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Ch-1 the Nature of Startegic Managemnt “without

Ch-1 the Nature of Startegic Managemnt “without

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Published by: smb_146 on Feb 19, 2010
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05/11/2014

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Ch-1 THE NATURE OF STARTEGIC MANAGEMNT
“Without a strategy an organization is like a ship without a rudder, going round incircles. It’s like a tramp; it has no place to go” 
 He who will not worry about what is far off will soon find something worse thanworry” 
THE PURPOSE
This chapter provides an over view of 
Strategic Management
Model of Strategic Management Process
Definition of Basic Activities & Terms
Some Important Themes
What is strategic management?
All firms have strategy even if it is informal, unstructured & sporadic all organizations donot know where they are heading.
A Strategic Plan is a game plan that can lead to sustainable competitive advantageto any type of business.
 
By adapting to change in external trends, internalcapabilities & resources. Effectively formulating, implementing & evaluatingstrategies
Represents a systematic, logical, & objective approach for determining the futuredirection & competitive position of an enterprise for a long time.
Focuses on multiple functions simultaneously. Integrating management,marketing, finance / accounting, production / operations, R &D, MIS to achieveorganizational success. Hence top managers are in best position to decide &understand the ramifications, besides having the authority to commit resources.
Tough managerial choices among numerous good alternatives. It signalscommitment to specific products, markets, resources, technologies, policies, procedures & operations over an extended period of time.
A firm needs to formulate strategy to take advantage of external opportunities &reduce impact of external threats for e.g. via lobbying
Organizations try to pursue strategies that capitalize on their internal strengths &eliminate internal weaknesses
The prime task of SM according to Peter Ducker is thinking through overallmission of a business
o
Asking the question, “what is our business?” This leads to setting of objectives, development of strategies, making of today’s decisions for tomorrow results. This must be clearly done by a part of the organizationthat can see the entire business; that can balance the objectives & needs of today against the needs of tomorrow, &that can allocate the resources of men & money to key results”
 
“The art & science of 
formulating, implementing, & evaluating,
cross-functionaldecisions that enable an organization to achieve its objective”
Strategic Management Process
The SM process can be described as
Integrating Intuition & Analysis. As intuition alone is grossly inadequate whendecisions are strategic in nature & have major irreversible consequences.
An objective, logical, systematic approach for making major decisions organizingqualitative & quantitative information to take decisions under conditions of uncertainty.
Three Stages of Strategic Management Process1.Strategy formulation2.Strategy implementation3.Strategy evaluation
 Note communication is key to successful strategic management to achieve theunderstanding & commitment from all managers & employees which leads toownership.
Strategy formulation includes
Developing a vision & mission
Identifying external opportunities & threats
Determining internal strengths & weaknesses
Establishing long-term objectives
Generating alternative strategies
Choosing particular strategy
 Strategy formulation issues include deciding about 
What new business to enter, what business to abandon
Whether to expand operations or diversify, whether to enter international markets
Whether to merge or form a joint venture or Partnering or to buy a business or how to avoid a hostile take over 
How to allocate resources
Business ethics
 
Global Vs. domestic operations
Vision/Mission
Matrix analysis
Partnering
Competitive analysis
Governance
& guidelines for conducting an internal/ external strategyassessment
Strategy Implementation (action stage, the most difficult one) requires a Firm to
Establish annual objectives
Devise policies
Motivate employees
Allocate resources
 Strategy implementation issues includes
Developing a strategy supportive culture
Creating an effective organizational structure
Redirecting Marketing efforts or introducing new marketingconcepts
Outsourcing
Preparing budgets & doing financial analysis, developing newcontrols
Developing & utilizing information systems
Linking employee compensation to organizational performance
Business ethics
Strategy EvaluationWhy:-
To know whether particular strategies are working or not
Strategies need modification because internal & external factors are constantlychanging
Three fundamental strategy evaluation activities
Reviewing Internal & External factors
Measuring performance
Taking Corrective actions
The Hierarchical Levels Involved
Corporate level

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