Strategic management

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Strategic management

  1. 1. I.H.M Dehradun Theory TOPIC - STRATEGIC MANAGEMENTNotes by -:G.K Sawhney7895190950 Process of strategic planning A formal system of strategic planning and management normally consist of the following steps-: 1. Developing a strategic vision of where the organization is headed & defining the business mission or purpose. 2.Analysis and diagnosis of the current & likely future environment identifying opportunities & threat. 3.Appraisal of internal capabilities & potential strategy for strength & weakness of the organisation. 4. Setting corporate objectives in broad term subject to the realities of external environment & power relations, internal resources & the values & preferences of executives. 5.Formulation of alternative strategies, evaluation & choice of option of appropriate strategic. 6.Implementation of the chosen strategy establishing structural & administrative system & planning. 7.Review of the strategy, monitoring the result. STRATEGIC INTENTS Developing strategic vision Defining organizational mission Setting Corporate objective Analysis of internal & external environment
  2. 2. Formulation & evaluation of strategic option & choice of strategy Implementation of strategy Monitoring & return of strategy Internal Environment External environment* Human resource * Economical environment* Capital * Social & cultural environment* Land * Religion, income* Equipment * Political* Structure * Legal* Mission * Technological* Culture * Natural* Financial aspects * International* Marketing environment * Competitive* Production * Demographic factor (eg- age,sex,population) MISSIONA company’s mission is along term view of what the organisation is striving to become infuture. The basic thrust of firm including its products business& markets. The missionmay be described as the scope of operation in term of product& market or of services &client. An organisation mission statement tell what it is, why it exists & the uniquecontribution it can make. The mission of a business is the fundamental unique purpose that sets itapart from other organisation of its type. It indicate the nature & scope of businessoperation in term of product market & technology.Features of a good mission statement-:The mission statement answer the question:*What is our business?
  3. 3. *It defines the business that the company wants to be in & serve as its guiding principle.*It differentiates the company from its competitors.* It is exciting & inspiring ,it adds zeal to the firm & its people.*It is not time bound & cannot be easily achieved with a fix time frame.* It represent the whole thrust of the organisation & its core values & belief.Essential of mission statements-:A mission statement should support these positions & should have essentials mentionedbelow-: 1. Clarity-The mission statement should be clear to lead to action. The corporate dreams must be presented in crystal clear manner preferably in positive tone. 2. Broad & enduring- The mission is a grand design of the firm’s future. It is a general statement of the firm’s intend a kind of self image , the firm intends to project for years to come. 3. Identity & image- The mission sets a firm apart from other of its style through this statement the firm wants to maintain its distinct image & character in term of quality ,services, latest technology & unique product offering, etc. 4. Realistic- Mission should be realistic & achievable ofcourse by running that extra miles. 5. Specific- Mission should be specific, they must define the competitive scope which the company will operate. 6. Values, belief & philosophy-The mission lays emphasis on the value the firm stand for what it intends to do so that it stands out in a crowd what is unique about its offering etc. 7. Vision- The mission is an expression of the vision of corporation. Its leader or founder . A vision statement usually describe what the company wishes to become in future. 8. Dynamic –The concept of mission is dynamic & not a static one. It must strike a happy balance between the narrow & broad way of doing in the years ahead between the present requirement & future expectations. Elements of mission statementA good mission statement reveals an organisation , customer, product, or services.Market technology ,concern for survival, philosophy, self concept, concerned for publicimage & concerned for employee. These nine basic components serve as practicalframework for evaluating & writing mission statements.*CUSTOMER – Who are the firm’s customer product & service, market, technology ,concerned for survival , growth & profitability, philosophy, self concept , concerned forpublic image, concerned for employees. OBJECTIVEAn objective indicates the result that the organisation expect to achieve in the long run. Itis an end result, the end point, sometime that you aim for & try to reach. It is a desiredresult towards which behaviour is directed in an organisation objectives are the productof specific concrete thinking. They commit person & organisation to achieve target &
  4. 4. goals . organizational objectives are defined as end which the organisation seek toachieve by existence & operation . The objectives may be classified into two cateories-: 1) External institutional objectives 2) Internal institutional objectives • External institutional objectives are those which define the impact of the organisation on its environment. • Internal institutional objectives on the other hand are those which define how much is expected to be achieved with the resources that organisation commands. Characteristics of objectives Objectives have the following features-: 1) Objective from a hierarchy-In many organisation objectives are structured n a hierarchy of important. There are objective within objectives. They are require definition & chose analysis if they are to be useful separately & profitable as a whole. 2) Objective from a network- Objective interlock an a network fashion. They are inter-related & inter –dependent. The concept of network of objective implies that once objective are established for every department & every individual in an organisation. These subsidiary objectives should contribute to meet the basic objectives of the total organisation. 3) Multiplicity of objective- Organisational pursue multi-farious objective at every level in the hierarchy , goals & likely to be multiple in order to meet the demand from various internal & external groups, organizations generally pursue multiple objectives. 4) Long term & short range objectives-Oganisational objectives are usually related to time, long range objective . extending over five or more years are the ultimate or required objectives for the organisation short range objective ( one year goal) & medium range objectives, two to four years period goals, reflect immediate attainable goals, the short range & medium range objectives are the means for achieving long term goals & the long terms goals supply a frame work within which the lower level goals are designed. Role of formal objectives Objectives serve the following functions-: 1) Legitenancy- Objectives describe the purpose of the organisation so that people know what is stands for and all will accept its existence & objective help to validate the presence of organistion in its environment. 2) Direction- Objective provide guidelines for orgnisational efforts. They keep attention focused on common purpose. Once objective are formulated , they become the polar star by which the journey is navigated . Every activity is directed towards the objective , every individual contribute to meet the goals. 3) Coordination- Objectives keep activities on the right track. They make behaviour in organisation more national, more coordinated & more effective because
  5. 5. everyone knows the accepted rolls to work toward. In setting effective goals, manager help members at all levels of the organisation to understand how they can best achieve their own goals by directing their behaviour towards the goals o organisation. 4) Benchmark for success-objectives serve as performance study against which actual performance may be checked. They provide a benchmark for assessment , they help in the control of human effort in an organisation. 5) Motivation- Goals are motivators. The setting if goal i.e both specific & challenging lead to an increase in performance because it makes clear for the individual what he is suppose to do. He can compare with past & present & also with others. Organisational objectiveOrganisational objective are not flexible to behaviour organizations seek stability, goalschange overtime & they change continuously . Goals change means that goals prioritiesare periodically revaluated keeping the ongoing changes in the external environment. Thereason why goals change are not far to see. Basically an oganisation is non-static & a setof objectives can not be static if it is to succeed. Managers may feel that there is scope forfurther expansion & instead of concentrating only on audio set(in the case of anelectronic firm). The production of video set may also be undertaken. At times demandfrom alide group that make up the enterprise may change & the organisation may beforced to change its goals. New government or labour ,leaders . for eg- may force achange in the way a business set its goals priorities.The mission can also change in acrisis. Normally goals changes are expressed in two forms-: 1) Goal displacement 2) Goal succession • GOAL DISPLACEMENT – It generally takes place when goals are expressed in a different manner. The official goals are ignored & changes take places. When old goals have been achieved or discarded. • GOAL SUCCESSION- It take place allowing old goals to outlive their utility will be disastrous for organisation. When the organisation is confronted with sales, outthroat competition, shortage of funds. The only way to survive is to find out the new goal which can inject a fresh breeze of life. MODE OF STRATEGYStrategy making is a complex process. It involves linking together number of importantdecision to form strategies to describe the strategy making process in term of modes isdifficult. There are combination of modes provide a more realistic description of theprocess. To understand the combination or mixed mode of strategy making. It isnecessary to go through the characteristics of various modes.1) Adaptive mode- Adaptive strategy making process is basically remedial in nature. Inthis mode the executives concerned with solving problems of immediate importancerather than developing long range strategies. This may imply bargaining with suppliers,
  6. 6. compromising with competitors or reducing conflicts among interest groups with theorganizations. The adaptive mode is characterised by the following features-:a) The process has a reactive approach aimed at solving crucial problems emerging in acomplex environment.b) This mode focus on minimum acceptability of satisfying objective.c) Decisions are made in adaptive mode in sequential steps one thing at a time strategymaking in the adaptive mode is typically a never ending process.d) Basin idea in this mode is to maintain flexibility & freedom to adapt the decision inthe more pressing need.2) Intuition mode-The basic approach of this mode is that the strategy evolves in themind of the cheap executive workout ever being used & workout the aid of formalprocedure. In the intuition approach ,personal judgement is also necessary element in thisapproach. The strategies developed by cheap executives over the years may be attributedto their intuition & judgement.3)Key factor approach- key factor approach or strategic factor approach. This approachconsists of determining significant factors that are important in the success of a particularbusiness & concentrating on major decision.4) Integrated approach-This approach provide framework which consist of followingpart:a)Analysing the present internal & external conditions.b) Identifying & evaluating the present strategy, the major objectives, policies ,plan&currently guiding the form.c) Generating alternatives to resolve the problems & look for opportunity.d) Developing alternatives unified strategies by combining the various alternatives ineach of the problem opportunity area & evaluation of each unified. Strategy in term ofenterprise objective & choosing the strategy the best satisfy the objective.5)Enterpreneurial approach-In this, the entrepreneur is defined as a creative thinker ,an individual who combine in himself the role of innovation & risk taker.He is tough inthis position & is motivated by a powerful deed for achievement & independence.Thismode of strategy making reflect the following characteristics:a) It is dominated by active search for opportunities. The focus in this mode is onopportunities rather than problem solving.b) In this mode power rest with one man.c) The bold decision taken in the face of uncertainity , strategy in the organisation movesforward by unusual way with corresponding gains.d) The most dominant role in this mode consist of gowth & expansion in terms of anasset, market , share & turnover.Briefly speaking, strategy in this mode characteristics pushes ahead in the face ofenvironmental orders.the vision & direction are typically provided by young entrepreneur& the heads of family owned enterprises. The planning mode essentialy involves decision making in anticipation ofa future state that the company wants to be in strategy making in this mode is ideallybased on study of – a) Fundamental socio-economic , purpose of the organisation b) Values of top management
  7. 7. c) Evaluation of external & internal opportunities & problems d) Evaluation of companies strength & weakness.The following characteristics are of planning mode. a) Strategy making depends on the role of analysis & planner as help to executives. This ensures application of scientific technique & tools of analysis in the planning process. b) It involves a systematic & a structured approach to the solution of the problems. c) It is a comprehensive process which produces a set of integrated decision & strategies & ensure the development of strategic direction. In short , the planning modes implies a strategy making process having oath proactive & reactive thrust , systematic & structured in its approach & result in integrated decision – making.
  8. 8. compromising with competitors or reducing conflicts among interest groups with theorganizations. The adaptive mode is characterised by the following features-:a) The process has a reactive approach aimed at solving crucial problems emerging in acomplex environment.b) This mode focus on minimum acceptability of satisfying objective.c) Decisions are made in adaptive mode in sequential steps one thing at a time strategymaking in the adaptive mode is typically a never ending process.d) Basin idea in this mode is to maintain flexibility & freedom to adapt the decision inthe more pressing need.2) Intuition mode-The basic approach of this mode is that the strategy evolves in themind of the cheap executive workout ever being used & workout the aid of formalprocedure. In the intuition approach ,personal judgement is also necessary element in thisapproach. The strategies developed by cheap executives over the years may be attributedto their intuition & judgement.3)Key factor approach- key factor approach or strategic factor approach. This approachconsists of determining significant factors that are important in the success of a particularbusiness & concentrating on major decision.4) Integrated approach-This approach provide framework which consist of followingpart:a)Analysing the present internal & external conditions.b) Identifying & evaluating the present strategy, the major objectives, policies ,plan&currently guiding the form.c) Generating alternatives to resolve the problems & look for opportunity.d) Developing alternatives unified strategies by combining the various alternatives ineach of the problem opportunity area & evaluation of each unified. Strategy in term ofenterprise objective & choosing the strategy the best satisfy the objective.5)Enterpreneurial approach-In this, the entrepreneur is defined as a creative thinker ,an individual who combine in himself the role of innovation & risk taker.He is tough inthis position & is motivated by a powerful deed for achievement & independence.Thismode of strategy making reflect the following characteristics:a) It is dominated by active search for opportunities. The focus in this mode is onopportunities rather than problem solving.b) In this mode power rest with one man.c) The bold decision taken in the face of uncertainity , strategy in the organisation movesforward by unusual way with corresponding gains.d) The most dominant role in this mode consist of gowth & expansion in terms of anasset, market , share & turnover.Briefly speaking, strategy in this mode characteristics pushes ahead in the face ofenvironmental orders.the vision & direction are typically provided by young entrepreneur& the heads of family owned enterprises. The planning mode essentialy involves decision making in anticipation ofa future state that the company wants to be in strategy making in this mode is ideallybased on study of – a) Fundamental socio-economic , purpose of the organisation b) Values of top management

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