Strategic management process


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Strategic management process

  1. 1. Types of corporate-level strategies  Stability strategy  Expansion strategy  Retrenchment strategy  Combination strategy
  2. 2. Stability strategy  The stability grand strategy is adopted by an organization when it attempts at an incremental improvement of its functional performance by marginally changing one or more of its businesses in terms of their respective customer groups, customer functions, and alternatives technologies--either singly or collectively.
  3. 3. Expansion strategy  The expansion strategy is followed when an organization aims at high growth by substantially broadening the scope of one ofr more of its businesses in terms of their respective customer groups, customer functions , and alternative technologies– singly or jointly– in order to improve its overall performance.
  4. 4. Retrenchment strategy A retrenchment strategy is followed when an organization aims at a contraction of its activities through substantial reduction or the elimination of the scope of one or more of its businesses, In terms of their respective customer groups, customer functions, or alternative technologies – either singly or jointly – in order to improve its overall performance.
  5. 5. Combination strategies  The combination strategy is followed when an organization adopts a mixture of stability, expansion and retrenchment, either at the same time in its different businesses, or at different time in the same business with an aim of improving its performance.
  6. 6. Strategic Management Process
  7. 7. Strategic management process in a single SBU firm
  8. 8. Defining organizational mission Organizational analysis Environmental Analysis Setting long- term objective Reset if required Identifying Alternative strategies Reformulated if required Choice of strategy Re implement If required Implementation of strategy Strategy evolution & control Feedback
  9. 9. Strategic Management Process in a Multiple SBUs firm
  10. 10. SBUs’ objective Corporate level Organizational Mission Environmental Analysis for Present & potential SBUs Organizational long-term objectives SBUs’ objective Environmental Analysis For SBUs Analysis of SBUs Organizational& SBU analysis Alternative strategies Alternative strategies Choice of strategy Choice of strategy Implementation of strategy Evaluation of Organization & SBU results Feedback Implementation Of strategy Evaluation of SBU’s results Feedback
  11. 11. Organizational mission & objectives  The mission of an organization is the fundamental unique purpose that sets it apart from other organizations and identifies the scope of its operation in product and market terms.  Choice of the objectives for an organization is a strategic decision because by choosing its objectives, the organization commits itself for these. Objectives are generally the end results which the organization makes an attempt to achieve.
  12. 12. Environmental Analysis  Organization operates within the environment. An organization has to interact continuously with its environmental factors. Various factors of the environment have dual effect in interaction process with the organization ; they affect the working of the organization & also affected by its working. The interaction process provides opportunities or threats to an organization depending on the situation.
  13. 13. Organizational Analysis Through organizational analysis, the organization evaluates its strengths and weaknesses so that it can relate itself by emphasizing its strengths and overcoming its weaknesses. Organizational strengths & weaknesses also help in identifying the relevant environmental factors taken for detailed analysis. Strategic opportunities & threats are determined on the basis of both environmental analysis as well as organizational analysis
  14. 14. Identification of Strategic Alternatives  This process may result into large number of alternatives through which an organization can relate itself to the environment. The strategic alternatives should be identified in the light of strategic opportunities & threats generated through environmental analysis, organizational analysis & organizational mission and objectives.
  15. 15. Choice of strategy  This is the stage of strategic decision process and all factor relevant for decision making are relevant here. Since the particular strategy attempts to affect the organizational operation in same predetermined manner, the choice process systematically considers how each alternative strategy affects the various critical factors of the organizational functioning. Further, the chosen alternative should be acceptable in the light of organizational objectives.
  16. 16. Implementation of strategy  To bring the result, the strategy should be put to action because mere choice of even the soundest strategy will not affect organizational activities and achievement of its objectives. In strategy implementation, various activities involved are design of organization structure to suit the chosen strategy, effective leadership, development of functional policies, development & allocation of resources, development of effective information system, etc.
  17. 17. Evaluation and Control  For effective implementation & consequently achievement of organizational objectives, it is necessary that there is continuous monitoring of the implementation of the strategy so that suitable action is taken whenever something goes wrong. Evaluation & control of strategy and its implementation may result into various actions that the organization will have to take to be successful, depending on the situation.