STRATEGIC

MANAGEMENT

MODULE ONE
 What is Strategic mgt?
IS defined as the set of decisions and
actions resulting in formulation
and implementation of strategies
designed to achieve the objectives
of an organization
 Dimensions
• Strategic issues require top mgt decisions
• It involves the allocation of large amounts of
company resources
• They are likely to have a significant impact
on the long term prosperity of the firm
• They are future oriented
• They usually have major multifunctional
consequences
• They necessitate considering factors in the
firms external environment.
Three levels of strategy
 Characteristics of SM decisions
LEVELS OF STRATEGY
CHARACTERISTICS
CORPORATE BUSINESS FUNCTIONAL

TYPE CONCEPTUAL MIXED OPERATIONAL

MEASURABILITY VALUE JUDGEMENTS SEMIQUANTIFIABLE USUALLY

QUANTIFIABLE

FREQUENCY PERIODIC OR PERIODIC OR PERIODIC

SPORADIC SPORADIC
ADAPTIBILITY LOW MEDIUM HIGH

RELATION TO INNOVATIVE MIXED SUPPLEMENTARY

PRESENT ACTIVITIES

RISK WIDE RANGE MODERATE LOW

PROFIT LARGE MEDIUM SMALL
POTENTIAL

COST MAJOR MEDIUM MODEST

TIME HORIZON LONG RANGE MEDIUM RANGE SHORT RANGE

FLEXIBILITY HIGH MEDIUM LOW

COOPERATION CONSIDERABLE MODERATE LITTLE

REQUIRED
 Benefits
• Enhance problem prevention
capabilities of the firm
• Group based decisions reflect the
best available resources.
• Employee motivation improves
• Clarification of role differentiation
 Risks
• Costly in terms of hours invested
• Effects of part involvement
• Should be trained to study
subordinates
 COMPANY
MISSION

COMPANY EXTERNAL
PROFILE ENVRT.

STRATEGIC ANALYSIS &

CHOICE

LONG TERM GRAND STRATEGY

OBJECTIVES

OPERATING
ANNUAL OBJ. POLICIES
STRATEGIES

MINOR IMPACT INSTITUTIONALIZATION OF

MAJOR IMPACT STRATEGY

CONTROL & EVALUATION

• Company mission: is a fundamental unique
purpose that sets it apart from other firms of
its type & identifies the scope of its operations
in product & market terms.
• Company profile: depicts the quantity &
quality of financial, human & physical
resources available to the firm.
• External environment: all the conditions &
forces that effect its strategic options but are
typically beyond the firms control .
- Remote environment
- Operating environment
• Strategic analysis & choice: simultaneous
assessment of external environment & company
profile enables firm to identify range of
opportunities, which are possible avenues for
invst. These must be screened through criterion
of the company mission, before the right
opportunity is generated.
• Long term objectives: the results an
organisation seeks over a multi year period .
• Grand strategy: the comprehensive, general
plan of major actions through which a firm
intends to achieve its long term objective.
The 12 grand strategies are: Concentration,
Market development , Product development,
Innovation, Horizontal integration, Vertical
integration, Joint venture, Concentric
diversification ,Conglomerate diversification,
Retrenchment/turn around ,Divestiture &
Liquidation.
• Annual objectives: the results an organization
seeks to achieve within a year.
• Operating strategies: detailed statements of the
means that will be used to achieve objectives in
the following year.
• Policies: directives designed to guide the
thinking , decision & actions of managers &
their subordinates in implementing the
organization's strategies.
• Institutionalizing the strategy: translating the
strategies into action.
- Structure
- Leadership
- Culture
• Control & evaluation: an implemented
strategy must be monitored to determine the
extent to which objectives are achieved.
 Limitations of the model
• Holistic
• Analytical v/s prescriptive
• Nonpolitical
MODULE TWO
 Company mission
• Defined as the fundamental , unique
purpose that sets a business apart from
other firms of its type and identifies the
scope of its operation in product &
market terms.
 Need for a mission
• To ensure unanimity of purpose
• Providing basis for motivating the use of org
resources.
• Standard for allocating resources.
• Generate org climate
• Translation of objectives into work structure
• Assessing cost ,time & performance
• Focal pt & to deter
Elements of a mission statement,

• Clearly articulated
• Relevant
• Current
• Written in a Positive (Inspiring) Tone.
• Unique
• Enduring
• Adapted to the Target Audience
 Formulating a mission
• The product or service benefits equal to its price
• The product or service can satisfy a need currently.
• Technology used to produce will give cost and qlty
competition
• With hard work, business will grow & be profitable
• Mgt philosophy will result in favourable public image
• Entrepreneurs self concept can be communicated to
the employees.
 Role of mission in strategy
formulation
• Deciding directions
• Clarification of goals
• Serves as reference pts for
stakeholders
• Integrating organization with
environment
• Clear msg to outsiders
 Setting objectives (imp)
• Justify the organization
• Provide direction
• Basis for Management by Objectives
• Help strategic planning/management
• Help coordination
• Provide standards for assessment and
control
• Help decentralization
 Guidelines in setting objectives
• clearly specified
• take into account the various factors affecting
their achievement
• consistent with organizational mission
• rational and realistic
• achievable but must provide challenge
• yield specific results
• Should be consistent over the period of time.
• Should be periodically reviewed.
 Financial objectives (primary)
• Return to shareholders
• A satisfactory return
• Size of the return
 Secondary objectives
• Profitability
• Return on investment
• Low risk
• Share price, earnings, dividends and market
value
• Price/earnings ratio
• Growth
 Balanced score card
An approach that tries to integrate the
different measures of performance is the
balanced scorecard. Where key linkages
between operating and financial
performance are brought to light. This
offers four perspectives (1) Financial (2)
Customer (3) Innovation and learning (4)
Internal business.
 Strategy intent
• An obsession with winning, unfettered by
their resource constraints – in their
envisioning of the future
Hierarchy of Strategic Intent
 Company goals
• Survival
• Growth
• Profitability
• Hindustan Lever: To meet everyday needs of people
everywhere with branded products.
• Kodak India -A quality oriented photographic
system appealing to the customer who desires
instant photography.
• Mirc Electronics - High-quality electronic products.
• Modern Foods. - National foods to be public who
prefer instant foods.
• Hero Cycles -Functionally valuable bicycles that
common people can afford to buy.
 Company philosophy/ creed
• It reflects or explicitly states basic
beliefs, values, aspirations &
philosophical priorities.
• They vary little from one firm to
another. Company’s accept a general,
unwritten code of behaviour.
 Public image
• Positive image
• Negative image
 Company self concept
• It is based on mgt perception of the ways other
will respond to the corporation.
• It will function to direct the behaviour of people
employed by the company.
• The actual response of others to the company
will in part determine the corporate self concept.
• It is incorporated in the mission to be
communicated to individuals inside and outside
the company.
 The Claimant Approach to
company
• Identification of claimants
• Understanding of specific claims vis-à-
vis the company
• Reconciliation of claims and assigning
them priorities.
• Coordination of claims with other
elements of the mission.
 Social responsibility
CLAIMS OF CLAIMS OF
INSIDERS OUTSIDERS
COMPANY
-EXECUTIVE -CUSTOMERS
MISSION
OFFICERS -SUPPLIERS
-BOARD OF -CREDITORS
DIRECTORS -GOVERNMENT
-STOCKHOLDER -UNIONS
-EMPLOYEES -COMPETITORS
-GENERAL PUBLIC
Guidelines for a socially responsible
firm
• Strive for optimal profit
• No true profits until business cost paid.
• If social cost in area with no std, them
managers should set a std.
• Recognize that it is depleting social
capital, & attempt to restore it.