Q. Define S/M.

Ans: Strategic management can be defined as the art and science of formulating, implementing, and
evaluating cross functional decisions that enable and organization to achieve its objectives.
John A. Pearce II and Richard B. Robinson, Jr. said Strategic management is defined as the set of
decisions and actions resulting in the formulation and implementation of strategies designed to achieve
the objectives of the organization.
Garry D. Smith, Danny R. Arnold, Bobby G. Bizzell Strategic management is the process of examining
both present and future environments, formulating the organization's objectives, and making,
implementing, and controlling decisions focused on achieving these objectives in the present and future
environments.
Q. Stages of S/M
Ans: The strategic management process consists of four stages:
Environmental
screening

Strategy
formulation

Strategy
implementation

Evaluation and
control

1. Environmental screening: It is the Impact of the environment- internal, external- in an organization.

Environmental analysis involves monitoring, evaluating information for the internal and internal
environment. The concerned issues are- Analysis of External environment: To identify O-T
- Analysis of Internal environment: To identify S-W.
2. Strategy formulation
A strategy is a broad plan developed by an organization to take it from where it is to where it wants to be.
Strategy formulation is the process of developing the strategy. Strategy formulation includes developing a
vision and mission, identifying an organizations external opportunities and threats, determining internal
strengths and weaknesses, establishing long-term objectives generating alternative strategies and choosing
particular strategies to pursue.
3. Strategy Implementation
Strategy implementation is the action stage of strategic management. It refers to decisions
that are made to install new strategy or reinforce existing strategy. The basic strategy implementation activities are establishing annual objectives, devising policies, and allocated
resources.

4. Strategy Evaluation
The final stage in strategic management is strategy evaluation and control. All strategies are
subject to future modification because internal and external factors are constantly changing.
The concerned issues are- a) Monitoring b) Performance measurement c) Feedback/
learning process.

Q. Key terms in S.M.

Ans: 1. Competitive advantage: Anything that a firm does especially well compared to its
competitors. when a company's profitability is greater than average profitability and profit growth of

other companies competing for same set of customers.

2. Strategists: The individuals who are most responsible for the success or failure of an organization.
Strategists are individuals who are most responsible for the success or failure of an organization.
Strategists hold various job titles, such as chief executive officers, president, owner, chair of the board,
executive director, chancellor, dean, or entrepreneur.
3. Vision and mission statement: Mission statements are enduring statements of purpose that
distinguish one business from other similar firms. A mission statement identifies the scope of a firms
operations in product and market terms. It addresses the basic question that faces all strategists: What is
our business? It should include the values and priorities of an organization.
Vision statements answer the question: What do we want to become?
4. External opportunities and external threats: Its refer to economic, social, cultural, demographic,
environmental, political, legal, governmental, technological, and competitive trends and events that could
significantly benefit or harm an organization in the future. Thus the term external.
5. Internal strengths and weaknesses: Internal strengths and internal weaknesses are an organizations
controllable activities that are performed especially well or poorly. Strengths and weaknesses are
determined relative to competitors and may be determined by both performance and elements of being.
6. Long term objective: Specific results that an organization success to achieve in pursuing its basic
mission.
7. Strategies: Strategies are the means by which long-term objectives will be achieved.
8. Policies: Policies are the means by which annual objectives will be achieved. Policies include
guidelines, rules, and procedures established to support efforts to achieve stated objectives.
Q. Determination of shareholders value.
Ans: It is The value delivered to shareholders because of management's ability to grow earnings,
dividends and share price.
1. Effectiveness of strategy.
2. Profitability- is, Return on Invested Capital (ROIC)
3. Profit growth- is, Increase in net profit over time.
Calculation:

100

Current year profit base year profit

Base year profit