strategic management

1. DEPARTMENT OF MBA
20MBA25
II SEM MBA
MODULE-1 INTRODUCTION

2. Understanding Strategy
Greek word - Strategos, which refers to military general
(Army leader).
A continuous, iterative process aimed at keeping an
organization as a whole appropriately matched to its
environment – Certo and Peter
Strategy is a tool for utilizing resources and skill sets
dynamically in a changing environment and thereby, meeting
market needs and fulfill stakeholders’ expectations.

3. STRATEGIC MANAGEMENT
According to Wheelen and Hungers - Strategic management is a set
of managerial decisions and actions that determines the long-term
performance of a corporation. It involves environmental scanning
(both external and internal), strategy formulation (strategic or long
range planning), strategy implementation, and evaluation and control.
Strategic management is a process that combines three major
interrelated activities: strategic analysis, strategy formulation and
strategy implementation.

5. Art & science of formulating,
implementing, and evaluating, cross-
functional decisions that enable an
organization to achieve its objectives
Ch 1 -5
Strategic Management – Defined

6. In essence, the strategic plan is a company’s game plan
Ch 1 -6
Strategic Management

7. Ch 1 -7
Strategic Management achieves a
firm’s success through integration –
–
Management
MIS
Production/Operations
Finance/Accounting
Marketing
Research & Development

8. Nature of Strategic Management
➢ Strategic management is a process which determines its
existence.
➢ Strategic management is equally applicable to all types of
organizations.
➢ Strategic management focuses on integrating different
system.
➢ Strategic management aids to exploit and create new and
different opportunities for tomorrow.

9. Characteristics of SM
1. Forward-Looking: Strategic management focuses on the future rather than the present. It involves
setting long-term goals and developing plans to achieve those goals by anticipating future trends and
changes in the business environment.
2. Holistic Approach: Strategic management takes a comprehensive and integrated view of the
organization. It considers various aspects such as the internal strengths and weaknesses, external
opportunities and threats, resources, capabilities, and stakeholders' interests.
3. Systematic Process: It follows a structured and systematic approach to formulate, implement, and
evaluate strategies. This involves conducting analyses, setting objectives, formulating strategies,
implementing action plans, monitoring progress, and making adjustments as needed.
4. External Orientation: Strategic management recognizes the importance of the external environment
in shaping an organization's success. It involves analyzing the industry dynamics, market trends,
customer needs, and competitive forces to identify opportunities and threats.
5. Long-Term Perspective: Strategic management focuses on achieving sustainable competitive
advantage and long-term success. It involves making decisions that have a lasting impact on the
organization, rather than short-term fixes.

10. 6. Multidisciplinary: It draws on various disciplines such as economics, finance, marketing,
operations, human resources, and information technology. Strategic management integrates these
different perspectives to make informed decisions and allocate resources effectively.
7. Adaptive and Flexible: Strategic management acknowledges that the business environment is
dynamic and constantly evolving. It requires organizations to be adaptable and flexible in response
to changes and to continuously monitor and update their strategies.
8. Decision-Making: Strategic management involves making choices and trade-offs based on
analysis, evaluation, and judgment. It requires decision-makers to consider multiple alternatives
and weigh their potential risks and benefits.
9. Inclusive and Participatory: Strategic management encourages involvement and participation
from various levels of the organization. It recognizes the value of diverse perspectives and
collaborative decision-making processes.
10. Performance-Oriented: Strategic management aims to improve organizational performance
and achieve strategic objectives. It involves setting performance metrics, monitoring progress, and
taking corrective actions to ensure the strategies are effectively implemented.

11. Importance of Strategic Management
Strategic management plays a crucial role in the success and sustainability of an organization. Here are
some key reasons why strategic management is important:
1. Clear Direction: Strategic management provides a clear sense of direction for the organization. It
helps define the organization's vision, mission, and long-term goals, which serve as a guide for decision-
making and resource allocation. This clarity ensures that all efforts and activities are aligned towards
achieving a common purpose.
2. Competitive Advantage: Strategic management helps organizations gain a competitive advantage in
the marketplace. By analyzing the external environment, identifying opportunities and threats, and
leveraging internal strengths and weaknesses, strategic management enables organizations to develop
unique strategies that differentiate them from competitors. It allows organizations to capitalize on their
strengths and exploit market opportunities while mitigating risks.
3. Resource Allocation: Strategic management assists in the effective allocation of resources. By
aligning resources with strategic priorities, organizations can optimize their use and avoid wastage.
Strategic management helps in identifying resource gaps, prioritizing investments, and making decisions
regarding the allocation of financial, human, and other resources to achieve strategic objectives.
4. Adaptation to Change: The business environment is dynamic and constantly evolving. Strategic
management enables organizations to adapt and respond to changes effectively. It involves continuous
monitoring of the external environment, anticipating trends, and making proactive adjustments to
strategies and operations. Strategic management helps organizations stay agile, identify new
opportunities, and mitigate potential threats.

12. 5. Risk Management: Strategic management aids in identifying and managing risks.
By conducting a comprehensive analysis of the business environment, strategic
management allows organizations to identify potential risks and develop contingency
plans. It helps in assessing the impact of risks on organizational objectives and
implementing measures to mitigate them. Strategic management also helps
organizations stay proactive and prepared to navigate uncertainties and challenges.
6. Performance Improvement: Strategic management focuses on enhancing
organizational performance. By setting clear objectives, developing performance
metrics, and regularly monitoring progress, strategic management helps
organizations improve their efficiency and effectiveness. It facilitates performance
evaluation, identifies areas for improvement, and enables organizations to make
informed decisions to enhance performance.
7. Alignment and Coordination: Strategic management ensures alignment and
coordination across various departments and functions within an organization. It
provides a framework for integrating different activities and initiatives, fostering
collaboration, and avoiding silos. Strategic management promotes a shared
understanding of goals and strategies, which improves coordination, communication,
and teamwork across the organization.

13. 8. Stakeholder Management: Strategic management considers the interests and
needs of various stakeholders such as customers, employees, shareholders,
suppliers, and communities. By understanding stakeholder expectations and
incorporating them into strategic decision-making, organizations can build strong
relationships, enhance reputation, and create value for all stakeholders.
9. Innovation and Growth: Strategic management encourages organizations to
embrace innovation and pursue growth opportunities. It involves scanning the
environment for emerging trends, technologies, and market shifts that can drive
growth. Strategic management fosters a culture of innovation, promotes creativity,
and facilitates the development of new products, services, and business models to
capitalize on market opportunities.
10. Long-term Sustainability: Strategic management emphasizes long-term
sustainability rather than short-term gains. By considering economic, social, and
environmental factors, strategic management enables organizations to create value
in a responsible and sustainable manner. It helps organizations make decisions that
balance the interests of stakeholders and contribute to the long-term success and
viability of the organization.

14. Advantages of Strategic Management
o Enhanced Decision-Making: Strategic management provides a systematic framework for decision-
making. It encourages organizations to consider various factors, conduct thorough analyses, and
make informed choices that align with the organization's long-term goals and objectives.
o Competitive Advantage: Strategic management helps organizations gain a competitive edge by
identifying their unique strengths, opportunities, and market differentiators. By developing and
implementing effective strategies, organizations can position themselves ahead of competitors and
create sustainable competitive advantage.
o Resource Optimization: Strategic management enables organizations to allocate their resources
effectively and efficiently. By aligning resources with strategic priorities, organizations can maximize
their utilization, reduce waste, and achieve better results.
o Improved Adaptability: Strategic management fosters an adaptive organizational culture. It
encourages organizations to monitor the business environment, anticipate changes, and adjust their
strategies accordingly. This flexibility allows organizations to respond quickly to market shifts,
technological advancements, and emerging trends.
o Performance Measurement: Strategic management facilitates the establishment of key performance
indicators (KPIs) and metrics to evaluate organizational performance. This enables organizations to
track progress, identify areas for improvement, and make necessary adjustments to achieve desired
outcomes.

15. Disadvantages of Strategic Management
• Implementation Challenges: Developing a strategic plan is one thing, but effectively executing it can be challenging.
Strategic management requires strong leadership, effective communication, and commitment from all levels of the
organization. Without proper implementation, strategic initiatives may fail to deliver the desired results.
• Time and Resource Intensive: Strategic management involves conducting detailed analyses, developing
comprehensive plans, and allocating resources accordingly. This process can be time-consuming and resource-
intensive, especially for organizations with limited capacity or competing priorities.
• Uncertainty and Risk: Despite thorough analysis and planning, strategic management cannot eliminate all
uncertainties and risks. The business environment is dynamic, and unexpected events can disrupt even the most
well-designed strategies. Organizations must be prepared to adapt and respond to unforeseen challenges.
• Resistance to Change: Strategic management often involves significant changes in organizational structure,
processes, and culture. Resistance to change from employees or other stakeholders can hinder the successful
implementation of strategic initiatives. Effective change management strategies are crucial to overcoming resistance
and gaining buy-in from key stakeholders.
• Overemphasis on Planning: While strategic planning is essential, excessive focus on planning can lead to analysis
paralysis and delayed decision-making. Organizations must strike a balance between planning and taking timely
actions to seize opportunities and respond to market dynamics.
• Environmental Complexity: The business environment is complex, with numerous internal and external factors
influencing organizational success. Strategic management requires organizations to understand and navigate this
complexity, which can be challenging and require continuous monitoring and adaptation.

16. stages of strategic management

17. 1. Develop a Strategic Vision and Mission: This stage involves defining the purpose, values, and long-
term direction of the organization. It includes creating a strategic vision that outlines the desired future
state and a mission statement that clarifies the organization's reason for existence.
2. Set Objectives: In this stage, specific and measurable objectives are established to guide the
organization's activities. Objectives should be aligned with the strategic vision and mission and serve as
benchmarks for evaluating progress.
3. Craft a Strategy to Achieve Objectives and Vision: This stage involves formulating a strategy to
achieve the established objectives and fulfill the strategic vision. The strategy should outline the overall
approach, key initiatives, and resource allocation necessary to achieve the desired outcomes.
4. Implement and Execute the Strategy: Once the strategy is developed, it needs to be implemented
throughout the organization. This involves allocating resources, aligning processes and systems, and
communicating the strategy to all stakeholders. Effective execution requires leadership, coordination,
and a focus on overcoming obstacles and resistance to change.
5. Monitor and Evaluate: The final stage involves monitoring the progress of the strategy and
evaluating its effectiveness. Key performance indicators (KPIs) are used to assess performance and
measure the extent to which objectives are being met. Regular monitoring and evaluation help identify
areas of success and areas that require adjustments or corrective actions.
6. Revise as needed : If any changes , revise needed we can change according to it.

18. The Strategic Management Model
The Strategic Management Model is a framework that provides a structured approach to strategic
planning and implementation. It consists of several interconnected components that guide organizations
through the strategic management process. While different models may vary in their specific components
or terminologies, the following is a general overview of the Strategic Management Model:
1. Environmental Analysis: This component involves assessing the external environment, including factors
such as industry trends, market conditions, competitive landscape, technological advancements, and
regulatory influences. It also includes an internal analysis of the organization's resources, capabilities, and
core competencies.
2. Strategy Formulation: Based on the analysis conducted in the previous step, strategy formulation
involves developing a strategic plan to achieve the organization's objectives. This includes defining the
organization's mission, vision, and values, identifying strategic goals and objectives, and selecting
appropriate strategies to pursue. Strategies may include market expansion, product diversification, cost
leadership, differentiation, or strategic alliances, among others.
3. Strategy Implementation: Once the strategy is formulated, the next step is to implement it effectively
throughout the organization. This involves translating the strategic plan into actionable initiatives, setting
priorities, allocating resources, and designing the necessary organizational structures and processes.
Implementation also requires effective communication, change management, and employee engagement
to ensure alignment and commitment to the strategy.

19. 4. Strategy Evaluation: This component focuses on monitoring and evaluating the
performance and outcomes of the implemented strategy. Key performance indicators (KPIs)
and metrics are used to assess progress towards strategic goals and objectives. Regular
evaluation helps identify deviations from the plan, assess the effectiveness of strategies,
and identify areas for improvement or adjustment.
5. Strategy Control: Strategy control involves taking corrective actions based on the
evaluation results to ensure the strategy stays on track. This may involve making strategic
adjustments, reallocating resources, or revising the implementation approach. Effective
control mechanisms help maintain strategic alignment, mitigate risks, and seize emerging
opportunities.
6. Feedback and Learning: This component emphasizes the importance of learning from the
strategic management process. Feedback mechanisms should be established to gather
insights and lessons learned from the evaluation and control stages. This feedback is used to
refine future strategies, improve decision-making, and enhance the organization's strategic
capabilities.

20. The Strategic Management Model

21. Key Terms In Strategic Management
1. Mission Statement: A concise statement that defines the purpose, scope, and overall
direction of an organization. It articulates the organization's reason for existence and its
primary objectives.
2. Vision Statement: A statement that describes the desired future state or long-term
aspirations of an organization. It provides a clear picture of what the organization aims to
achieve and serves as a guide for strategic decision-making.
3. Objectives: Specific, measurable, and time-bound goals that an organization sets to achieve
its mission and fulfill its strategic vision. Objectives serve as benchmarks for evaluating
performance and progress.
4. Strategy: A comprehensive plan of action designed to achieve specific objectives and fulfill
the organization's mission. It outlines the approach, initiatives, and resource allocation
necessary to gain a competitive advantage and create value for stakeholders.
5. SWOT Analysis: An assessment of an organization's internal strengths and weaknesses, as
well as external opportunities and threats. SWOT analysis helps identify key factors that can
influence strategic decision-making.

22. 6. Competitive Advantage: The unique attributes, resources, or capabilities that enable an
organization to outperform its competitors and achieve superior results in the marketplace.
It is a key factor in developing effective strategies.
7. Core Competencies: The distinctive capabilities or areas of expertise that give an
organization a competitive edge. Core competencies are often deeply embedded within the
organization and contribute to its strategic success.
8. Key Performance Indicators (KPIs): Quantifiable metrics used to measure progress and
evaluate the performance of an organization against its objectives and strategic goals. KPIs
help track performance, identify areas for improvement, and support decision-making.
9. Strategic Planning: The process of setting goals, formulating strategies, and outlining the
actions required to achieve desired outcomes. Strategic planning involves analyzing the
internal and external environment, making informed decisions, and aligning resources and
efforts.
10. Stakeholders: Individuals, groups, or organizations that have an interest in or are
affected by the actions and outcomes of an organization. Stakeholders can include
employees, customers, shareholders, suppliers, and the wider community.

23. STRATEGY AND TATICS
Strategy: Strategy refers to the overall plan or approach formulated to achieve a specific goal or
objective. It involves making high-level decisions and setting long-term directions. Strategy focuses on
the big picture and involves analyzing the environment, identifying strengths and weaknesses, and
making choices to allocate resources effectively. It is concerned with determining the best course of
action to achieve success in the long run. Strategies are typically broad, overarching plans that guide
decision-making at various levels.
Examples of strategies:
A business might develop a strategy to enter new markets by diversifying its product line.
A military might devise a strategy to defeat an enemy by using surprise and overwhelming force.
Tactics: Tactics are the specific actions to implement the strategy and achieve short-term objectives.
They are more detailed and specific than strategies, focusing on the immediate steps and methods used
to gain an advantage. Tactics are flexible and adaptable, designed to respond to changing circumstances
and exploit opportunities as they arise. They are typically concerned with the practical aspects of
execution.
Examples of tactics:
A business might use tactics like targeted marketing campaigns or price discounts to attract new
customers.
In a football match, a coach might employ specific tactics like pressing high or playing a counter-
attacking style to gain an advantage over the opponent.

25. Competitive Advantage
In strategic management, competitive advantage refers to the unique position and capabilities that
allow a company to outperform its competitors over the long term. It is a key concept in
formulating and implementing effective business strategies. Here are some key points about
competitive advantage in strategic management:
1. Sustainable competitive advantage: Strategic management focuses on developing a sustainable
competitive advantage that can be maintained over time. This means that the advantage should be
difficult for competitors to replicate or surpass, providing the company with long-term benefits.
2. External analysis: To identify and develop a competitive advantage, strategic management
involves conducting a thorough analysis of the external environment. This includes studying the
industry dynamics, market trends, customer preferences, and competitive forces that impact the
company's ability to differentiate itself.
3. Internal analysis: Strategic management also requires a deep understanding of the company's
internal strengths, weaknesses, resources, and capabilities. By evaluating its internal factors, a
company can identify areas where it has a competitive edge or areas that need improvement to
achieve a competitive advantage.
4. Value creation: Competitive advantage is closely tied to the ability to create superior value for
customers. Strategic management involves identifying and leveraging the company's unique value
proposition, which sets it apart from competitors and fulfills customer needs better than
alternatives.

26. 5. Core competencies: its core competency refers to the capabilities, knowledge, skills and
resources that constitute its "defining strength. "Core competencies are the unique
strengths, capabilities, and knowledge that a company possesses. Strategic management
aims to identify and develop core competencies that can be a source of sustainable
competitive advantage. These competencies can include technological expertise, innovative
processes, strong customer relationships, or specialized knowledge.
6. Differentiation strategies: Differentiation strategies focus on creating unique and
desirable products or services that are valued by customers. Strategic management helps in
developing and implementing effective differentiation strategies that allow the company to
charge premium prices or capture a larger market share.
7. Cost leadership strategies: Cost leadership strategies aim to achieve a competitive
advantage by offering products or services at lower costs than competitors while
maintaining acceptable quality. Strategic management involves finding ways to reduce costs,
improve operational efficiency, and optimize the value chain to achieve cost leadership.
8. Dynamic and evolving nature: Competitive advantage is not static; it evolves over time
due to changes in the business environment, technology advancements, and shifting
customer preferences. Strategic management requires continuous monitoring of the
competitive landscape and adapting the company's strategies to maintain or enhance its
competitive advantage.

27. Strategists
In strategic management, strategists are individuals or teams responsible for formulating and
implementing the organization's strategic plans. They play a crucial role in analyzing the internal and
external environment, identifying opportunities and challenges, and making strategic decisions to gain
a competitive advantage. Here are some key aspects of strategists in strategic management:
1. Strategic thinking: Strategists possess strategic thinking skills, which involve the ability to analyze
complex situations, think critically, and make informed decisions. They have a holistic view of the
organization and its environment, considering both short-term and long-term implications of their
decisions.
2. Vision and goal-setting: Strategists work to develop a clear vision for the organization and set
strategic goals that align with that vision. They define the direction and purpose of the organization,
providing guidance for the overall strategy.
3. Environmental analysis: Strategists conduct a comprehensive analysis of the internal and external
environment to understand the organization's strengths, weaknesses, opportunities, and threats. This
analysis involves examining market trends, competitor analysis, industry dynamics, technological
advancements, and other factors that may impact the organization's strategy.
4. Strategy formulation: Based on the environmental analysis, strategists develop strategic plans and
formulate strategies to achieve the organization's goals. They consider various options and
alternatives, evaluate their feasibility and potential impact, and select the most appropriate strategies
to pursue.

28. 5. Strategic decision-making: Strategists make critical decisions regarding resource allocation, market
positioning, product development, partnerships, acquisitions, and other strategic initiatives. They
evaluate different alternatives, weigh the risks and benefits, and make informed decisions that align
with the organization's overall strategy.
6. Strategy implementation: Strategists are responsible for translating the formulated strategies into
actionable plans and initiatives. They develop implementation plans, allocate resources, coordinate
activities across different departments or business units, and ensure effective execution of the
strategy.
7. Monitoring and evaluation: Strategists continuously monitor the progress of the implemented
strategies and evaluate their effectiveness. They track key performance indicators (KPIs), measure
outcomes, identify areas of improvement, and make necessary adjustments to the strategy as
needed.
8. Leadership and communication: Strategists provide leadership and communicate the strategic
direction to the organization. They engage with stakeholders, inspire and motivate employees, build
consensus, and create a shared understanding of the strategic objectives.
9. Adaptability and agility: Effective strategists are adaptable and agile, recognizing the dynamic
nature of the business environment. They are open to change, willing to experiment, and able to
adjust strategies as needed to respond to emerging trends, market disruptions, and new
opportunities.

29. Vision and mission are fundamental components of an organization's strategic planning
process. They help define the purpose, direction, and goals of the organization. Here's what
each term means and why they are essential:
Vision:
A vision is a statement that outlines the long-term aspirations and future state of the
organization. It is a clear, inspiring, and ambitious description of what the organization aims to
achieve over a considerable period, usually spanning several years or even decades. A well-
crafted vision statement should provide guidance and motivation to everyone involved in the
organization, including employees, stakeholders, customers, and partners.
Importance of Vision:
- Direction and Focus: A vision sets the direction for the organization, ensuring that all efforts
and resources are aligned towards a common goal.
- Inspiration: A compelling vision inspires and energizes employees, creating a shared sense of
purpose and commitment.
- Decision-Making: It serves as a guiding principle for decision-making, helping leaders and
employees make choices that support the long-term objectives of the organization.
- Differentiation: A unique and bold vision can differentiate the organization from competitors,
attracting customers and partners who resonate with the vision.
- Evaluation: The vision acts as a benchmark against which the organization's progress can be
measured. It provides a reference point to assess success and identify areas for improvement.

30. Company’s Vision Statements
✓ BBC: “To be the most creative organization in the
world”
✓ Disney: “To make people happy.”
✓ Google: “To provide access to the world’s information
in one click”
✓ IKEA: “To create a better everyday life for the many
people”
✓ Instagram: “Capture and share the world’s moments”
✓ LinkedIn: "Create economic opportunity for every
member of the global workforce”

31. Mission:
A mission statement describes the fundamental purpose and core activities of an
organization. It answers the question, "Why does the organization exist?" The
mission statement should be concise, focused, and specific, highlighting the
primary products or services offered and the target market or beneficiaries.
Importance of Mission:
- Purpose and Identity: The mission defines the organization's purpose and
identity, helping stakeholders understand what the organization stands for and
what it does.
- Goal Alignment: It ensures that all activities and strategies are aligned with the
central purpose, avoiding distractions and wasted resources.
- Communication: The mission statement serves as a communication tool for
both internal and external stakeholders, conveying the organization's objectives
and values clearly.
- Decision Framework: It provides a framework for decision-making, guiding
choices that align with the organization's core mission.
- Accountability: The mission statement fosters accountability, as it sets clear
expectations for the organization's performance and impact.

32. Company’s Mission Statements
✓ Microsoft: "To empower every person and every organization on the planet to
achieve more."
✓ Apple: "To bring the best user experience to its customers through its innovative
hardware, software, and services."
✓ Tesla: "To accelerate the world's transition to sustainable energy."
✓ Facebook: "To give people the power to build community and bring the world
closer together."
✓ Walmart: "To save people money so they can live better."
✓ The Coca-Cola Company: "To refresh the world in mind, body, and spirit, and
inspire moments of optimism; to create value and make a difference."
✓ Starbucks: "To inspire and nurture the human spirit – one person, one cup, and
one neighborhood at a time."

33. LONG-TERM OBJECTIVES
Long-term objectives, in the context of strategic management, are specific, measurable goals that an
organization aims to achieve over an extended period, typically spanning several years. These
objectives play a critical role in guiding the organization's strategic planning and decision-making
processes. They help translate the organization's vision and mission into actionable and quantifiable
targets, providing a roadmap for success. Here are some key characteristics and the importance of
long-term objectives in strategic management:
Characteristics of Long-Term Objectives:
1. **Timeframe**: Long-term objectives typically cover a period of three to five years or even longer.
They extend beyond the scope of short-term goals, which are usually operational and tactical in nature.
2. **Specificity**: Long-term objectives should be clear, specific, and well-defined. They must leave no
room for ambiguity, enabling the organization to measure its progress accurately.
3. **Measurability**: Each long-term objective should be quantifiable, allowing the organization to
track its advancement and determine whether the objective has been met.
4. **Realistic and Attainable**: While long-term objectives should be ambitious, they should also be
realistic and achievable. Setting overly ambitious goals can demotivate employees and hinder progress.
5. **Aligned with Vision and Mission**: Long-term objectives must align with the organization's vision
and mission, ensuring that efforts are focused on achieving the overarching purpose.

34. Importance of Long-Term Objectives in Strategic Management:
1. **Guidance**: Long-term objectives provide clear guidance to the entire organization, from top
management to frontline employees, by defining the desired outcomes and results to be achieved over time.
2. **Direction**: They set the direction for the organization's growth and development. By knowing where
they want to be in the future, organizations can plan and prioritize their actions accordingly.
3. **Alignment**: Long-term objectives align different functional areas and departments within the
organization, ensuring that all efforts contribute to the same overarching goals.
4. **Measurement of Success**: Long-term objectives act as benchmarks for evaluating the organization's
performance and progress over time. They help assess whether the organization is on track or needs to make
adjustments to its strategies.
5. **Motivation and Engagement**: Ambitious and meaningful long-term objectives can inspire and
motivate employees, fostering a sense of purpose and commitment to achieving the organization's mission.
6. **Resource Allocation**: Having clear long-term objectives enables efficient allocation of resources, as
they help identify which initiatives and projects are most critical to achieving the desired outcomes.
7. **Adaptation and Flexibility**: While long-term objectives provide direction, they should also allow for
flexibility and adaptation in response to changing market conditions, technologies, or other external factors.

35. Annual Objectives and Policies
Annual objectives and policies are essential components of an organization's
operational planning and management processes. They complement the long-term
objectives and strategies by breaking them down into specific, achievable targets
and guidelines for the upcoming year. Let's explore each of them in detail:
Annual Objectives:
Annual objectives are short-term, quantifiable goals that an organization sets to be
accomplished within a single fiscal year. They are derived from the organization's
long-term objectives and are aligned with its vision, mission, and overall strategic
direction. Annual objectives act as stepping stones toward the achievement of the
broader, long-term goals. Each objective should be specific, measurable,
achievable, relevant, and time-bound (SMART).

36. Characteristics of Annual Objectives:
- **Specific**: The objectives should be well-defined, leaving no room for ambiguity or
confusion.
- **Measurable**: Each objective should have clear metrics or key performance
indicators (KPIs) that can be used to assess progress and success.
- **Achievable**: Annual objectives should be realistic and attainable within the given
timeframe and available resources.
- **Relevant**: They should be directly related to the organization's strategic priorities
and contribute to its overall mission and vision.
- **Time-Bound**: Each objective should have a deadline or timeframe for completion,
usually within the fiscal year.
Example of an Annual Objective (for a software company):
"Increase customer retention rate by 15% by the end of the fiscal year through
improved customer support and personalized onboarding processes."

37. Policies:
Policies are guidelines or principles that dictate how certain activities or decisions should be made within
an organization. They serve as a framework for employees to follow, ensuring consistency and uniformity
in the organization's operations. Policies are designed to help employees understand what is expected of
them and how they should act in various situations.
Characteristics of Policies:
- **Clear and Concise**: Policies should be written in a straightforward manner, avoiding ambiguity and
confusion.
- **Consistent**: Policies should be consistent with the organization's values, mission, and legal
requirements.
- **Enforceable**: Policies should be practical and enforceable, meaning that they can be implemented
and monitored effectively.
- **Updated**: Policies should be periodically reviewed and updated to remain relevant and in line with
changing business conditions.
Example of a Policy (for an IT company):
"Data Security Policy: All employees must adhere to strict data security protocols, including using strong
passwords, encrypting sensitive data, and reporting any potential security breaches immediately."

38. Assignment - 1
Select a company that has performed very badly compared to its
competitors.
1. Collect information on why the company failed.
2. What were the issues in strategy and execution that were responsible
for the company’s failure in the market.
3. Analyze the internal and external factors
4. Draw business model and explain