The nature of strategic management

Definition:-

Strategic management is the process of formulating, implementing and evaluating cross function
decision that helpful for the organization to achieve its goals. It focus on marketing, finance and
accounting production and operations, research and development to get org success. The purpose of
strategic management is to creates new opportunities for tomorrow.

Stages of strategic management

Formulating

In strategy, formulation includes developing vision and mission, identify external opportunities and
threat, and determine internal strength and weakness, generating alternative strategies. For example
what new business enter,whether reduce the business or expand the business.because of unlimited
resourse oraganisaton has to select best lateranative strategies .

Strategy implementation:-

In this stage, frim establish policies, motivate employees and allocated resources so that formulated
strategy can be executed. It include creating effective organizational structure preparing budgets, using
information system and link employees’ compensation with organization performance. It also called
action stage.It require personal decipince ,commitment and sacrifices .Successful strategy
implementation depend on manger ability to motivate worker that is and art more than science.

Strategy evaluation :-

In this stage manager want to know when specific strategic are not working well .The primary mean for
ontaining this information .Becuas internal and external envoriment consistently changing as a result
strategies are subject to future modifivation.There are three fundamental strategy evaluation activities

1) Reviewing internal and external factor

2) Measuring performance
3) Taking corrective action

It important because success today is not garentee for success tommorow

Intergrating and intuition analysis

For making decision making in the organization require qualitative and quantitative information
.however depend on institution only is not reliable,it important in a situation of great uncertainity

Imagination is more then knowledge because knowledge is limited but imagination embrace the entire
wold.
Adopting to change

To adopt the change is very important for success beacuase its lead organization key strategic
management question such as “what kind business should we become “ should we reshape our business
what strategy should we pursue .

Key term in strategic management

There are nine important term in management

Competitive advantage

Strategic management is all about maintaining and create competitive advantage .competitive
advantage is that anything you do that your rival can not do is called compitative advantages

Strategist

Strategist is and individual who responsible for the success or failure of the organization .Strategist have
many titles such as Chief executive officer ,president ,owner ,executive director and dean or
entrepreneur .

Vision and mission statement

Vision is final destination that you want to achieve it answer that question what you want to become .it
is the step in strategic planning. Mission is that how reach that destination that the way ot path .it
remind the employees why organization exists .

External oppurtunities and threat

It refer to economic,social cultural ,demographic envroment political lagel governmental ,technological

and competitive trend that are harmfull as well as benefit for the organization in future .It
uncontrollable for the firm

Internal strength and weekness

It is controllable activities its arise in all department in the frim.Identifing and evaluating organizational
strength and weekness in the fuctional areas of the business is and essential for strategic mangemnt
ativities. It determind by compating competitor strength and weekness to own.

Long term objective

These are goal that organization want to achieve its usually more than one year.it important for the
organization beacuase its provide direction .

Strategies

It mean by which you achive long term goals.

Annual objectinve

It also called short term objective by which you can achinve long term objective

Polices
Policies

Policies by which annual objective will be achieve polices include guidline ,rules and procedure
established to support effort to achieve state objectives.

Chapter No 4

Internal audit

The nature of internal audit

Basically it is related to internal organization. Objective and strategies are developed base on internal
strength and weakness. every organization has its own strength and weakness the main objective of the
organization is to over from weakness.

Key internal audit

The strength which cannot match or copy by its competitor are called distinctive competencies. There
are many researchers who emphasize the importance of internal audit by comparing to external audit

The process of performing an internal audit

The process of internal audit process is parallel to external audit process. The manager and employees
should participate in the internal audit to determine the frim strength and weakness. The process
required information about cross functional department.

The resource base view (RBV)

It emphasizes that internal factor more than external factor for gaining competitive advantage. This
theory is contrary to I/O approach which emphasize on external audit. RBV view said that organization
performance determines by internal resource that base on three categories physical resources, human
resource and organization resources