STRATEGIC MANAGEMENT

STRATEGY

The word strategy is derived from the Greek word strategos which means generalship.
Strategy is a Course of action or a set of decision rules making a pattern or crating a common
thread; the pattern relates to organisational activities which are derived from the policies,
objective and goals. It relates to pursuing those activities which move an organisation from
its current position to desired future state. It concerned with the resources necessary for
implementing a plan or a course of action.

Kenneth Andrews "The pattern of objectives, purpose, goals and the major policies and
plans for achieving these goals stated in such a way so as to define what business the
company is in or is to be and the kind of company it is or is to be".

Difference between strategy and policy

BASIS FOR
STRATEGY POLICY
COMPARISON

Meaning Strategy is a Policy is the guiding

comprehensive plan, principle that helps
made to accomplish the the organization to
organizational goals. take logical decisions.

What is it? Action plan Action principle

Nature Flexible Fixed, but they allow

exceptional situations

Orientation Action Decision

Formulation Top Level Management Top Level

and Middle Level Management
Management

Approach Extroverted Introverted

Strategies can be modified as per the situation, so they are dynamic in nature. Conversely,
Policies are uniform in nature. However, relaxations can be made for unexpected situations.

Strategies deal with external environmental factors. On the other hand, Policies are made for
internal environment of business.
STRATEGIC MANAGEMENT

Strategic management is defined as the dynamic process of formulation, implementation,

evaluation, and control of strategies to realize the organization’s strategic intent. It is not one
time, static process. Strategic management is the process of specifying the organization’s
objectives, developing policies and plans to achieve these objectives, and allocating resources
to implement the policies and plans to achieve the organization’s objectives.

Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the smallest
organization face competition and, by formulating and implementing appropriate strategies,
they can attain sustainable competitive advantage.

Strategic management is a continuous process that evaluates and controls the business and the
industries in which an organization is involved; evaluates its competitors and sets goals and
strategies to meet all existing and potential competitors; and then revaluates strategies on a
regular basis to determine how it has been implemented and whether it was successful or
does it needs replacement.

Strategic Management gives a broader perspective to the employees of an organization and

they can better understand how their job fits into the entire organizational plan and how it is
co-related to other organizational members.

Definition

Glueck and Jauch “Strategic management is a stream of decisions and actions which lead to
the development of an effective strategy or strategies to help achieve corporate objectives.”

Fed R. David “Strategic management is a process of formulating, implementing and

evaluating cross-functional decisions that enable an organisation to achieve its objective.”

Pearce and Robinson “Strategic management is the set of decisions and actions resulting in
the formulation and implementation of plans designed to achieve a company’s objectives.”
Alfred Chandler “Strategic management is concerned with the determination of the basic
long-term goals and the objectives of an enterprise, and the adoption of courses of action and
allocation of resources necessary for carrying out these goals.”

Characteristic of Strategic Management

1. Helps to respond to the environment
2. Helps to make effective strategies through use of logical, systematic and rational
approach.
3. Encourages decentralizing the management process.
4. Boosts profits by systematic strategies.
5. It strengthens the employee commitment and participation
6. Helps to enhance employee’s productivity.
7. Reduces resistance of employees to change.
8. Enhances problem prevention capabilities.
9. It helps for identification, prioritization and exploitation of opportunities.
10. It maximizes the effects of adverse conditions and changes through improved control of
activities.
11. Helps to integrate the behavior of individuals into total efforts.
12. Offers degree of discipline and formality to the management of business.
13. It helps to anticipate the future problems.
14. It improves the chances of decision making.
LEVELS OF STRATEGY

Strategy may operate at different levels of an organisation-corporate level, business level and
functional level. The strategy may change based on the levels of strategy.

1. Corporate Level Strategy

This strategy occupies the highest level of strategic decision making and covers actions
dealing with the objective of the firm, acquisition and allocation of resources and
coordination of strategies of various SBU’s for optimal performance.
Corporate strategy is formulated by the top level of management. The nature of strategic
decisions tends to be value-oriented, conceptual and less concrete than decisions at the
business or functional level. Ex. Stability, retrenchment, restructuring

2. Business Level Strategy

This strategy is called as a competitive strategy. Business level strategy is – applicable in

those organizations, which have different businesses-and each business is treated as strategic
business unit (SBU). The fundamental concept in SBU is to identify the discrete
independent product / market segments served by an organization. SBU Can be defined “any
part of business organization which is treated separately for strategic management purpose.”

Since each product/market segment has a distinct environment, a SBU is created for each
such segment. For example, Reliance Industries Limited operates in textile fabrics, yarns,
fibers, and a variety of petrochemical products. For each product group, the nature of market
in terms of customers, competition, and marketing channel differs.

3. Functional-Level Strategy.

Functional strategy deals with relatively restricted plan providing objectives for specific
function, allocation of resources among different operations within that functional area and
co-ordination between them for optimal contribution to the achievement of the SBU and
corporate-level objectives.

Below the functional-level strategy, there may be operations level strategies as each function
may be dividend into several sub functions. For example, marketing strategy, a functional
strategy, can be subdivided into promotion, sales, distribution, pricing strategies with each
sub function strategy contributing to functional strategy.
4. Operational-Level Strategy.

Operational strategy deals with relatively restricted plan related to the functional departments.
It includes the strategies of individual departments like marketing, finance, HR or
productions. New product launches strategies, campaign or promotion strategies.

MINTZBERG 5 P’S STRATEGY

In 1987, the Canadian management scientist Henry Mintzberg distinguished five visions for
strategy for organisations. According to Mintzberg, developing a good strategy is difficult.
With the help of the 5 P’s of Strategy, you can at least include as many different aspects as
possible and approach the strategy from different perspectives.5 P’S Stand for

1. Plan 2. Pattern 3. Position 4. Perspective 5. Ploy

Here five components allow an organisation to implement a more effective strategy. A

strategy is aimed at the future, concerns the long term and involves different factors of an
organisation.

Plan:- A strategy is a plan for dealing with situations. A plan has to be made before possible
actions are taken and it’s also important that the plan is followed consciously and
effectively. Goals can only be achieved with a good plan. They enable managers to give their
teams clarity and work towards evaluations and final results. However, a clear organisational
strategy requires more than just a plan.

Ploy:- A second way to view strategy is in terms of ploys. A strategic ploy is a specific move
designed to trick competitors. Mintzberg says that getting the better of competitors, by
plotting to disrupt, dissuade, discourage, or otherwise influence them, can be part of a
strategy. This is where strategy can be a ploy, as well as a plan. For example, a grocery chain
might threaten to expand a store, so that a competitor doesn't move into the same area; or a
telecommunications company might buy up patents that a competitor could potentially use to
launch a rival product.
STRATEGIC INTENT
Strategic intent is the purpose for which an org. strives for. These could be in the form of
vision and mission statements for the organization as a corporate whole.
At the business level of firms these could be expressed as the business definition and business
model.

VISION
Vision is a descriptive image of what a company wants to be or want to be known for. It is “a
vividly descriptive image of what a company wants to become in future”. Vision represents
top management’s aspirations about the company’s direction and focus. Every organisation
needs to develop a vision of the future. According to Collins and Porras, a well-conceived
vision consists of two major components:
1. Core ideology
2. Envisioned future
Core ideology is based on the enduring values of the organisation (“what we stand for and
why we exist”), which remain unaffected by environmental changes. Envisioned future
consists of along-term goal (what we aspire to become, to achieve, to create”) which demands
significant change and progress.it also the vivid description of achievements.
Richard Lynch defines vision as “ a challenging and imaginative picture of the future
role and objectives of an organisation, significantly going beyond its current environment and
competitive position.
Kotter defines it as “a description of something (an organisation, corporate culture, a
business, a technology, an activity) in the future.”