Strategic Management Strategic Management is the formulation and

implementation of the major goals and initiatives taken by a company's top

management on behalf of owners

It is the process of developing and implementing a plan to achieve an

organization's long-term goals.

Characteristics of Strategic Management:

1Forward-Looking: Strategic management focuses on the future, anticipating
challenges and opportunities to guide long-term decision-making.

2Holistic Approach: It considers the entire organization, integrating various

functions and departments to work towards common goals.

3Adaptability: The process is flexible, allowing for adjustments in response to

changes in the internal or external environment.

4Goal Orientation: Strategic management aligns activities with overarching

organizational objectives, ensuring everyone works towards shared goals.

5Continuous Process: It is an ongoing, cyclical process involving planning,

implementation, evaluation, and adjustment.

Contribution to Long-Term Success and Competitive Advantage/importance

1Clear Direction: Strategic management provides a clear direction, helping

organizations avoid aimless actions and focus on achieving specific, meaningful
objectives.

2Resource Optimization: By aligning resources with strategic goals, it ensures

efficient resource allocation, reducing waste and enhancing overall performance.

3Competitive Positioning: Strategic management enables organizations to identify

and capitalize on their strengths, gaining a competitive edge in the marketplace.

4Adaptation to Change: The adaptability inherent in strategic management allows

organizations to respond effectively to changes in the business environment,
maintaining relevance and competitiveness.
5Innovation: It fosters a culture of innovation, encouraging organizations to explore
new ideas and approaches that can lead to differentiation and competitive
advantage.

6Risk Management: Strategic management helps in assessing and managing risks,

allowing organizations to make informed decisions and navigate uncertainties
effectively.

7Enhanced Communication: The process facilitates communication across all levels

of the organization, ensuring everyone understands and contributes to the strategic
goals.

stm process

1Scanning the Environment:Involves monitoring and analyzing external factors that

could impact the organization.Identifying opportunities and threats in the market,
technology, politics, economy, and society (PESTEL analysis).

2Analyzing Strengths and Weaknesses:Evaluating the internal capabilities and

limitations of the organization.Conducting a SWOT analysis to identify strengths,
weaknesses, opportunities, and threats.

3Identifying Opportunities and Threats:Building on the environmental scan,

recognizing potential avenues for growth and external challenges.Understanding
market trends, competitor actions, and emerging opportunities or risks.

4Setting Goals:Establishing clear, measurable, and time-bound objectives aligned

with the organization's mission and vision.Goals serve as a guide for developing
strategies and assessing performance.

5Developing Strategies:Formulating strategies based on the analysis of strengths,

weaknesses, opportunities, and threats.Choosing approaches that leverage
strengths to capitalize on opportunities and address weaknesses and threats.

6Implementing Strategies:Executing the chosen strategies through resource

allocation, organizational structure, and effective management.Ensuring that the
organization's day-to-day activities align with the strategic plan

7Evaluating Results:Regularly assessing performance against the set goals and

objectives.Monitoring the effectiveness of implemented strategies and making
adjustments if necessary.Creating a feedback loop to inform future strategic
decisions.

Q.Corporate governance(CG):Corporate governance is the system by which

companies are directed ,controlled and fits the best interests of all.

Corporate governance refers to the system of rules, practices, and processes by

which a company is directed and controlled. It involves balancing the interests of a
company's many stakeholders, such as shareholders, management, customers,
suppliers, financiers, government, and the community.

Responsibilities of BOD:

1Decision Making:The Board makes critical decisions on behalf of the company,

including major investments, acquisitions, partnerships, and divestments. They
assess risks, evaluate opportunities.

2Setting Strategic Direction:The board decides the long-term goals and plans of the
company.Example: The board of a car manufacturer determines to focus on electric
vehicles and invest in R&D to lead the green mobility market.

3Appointment and oversight of Senior Management:

The Board selects, appoints, assess and evaluates the performance of the CEO or
other senior executives

They provide guidance and support to the management team, ensuring necessary
resources to achieve organizational goals.

The board hires and supervises the top executives, like the CEO.

Example: The board selects a new CEO with experience in e-commerce to lead a
retail company's digital transformation.

4Financial Oversight:They monitors the company's financial performance and

ensures the integrity of financial reporting.

They decide on executive compensation, shareholders dividends.

The board monitors the company's finances and approves budgets.

Example: The board reviews and approves the annual budget of a software company
to allocate resources for product development and marketing.
5Risk Management:The board identifies and addresses potential risks to protect the
company.Example: The board of a bank implements security measures to safeguard
customer data from cyber threats.

Q.Corporate Social Responsibility (CSR) refers to a business practice that involves

companies taking into account the social and environmental impact of their
operations. It goes beyond solely focusing on financial profit and includes a
commitment to contributing to the well-being of society

1Economic Responsibility: At the base of the pyramid, businesses must fulfill their
economic obligations by being profitable and ensuring financial stability.

2Legal Responsibility: The next level involves complying with laws and regulations,
meeting societal expectations, and operating within the legal framework.

3Ethical Responsibility: Going beyond legal requirements, businesses should also

consider ethical standards, behaving in a morally right way and avoiding actions that
may be perceived as unethical.

4Philanthropic Responsibility: At the top of the pyramid is philanthropic or

discretionary responsibility, where companies engage in activities that benefit
society, such as charitable donations, community development, and environmental
sustainability.

Carroll's pyramid suggests that businesses should progress from economic

responsibilities to philanthropic ones, recognizing the evolving expectations placed
on modern organizations to contribute positively to society.

Unit2

Environment Scanning

Environmental scanning refers to the systematic process of gathering, analyzing, and

interpreting information about the external environment to understand the factors,
trends, and events that can impact an organization. It involves monitoring various
elements such as economic, political, social, technological, legal, and environmental
factors to identify opportunities and threats.

Tools for External analysis

1PESTLE Analysis: Examines Political, Economic, Social, Technological, Legal, and
Environmental factors influencing an organization.

2Porter's Five Forces Model: Analyzes the competitive forces in an industry,

including the threat of new entrants, bargaining power of buyers and suppliers,
competitive rivalry, and the threat of substitute products.

3SWOT Analysis: Assesses an organization's internal Strengths and Weaknesses, and

external Opportunities and Threats.

4Competitor Analysis: Evaluates competitors' strengths, weaknesses, strategies, and

market positions to gain a competitive advantage.

5Market Research: Involves collecting and analyzing data about the market,
customers, and competitors to make informed business decisions.

6Trend Analysis: Examines patterns or shifts in market, industry, or societal trends

to anticipate future developments and adapt strategies accordingly.

INTERNAL TOOLS

1value Chain Analysis: Examines a firm's internal activities to identify value-adding

processes and areas for improvement.

2VRIO Framework: Evaluates the Value, Rarity, Imitability, and Organizational

support of resources to determine their strategic significance.

3Benchmarking: Compares an organization's processes, performance, or products

against industry standards or competitors to identify areas for improvement.

4Financial Analysis: Assesses a company's financial health using tools like ratio
analysis, cash flow analysis, and income statement examination.

5Employee Surveys and Feedback: Gathers insights from employees about

workplace satisfaction, engagement, and areas needing improvement.

6Capacity and Resource Analysis: Evaluates the organization's ability to meet

demand, utilizing resources effectively, and identifying potential bottlenecks.

Q.SWOT analysis is a strategic planning tool that helps organizations identify their
internal strengths and weaknesses, as well as external opportunities and threats.
The acronym SWOT stands for:
1Strengths: Internal factors that give an organization an advantage over others. This
could include a strong brand, skilled workforce, or proprietary technology. For
example, a tech company might have a strength in cutting-edge innovation.

2Weaknesses: Internal factors that place an organization at a disadvantage. This

could be a lack of resources, outdated technology, or inefficient processes. As an
example, a retail business might have a weakness in outdated inventory
management systems.

3Opportunities: External factors that the organization could exploit to its advantage.
Opportunities could arise from market trends, technological advancements, or
changes in regulations. For instance, a renewable energy company might see an
opportunity in growing demand for sustainable solutions.

4Threats: External factors that could pose a risk to the organization. This might
include competition, economic downturns, or shifts in consumer behavior. An
example could be a manufacturing company facing a threat from cheaper overseas
competitors.

Q. PESTLE analysis is a strategic management tool that helps businesses understand

and evaluate the external macro-environmental factors that can impact their
operations. The acronym PESTLE stands for Political, Economic, Social, Technological,
Legal, and Environmental factors.

1Political: This involves examining the influence of government policies, stability,

and political trends. For example, changes in tax policies or government regulations
can significantly affect businesses.

2Economic: Assessing the economic factors that may impact the business, such as
inflation rates, exchange rates, and economic growth. For instance, a recession
might affect consumer spending and demand for certain products.

3Social: Analyzing societal factors, including demographics, cultural trends, and

lifestyle changes. An example could be the impact of changing consumer
preferences on product demand.

4Technological: Considering the influence of technological advancements and

innovation on the industry. This may include automation, digitalization, or the
adoption of new technologies affecting business processes.
5Legal: Evaluating the legal environment, including regulations, laws, and
compliance issues. For instance, changes in labor laws or product safety regulations
can affect business operations.

6Environmental: Examining the impact of ecological and environmental factors on

the business. This could involve assessing sustainability practices, climate change
concerns, or the company's carbon footprint

Q. Value Chain Analysis is a strategic management tool that helps identify the
activities within a company's operations that add value to its final product or service.
It was introduced by Michael Porter in his book "Competitive Advantage."The value
chain is divided into two types of activities: primary activities and support activities.

A.Primary Activities:

1Inbound Logistics: Involves receiving, storing, and distributing inputs for the
product or service. For example, a car manufacturer's inbound logistics include
receiving raw materials like steel and electronics.

2Operations: The core processes that transform inputs into the final product or
service. Continuing with the car manufacturer example, this would include
assembling the car components.

3Outbound Logistics: Activities related to distributing the final product to

customers. For the car manufacturer, outbound logistics involve shipping the
finished cars to dealerships.

4Marketing and Sales: Activities that promote and sell the product. This includes
advertising, sales, and distribution channels.

5Service: Providing post-sale support to customers. For the car manufacturer, this
could involve warranty services and maintenance.

B..Support Activities:

1Procurement: Involves sourcing and purchasing inputs needed for the primary
activities. In the car manufacturing example, this includes buying raw materials and
components.
2Technology Development: Investments in technology and innovation to support
primary activities. This could involve research and development for new car
technologies.

3Human Resource Management: Activities related to recruiting, training, and

managing employees. Skilled employees are crucial for efficient operations.

4Infrastructure: This includes the overall company infrastructure that supports all
other activities. It could be administrative functions, legal, and financial systems.

Q..VRIO analysis is a strategic management tool used to evaluate the internal

resources and capabilities of a firm. The acronym VRIO stands for Value, Rarity,
Imitability, and Organization. Let's break down each component:

1Value: Resources or capabilities must add value to the firm's products or services.
For example, if a company has advanced technology that allows it to produce higher
quality products, that technology adds value.

2Rarity: Resources or capabilities should be rare or unique in the industry. If a

company possesses something that is uncommon and not easily available to
competitors, it becomes a source of competitive advantage. For instance, exclusive
patents or unique expertise could be rare.

3Imitability: The resources or capabilities must be difficult for competitors to imitate

or replicate. If a competitor can easily copy what a company is doing, it diminishes
the potential for sustained competitive advantage. This could include proprietary
processes or unique knowledge.

4Organization: The firm must be able to effectively organize and utilize its resources.
Even if a resource is valuable, rare, and difficult to imitate, it may not contribute to a
sustainable competitive advantage if the organization cannot leverage it efficiently
Q.Porter's Five Forces is a strategic framework developed by Michael Porter to
analyze the competitive forces within an industry. The model provides a structured
way to assess the level of competition and attractiveness of an industry. Here are the
five forces:

1Threat of New Entrants:This force assesses the ease with which new competitors
can enter the market. High entry barriers, such as high initial capital requirements,
brand loyalty, and government regulations, reduce the threat.

2Bargaining Power of Buyers:This force examines the power that buyers

(customers) have over the industry. If buyers can easily switch to alternatives or
demand lower prices, they have high bargaining power.

3Bargaining Power of Suppliers:Suppliers' power is determined by their ability to

control key inputs, prices, or impose conditions. Fewer suppliers or unique resources
can increase their bargaining power.

4Threat of Substitute Products or Services:The presence of alternative products or

services that can meet similar needs affects an industry's attractiveness. The higher
the availability of substitutes, the greater the threat.

5Intensity of Competitive Rivalry:This force assesses the degree of competition

among existing firms in the industry. Factors like the number of competitors, price
wars, and differentiation strategies contribute to the intensity of rivalry.