Unit:1

Introduction

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 Strategy Concept

• Strategy = StraTegos = A Greek word, means THE ART OF GENERAL

• Art of army General- What a chief of the Army does to offset actual or
potential actions of enemy.
• Its an holistic approach to looking at all the functional area of management
and gives the answer of how to run a business?
➢What determines the total corporate performance of an entire business
enterprise?
➢Why do some companies succeed while others fail?
➢What if anything can managers do about it?

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 Thinking Strategically: 3 Big Strategic
Questions?

1. Where do we compete?
• (Attractive market opportunity)
2. How do we compete?
• (Resources and capabilities that are able to serve the
market opportunity better than any other competitors.)
= Strategy formulation
3. How do we execute?
=Implementation plan for lining a people and organization
with the strategy

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 Strategic Concepts

• It consists of competitive moves and business approaches

to produce successful performance.
• Management’s “Game Plan” for
➢Running the business
➢Strengthening firm’s competitive position
➢Satisfying customers
➢Achieving performance targets.

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 What does a firm’s strategy consist of?

• Customer satisfaction
• Growth of business
• Responding to changing industry and market condition
• Capitalize new opportunities
• Manage each functional piece of business
• Achieve strategic and financial objectives.

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 Definitions

• Strategy is the determination of the basic long term

goals and objectives of an enterprise and the adoption
of the course of action and allocation of resources
necessary for carrying out these goals. – Alfred D. Candler
• Strategy is an integrated set of choices that uniquely
position the firm in its industry so as to offer sustainable
advantage and superior value relative to the competition.
• Strategic management involves the formulation and
implementation of the major goals and initiatives taken by
firm’s top management on behave of owner based on the
consideration of resources and assessment of external and
internal environment in which the organization compete.
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 Strategic Business Unit (SBU)

• Jauch and Glueck: A strategic business unit is an

operating division of a firm which serves a
distinct product market segment or a well defined
set of customers or a geographical area. The SBU
is given the authority to make its own strategic
decisions within corporate guidelines as large as
it meets corporate objectives.

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Level of strategy

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•Thus, the hierarchy of strategy is a
nesting process of one strategy within
another so that they complement and
support one another.

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 Strategic Decision Making

• It deals with the long run future of the entire organization.

• It is a choice regarding the course of action for the future.
• It is a broad action plans to achieve mission/objectives
made by top management.
• It matches organizations resources and activities with
opportunities in the environment.
• It aims for strategic advantages.

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 What makes a Decision strategic?

1. Rare
2. Consequential
3. Directive

Note: Strategic decisions are different from other kind of decisions.

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 Examples: Strategic Decisions

• For Business organization:

1. Should we enter a new market ?
2. Should we introduce a new product?
3. Should we merge with another organization?
• For a Student:
1. What college/university should I attend?
2. Should I go for employment or Master?
3. Should I get married?

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 Strategic Planning

• The process of determining the basic objectives of an organization &

deciding the strategies & policies to achieve these objects.
• Provides the framework within which future activities of the org. are
expected to be carried out.
• A rod map for future that aims to achieve strategic advantages in changing
environment.
• In short, it provides a broad directions in which the organization seeks to
move.
• Strategic planning is careful, deliberate, systematic taking of decisions
which affect or intended to affect the organization as a whole over long
period of time.- Robert Anthony

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 Steps in Strategic Planning

Define Organization’s
• Vision
• Mission
• Objectives
• Strategies

SWOT Analysis

Assess Internal Assess External

• Strengths • Opportunities
• Weaknesses • Threats

Match Resources
With Opportunities of
Competitive Advantages

Strategic
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 Strategic Management

• SM is that set of managerial decisions and actions that

determines the long run performance of a corporation. It is
an overall process of decisions and actions in formulation and
implementation of strategies designed to achieve the
objectives of the org. It includes:
1. - Defining Mission & Objectives (Long –term vision)
2. -Environmental Analysis (Both external & internal)
3. -Strategies Formulation & Choice (strategic or Long-
range planning)
4. - Strategy Implementation,
5. -Evaluation, Control & Change of Strategy
(SM aims at maximizing strategic advantages.) Ram Sapkota
Definitions

• SM is primary concerned with relation the org. to its environment,

formulating strategies to adapt to that environment, and assuring
that implement of strategy takes place.
-Steiner, Miner & Gray
• SM is a stream of decisions and actions which leads to the
development of an effective strategy (s) to help achieve corporate
objectives.
-Jauch & Glueck

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 Components of Strategic Management

• Strategic Planning
Defining mission/objectives, environmental analysis/strategy identification
& choice
• Strategy Implementation
Through programs, budgets, procedures, structures
• Strategic Control
Evaluation, control and change of strategy

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Difference between General & Strategic
Management

General/Operational Strategic Management

Management

• Routinized • Ambiguous/Uncertain
• Operationally • Complex
specialized • Organization-wide
• Short-term • Fundamental
implication • Long-term implication
• Action/Result
Oriented.
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Basic Model/Process of Strategic Management

DIFINNG BUSINESS
• MISSION
• OBJECTIVES

ENVIRONMENTAL SCANNNG

OT SW
External Env. Internal Env.

STRATEGY FORMULATION

Grand Strategy Generic Strategy

• Growth • Overall cost leadership
• Stability • Differentiation
• Retrenchment • Focus

STRATEGY IMPLEMENTAION
• Programs Budgets
• Procedures Structure
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EVALUATION & CONTROL
 Formality Strategic Management

• Formality refers to the degree to which participants, responsibilities,

authority and discretion in decision making are specified.
• Greater formality is usually positively correlated with the cost,
comprehensiveness, accuracy and success of planning
• A number of forces determine how much formality is needed in
Strategic Management
• Size of org., management styles, complexity of environment,
production process etc.
In particularly, formality is associated with the size of the firm.

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 Formality in S/M (contd..)

• Planning mode: Very large firms follow it

• In such firms, a number of SBUs or work units working and produces a
large no. of products.
• It needs comprehensive formal planning and evaluation of strategies.
• Strategic decisions are made in group using adequate information.

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 Formality in S/M (contd..)

• Adaptive mode: Medium sized firms follow it.

• It is carried relatively in stable environments.
• Firms following this mode, identifies and evaluates alternative strategies
based on the existing strategies.
• Emphasis the incremental modification of existing competitive approaches.
• Focus on existing problems, not to seek opportunities.

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Formality in S/M (contd..)

• Entrepreneurial mode: smaller firms follow it.

• Because such firms are under the control of single individual and
they produce a limited number of products and services.
• Strategic evaluation is informal, intuitive and limited.

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 Importance of Strategic Management

• Full exploitation of opportunities.

• Clarity in objectives and directions
• Efficiency, effectiveness and success
• Focus on research –for diversification or growth
• Meeting global competition
• Bearing social responsibility
• Industrial development
• National prosperity

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