the policy to pursue during period for the purpose of attaining a given object.
Process of strategy implementation or steps involved in strategy implementation

Strategy implementation involves the following steps.
1) Allocation of monetary and non monetary resources: Success of the project largely
depends on the timely availability of resources. Various resources such as physical
financial and human resources are required.
2) Fixing key tasks and priorities: Strategies should prioritize activities for the optimum
utilization of available resources. Each operational plan should incorporate the tasks
to be performed by the manager and the work to be carried out according to priority.

3) Task assignment: Tasks need to be assigned to concerned managers and their

workforce for successful implementation.
4) Delegation of authority: Authority and power should be delegated to the key
persons for the smooth execution of the plans. Work will thus get done without any
interruption within the framework of company objectives.
5) Method formulation: Effective coordination is required for the smooth operation of
any task. Every operation should be cohesive and there should be no zig zag or
backtracking. Each operation should have uninterrupted system, method and
procedure.
6) Policies, goals, evaluation, and feedback: Goals should be property clarified. Also, a
management information system needs to be developed, along with feedbacks
methods, to provide necessary information to the manager and the better the
resulting decision. A good information system minimizes risk and uncertainly and
provides a base for decision making.
7) Rewards and incentives for behavior reinforcement : Rewards and incentives should
be instituted to motivate the people at work. It should be a part of the strategic plan
and should a part of the strategic plan and should be awarded as when particular
tasks are fully performed.
8) Training and development:
Managers and workforce need to be trained. Workshop and seminars should be
conducted for knowledge up gradation and skills up gradation.
9) Implementation:
The plan now needs to be implemented. Operations should be monitored and results
analyzed. Comparison of the plans with the actual will disclose deviations which need
to be reported and suitable corrective action should be taken.
10.Strategy Restructuring:
If need be policies and strategies should be restructured to achieve the desired
results.

ISSUES IN STRATEGY IMPLEMENTATION

Successful implementation of a strategy depends on how efficient the organization is in
allocating resources, designing suitable structure, formulating functional strategies.
Important issues relating to strategy implementation are mentioned as follows:
1. Project implementation
2. Procedure implementation
3. Resources allocation
4. Structural implementation
5. Functional implementation
6. Behavioral Implementation
I. Project implementation:
Project implementation involves decision regarding the project to be undertaken in
future and to see that they are properly executed. Following are the different phases of
pertaining to project implementation:
1. Conceptual Stage:
Environmental scanning reveals various potential opportunities to the organization. These
opportunities are categorized in to various projects based on the priorities.
2. Analyzing stage:
After a project is identified, detailed analysis has to be made regarding possibility and
feasibility. Examination of technical, financial, marketing, Economical and legal aspects are to
be made.
5. Planning stage:
Once it is decided that the project idea is feasible and workable the organization should
begin planning and organization the project. Plan should mention in detail about the
infrastructure, finance and manpower etc.
4. Implementation stage:
Activities needed to accomplish the project are put to action at this stage. Various contracts
are entered into test and trails are undertaken to ensure that the project is ready for the final
take off.
5. Launching stage:
Implementation stage ensures that the project is ready for the operation. At the launching
stage project is handed over for the actual execution to those involved in its operation .

II. Procedure implementation

Procedure implementation After organization is satisfied with the feasibility of the project, it
has undergo certain procedures. Following are the important procedures connected with the
project implementation:
1. Formulation of a company
2. Licensing procedure
3. SEBI requirement
4. Foreign collaboration
5. FEMA requirements(Foreign exchange management act)
6. MRTP requirements( Monopoly restricted and trade practices act)
7. Business incentives
8. Import and export requirements
9. Labour legislations
10. Patenting requirements
11. Environmental requirements
12. Consumer protection requirements.
III .Resources Allocation:

To accomplish the stated objectives, organization requires various resources like physical,
Financial and Human resources. Organization must utilize sources of resources for the
maximum benefit of the organization. Resources allocation process is continues and complex.
IV. Structural Implementation:

According to Miner and Gray” Implementation of strategies is concerned with the design
and management of systems to achieve the best integration of people, structures, process
and resources in reaching organizational purposes”
Strategy is influenced by several factors like the size and nature of business, market
characteristics, characteristics of the strategy etc.
Importance of organization structure:
1. It determines the nature of work to be done by different people in the organization
2. It establish relationship between various activities in the organization .
3. It establishes an effective communication system in the organization.
4. It ensures proper delegation of authority and responsibility.
5. It ensures smooth functioning of the organization.
6. It ensures co-operation among workers.

7. It helps effective use of human resources of the organization.

8. It encourages creativity
9. It prevents duplication of work
10. It helps in measuring performance of the people in the organization.
The MCKinskey company , a well known management consultancy company of united states
has given s popular model known as 7-S framework for the success of the organization.
The MCKINSKY 7-S Model / Framework:
1. Strategy
2. Structure
3. Systems
4. Style
5. Staff
6. Skill
7. Shared values
1. Strategy:
Long term decisions aimed at gaining competitive advantages for the organization. Strategy
must give scope for modification to suit environmental change.
2. Structure :
Structure shows authority and responsibility relationship between the people working at
different levels . it a chat that explains who reports to whom. It clearly shows how the tasks
are subdivided and integrated. Based on the change in the strategy, structure must also be
altered.
3. Systems:
Several activities are involved in daily operation of business activities . Flow of activities should
follow a system for an effective accomplishment of objectives. Proper systems avoids
confusion and duplication of work .changes that are made in the structure should be
incorporated in the system of operation.
4. Style:
Leadership style adopted by the management goes a long way in attaining organizational goal.
How managers act is more important than what managers say. Manger’s behavior influences
the behavior of their subordinates.

5. Staff:
Acquiring and developing employees is vital in the organizational success. Committed
workforce is an asset to the organization. They must be motivated to contribute their
maximum efforts for the development of the organization. Quality and quantity of the
workforce should change to suit the demanding situation.
6. Skill:
Organizational capabilities and competencies help the organization to gain competitive
advantage . These strong qualities must be polished and strengthened to maintain competitive
advantage over a long period of time.
7. Shared values:
Beliefs, Mindset and assumptions that of the organization has an impact on the overall
corporate culture . Shaping the minds of people to adjust to the changed environment is more
essential. it is belief and value systems that makes employees and the organization to newer
heights .
Structures for Strategies:
1. Entrepreneurial structure
2. Functional structure
3. Product based structure
4. SBU organizational structure
5. Geographical organization structure
6. Matrix structure
1. Entrepreneurial structure
This structure is suitable for very small organizations. The owner and the manager are one and
same and all the power vests with him. Such a structure facilitates quick decision making. The
owner – manager can completely devote his time and knowledge for the absolute
development of the organization. The structure is simple to understand. However it is one
man show and structure becomes unsuitable when the organization grows.
2. Functional structure:
Various functions performed by the organization are taken as the basis for the formulation of
various structure. Production, finance, marketing, HR, R&D are the useful functional
performed by an organization.
Merits:
1. Top management can concentrate on strategic issues dept heads will take care of
activities

2. It clearly defines function and responsibilities.

3. It simplifies training, and Control made easy
4. It provides specialization for the people working for a specific function
3.Product based structure:
Under product based structure all functions important for the production of a product or
service are grouped together. The organization is split into product division. The divisional
head is the responsible for performance and operating decision making. This structure is well
suited for an organization with multiple products having distinct manufacturing and marketing
features.
Advantages:
1. The most suited stricter for the multiple products.
2. Measurement of the performance of each unit made easy.
3. Product development and market exploitation are made easy.
4. Responsibility for profit can be fixed at divisional levels.
5. Faster decisions is possible.
4.SBU organizational Structure:
The SBU structure is an example of divisional structure. Each SBU operates as a separates
organization. SBU is under the control of chief executive. SBU chief executive performs the
roles of MD and attempts to achieve the best results in their business units within the
facilitates and resources provided , freedom sanctioned and overall corporate objectives.
Advantages:
1. In depth business planning is possible at each SBU .
2. Accountability can easily be identified at business level.
3. Well suited for an organization with distinct business.
5.Geographical organization structure:
Geographical organization structure is followed by those organizations which are operating in
different geographical regions. Each geographical unit has all functions required to produce
and market the products in the geographical area under consideration. Each geographical
head is responsible for the formulation of strategies for the accomplishment of their
respective regional objectives.
Advantages:
1. Needs of customers in different regions can be properly satisfied.
2. Organization can fix responsibility for each region in respect to profit.
3. Products can be designed to suit each geographical region.
4. Technological and legal adjustments can be made based on each region.

6.Matrix structure :
In large companies there are number of products and projects. Organization should ensure
optimum use of available resources for the accomplishment of these projects. The matrix
organization structure operates on a dual channel of authority, performance, responsibility,
evaluation and control.
Advantages:
1. It has the capacity of accomplishing a wide variety of project oriented business activity.
2. It helps in optimum utilization of available resources.
3. It makes an organization more dynamic and result oriented.
4. It provides opportunities for middle level manger to prove their skill.
BEHAVOIRAL IMPLEMENTATION
Leadership is the ability of a manager to induce subordinates to work with zeal and
confidence.
In other words it is the activity of influencing the people to strive willingness for group
objectives.
Leadership Styles:
1. Autocratic style
2. Democratic style
3. Participative style
4. Free rein or laissez fair style
5. Situation approach.
STYLES OF LEADERSHIP :
1. Autocratic or Authoritarian leadership:
An autocratic leader is also known as authoritarian style of leadership implies wielding
absolute power. The Leader expects the subordinates to obey him without questioning, He is
an formal head and this style of leadership is practiced to direct those subordinates who feel
comfortable to depend completely on leader.
2.Democratic or participative style leader:
The democratic and participative leadership the supervisor acts according to the mutual
consent and decisions reached after consulting the subordinates. Subordinates are
encouraged to make suggestions and take initiative . It provides necessary motivation to works
by ensuring participation and acceptance of work methods.

3.Laissez –Faire or Free rein style leadership:

Under this type of leadership maximum freedom is allowed to subordinates. The leaders give
free hand in deciding their policies and methods and help the subordinates only when
required and influence is Minimum. The style of leadership creates confidence and provides
the opportunity is develop the subordinates. This would be successful only when workers are
competent. Sincere, and Disciplined .
4. Paternalist style leader:
This style of leadership is based on sentiments and emotions of people. A Paternalistic leader
is like father to his subordinates. He helps guides, and protects all of his subordinates but
under him no one grows. The subordinates become dependent upon the leader.
Corporate culture :
Corporate culture refers to the values and patterns of beliefs and behavior that area accepted
and practiced by the members of a company.
According to O Reilly, “ organizational culture is the set of assumptions, beliefs, values ,and
norms that shared by an organization’s members.
Organizational Culture is Determine the following:
1.Individual Initiative:
The culture is largely based on the degree of responsibility, freedom and independence that
individuals of the organization have.
2.Clarity of Objective:
Are the people working in the organization clear about the objectives stated by the
organization? If the objective is not clear , positive behavior cannot be created.
3.Risk taking Ability:
Are the people encouraged to take risk ? or are they aggressive and innovative?
4.CO-Ordination: Are the people working with close harmony?
5.Mnagement Support: Is communication clear? Do the people get sufficient assistance and
support from the mangers?
6.Reward System: is the reward system based on real performance? Is there any partiality,
favoritism? Is the system in place practiced in a justified manner?
7. Identity:
Do the people the people identify themselves with the organization or with their work group?
It means how belonging they are to the organization.
8.Control: What is the prevailing control system in the organization? Is close supervision used
to control the people.

9.Communication System: Does communication follow formal channel of communication? Is

there any scope for two way communication?
Corporate culture has profound influence on the organization success. A strong culture is
strength to the organization and weak culture is the hindrances to the organization.
Corporate politics and power:

Power : power may be defined as the capacity to a person, team , department or organization
to influence others. Power has potential to influence and change the attitude of people.
Subordinates expect some favour from his superior. Favour may be related to work allocation ,
work schedule, promotions etc.
Types of Power:
1. Legitimate power : This is ability of the managers to use position to influence behavior of
the people worming in the organization.
2. Reward Power:
This arises due to the ability of managers to reward positive result. People are influenced to
follow instructions of the executives with a pre – assumptions that they will get positive
outcome by the following instructions.
3. Coercive power:
Is the ability to apply punishment. Supervisors have power to demote and retrench employees
using coercive power.
4. Expert power:
Some person poses in-depth knowledge and skills in certain areas. People tend to follow the
instructions and influence of such people. Expert power arises due to excess knowledge or skill
possessed by an individual.
5. Referent power :
Is an inborn quality of a charismatic leader? These persons can influence the people through
interpersonal relationships. These people influence subordinates to follow their direction
willfully.
Politics:
Politics may be understood as the use of available power. Political behavior of the employees
cannot be completely eliminated. Political behavior contributes to the accomplishment of
organizational goals.

1. Executives can use power and politics to motivate the workers to achieve common goals of
the organization.
2. If power and politics are used properly it will lead to job satisfaction of the employees and
to achieve the higher performances.
3. Power and politics enable the executives to create an attitude of team work among the
people working in the organization.
4. The referent power and expert power provides employee empowerment.
5. Employee involvement is provided by counter – power and politics.
6. Power and politics helping moulding behavior of unwilling workers positively bring to
desired level.
Functional and Operational Implementation:

A Functional strategy is a game plan for different functions in the organization. Functional
strategies provides more details about how each of those functions carried out near future.
Operational management directs and controls processes that are needed to convert inputs
and finished goods. Operation management deals many functions like inventory
management, capacity utilization, scheduling, technology management etc.
Operation strategy deals with the following:

1. Product planning
2. Capacity planning
3. Technology
4. Inventory management
5. Purchase management
6. Use TQM
7. Quality management
8. Facility location
9. Process planning

Functional Strategies:
Functional strategies are short term plans for the key functional areas. They help in
accomplishing annual plans. Functional strategies help organization to accomplish long term
objectives systematically.
1. Financial Policies:
Financial plan of an organization is concerned with the planning and controlling of financial
resources of the company. Capital recruitment. Short term, medium term, long term,
borrowing and sources of borrowing utility of funds ratio utilization between various sources
of fund . Credit policy return on investment, shares, dividends, to the share holders, profit and
loss waiving . Dissolution taxes and depreciation ,modernization of plant and machinery.
2. Marketing Policies:
Product type, depth of product line size and quality of the product or service . Place channels
of distribution types of outlets and transportation methods pricing methods trade discounts
and quantity mark up , mark down prices . Promotion advertising, promotion , personnel
selling sales promotion, medias of advertising customer service. Sales control, sales budget
and sales management
3. Production function policies:
Determining the factory layout.
Type of technology tools, process, equipment etc . selection of office, plant factory site
location and layout Decision with regard the scale of the production budget and cost
.Inventory Management and control Production planning and control, collective bargaining ,
labor relations etc with regard to production schedule.
4. Personal Policy:
Developing the job description
Recruiting selection training
Performance appraisal, wages salary administration
Promotion and transfers.
Motivation, Compensation wages incentives benefits service condition etc.

UNIT V. STRATEGIC EVOLUTION AND CONTROL
Strategy evaluation implies” Monitoring and evaluating progress towards organizations

objectives and guiding the process or changing the strategic plan accordance with the
current conditions and purposes”
Strategy evolutions and control is concerned with the comparison of actual performance
with desired results providing feedback necessary for management to evaluate results and
taking corrective action.
Strategy Evaluation and control process:
The evaluation and control process follows the following steps:
1. Determine What to measure:
Every one in the organization needs to be clear on what is to be monitored and evaluated.
An organization is a group of many complex interrelated and interdependent activities.
Hence the management will focus only on significant elements that involves huge expenses
or pose a number of problems.
2. Establishment of standards:
Standards have to be established for each activity to facilitate to comparison. The

standards set must be reliable and achievable. Standards must also fix tolerance limit for
the acceptance of each performance.
3. Performance measurement:
The actual results achieved must be measured periodically. A suitable time frame should fixed
for evaluation.
4. Comparison with actual results with the set standards:
The actual performance measured must be compared with standards. Deviations if any
should be noted .if the actual performance is well with in the acceptable tolerance limit.
the measurement process will stop and if it is not within the limit the measurement process
will go the next step.

5. Correcting deviations:
If the actual performance is not within the acceptable limits, corrective corrections needs
to be taken. underperformance can takes place due to any of the following factors:
Unrealistic standards, inappropriate resource allocation,

faulty organization structure, inefficient leadership,
lack of motivation, improper communication system.
Nature and importance of strategic evolution:
Strategic evaluation is the process of determining the effectiveness of a given strategy in

accomplishing organizational objectives and taking corrective action, whenever is necessary.
Business environment is constantly changing so it is necessary to change the strategy also.
Strategic evolution takes into account the following aspects.

1. The attainment of organizational objectives with the given resources.
2. The matching of policies and strategies with the corporate objectives.
3. Measurement of actual performance as against the standards.
Importance of strategic evolution:
1. Strategic evolution provides the much needed feedback regarding progress of plans
and policies. This helps in determining whether the strategy accepted earlier is
relevant or not.
2. Strategic evolution helps in assessing the effectiveness of existing policy. Thus
existing policy can be modified, if needed and a new policy be introduced in its place.
3. Strategic evolution also aids in evaluating the performance of the employees and
consequently in the formulation of rewards and promotions.
4. It also helps the managers to know the appropriateness of the decision taken and
whether the decisions are in line with the strategic requirements of the orgnisation,

Operational control
Operational control regulates day to day output relative to schedules, verifications
and costs.
Merits of operational control;
1. Operational control provides full authority to organize commands and forces to
employ those forces as the commander in operational control considers necessary to
accomplish assigned missions.
2. It is authority to perform those functions of command over subordinates forces
involving organizing and employing commands and forces assigning tasks
,designating objectives and giving authority to accomplish the mission.
3. Operational control includes authoritative direction over all aspects of military
operations and joint training necessary to accomplish missions assigned to the
command.
4. The authority is exercised through subordinate joint force commanders and services
or functional component commanders.
5. Operational control helps for safety inspector to provide guidance on how to enforce
policy.
6. Demonstrating operational control is pretty straight forward.
7. Operational control helps to the hazardous waste operations procedure.
8. Operational control helps to control of discharge and disposal.
Techniques of Operational control:

The different evaluation techniques for operational control are:
1. Value Chain Analysis:
A company’s value chain identifies the primary activities that create value for customers and
the related support activities. It is a primary analytical tool of strategic cost analysis. It is
expected that each activity undertaken in an organization should add some value to the
overall accomplishment. Value chain helps the organization to improve its capabilities
advantage by using resources for a better cause.
2. Benchmarking:
Bench marking is a tool that allows a company to determine whether the manner in which it
performs particular functions and activities represents industry best practices when both cost
and effectiveness are taken into account. The objectives of benchmarking are to identify the
best practices in performing an activity to learn how other companies have actually achieved
lower costs or better results in performing bench mark activities and take action to improve a
company’s competitiveness .whenever benchmarking reveals that its cost and results of
performing an activity do not match those of other companies.
3. Balanced score card:
The balanced score card method takes into consideration four important key performance
measures. These are; customer perspective, internal business perspective innovation and
learning perspective and financial perspective.
4. Quantitative performance measures
Quantitative performance measures involves Ratio analysis, Return on Investment. ROE, profit
margin , EPS etc used for comparing the actual performance with the predetermined
standards.
5. Qualitative performance measures:
Takes into consideration the following qualitative considerations.
1.internal consistency of strategy
2. Environmental consistency of strategy
3.Consistency of strategy in line with the available
4.Degree of acceptability of strategy
5.Workability of the strategy
6. Key Factor Rating:
KRA involves evaluating those factors which have a significant impact on the overall
organization capability. Such factors need to be monitored to ascertain their suitability in the
present environment.
KRA refers to general areas of outcomes or outputs for which role is responsible a typical role
targets there to five KRAs
Identification of KRA’s help individuals to
1.clarify their role 2. Concentrate on results 3.set realistic goals and objectives
4.Establish work priorities 5.Align their roles in line with the organizational business or
strategic plan.
Parameters that are used to measure KRA’s are
Schedules ,Zero defects, percentage achievement, no of queries, No of complaints,
customer retention etc.

MANAGEMENT CONTROL
Management control is a basic management function that ensures that work is
accomplished as per the plans. It is considered with measuring and evaluating
performance to ascertain the effectiveness of the management in accomplishing the
stated objectives.
Advantages of management control:
1.It is a continuity and ongoing activity and it is exists as long as the organization exists.
2.It focuses on past deviations and prepares the organizations to face the future
systematically.
3.It involves continuous review of standards of performance based on the changed
environment.
4.It involves interaction between management and subordinates and hence helps in
developing good communication between them. This results in better understanding of
organizational goals and makes it easier to achieve them.
Limitations of management control:

1. Management control has no control over ever changing external factors like
industrial recessions, Govt policies, technological changes .
2. Management control is very expensive process requiring a lot of time and money.
3. Employees are very apprehensive about management control as they feel it curtails
their freedom . thus don’t accept it wholly and this makes unsuccessful of
management control
4. Management control becomes meaningless and ineffective when it is not possible to
quantify terms.
Features of Management Control/ areas of management control:
1. Management control is a fundamental function of every manager at all levels of the

organization.
2. Planning and managerial control are interrelated.
3. Management control is a continuous ongoing activity and exists so long as the
organization exists.
4. Management control is the forward looking activity. So it focus on future

5. Management control is a people oriented activity. It is designed by human beings to

control and monitor the performance of the people.
6. Management control is dynamic activity and involves continuous review of standards of
performance based on the changed environment.
Features/Essentials of a Good control systems:
An effective control system should have the following features:
1. A control system must be suitable to the nature and needs of the area in the organization
that needs to be controlled.
2. The control system should be easy to understand and simple to operate. This will avoid
confusion and frustration among employees.
3. While designing the control system, Key Factors should be systematically addressed.
4. The control system should be economical.
5.An effective control system should be flexible enough to adjust to the changed environment
.there should be room for modification and revision of plans and policies.
6.The control system really workable and must have a realistic approach so that employees
feel motivated.
7.The control system should be forward looking and must provide timely information
regarding any deviations.
8.An effective control system must clearly establish responsibility.
9. An effective control system should have clear objective behind its introduction.

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STRATEGIC MANAGEMENT

STUDY MATERIAL 2020-21

SNR DEGREE COLLEGE,JIGANI Page 1

SYLLABUS : STRATEGIC MANAGEMENT

UNIT – 1: INTRODUCTION TO STRATEGIC MANAGEMENT 10HRS

UNIT – 2 : ENVIRONMENTAL APPRAISAL 12HRS

UNIT – 3 : STRATEGIC PLANNING 12HRS

UNIT -4 : IMPLEMENTATION OF STRATEGY 14HRS

UNIT 5 : STRATEGY EVALUATION 08HRS

SNR DEGREE COLLEGE,JIGANI Page 2

Unit : I strategic Management:-

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Strategic Management helps in better delegation and co-ordination. Executives working a t

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2. Strategic management is a means to achieve organizational mission or objectives, if the

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Strategic Decision Making:

Decision Making Process:

1. Identification of Problems or determining the objectives to be accomplished

SNR DEGREE COLLEGE,JIGANI Page 6

Strategic Management Process:

4. Strategy Evolution and control:

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Role of strategists or CEOs

III. Decisional Roles:

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Key Concepts Of Strategic Management:

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3.Strategy :A strategy is a set of decisions made to meet objectives. it is an action plan by

COMPONENTS OR AREAS OF SOCIAL RESPONSIBILITY

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III. Social responsibilities towards consumers or customer

V. Social responsibilities towards the Government:

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8. Code of corporate governance for directors of company.

Social Responsibility for Economic Growth

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Benefits of Social Audit:

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UNIT II ENVIRONMENTAL SCANNING

Business Environment” According to Keith Davis “Business Environment is the aggregate of

Environmental scanning is the monitoring and disseminating of information from the

According to Abell” Environment appraisal is the identification, measurement and

Need for Environmental Scanning:

Various components of External Environment:

SNR DEGREE COLLEGE,JIGANI Page 14

1. Political system 5. Monopoly controls

Economic Environmental Factors:

1. National Income , per capita income

3.Socio cultural environment:

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1. Changes in life styles 6.Demographies

Technological environment means the advancement in the field of technology which

1. Geographical Location 2. Availability of resources

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Environmental scanning techniques

1.SWOT ANALYSYS 2.ETOP analysis 3.PEST analysis 4.Quest analysis