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strategy formulation

strategy formulation

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Published by amitjan1980
strategy formulation
strategy formulation

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Published by: amitjan1980 on Feb 27, 2013
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MODULE 99.1. Strategy Formulation : An Overview
 The corporate world is in the process of a global transformation. Mergers,acquisitions, outsourcing and downsizing are becoming common wordeverywhere. Privatization is allowing free enterprise to take on functions thatpreviously were the domain of government. International boundaries are fading inimportance as businesses take on a more global perspective and the technologyof information age is telescoping the time it takes to communicate and makedecision. Strategic management takes a panoramic view of this changingcorporate terrain and attempts to show how large and small firms can be moreeffective and efficient not only in today's world but tomorrow as well.Strategic management is the set of managerial decisions and action thatdetermines the way for the long-range performance of the company. It includesenvironmental scanning, strategy formulation, strategy implementation,evaluation and control. It emphasizes the monitoring and evaluation of externalopportunities and threats in light of corporation’s strength and weakness.Business policy has a general management orientation and tends primarily tolook inward with its concern for properly integrating the corporations manyfunctional activities. But strategic management as a field of study integrates thebusiness policy with the environmental opportunities and threats. Thereforestrategic management has tended to replace business policy as the preferredname of the field.
 
Why Strategic Management?
Strategic management provides the route map for the firm. It lends aframework, which can ensure that decisions concerning the future are taken in asystematic and purposeful way. Strategic management also serves as a hedgeagainst uncertainty, a hedge against totally unexpected developments on thebusiness horizon. It lends a frame of reference for investment decisions. It aidsthe concentration of resources on vital areas of best potential. It offers amethodology by which the firm could anticipate and project the future and beinternally equipped to face it. It helps to develop processes, systems,mechanisms and managerial attitude that are essential for this purpose
.
Defining Strategy:
Management is an art as well as science. Many of the concepts used inbuilding management theory have been derived from the practical experience of the managers.Chandler defined strategy as: "The determination of the basic long termgoals and objectives of an enterprise and the adoption of the courses of actionand the allocation of resources necessary for carrying out this goals".Andrews defined strategy as: "The pattern of objectives, purposes, goalsand the major policies and plans for achieving these goals stated in such a wayso as to define what business the company is in or is to be and the kind of thecompany it is or it is to be".Ansoff explained strategy as: "The common thread among theorganization's activities and product markets, that defines the essential nature of business that the organization was or planned to be in the future"
 
Glueck define the strategy as: "A unified, comprehensive, and integratedplan designed to assume that the basic objectives of the enterprise are achieved" To put it precisely, strategic management is the set of managerialdecisions and actions that determines the long run performance of anorganisation that includes environmental scanning (both external and internal),strategy formulation, strategy implementation, evaluation and control.
Levels Of Strategy:
 
Strategy may be formulated at the corporate level,business level and functional level
.
Corporate strategy:
Corporate strategy is one, which decides what business the organizationshould be in, and how the overall group of activities should be structured andmanaged. Porter has described it as the overall plan for a diversified business. The strategies are then evolved for each strategic business unit and strategicbusiness area.
Strategic business unit:
As the number and diversity of products increases the structure is likely tobe centered upon division called Strategic Business Unit (SBU). SBU areresponsible individually for developing, manufacturing and marketing their ownproduct or group of products.
Strategic Business Area (SBA):
SBA is a distinctive segment of the environment in which the firm doeswant to do business. A company instead of trying to compete in all the area, itselects the area of its competitive advantage and invest its money and strategies

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