Planning - the process of thinking about the future and organizing the

activities, what should be done and how it should be realized.

Strategy – Determining actions to achieve the goals. (Direction)

Management - the process of dealing with or controlling things or

people.

What is a Strategic Plan?

A strategic plan is a document used to communicate with the

organization the organization's goals, the actions needed to achieve
those goals and progress in a highly dynamic environment where change
is the rule and not the exception.

The strategic plan is intended to guide the organization's leaders in their

decision-making.

Definition:

Alfred – Concerned with the determination of the basic long-term goals

and objectives of an enterprise, and the adoption of courses of action
and allocation of resources necessary for carrying out these goals.

F R David – Allows an organization to initiate and influence activities, and

thus exert control over its own destiny”.
Factors affecting our Strategic Planning.

1. Company strengths and weaknesses;

2. Personal values of the key implementers (i.e., management and the
board);
3. Industry opportunities and threats; and
4. Broader societal expectations.

Strategy - is an action that managers take to attain one or more of the

organization’s goals. The strategy can also be defined as “A general
direction set for the company and its various components to achieve a
desired state in the future. Strategy results from the detailed strategic
planning process”.

The strategy is the overall plan of a firm deploying its resources to

establish a favorable position and compete successfully against its rivals.

Definition –

Mintzberg – “Strategy represents a fundamental congruence between

external opportunity and internal capability”.

Features of strategy:-

 It is all about winning.

 It offers broad guidelines
 It is forward looking.
 Strategy’s lifespan is limited.
 Top management thinking.
 Dynamic and flexible program of action.
 Inherently creative process.
Elements of a strategy:-

 Goals.
 Scope (Geographies, technologies, and process)
 Competitive advantage.
 Logic – Low costs - Low price – High volume & market dominance.

Strategic Management

What is Strategic Management?

Strategic management is an organizational management activity that is

used to set priorities, focus energy and resources, strengthen operations,
ensure that employees and other stakeholders are working toward
common goals, establish agreement around intended outcomes/results,
and assess and adjust the organization's direction in response to a
changing environment.

It is a disciplined effort that produces fundamental decisions and actions

that shape and guide what an organization is, who it serves, what it does,
and why it does it, with a focus on the future. Effective strategic
management articulates not only where an organization is going and the
actions needed to make progress, but also how it will know if it is
successful.

Strategic management can also be defined as a bundle of decisions and

acts which a manager undertakes and which decides the result of the
firm’s performance. The manager must have a thorough knowledge and
analysis of the general and competitive organizational environment so as
to take right decisions. They should conduct a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats), i.e., they should make best
possible utilization of strengths, minimize the organizational weaknesses,
make use of arising opportunities from the business environment and
shouldn’t ignore the threats.

Features:

 It is high level (Top level management).

 It affects the whole organisation.
 It covers a wide range of activities
 It exploits a particular concept.
 It is general.

 It is usually developed from the ground upwards.

 Its time span is long range.

Importance of SM:-

1. Comprehensive guide - It provides the roadmap for the firm.

2. Utilization of resources.
Men, material, machine, money and management.
3. Ready to the environmental changes. – External and internal.
4. Avoiding costly investment.
5. Minimises the mistakes and unpleasant surprises - Forward
thinking.
6. Internal communication.

7. Integration of efforts.
8. Clarification of individual responsibilities.
9. Realizing opportunities.
10. Accomplishment of organisational goals.

Strategic management process

1. Environmental Scanning- Environmental scanning refers to a

process of collecting, scrutinizing and providing information for
strategic purposes.

 Vision, Mission and objectives.

 External Analysis.

 Internal analysis.

2. Strategy formulation - refers to the process of choosing the most

appropriate course of action for the realization of organizational
goals and objectives and thereby achieving the organizational
vision.
 Grand strategy is the general plan of major action by which a firm
intends to achieve its long term goal.

3. Strategy Implementation- Strategy implementation implies making

the strategy work as intended or putting the organization’s chosen
strategy into action.

 Organising.

 Staffing.

 Directing.

 Motivational.

 Control and assessment.

4. Strategy Evaluation- appraising internal and external factors that

are the root of present strategies, measuring performance, and
taking remedial / corrective actions.

Types of strategy:-

 Master Strategy – Top level.

 Program Strategy – How basic organizational objectives to be
achieved.
 Sub-Strategy - Detailed steps to implement program strategy.
 Tactics – Short-term methods.

1. Corporate level strategy (Grand Strategy)

 Expansion Strategy.
  Stability Strategy.

 Retrenchment Strategy.

 Combination Strategy.

2. Business level strategy

3. Functional level strategy.

 Research and development Strategy.

 Operations Strategy.

 Financial Strategy.

 Marketing Strategy.

 Human resource Strategy.

Formulating the strategy depends on:

We need to get the answer for the below questions before we start up
with our strategy formulation.
 What is the organization's business or interest? (GOAL)
 What is considered "value" to the customer or constituency?
 Which products and services should be included or excluded from the
portfolio of offerings?
 What is the geographic scope of the organization?
 What differentiates the organization from its competitors in the eyes
of customers and other stakeholders?
 Which skills and resources should be developed within the
organization?

Strategy formulation - refers to the process of choosing the most

appropriate course of action for the realization of organizational goals
and objectives and thereby achieving the organizational vision.

1. Setting Organizations’ objectives - The key component of any strategy

statement is to set the long-term objectives of the organization.
2. Evaluating the Organizational Environment - The next step is to
evaluate the general economic and industrial environment in which
the organization operates.
3. Setting Quantitative Targets - In this step, an organization must
practically fix the quantitative target values for some of the
organizational objectives.
4. Aiming in context with the divisional plans - In this step, the
contributions made by each department or division or product
category within the organization is identified and accordingly strategic
planning is done for each sub-unit.
5. Performance Analysis - Performance analysis includes discovering and
analyzing the gap between the planned or desired performance.

6. Choice of Strategy - The best course of action is actually chosen after

considering organizational goals, organizational strengths, potential
and limitations as well as the external opportunities.

Vision – It is for the organisation and it’s member. Where we want to

be.

A vision statement identifies where the organization wants or intends to

be in future or where it should be to best meet the needs of the
stakeholders. It describes dreams and aspirations for future. For
instance, Microsoft’s vision is “to empower people through great
software, anytime, any place, or any device.” Wal-Mart’s vision is to
become a worldwide leader in retailing.

A vision is the potential to view things ahead of themselves. It answers

the question “where we want to be”. It gives us a reminder about what we
attempt to develop. A vision statement is for the organization and it’s
members, unlike the mission statement which is for the customers/clients.
It contributes to effective decision-making as well as effective business
planning. It incorporates a shared understanding about the nature and
aim of the organization and utilizes this understanding to direct and
guide the organization towards a better purpose. It describes that on
achieving the mission, how the organizational future would appear to be.
An effective vision statement must have following features-

a. It must be unambiguous. Clear-cut.

b. It must be broad and enduring.
c. It must harmonize with organization’s culture and values.(identity
and image).
d. The dreams and aspirations must be rational/realistic.
e. Vision statements should be shorter so that they are easier to
memorize. Specific.

In order to realize the vision, it must be deeply instilled in the

organization, being owned and shared by everyone involved in the
organization.

Mission Statement – It is for customers and clients. Where we are.

Mission statement is the statement of the role by which an organization

intends to serve it’s stakeholders. It describes why an organization is
operating and thus provides a framework within which strategies are
formulated. It describes what the organization does (i.e., present
capabilities), who all it serves (i.e., stakeholders) and what makes an
organization unique (i.e., reason for existence).

A mission statement differentiates an organization from others by

explaining its broad scope of activities, its products, and technologies it
uses to achieve its goals and objectives. It talks about an organization’s
present (i.e., “about where we are”). For instance, Microsoft’s mission is to
help people and businesses throughout the world to realize their full
potential. Wal-Mart’s mission is “To give ordinary folk the chance to buy
the same thing as rich people.” Mission statements always exist at top
level of an organization, but may also be made at various organizational
levels. Chief executive plays a significant role in the formulation of the
mission statement. Once the mission statement is formulated, it serves
the organization in long run, but it may become ambiguous with
organizational growth and innovations.

In today’s dynamic and competitive environment, the mission may need

to be redefined. However, care must be taken that the redefined mission
statement should have original fundamentals/components. The mission
statement has three main components a statement of mission or vision of
the company, a statement of the core values that shape the acts and
behavior of the employees, and a statement of the goals and objectives.

Components of mission statement:

1. Customers: Who are the enterprise's customers?
2. Products or services: What are the firm's major products or services?
3. Markets: Where does the firm compete?
4. Technology: What is the firm's basic technology?
5. Concern for survival, growth, and profitability: What is the firm's
commitment towards economic objectives?
6. Philosophy: What are the basic beliefs, core values, aspirations and
philosophical priorities of the firm? What is our business?
7. Self-concept: What are the firm's major strengths and competitive
advantages? It represents the whole thrust of the firm and its core values
and beliefs.
8. Concern for public image: What is the firm's public image?
9. Concern for employees: What is the firm's attitude/orientation towards
employees?
Business definition:

It is a clear statement of the business the firm is engaged in

or is planning to enter. It has to define its business in a broad way, keep
changing customer tastes and aspirations in mind.

Customer groups (who is being satisfied)

Customer needs (what is being satisfied)

Alternative technologies (how the need is being satisfied)

We can see 3 different ways of defining namely, business definition,

product definition and market definition.

Let’s go through below three points which define its business covering;

Vision

Mission

Objectives

Goals

│
 Plans

Objectives and Goals:

The objective indicates the result that the organisation expects to achieve
in the long run. They serve as reference points to concentrate resources
and efforts. They determine what action to take today to obtain results
tomorrow.

Goals;

They are derived from the objectives and offer a standard for measuring
performance. They are expressed in the concrete terms and are time-
bound and work oriented.

Role of objecives:

 Legitimacy – Purpose of the organistaion.

 Direction - Provide guidlines.
 Coordination – More effective.
 Benchmarks for success – Performance standards.
 Motivation – Motivators.

Features of objectives;

1. Objectives should be understandable

2. Objectives should be measurable

 3. Hierarchy of objectives

4. Multiplicity of objectives

5. Achievable

6. Objectives should be specific

7. Quantitative and Qualitative

8. Flexible

Strategic Intent: is the leveraging of a firm’s internal resources,

capabilities and core competencies to accomplish the firm’s vision,
mission and objectives in a competitive environment.

Strategic Intent tries to establish the parameters that shape the values,
motives and actions of the people throughout their organisation.

 A broad vision of what the organisation should be.

 The organisation’s mission.
 The strategic objectives and specific goals to be pursued
uncompromisingly.
 The plans that are developed to accomplish the intentions of
management in a concrete way.
SM Concept.

1) The product/service concept:

Product concept is the understanding of the dynamics of

the product in order to showcase the best qualities and
maximum features of the product. Marketers spend a lot of time

and research in order to target their attended audience. While

trying to position its products/services in a distinct environment,
changing preferences of customers etc. If a firm tries to look at the total
competitive environment this way , it can avoid what Theodore Levitt
called “marketing myopia”. When a company views marketing strictly
from the standpoint of selling a specific product rather than from the
standpoint of fulfilling customer needs.

A firm, therefore, needs to define its business in a way that allows it to

focus on its stregths in a pin-pointed way and march ahead of its rivals
with confidence.

2) Customer Segment:

A firm cannot appeal to all buyers in the market in the same way since
buyers are too numerous, too widely scattered and too varied in their
buying needs and buying practices.

So that we can see below three steps involved:

1) Market segmentation
2) Market targeting
3) Market positioning.

3) Value creation:

On the final analysis, has to define the factors that offer ‘value’ to
customers in terms of say low price, high quality, fast delivery, novel
features, excellent after sales services etc. Value is the ratio between what
the customer gets (both functional and emotional benifits) and what he
gives (in terms of money paid and time spent).
Environmental appraisal – Organizational environment consists of both

external and internal factors. Environment must be scanned so as to

determine development and forecasts of factors that will influence
organizational success. Environmental scanning refers to possession and
utilization of information about occasions, patterns, trends, and
relationships within an organization’s internal and external environment.
It helps the managers to decide the future path of the organization.
Scanning must identify the threats and opportunities existing in the
environment. While strategy formulation, an organization must take
advantage of the opportunities and minimize the threats. A threat for one
organization may be an opportunity for another.

While in external analysis, three correlated environment should be

studied and analyzed —

 Immediate / industry environment

 National environment
 Macro-environment - macro-economic, social, government, legal,
technological and international factors.

Stakeholder in the business: - A stakeholder is any person, organization,

social group, or society at large that has a stake in the business. Thus,
stakeholders can be internal or external to the business. Stakeholders can
affect or be affected by the organization's actions, objectives and policies.
Some examples of key stakeholders are creditors, directors, employees,
government (and its agencies), owners (shareholders), suppliers, unions,
and the community from which the business draws its resources.
  Affect a business
 Be affected by a business
 Be both affected by a business and affect a business

A stakeholder is often contrasted against a shareholder, which has an

ownership interest in the business. The concept of a stakeholder does
have moral and ethical implications for business governance. If a business
only has a duty to its shareholders, then the business may have no moral
obligations to any other person, organization or society. On the other
hand, if a business has a duty to its stakeholders, then a business must
take into account the interests of its stakeholders as well and not focus
completely on maximizing the interests of its owners.

Important Guidelines for Effective Strategies in management

1. They should contribute to objectives and plans:

If strategy or policy does not further plan or make enterprise objectives

more sustainable, it has not done its job.

2. They should be consistent:

Both policies and strategies should be consistent in the sense they should
not contradict each other in achieving the main goal.

3. They should be Flexible:

If goals or plans are changed the strategies and policies must also be
changed.

4. Policies should be distinguished from Rules and Procedure:

They should be clearly distinguished with each other in order to avoid

confusion and to reduce the distraction of managerial functioning. 'Some
policies are rules and not recognized as such; other so called policies are
really procedures designed to channel action, not thinking.

The correct separation of these three types of guidelines is important to

good planning, workable delegation of authority and even good human
relations, it can be accomplished'.

5. Policies should be in Writing:

For effective communication, policies must be in writing. It can also fix

responsibility over the staff. 'If policies are to be used they should be
written. Putting a policy in writing does not make it clear, but a policy that
cannot but put in writing is at best an unclear one'.

6. Policies should be taught:

To understand the policies properly it must be explained and interpreted

to the concerned line of staff. Misinterpretation or wrong conception of a
policy may not lead to achieve the goals.

7. They should be reviewed:

Policies and strategies must review before they become obsolete or

misinterpreted.

Strategies to Fit Industry Situation

Tailoring Strategy to Fit Specific Industry
Strategic Avenues for Competing in an Emerging Industry

1. Try to win the early race employing broad or focused differentiation

strategy.
2. Push to perfect the technology, improve the product and quality.
3. Adopt dominant technology quickly.
4. Form strategic alliances with suppliers
5. Acquire or form alliances with companies that have related or
complementary technological expertise.
6. Try to capture first mover advantages
7. Pursue new customer groups, new user applications and entry into new
geographical areas.
8. Begin to shift advertising to increase the frequency of use and building
brand loyalty.
9. Use price reductions to attract the next layer of price-sensitive buyers
into the market.

Rapid Growth Company

Strategies typically include adding new items to the company's present

product line, expanding into new geographic areas, and launching
offensives to take market share away from competitors.

Entering new businesses

Pumping funds into R&D to create new businesses

Strategic Moves in Mature Industries

1. Prune marginal products and models.

2. More emphasis on value chain innovation.
3. Trimming costs.
4. Increasing sales to present customers.
5. Acquiring rival firms at bargain prices.
6. Expanding internationally.
7. Building new or more flexible capabilities.

Strategies for Firms in Stagnant or Declining Industries

1. Pursue fastest growing market segments in the industry.

2. Stress differentiation based on quality improvement and product
innovation
3. Strive to drive cost down.

Strategies for Weak and Crisis-Ridden Businesses

1. Selling off assets

2. Cutting costs
3. Liquidation

Strategies for Competing in Turbulent, High-Velocity Markets.

1. Invest aggressively in R&D
2. Develop quick response capability.
3. Develop tie-in.
4. Initiate fresh actions every few months - Create change proactively
5. Keep the company's products and services fresh.

Activity

“Strategy is a pattern in a stream of decisions” —Henry Mint berg

“The essence of strategy is choosing what not to do.” —
Michael Porter

“We don’t like their sound, and guitar music is on the way
out” —Decca
“Perception is strong and sight weak. In strategy it is
important to see distant things as if they were close and to
take a distanced view of close things” —Miyamoto Mustachio,
“Strategy without tactics is the slowest route to victory;
tactics without strategy is the noise before defeat.” Sun Tzu.
A vision of future that promises to right today’s wrongs.
Grow with the new oppurtunities and be the leader in an
ever changing global market.
ETOP.