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Kishore C. Mishra
Chapter Outline..
Concept of Strategy Levels of Strategy Strategic Management Process Vision, Mission, Objectives, Goals, Target, Approaches to Strategic decisions Mintzbergs Model
Concept of Strategy
Strategy
is the direction and scope of an organization over the long term,
which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.
Consists of competitive moves and business approaches to produce successful performance. Large-scale, future-oriented plan for interacting with the competitive environment to achieve objectives.
Strategic management :
The process of
specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans.
Levels of Strategy:
Corporate level: board of directors, CEO & administration [Highest] Business level: business and corporate managers [Middle] (SBU Strategic business Unit) Functional level: Product, geographic, and functional area managers [Lowest]
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a. Strategic Intent
The strategic intent makes clear why an organization stands for. It is reflected through vision, mission, business definition and objectives.
Vision is a statement of what an organization wishes to be like in long run/future. Mission is the reason for existence of an organization. The process of assigning a part of a mission to a particular department and then further sub dividing the assignment among sections and individuals creates a hierarchy of objectives. Goals are the intentions behind actions/decisions- the state of mind that derive individuals to do what they do.
d. Choice of Strategy
The next logical step after evaluation of strategic alternatives is choice of the most suitable alternative. While making a choice, two types of factors have to be considered:
Objective factors Subjective factors Objective factors are the ones which can be quantified while subjective factors are the ones which cannot be quantified and are based on experience and opinion of people.
The strategic choice is a decision making process which looks into the following steps:
Focusing on strategic alternatives Evaluating strategic alternatives Considering decision factors objective factors and subjective factors. Finally, making the strategic choice.
e. Implementation of Strategy
After the evaluation of the alternatives, the choice of strategy is made. This choice now needs to be implemented i.e. strategy is now put into action. Implementation of Strategy includes the activation of the strategic alternatives chosen. Strategy making and strategy implementation are two different things. Strategy making requires person with vision while strategy implementation requires a person with administrative ability.
Vision:
A vision is an image of the future we aspire to create. A Vision statement outlines:
- what the organization wants to be, or - how it wants the world in which it operates to be. - It concentrates on the future. - It is a source of inspiration. - It provides clear decision-making criteria.
Examples of Vision Statements. To be reputed global Company in the Metals and Energy Sectors. NALCO. A world class integrated power major, powering Indias growth, with increasing global presence. NTPC
Mission
Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its Vision. The mission could be either for the long term or the short term. Provides the framework or context within which strategies are formulated.
Examples. NALCO :
To achieve sustainable growth in business through diversification, innovation and global competitive edge. To continuously develop human resources.
REVLON We
Make We sell Lifestyles Cosmetics and self expressions We run Theme We provide fantasies Parks and entertainments
DISNEY
A Mission statement tells you the fundamental purpose of the organization. It defines the customer and the critical processes. It informs you of the desired level of performance.
Goals
The setting of goals for the organization based on its vision and mission statement. A goal is a long-range aim for a specific period.
It must be specific and realistic. Long-range goals set through strategic planning are translated into activities that will ensure reaching the goal through operational planning.
Objectives:
Purpose of setting objectives
Converts vision into specific performance targets Creates yardsticks to track performance
Spell-out how much of what kind of performance by when Short-Term vs. Long-Term Objectives: Short-term objectives
Targets to be achieved soon Building Blocks for reaching long-range performance
Long-term objectives
Targets to be achieved within 3 to 5 years Prompt actions now permit long-range performance later
Leads to Determination of long term objectives. Plans for Organizational development. Generalized process. Advance indicator of demands on the resources.
Fit for short term objectivity. Development and implementation are intertwined. Achieved through constant monitoring and control. Highly flexible and situation friendly.
Process: Strategy can be a dangerous delusion. Companies tend to overestimate the power of strategy. If deliberate strategizing is ineffective, then what matters is an abundance of diverse new initiatives from which the organization can select the best --- the mistakes and relatively ill-adapted are ruthlessly deselected. Systemic: Strategies are not chosen; they are programmed Strategies, then are a way in which managers try to simplify and order a world which is too complex and chaotic for them to comprehend --- the regular procedures and precise quantifications of strategic plans are comforting managerial security blankets Strategies only emerge from small successive steps, which eventually merge into a pattern Strategic plans may be wrong, but it does not matter as long as they give managers the confidence and sense of purpose to act
Classical
Rationale Focus Profit maximize Internal (plans) Analytical Economics/ military 60s Chandler Ansoff Porter Hax
Process
Vague Internal (politics/ cognitions) Bargaining/ learning) Psychology
Evolutionary
Survival External (markets) Darwinian Economics/ biology 80s
Systemic
Local External (societies) Social Sociology
90s
Mintzbergs Model
Henri Mintzbergs (1980: Designing an Effective Organizations ) According to Mintzberg organizations are formed of five main parts:
Operating core Those who perform the basic work related directly to the production of products and services Strategic apex Charged with ensuring that the organization serve its mission in an effective way, and also that it serve the needs of those people who control or otherwise have power over the organization Middle-line managers Form a chain joining the strategic apex to the operating core by the use of delegated formal authority Techno-structure or Techno storm The analysts who serve the organisation by affecting the work of others. They may design it, plan it, change it, or train the people who do it, but they do not do it themselves Support staff Composed of specialized units that exist to provide support to the organisation outside the operating work flow
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