SM

Strategic Management

Prof(Dr) Ajit Bansal

Professor,
Chitkara Business School,
Chitkara University
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 What is Policy?
• Policy define how the company will deal with stakeholders,
employees, customers, suppliers, distributors and other
important groups. Policies narrow the range of individual
discretion so that employees act consistently on important
issues.

• A policy is the statement or general understanding which

provides guidance in decision making to members of an
organization in respect to any course of action.
 What is Tactics?
• In a business environment, firms use various
techniques, to survive, compete and grow in the long
run. These techniques can be called as tactics and
strategy. Tactics are the actions, projects or events, to
reach a particular point or the desired end.
 What is strategy?
• Strategy is a tactical course of action which is designed to
achieve long term objectives. It is an art and science of
planning and marshalling resources for their most efficient
and effective use in a changing environment.

• Strategy of a business enterprise consists of what

management decides about the future direction and scope
of the business. It entails managerial choice among
alternative action programmes, competitive moves and
different business approaches to achieve enterprise
objectives.

• Strategy once formulated has long term implications. It is

framed by top management in an organization. In short, it
may be called asthe ‘game plan of management’.
 Definition of Business Analysis
• Business analysis is a research discipline of
identifying business needs and determining
solutions to business problems. Solutions often
include a software-systems development
component, but may also consist of process
improvement, organizational change or strategic
planning and policy development.
• Business Analysis is the practice of enabling
change in an organizational context, by
defining needs and recommending solutions
that deliver value to stakeholders.
 Definition of Strategy
• Asper Glueck,
Strategy is unified, comprehensive and integrated plan
relating the strategic advantages of the firm to the
challenges of the environment. It is designed to ensure that
the basic objectives of the enterprise are achieved.

• Asper Alfred D. Chandler,

Strategy is “The determination ofbasic long-term goals and
objectives of an enterprise and the adoption of the courses
of action and the allocation of resources necessary for
carrying out these goals.”
 Basis of
Comparison TACTICS STRATEGY
Meaning A long range blue print of an organization's
A carefully planned action made to expected image and destination is known as
achieve a specific objective is Tactics. Strategy.

Concept Determining how the strategy be An organized set of activities that can lead the
executed. company to differentiation.

Nature Preventive Competitive

What is it? Action Action plan
Focus on Task Purpose
Formulated at Middle level Top level
Risk involved Low High
Approach Reactive Proactive
Flexibility High Comparatively less
Orientation Towards the present conditions Future oriented
The strategy lenses
Different approaches taken by managers to formulate the strategies of an
organization
Strategy as Strategy as Strategy as
design experience ideas
Logical and Based on adaptation of Based on new ideas and
rational process past strategies, influenced innovation
by managers’ experience
Uses analytical Adaptive approach, Emphasizes importance
and evaluation incremental of variety and diversity
techniques
Most common Driven by the taken-for- Ideas likely to come from
approach granted assumptions anywhere
Top-down Adopted by risk averse Top managers - creators
approach managers of the
context
Found in For stable and static Adopted by risk takers in
conservative environments dynamic environments
organizations
If environment dynamic, Commonly used by
The strategy lenses
Lenses Advantages Disadvantages
Strategy as Structured process Does not encourage lower
design level participation
Logical, makes sense Rigidity
Many academic models Paralysis by analysis
Strategy as Managers learn from Low on innovation
experience experience
Low on logic
Strategic drift
Strategy as High on creation and Lack of structure
ideas innovation
Includes everyone Not all great ideas translate
into great commercial
products
Can lead to massive High risk
competitive
advantage
High cost (failure cost)
The strategy lenses
New ideas/high
innovation
Ideas

Desi
gn

Experience
Conformity/low innovation

Low rationality High rationality

Summary: Something as complex as strategy
should be viewed in a number of complementary
ways i.e.
by looking through all three lenses
 Features of Strategy
• Strategy links firm to its environment.
• Strategy combines factors.
• Strategy is T=Relative Combination of Actions.
• Top management responsibility
• Allocation of large amount of resources
• Impact on long term prosperity of the firm
 Features of Strategy
• Future oriented
• Multi-functional or multi-business
consequences
• Consideration of factors in theexternal
environment
Levels of Strategy
 Different Levels of Strategy

Corporate Office

SBU A SBU B SBU C

Finance Marketing Operations

HRM IT
 Corporate-level Strategy
• At this level, strategic decisions relate to organization-wide
policies and are taken care by top-level management (BOD)
with a visionof determining ‘Where the company wants to
be?’
• It has two main aspects- Formulation of Strategy(strategic
planning) and Strategy Implementation
• The nature of strategy at this level tend to be value-oriented,
conceptual and than other levels.
• There is also greater risk, cost and profit potential as well as
greater need of flexibility associated withthis level.
• Major financial policy decisions involving acquisition,
diversification and structural redesigning belong to this level.
 Business-Level Strategy
• Business-level strategy is more likely related to a unit
within the whole. It is concerned withcompetition in a
market.
• The concerns are about what products or services should
be developed and offered to which markets in order to
meet customer needs and organizational objectives.
• At this level, multifunctional strategies developed at
corporate level are formulated and implemented for
specific product market in which the businessoperates.
Thus, managers at this level translate general directions
and intent into concrete functionalobjectives.
• Decisions at this level include policies involving new
product development, marketing mix, research &
development, personnel, etc.
Functional/Operational-Level Strategy
• Functional strategy involves decision-making with respect
to specific functional areas- production, marketing,
personnel, finance etc.
• While corporate and business level strategies are
concerned with “Doing the rightthings”, functional
strategies stress on “Doing things right”.
• Operating level strategy is concerned with strategic
approaches for managing frontline operating units(like
plants, sales, etc) and for handling day to day tasks of
strategic significance(like advertising campaign,
purchasing materials, inventory control, maintenance,
etc.). Thus, it focuses on how the different functions of the
enterprise contribute to the other levels of strategy.
• Thus, functional level strategic management is the
management of relatively narrow areas of activity, which
are of vital, pervasive or continuing importance to the total
organization.
 Strategic Management
• Strategic management is a set of management decisions
and actions that determines the long-run performance of a
corporation. It includes environmental scanning, strategy
formulation, strategy implementation and evaluation and
control to achieve the objectives ofan organization.
• The study of strategic management emphasizes the
monitoring and evaluating of external opportunities and
threats in light of a corporation’s strengths and
weaknesses.
• Asper Fred R. David, strategic management is an art and
science of formulating, implementing and evaluating cross
functional decisions that enable an organization to achieve
its objectives.
• Asper Channon, strategic management is defined as that
set of decisions and actions that result in formulating of
strategy an its implementation to achieve the objectivesof
the corporation.
Benefits of Strategic Management
1. Financial Benefits
2. Offsetting Uncertainty
3. Clarity in Objectives & Direction
4. Increased Organizational Effectiveness
5.Personnel Satisfcation
Limitations
Complex & Dynamic Enviroonment
Rigidity
Limitations in Implementation
Inadequate Appreciation of Strategic Mangement
 Step 1: Strategic Intent
• Vision- Vision is the statement that expresses organization’s
ultimate long-run objectives. It is what the firm ultimately like to
become. Vision once formulated is for forever and long lasting for
years to come. Vision is closely related with strategic intent and isa
forward thinking process. Eg-Microsoft- ’Acomputer software on
every desk and in every home’.
• Mission- It tells who we are and what we do as well as what we’d
like to become. Mission of a business is the fundamental, unique
purpose that sets it apart from other firms of its kind and identifies
the scope of its operations in product and market terms. Eg-
Microsoft- ‘Empower every person and every organization on the
planet to achievemore’.
• Objectives- These are the end results of planned activity that state
what is to be accomplished by when and should be quantified if
possible and their achievement should result in the fulfillment of a
corporation’s mission. Objectives state specifically how the goals
shall be achieved. Following are the areas for setting objectives-
profit objective, marketing objective, production objective,etc.
 Strategy Formulation
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. For
choosing most appropriate course of action, appraisal of organization
and environmental is done with the help of SWOTanalysis.
• Environmental Appraisal- The environment of any organization is
"the aggregate of all conditions, events and influences that
surround and affect it". It is dynamic and consists of External &
Internal Environment . The external environment includes all the
factors outside the organization which provide opportunities or
pose threats to the organization. The internal environment refersto
all the factors within an organization which impart strengths or
cause weaknesses of a strategic nature.
• Organizational Appraisal- It is the process of observing an
organizational internal environment to identify the strengths and
weaknesses that may influence the organization's ability to achieve
goals. The analysis of corporate capabilities and weaknesses
becomes a pre-requisite for successful formulation and
reformulation of corporate strategies. This analysis can be done at
various levels: functional, divisional andcorporate.
 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.
• Designing structure, process & system- Strategy implementation
includes the making of decisions with regard to organizational
structure, developing budgets, programs and procedures in order to
accomplish certain activities.
• Functional Implementation- Functional implementation is
carried out through functionalplan and policies in
five different areas- marketing, finance, operation, personneland
Information management.
• Behavioral Implementation- It denotes mobilizing employees and
managers to put and formulate strategies into action and require
personal discipline, commitment and sacrifice. It dependsupon
manager’s ability to motivate employees.
• Operationalizing strategy- It includes establishing annual
objectives, devising policies, and allocating resources.
 Strategy Evaluation & Control
• Strategy evaluation- It is the primary means to know when
and why particular strategies are not working well. It is the
process in which corporate activities and performance
results are monitored so that actual performance can be
compared with desired performance. Thus strategic
evaluation activities include reviewing external and internal
factors that are the basis for currentstrategies.
• Strategic control- In this step, organizations Determine
what to control i.e., which objectives the organization
hopes to accomplish, set control standards, measure
performance, Compare the actual with the standard,
determine the reasons for thedeviations and finally taking
corrective actions and review the policies and activities if
needed.
Thank You !