Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management

Strategic Management
Prepared By
Prof. Jitendra Patel
Assistant Professor
Prestige Institute of Management
and Research. Indore.

Module I
General Introduction
5 P’s of Strategies
1.1Definition
1.2Relevance of Strategic Management
1.3Characteristics of Strategic Management
1.4Strategic Management Model Explained
1.5Level of Strategies
1.6Four Approaches to Strategic Management
1.7Strategist and their role in Strategic
Management
1.8Type of Strategist
1.9 Pitfalls in Strategic Management
1/22/2020 2
Jitendra Patel, Assistant Professor, PIMR,
Indore

Management Strategies
• Strategy”, narrowly defined, means “the art of the general” (the
Greek stratos, meaning ‘field, spread out as in ‘structure’; and agos,
meaning ‘leader’).
5 P’s of strategy
1. A plan, a “how do I get there”
2. A pattern, in consistent actions over time
3. A position that is, it reflects the decision of the firm to offer
particular products or services in particular markets.
4. A ploy, a maneuver intended to outwit a competitor
5. A perspective that is, a vision and direction, a view of what
the company or organization is to become.
1/22/2020 3
Indore

Definition
1. Chandler(1962) Strategy is the determinator of the
basic long-term goals of an enterprise, and the
adoption of courses of action and the allocation of
resources necessary for carrying out these goals.
2. Mintzberg (1979) Strategy is a mediating force
between the organization and its environment:
consistent patterns in streams of organizational
decisions to deal with the environment.
3. Prahlad (1993) Strategy is more then just fit and
allocation of resources. It is stretch and leveraging of
resources.
4. Porter (1996) Strategy is about being different. It
means deliberately choosing a different set of
activities to deliver a unique mix of value .
1/22/2020 4
Indore

Definition
5. The systematic analysis of the factors associated with
customers and competitors (the external
environment) and the organization itself (the internal
environment) to provide the basis for maintaining
optimum management practices. The objective of
strategic management is to achieve better alignment
of corporate policies and strategic priorities.
6. The strategic management process means defining
the organization’s strategy. It is also defined as the
process by which managers make a choice of a set of
strategies for the organization that will enable it to
achieve better performance.
1/22/2020 5
Indore

Relevance of Strategic Management
• Strategic management seeks to coordinate and integrate the activities of
the various functional areas of a business in order to achieve long-term
organizational objectives.
• The initial task in strategic management is typically the compilation and
dissemination of the vision and the mission statement. This outlines, in
essence, the purpose of an organization.
• Strategies are usually derived by the top executives of the company and
presented to the board of directors in order to ensure they are in line with
the expectations of the stakeholders.
• The implications of the selected strategy are highly important. These are
illustrated through achieving high levels of strategic alignment and
consistency relative to both the external and internal environment.
• All strategic planning deals with at least one of three key questions: "What
do we do?" "For whom do we do it?" and "How do we excel?" In
business strategic planning, the third question refers more to beating or
avoiding competition.
1/22/2020 6
Indore

Relevance of Strategic Management
1. Formulate the company’s mission, including broad statements about its
purpose, philosophy, and goals.
2. Conduct an analysis that reflects the company’s internal conditions and
capabilities.
3. Assess the company’s external environment, including both the
competitive and general contextual factors.
4. Analyze the company’s options by matching its resources with the
external environment.
5. Identify the most desirable options by evaluating each option in light of
the company’s mission.
6. Select a set of long-term objectives and grand strategies that will
achieve the most desirable options.
7. Develop annual objectives and short-term strategies that are compatible
with the selected set of long-term objectives and grand strategies.
8. Implement the strategic choices by means of budgeted resource
allocations in which the matching of tasks, people, structures,
technologies, and reward systems is emphasized.
9. Evaluate the success of the strategic process as an input for future
decision-making.
1/22/2020 7
Indore

Characteristics of Strategic Management
1. Uncertain :Strategic management deals with future-oriented non-routine
situation. They create uncertainly. Managers are unaware about the
consequences of their decisions.
2. Complex :Uncertainly brings complexity for strategic management. Managers
face environment which is difficult to comprehend. External and internal
environment is analyzed.
3. Organization wide :Strategic management has organization wide implication. It is
not operation specific. It is a systems approach. It involves strategic choice.
4. Fundamental :Strategic management is fundamental for improving the long-
term performance of the organization.
5. Long-term implication :Strategic management is not concerned with day-to-day
operation. It has long-term implications. It deal with vision, mission and
objective.
6. Implication :Strategic management ensure that strategic is put into action,
implementation is done through action plans.
1/22/2020 8
Indore

7. Universal
Strategy refers to a complex web of thoughts,
ideas, insights, experiences, goals, expertise,
memories, perceptions, and expectations that
provides general guidance for specific actions in
pursuit of particular ends. Nations have, in the
management of their national policies, found it
necessary to evolve strategies that adjust and
correlate political, economic, technological, and
psychological factors, along with military
elements.
1/22/2020 9
Indore

8. Keeping Pace With Changing Environment
The present day environment is so dynamic and
fast changing thus making it very difficult for any
modern business enterprise to operate. Because
of uncertainties, threats and constraints. Under
such circumstances, the only last resort is to
make the best use of strategic management
which can help the corporate management to
explore the possible opportunities and at the
same time to achieve an optimum level of
efficiency by minimizing the expected threats.
1/22/2020 10
Indore

Strategic Management Model
• Basic Model
Environmental
Scanning
Strategy
Formulation
Evaluation
and Control
Strategy
Implementation
1/22/2020 11
Indore

Strategic Management Model
Environment
External
Societal
Environment
General
Forces
Task
Environment
Industry Analysis
Internal
Structure
Chain of command
Culture
Belief,
Expectations
values
Resources
Assets,
Skills,
Competencies
Knowledge
Strategy
Formulation
Mission
Reason For
Existence
Objectives
What Result To be
Achieved
Strategies
Policies
Strategic plans to
policies
broad guidelines for
decision-making
Strategy
Implementation
Program
Programs
Activities
Needs
Budget
Budgets
Procedure
Sequence of Steps
Evaluation and
Control
Performance
1/22/2020 12
Indore

Strategic Model Explained
1. Environmental Scanning
Environmental Scanning is the monitoring, evaluating,
and disseminating of information from the external
and internal environments to key people within the
corporation. Its purpose is to identity strategic factors –
those external and internal elements that will
determine the future of the corporation.
The external environment consists of variables
(Opportunities and Threats) that are outside the
organization and not typically within the short-run
control of top management. These variables form the
context within which the corporation exists.
1/22/2020 13
Indore

• The internal environment of a corporation consist of variables
(Strengths and Weakness) that are within the organization itself and
are not usually within the short run control of top management.
These variables form the context in which work is done. They
include the corporation’s structure, culture, and resources. The
internal environment of a corporation consist of variables(Strengths
and Weakness) that are within the organization itself and are not
usually within the short run control of top management. These
variables form the context in which work is done. They include the
corporation's structure, culture, and resources. The simplest way to
conduct environmental scanning is through SWOT analysis . SWOT
is an acronym used to describe those particular Strengths,
Weaknesses, Opportunities, and Threats that are strategic factors
for a specific company.
1/22/2020 14
Indore

• The simplest way to conduct environmental
scanning is through SWOT analysis . SWOT is
an acronym used to describe those particular
Strengths, Weaknesses, Opportunities, and
Threats that are strategic factors for a specific
company.
1/22/2020 15
Indore

• Strategy formulation is the development of
long-range plans for the effective
management of environmental opportunities
and threats, in light of corporate strengths and
weaknesses. It includes defining the corporate
mission, specifying achievable objectives,
developing strategies and setting policy
guidelines.
1/22/2020 16
Indore

Strategy Implementation is the process by which
strategies and polices are put into action through the
development of programs, budgets and procedures.
This process might involve changes within the overall
culture, structure, and/or management system of the
entire organization. Most of the times strategy
implementation is carried out by middle and lower
level managers with top management’s review. Some
times refereed to as operational planning, strategy
implementation often involves day-to-day decisions in
resource allocation. It includes programs, budgets and
procedures.
1/22/2020 17
Indore

• Evaluation and Control is the process in which
corporate activities and performance results are
monitored so that actual performance can be
compared with desired performance. Managers
at all levels use the resulting information to take
corrective action and resolve problems. Although
evaluation and control is the final major element
of strategic management, it also can pinpoint
weaknesses in previously implemented strategic
plans and thus stimulate the entire process to
begin again.
1/22/2020 18
Indore

Responsibility of plant
managers, geographic
unit managers, and
lower-level supervisors
Responsibility of heads of
major functional activities
within a business unit or
division
Responsibility of
business –level general
managers
Responsibility of
corporate-level managers
Level of Strategies
1/22/2020 19
Indore

Four Approaches to strategic decision
making process
1. The Chief Architect approach: A single person – the
owner or CEO –assumes the role of chief strategist and
chief entrepreneur, singlehandedly shaping most or all of
the major pieces of strategy.
2. The Delegation Approach: Here the manager in charge
delegates big chunks of the strategy-making task to
trusted subordinates, down the-line managers in charge
of key business units and departments, a high-level task
force of knowledgeable and talented people from many
parts of the company, self-directed work teams with
authority over a particular process or function, or, more
rarely, a team of consultants brought in specifically to help
develop new strategic initiatives.
1/22/2020 20
Indore

Four Approaches to strategic decision
making process
3. The Collaborative or Team Approach: This is a
middle approach when by a manager with
strategy-making responsibility enlists the
assistance and advice of key peers and
subordinates in hammering out a consensus
strategy.
4. The Corporate Entrepreneur Approach: In the
corporate entrepreneur approach, top
management encourages individuals and teams
to develop and champion proposals for new
product lines and new business ventures.
1/22/2020 21
Indore

Strategist and Their Role
Who are strategists?
• Strategists are individuals or groups who are
primarily involved in the formulation,
implementation, and evaluation of strategy. In
a limited sense, all managers are strategists.
They can be internal, as well as external
1/22/2020 22
Indore

List of Strategists
1.Board of directors
2.CEOs
3.Entrepreneurs
4.Senior Management
5.SBU- Level Executives
6.Corporate Planning Staff
7.Consultants
8.Middle Level Managers
9.Executive Assistants
1/22/2020 23
Indore

1. Board of Directors
Who are they?
Who appoints them?
What are they supposed to do?
What binds them?
1/22/2020 24
Indore

Board of Directors
Variation in the boards of companies
across sectors
Directions to managers + Operational
matters of significance
Formal and informal functions
Vital link between the company and the
environment
1/22/2020 25
Indore

BoD as STRATEGISTS
Guidance for objectives, review and
appointment
Strategic direction to the organization
Exact role of board dependent on relative
strength
1/22/2020 26
Indore

2. Chief Executive Officer
Who is a CEO?
What else is he/she known as?
How important is the CEO to the
organization?
1/22/2020 27
Indore

Chief Executive Officer
Defining Roles Theoretically:
The Role Modeling Approaches
Chief architect of organizational purpose,
strategist or planner
Organizational leader, organizer, or
organizational builder
Chief administrator, implementer, or
coordinator
Communicator of organizational purpose,
motivator, personal leader or mentor
1/22/2020 28
Indore

Chief Executive Officer
The other approaches:
• On parameters like:
• How time is spent
• Qualities & personalities
• Communication styles
• Demographic characteristics
• Managerial values
• Environment
• Managerial styles
1/22/2020 29
Indore

Example: Indira Nooyi (Pepsi co)
Extremely important strategies for the
company, for e.g.,
Acquisition of Tropicana
Merger with Quaker Oats
1/22/2020 30
Indore

3. Entrepreneurs
The entrepreneur always searches for
change, responds to it and exploits it is an
opportunity.
1/22/2020 31
Indore

Example
Kiran Mazumdar, a young entrepreneur, set
up an export-oriented unit manufacturing a
range of enzymes.
She was actively involved in all aspects of
policy formulation and implementation for
her companies.
1/22/2020 32
Indore

4. Consultants
They can be individuals, academia, or
consulting companies specializing in
strategic management.
1/22/2020 33
Indore

• McKinsey and Company, specializes in offering
consultancy in the areas of fundamental change
management and strategic visioning;
• Anderson Consulting, is in business restructuring,
and info tech and systems; Boston Consulting
helps in building competitive advantage; and
KPMG Peat Marwick is in strategic financial
management and feasibility studies for strategy
implementation.
1/22/2020 34
Indore

5. Corporate Planning Staff
They support and assist the management,
prepare & communicate strategic plans
and conduct special studies &
researches.
1/22/2020 35
Indore

6. SBU- Level Executives
The executive head of each SBU is
responsible for the framing of strategies
for that SBU and for the coordination
with the other SBUs in the organization.
1/22/2020 36
Indore

Pitfalls in Strategic Planning
• Using Strategic Planning for gaining control
over decisions and resources
• Doing strategic Planning only to satisfy
accreditation and regulatory requirement
• Too hastily moving from mission development
to strategy formulation
• Failing to communicate the plan to
employees, who continue to work in dark.
• Top managers making many intuitive decisions
that conflict with formal plan
• top management not actively supporting
strategic – planning process.1/22/2020 37
Indore

Pitfalls in Strategic Management
• Failing to use plan as a standard for measuring
performance
• Delegating planning to a “ planner” rather than
involving all managers
• Failing to involve key employees in all phases of
planning
• Failing to create a collaborative environment
supportive of change
• Viewing planning as unnecessary or unimportant
process.
• Becoming so engrossed in current problems that
insufficient or no planning is done
• Being so formal in planning that flexibility and
creativity are stifled.
1/22/2020 38
Indore

References
1. David, F.D. (2011), “Strategic Management Concept And Cases”,
Thirteenth Edition, Prentice Hall, South Carolina, USA.
2. Dess, G.G., Lumpkin, G.T. and Marilyn, L. T. (2005), “Strategic
Management”. 2 ed. New York: McGraw-Hill Irwin.
3. Kazmi, A. (2008),“Strategic Management & Business Policy, Tata
McGraw-Hill Publishing Company Limited, New Delhi.
4. Nedelea, S. and Păun, L.A. (2009) “The Importance of the Strategic
Management Process in the Knowledge-Based Economy” , Review of
International Comparative Management , 10(1), 95-105.
5. Olsen, E (2009), “Strategic Planning Kit For Dummies”, 2nd Edition,
Willey Publication.
6. Role Of Strategists, retrieved from
https://www.slideshare.net/07Deeps/role-of-strategists. Last assessed
on 06 January 2020.

Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management

Similar to Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management (20)

More from PROF.JITENDRA PATEL

More from PROF.JITENDRA PATEL (20)

Recently uploaded

Recently uploaded (20)

Strategic management definition,relevance , characterstics , level, approach, strategic management model, strategist and pitfall in strategic management