1. STRATEGIC MANAGEMENT : An
Overview
Team:
Soumajit
Neeraj
Virendra
Shikhar
Rewa
G. L. Bajaj Institute of Management and Research
Greater Noida, U.P. - INDIA
2. Evolution of Strategic Management
Harvard Business School introduced Business Policy as a subject
in 1911 as an integrative subject with case studies as its pedagogy
Carnegie Foundation and Ford Foundation had instituted
Pierson Committee, and Gordon and Howell Committee to
make the recommendations about Curriculum for Management
Programme
It has been recommended as Capstone (Concluding) Course
requiring students to integrate their learning from various
functional management courses
Introduced by US Universities and then by other Countries
3. Concept of Strategy
• Determination of long term goals and objectives of an enterprise.
• Generating ideas for linkage of purpose and actions.
• A direction that is set for a company and various components to achieve a
desired state of future outcome.
• Strategy formulation is done for getting sustainable outcome for a certain
level of time.
Why do we need Strategy?
A strategy in a organization may be the result of a triggering event.
Such as…
A new CEO
Outside intervention – Competition, Inadequacy of Funds
Falling performance level
Impending (near future or close-to-come) ownership change
4. Types / Levels of Strategies
Business
Functional
Corporate
Corporate – Overall direction of
the organization in terms of its
general attitude towards growth
and management of business
Business – It is followed at
business unit or product level
Functional – It refers to the
approach in a functional area to
achieve business objectives
5. Strategic Management Process
1
• Establish the strategic intent- vision, mission, objectives and goals of the firm
2
• Environmental appraisal – SWOT Analysis
3
• Evaluate and select a proper corporate, business and functional level strategy
4
• Allocation of resources like funds, manpower, technology etc..
5
• Executing the strategy
6
• Comparing the results with desired outcomes
7
• Identify the reasons for gaps and deviations
8
• Taking corrective actions
9
• Do it all over again
6. Components in Strategic Management Process
Environmental Scanning - collecting, scrutinizing and providing
information, analyzing internal and external factors
Formulation – Developing a vision and mission statement, identifying
external opportunities and threats, deterring internal strengths and
weakness (SWOT Analysis) and choosing particular strategy to pursue
Implementation – Establish annual objectives, devise policies, motivate
employees and allocate resources
Evaluation – Reviewing external and internal factors, measuring
performance and taking corrective actions
7. Benefits of Strategic Management
Facilitates identification, prioritization and exploitation of opportunities
Minimizes the impact of adverse situations
Better allocation of resources
Integrates behavior of individuals into total effort
Encourages positive attitude towards change
Provides futuristic thinking
Provides a framework of improved communication, coordination and
activities
The most highly rated benefits of Strategic management are:
Clarity of Strategic Vision for the organization.
Focus on what is strategically important to the organization.
Better understanding of the rapidly changing business environment
8. Vision Statement
A vision statement is a company's road map, indicating both what
the company wants to become and guiding transformational
initiatives by setting a defined direction for the company's growth
An aspirational description of what an organization would like to
achieve or accomplish in the mid-term or long-term future
It is intended to serves as a clear guide for choosing current and
future courses of action
A written declaration of an organization’s core purpose and focus
that normally remains unchanged over time
Something that you imagine or a picture that you see in your
mind
9. Mission Statement
A mission statement defines the basic reason for the existence of
that organization
A mission statement is a statement which is used as a way of
communicating the purpose of the organization
It is a formal summary of the aims and values of a company,
organization, or individual
Mission statements are normally short and simple statements which
outline what the organization's purpose is and are related to the
specific sector an organization operates in
A mission statement guides the actions of the organization, spells
out its overall goal, provides a path, and guides decision-making
It is the framework or context within which the company's
strategies are formulated
10. Traits of Vision and Mission Statement
Traits for Vision Statement:
Concise: able to be easily remembered and repeated
Clear: defines a prime goal
Future-oriented: describes where the company is going rather than the current
state
Stable: offers a long-term perspective and is unlikely to be impacted by market or
technology changes
Challenging: not something that can be easily met and discarded
Abstract: general enough to encompass all of the organization's interests and
strategic direction
Inspiring: motivates employees and is something that employees view as desirable
Traits for Mission Statement:
Feasible - should not be an impossible statement
Precise - should not be so narrow as to restrict the organization’s activities nor
should it be too broad
Clear - clear enough to lead to action
Motivating - should be motivating for members of the organization and of society
Distinctive - likely to have an impact
11. Vision vs Mission
Mission Statement
1.) It should be short and easy to memorize.
2.) It must be specific enough that people understand what we do and how it may differ from our
competitors.
Ex:
• Public Broadcasting System (PBS): To create content that educates, informs and inspires.
• Google: To organize the world’s information and make it universally accessible and useful.
Vision Statement
1.) Vision statement is more prominent as it drives decision and goals in our company.
2.) Vision statement also provides strategic direction and describes what the owner/founder wants
the company to achieve in future.
3.) It also describes “What business are we in?” and “What is our business for?”
4.) Plans are done based on long term objectives and not on short term objectives from which
something could be accomplished.
Ex:
• Ford: To become the world’s leading consumer company for automotive products and
services.
• Avon: To be the company that best understands and satisfies the product, service and self-
fulfillment needs of women-globally.
12. Objective and Goal
Objective:
An objective is something you plan to achieve
The state of affairs that a plan is intended to achieve and that (when achieved)
terminates behavior intended to achieve it
Something that one's efforts or actions are intended to attain or accomplish
A specific result that a person or system aims to achieve within a time frame and
with available resources
Objectives are basic tools that underlie all planning and strategic activities
They serve as the basis for creating policy and evaluating performance
For instance:- Minimizing expenses, maximizing profits, reducing cost etc…
Goal:
Something that you are trying to do or achieve
An observable and measurable end result having one or more objectives to be
achieved within a more or less fixed timeframe
A goal is a desired result that a person or a system envisions, plans and commits
to achieve
Goal suggests something attained only by prolonged effort and hardship
13. Traits of Objective and Goals
Traits of Objective
Not influenced by personal feelings, interpretations, partiality
Based on facts
Unbiased
intent upon or dealing with things external to the mind rather than
with thoughts or feelings
Implies something tangible and immediately attainable
Believed to be attainable
Traits of Goal
Usually long-term
One goal may have more than one objectives
A change in a goal could eliminate one or more objectives, or add new
ones
Goals tend to control objectives
14. Objective vs Goal
Objectives are more specific and easier to
measure than a goal
Goals are relatively long in duration as compare
to objectives
We can think of goals as being the big picture
whereas Objectives are about a specific plan of
actions
Objectives help us to reach our goals
15. Concept and Characteristics of Environment
Concept of Environment :
Environment means surroundings, external objects, influences or
circumstances under which someone or something exists
The environment of an organization is an aggregate of all the conditions,
events and influences that surrounds and affect it
Characteristics of Environment :
Environment is complex
It consists of number of factors, events, conditions and influences
arising from different sources
All these do not exist in isolation but interact with each other to create
an entirely new set of influences
It is dynamic
Environment is consistently changing in nature
Environment is multifaceted – depends on perception of different
observers
It has far reaching impact on organizations – growth and profitability
depends on environment
16. Environmental Appraisal and Scanning
Environmental appraisal is a process of analyzing
organization’s strengths and weaknesses to
formulate, implement and evaluate different strategies
in order to compete in dynamic marketplace
Environmental scanning is a process by which
organizations monitor their relevant environment to
identify opportunities and threats affecting their
businesses for purpose of taking strategic decisions
17. Approaches to Environmental Scanning
Systematic Approach – Information related to markets,
customers, legislations could be collected continuously
and systematically for monitoring purpose
Ad hoc Approach – Information collection is for any
particular situation or purpose
Processed form Approach – information collection In
processed form through different sources (inside and
outside the organizations)
19. Continued…
Strength - It is an inherent capacity which a organization can use to
gain strategic advantages
Eg. Goodwill, resources, assets etc…
Weakness – it is an inherent limitation or constraints which creates
strategic disadvantages.
Eg. Financial deadlines, low morale of employees, etc…
Opportunity – It is a favorable condition in organization’s
environment which enables it to consolidate and strengthen its
position
Eg. Arrival of new technologies, economic booms etc…
Threat – It is an unfavorable condition in organization’s
environment which creates a risk for or cause damage to the
organization
Eg. Outdated technologies, economic downturn etc…
20. Benefits of SWOT Analysis
SWOT Analysis helps in strategic planning in following manner :
• Simple to use
• Low cost
• Helps to develop alternative goals
• Useful for strategic analysis
• Flexible and easy to adapt in varying situations
• It is a source of information for strategic planning.
• Builds organization’s strengths.
• Reverse its weaknesses.
• Maximize its response to opportunities.
• Overcome organization’s threats.
• It helps in identifying core competencies of the firm.
• It helps in setting of objectives for strategic planning.
• It helps in knowing past, present and future so that by using past and
current data, future plans can be chalked out.
21. Limitations of SWOT Analysis
There are certain limitations of SWOT Analysis which are
not in control of management. These include:
• Price increase
• Inputs/raw materials
• Government legislation
• Economic environment
• Searching a new market for the product which is not
having overseas market due to import restrictions; etc.
Internal limitations may include:
• Insufficient research and development facilities
• Faulty products due to poor quality control
• Poor industrial relations
• Lack of skilled and efficient labour etc
22. Corporate Level Strategies
Corporate level strategies are basically about decisions related to:
Allocating resources among different business of the firm
Transferring resources from one set of business to others
Managing and nurturing a portfolio of businesses
These decisions are taken so that overall corporate objectives are achieved
Corporate strategies help to exercise the choice of direction that an
organization adopts.
Corporate strategies are the basic directions of the firm as a whole for
both a small business firm or a large/complex group of business firms.
In case of small business firms, it could mean the adoption of courses of
actions that yield better profitability for the firm.
In case of multi business firms, it would also be about managing the
various businesses for maximizing their contribution to the overall
corporate objectives and transferring resources from one set of businesses
to others.
24. Strategic Alternatives
Strategic alternatives revolve around the question of whether
to continue or change the business, the enterprise is currently
in or improve the efficiency and effectiveness with which the
firm achieves its corporate objectives in its chosen business
sector.
According to Glueck there are four strategic alternatives:
Expansion
Stability
Retrenchment
Combination of these three
25. Stability Strategies
The corporate strategy of stability is adopted by an
organization when it attempts at incremental improvements
of its performance by marginally changing one or more of
its businesses in terms of their respective customer groups,
customer functions and alternative technologies – either
singly or collectively.
For eg.
Adding institutional buyers rather than individual consumers
Better after sales services
Modernization of machinery and plant
Stability strategy is adopted because:
It is less risky
Involves less changes
People feel comfortable with things as they are
Environment is relatively stable
Extension may be perceived as being threatening
26. Growth / Expansion Strategy
The corporate strategy of expansion is followed when an organization
aims at high growth by substantially broadening the scope of one or
more of its businesses in terms of their respective customer groups,
customer functions and alternate technologies – singly or jointly – in
order to improve its overall performance.
For eg.
Adding new customer group or segment
Personalized services to same and new customer group
Changing technologies for speed, productivity and efficiency
Growth strategy is adopted because:
It may become imperative when environment demands increase in
pace of activity
Psychologically, strategies may feel more satisfied with the
prospects of growth from expansion
Increasing size may lead to more control over markets and
competitors
27. Retrenchment Strategies
The corporate strategy of retrenchment is followed when an
organization aims at contraction of its activities through a
substantial reduction or elimination of the scope of one or
more of its businesses in terms of their respective customer
groups, customer functions and alternate technologies – singly
or jointly – in order to improve its overall performance.
For eg.
Withdrawing product from consumer market and focusing only on business
market
Focusing on specialized services rather than general offerings
Adopting means of online service delivery rather that physical delivery
Retrenchment strategy is adopted because:
Management is no longer wishes to remain in business partly or fully due to
continuous losses
Environment faced is threatening
Stability can be ensured by reallocation of resources from unprofitable to
profitable business
28. Combination Strategies / Portfolio
Restructuring
The combination strategy is followed when an organization
adopts a mixture of stability, expansion, and retrenchment
strategies, either at the same time in different businesses or at
different times in one of its businesses, with the aim of
improving its performance
For eg.
Offering wider variety to its customers (stability), expanding product
range (expansion) and closing contractual job services (retrenchment)
Combination strategy is adopted because:
The organization is large and faces complex environment
The organization is composed of different businesses, each of which
lies in a different industry, requiring a different response
