STRATEGIC MANAGEMENT

1. Explain the evolution, role and importance of business policy and strategic management. What would be the role of manager in this age?
Introduction: The term strategic management has been traditionally used. New title such as business policy, corporate strategy and policy, corporate policies is essentially and extensively used which means more less the same concept. Evolution of Strategic Management: 1) In early 1920’s and 1930’s the managers used day-to-day planning methods to perform any task. 2) To anticipate the future, they tried using tools like preparation of budgets and control systems like capital budgeting and management by objectives. 3) The techniques were unable to emphasize the future adequately. 4) The next step was they tried using long range planning which was replaced by strategic planning and later by strategic management. 5) In mid 1930’s, according to the nature of business the planning was done during Adhoc policy making. 6) As many businesses had just started operations and were mostly in a single product line, there arose a need for policy making. 7) As companies grew they expanded their products and they catered to more customer and which in turn increased their geographical coverage. 8) The expansion brought in complexity and lot of changes in the external environment. Hence there was a need to integrate functional areas. 9) This integration was brought about by framing policies to guide managerial action. 10) Policies helped to have pre-defined set of actions, which helped people to make decision. 11) Policymaking was the owner’s prime responsibility. 12) Due to increase in the environment changes, in 1930’s and 40’s policy formulation replaced ad-hoc policy making, which led to emphasis shifted to the integration of functional areas in this rapidly changing environment. 13) Especially after II World War there was more complexity and significant changes in the environment. 14) Competition increased with many companies entering into the market. 15) Policy making and functional area integration was not sufficient for the complex needs of a business.

ROLE OF STRATEGIC MANAGEMENT: 1) Due to increase in the competition, in 1960’s there was a demand for critical look at the bane corrupt of business. 2) The environment played an important role in the business. 3) The relationship of business with the environment lead to the concept of strategy.

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Here are few steps Indian managers need to do. Hence as managers had variety of choices. 7) Strategic management focused on 2 aspects: • Strategic process of business. II.4) In early sixties. It helps to understand and make sense of complex interaction in various areas of management. b) Decides to go for an expansion. IV. Managers need to begin by gaining an understanding of the business environment and to in control. III. Their role was important in decision-making like a) Whether a company promotes a joint venture/new decision. Strategic Management is The study of function and responsibilities of senior management A crucial problem that affects success in total enterprise. in this phase the role of senior management is vital and of utmost importance. which was the prime responsibility senior management. this helped the management to manage between the business and the environment. • Responsibilities of strategic management. The decision that determine the direction of the organization and shape of its future Identity and molding of its character Mobilisation and their allocation of the resources. III. II. which led to the current thinking. which was the result of senior management decision-making. 9) Strategic management is both about the present and future course of action. It helps in understanding how policies are formulated and in creating appreciation of complexities of environment that the senior management faces in policy formulation. 8) Unlike others. 2 . decisions were based on the circumstances. as many companies were globalised which lead to the competition of the rivals access the world. Strategic management integrates the knowledge and experience gained in various functional areas. which would take the company in specified directions. IMPORTANCE AND ROLE OF MANAGERS IN STRATEGIC MANAGEMENT: I. 8) All these actions and decision had a long-term impact on the company and its future operations. 6) Japanese companies along with other Asian companies unleashed a force across the world and posed a threat for the US and European companies. I. IV. 5) In early eighties. V. c) Takes other important actions.

f) As corporates are becoming more integrated with the public life. They should know to deal with global managers. d) Successful companies depend on people. a senior manager can understand the complex inter linkages operating within the organisation and should have systematic approach in decision-making in relation with the changes which takes place in the environment. as distinct from governing its deployment. For people. corporate governance is becoming important which manager may have to practice. g) Managers should learn to deal with confused and complex situations. h) In complex and certain situations. e) Managers need to provide speed responses to environmental changes through informational systems and organizational process. To be successful in the business one should possess/have holistic approach and should know to integrate the knowledge gained in various functional area of management. which is changing the face of business. What is strategy? At what levels is it formulated? INTRODUCTION: To understand the process of strategic management the concept should be understood and controlled. i) Managers should possess high ethical standards in business and focus on social responsibility. Whether to undertake expansions/diversification To be focused/ broad based How to chart a turn around 3 . STRATEGY: 1. Conclusion Thus we can say the purpose of strategic management is manifold. managers should have the courage in decision-making to make unconventional decisions. The word strategy means “ THE ART OF GENERAL ”. logic reasoning is required for proper decision-making. business protocols and market conditions. Q2. The actual direction of military force. commitment and perseverance. management managers should create capability for imitating and manage things through leadership and should possess qualities like patience. The term strategy is derived from the Greek word “STRATEGOS”  Generalship.a) They should know to manage and understand information technology. Intuitive. Before making a decision managers have to look into the course of deciding since Strategy involves situations like a) b) c) d) How to face the competition. c) To have/take a strategic perspective. Based on the studies and views by various experts and management gurus Strategy in business has taken various connotations. managers should foresee the future and track changes in customer expectation. b) As public and common investors own and more companies managers need to acquire skills to maximize shareholder value. By having generalistic approach.

4. Michael Porter views strategy as the “ core of general management is strategy”. It can become good and not better. 8. Companies can outperform rivals only if it can establish a difference it can preserve and deliver greater value at a reasonable cost. 9. the company will organize itself in the form of strategic business units (SBU’s). LEVELS OF STRATEGY: 1. An establishment and successful company would start to face new threats in the environment. 7. For a company to survive and to be successful strategy is one of the most significant concepts to emerge in the field of management. benchmark the best practices. Strategy rests on unique activities –“ The essence of strategy is in the activities – choosing to perform things differently and to perform different activities than rivals”. the company might fundamentally rethink and reason the ways and means. 10. comprehension and integrated plan designed to assure that the basic objectives of the enterprises are achieved”. These are called “ strategies “. Growth is achieved by deepening strategy. According to Alfred chandler the determination of basic long-term goals and objectives of an enterprise and the adoption of the course of action and the allocation of resources for carrying out these goals. develop core competencies. It has to rethink the course of action it has been following. 5. It is about the trade off between its different activities and creating a fit among these activities. new opportunities may emerge and be identified. the actions it had been following in the past. when it would like to reach from its current position. 2. Strategy is long term. Overemphasis on growth leads to the dilutions of strategy. which relates to the companies activities and its mission/vision i. This is due to its success and emergence of new competitors. William Gluck defines strategy as “a unified. Hyper competition is a common phenomenon that rivals copy very fast. These are known as strategic business units. Infact should know how to play new roles everyday. Strategy is the future plan of action. CORPORATE LEVEL 4 . many companies are organized on the basis of operating divisions/decisions. respond rapidly. When a company performs different business/ has portfolio of products. 3. To make use of these opportunities.e. 11. If company focus is only on operational effectiveness. In order to segregate different units each performing a common set of activities. 6. It is concerned with the resource available today and those that will be required for the future plan of action. With such rethinking and environment analysis. outsource aggressively.e) Ensuring stability/should we go in for disinvestments etc 2. Managers must make companies flexible. This is called strategy.

7) For most companies strategies plans are made at 3 levels. production etc 5 . pricing. These are interlinked with other strategies at functional level like those of finance. Smaller area that provides objectives for a specific function in that SBU environment are marketing. 5) CORPORATE LEVEL STRATEGY: It’s a broad level strategy and all its plan of actions is at corporate level i. FUNCTIONAL STRATEGY: As the SBU level deals with a relatively. finance. It should contribute to the functional objectives of marketing function. production. finance. There are more specific & has a defined scope. distribution etc. productions etc.e. Operational Level Strategy: In the dynamic environment & due to the complexities of business strategies are needed to be set at lower levels i. To ensure things there would need to have co-ordination of different business of the SBU’s. Functional level strategies exist at both corporate and SBU level. operation etc. 1) A relatively smaller company may require a strategy at a level higher than corporate level. 6) Resources should be allocated to each SBU and broad level functional strategies. a) FUNCTIONAL STRATEGY b) SOCIETAL STRATEGY c) OPERATIONAL STRATEGY Societal Strategy: Larger Companies like conglometers with multiple business in different countries needs larger level strategy. E.FUNCTIONAL LEVEL STRTEGIES [CORPORATE] SBU1 SBU2 SBU3 (SBU LEVEL) FUNCTIONAL 3) Strategies are looked at LEVEL STRATEGIES  Corporate level  SBU level 4) There exists a difference at functional levels like marketing. Strategies needs should be in align with the company objective. what the company as a whole. one step down the functional level. It has to be aligned and integrated. 2) It’s how the company perceives itself in its role towards the society/ even countries in terms of vision/ mission statement/ a set of needs that strives to fulfill corporate level strategies are then derived from the societal strategy. Some of them may be common & some unique to the target markets. operational level strategies.g. Marketing Strategy could be subdivided into sales Strategies for different segments & markets.e. It covers the various strategies performed by different SBU’s.

Functional Strategies operate under SBU Level.U Level are put in to action under the corporate level strategy.B. Operational Level is derived from functional level strategies Conclusion: These are the levels at which strategies are formulated 6 .MISSION/VISION LEVEL CORPORATE LEVEL FUNCTIONAL LEVEL STRTEGIES [CORPORATE] SBU1 SBU2 SBU3 (SBU LEVEL) FUNCTIONAL LEVEL STRATEGIES OPERATIONAL LEVEL Corporate level is divided from the societal level strategy of a corporation S.

The concept of incrementalism. 2. 3. Based on the concept chosen the strategic decisions will differ. a company has to set its objectives which serves as main bench mark. While making a decision the company might have different people at different periods of time. There will be a difference between the individual and group decision-making.3) What are the Issues in Strategic Decision Making? Explain the role of Various Strategies. The concept of Maximization. which leads to attain the objectives in a best possible way. He is the 7 . 6.D help to get new ideas. Generally decision-making process is logical and there will be rationality in decisionmaking. When it comes to Strategic decision making point of view there would be proper evaluation & then exercising a choice from various available alternative resource. 5. On what Criteria a company should make its decision. Creativity in decision-making is required when there is a complete situation & the Decision taken must be original & different. 4. c. b. 8. Senior management plays n important role in Strategic Management. 3 Major Criteria in decision Making are a. Decision requires judgments.O. Role of C. The Company act and other laws blind them and their actions & they sometimes do get involved in operational issues. They are the owners/ shareholders/ lenders. Hence decision ma y differs as person change. a personal related factors are important in decisionmaking. The concept of satisfying. Decisions are not taken individually. for evaluation of the efficiency & effectiveness of the decision making process. They are the ones who direct and responsible for the governance of the company. Issues in Strategic Decision Making 1.O: Chief Executive Officer is the most important Strategist and responsible for all aspects from formulations/Implementation to review of Strategic Management. 7. Professionals on the B.E. but often there is a task in decisions which could be Individual Vs Group decision making. perspectives & provide guidance. They are the link between the company and the environment. Various Roles of Strategic Management. 9. Role of Board Of Directors: Board of Directors is the supreme Authority in a company. There could be variability in decision-making based on the situation & Circumstances.

leader. Role of Senior Management: They are answerable to B. Role of SBU – Level Executives: They Co-ordinate with other SBU’s & with Senior Management. Role Of Entrepreneur: They are independent in thought and action and they set / start up a new business. Role of Corporate Planning Staff: It provides administrative support tools and techniques and is a Co-ordinate function. They are more on the implementation role. They are not actively involved in formulation of Strategies and they are developed to be the future management.O as they would look after Strategic Management a responsible of certain areas / parts of terms.O. A Company can promote the entrepreneurial spirit and this can be internal attitude of an organization. They provide a sense of direction and are active in implementation. 4) What is Strategic Management Process? Explain each step briefly. They are more focused on their product / burners line. 1) According to Glueck it’s a stream of decisions and actions that lead to the development of an effective strategy/ Strategies to help achieve Corporate Strategies.Directors & The C. Conclusion: These are the issues in strategic decision-making and the role in Strategic Management. motivator & Builder who forms a link between company and the board of directors and responsible for managing the external environment and its relationship. Role of Consultant: Often Consultants may be hired for a specified new business or Expertise even to get an unbiased opinion on the business & the Strategy.E. Role of Middle Level Managers: They form an important link in strategizing & Implementation. 8 . Here are few definitions of Strategic Management Process.

9 . 4) Sharplin defines as the formulation & implementation of plans and Carrying out activities related to the matters. which are vital. and of continuing importance to the total organization. Mission Goals and Objectives. Structures and Systems necessary to achieve such renewal and growth and with the organizational systems needed to effectively manage the strategy formulation and implementation process. 2) Company Mission is what the Company is and why it exists 3) James Parras & James Collins divides Vision/Mission into 2 Parts. Company Vision / Mission 1) Company Vision is What a Company Wishes to become or aspire to be. 3) Ansoff defines it as “ The Systematic approach & important responsibility of general management to position and relate the firm to its environment in a way that will assure its Continued Success and make it secure from surprises”.2) According to Hofer it’s the process. COMPANY VISION &MISSION/ REQUIREMENTS OF MAJOR STOCK HOLDERS STRATEGIC INTENT EXTENAL & INTERNAL ANALYSIS / SWOT ENVIRONMENT ANALYSIS DEFINE STRENGTHS/WEAKNESS/ CORE COMPENTENCIES GENERATE STRATEGIC ALTENATIVES/ EVALUATE & SELECT IMPLEMENT/ FEEDBACK/CONTROL From the above block diagram it states that Strategic Management is a process. renewal & growth with the development of strategies. establish strategic decision create strategies that are intended to help achieve establish goals & execute there strategies achieve Establish goals and execute there Strategies all in an effort to satisfy key organizational stake holders. 5) According to Harrison & St John – Strategic Management is the process through which organization learn from their internal & external environment. which leads to the formulation of Strategy/ Set of Strategies & managing thru Organisational System for the achievement of Vision. which deals with fundamental Organisational.

Vision/ Mission Core Ideology Core Values Core Purpose Envisioned Future Audaclous Goals Vivid Description Core Ideology: Is the unchanging part of organization. SWOT Analysis: External & Internal Analysis: 1. using these competencies exceeding well. Conditions & influences outside the organizations. They are tough needs extraordinary commitment and effort. Core Purpose: Existence of Organization and that goes far behind Envisioned Future: Are the goals to be reached. 2. Over dependence on a single product line in a mature market. Weakness: It’s something required for success is missing/inherent inadequacy. Superior research where new products & Innovations are required. It gives strategic disadvantage to the Organisation. E.g. it develops a fine art of Competition with its rules. It has strengths more than the competitor.g. which needs to fulfill two conditions. It is classified into: Audaclous Goals: These are the goals that the company would like to achieve. E. He is responsible from implementation to review of Strategic Management. STRENGTHS/WEAKNESS/CORE COMPETENCIES Strengths: it’s always in relation to the environment. it gives rise to opportunities which can be exploited or it may give rise to threats which can weaken / cause problem to the organization. Core Values : what it believes in. This capacity of exercing turns them to core competencies. Core Competencies: Is developed over a period of time. 1) Requirement for success. 2) It gives the Strategic Advantage. General Strategic Alternatives / Evaluate & Select. this would not change for a longer time even it were disadvantage. It means that there is a proper evaluation and exercing a choice from various alternative available resources in such a way it may lead to the achievement of company’s objective. Vivid Description: These Goals are put into words that evoke a picture of what it would be like to achieve the Audaclous Goals. The External Environment is made up of all the Factors. It is the character of an organization. It’s an unborn capacity. it could gain more than the Competitor. 10 . Implement / Feedback/ Control Implementation is the responsibility of CEO.

Strategic Intent is something more than the unfettered ambition. 2) It Captures the essence of winning & is stable over time. stretch leverage & Fit. 4) The Important thing that a company asks for is not “How Well Next Year be different”? But they ask. Commitment and bit of luck to achieve the target. 3) It requires personal effort. 11 . Introduction: for an effective strategic intent one has to develop effective strategy.5) Explain Strategic intent. According to Prahlad & Gray 1) It forsee’s a desired leadership position and establishes the criteria the organization will chart it’s progress. It’s not a soft target. innovation & top Management directs it. “ What must we do differently next year to get closer to our strategic intent?” 5) Most companies look at change and innovations in isolation 6) Innovations come from everywhere & top Management role is to add value to it. rather than focusing at the resourcefulness of Competition & their pace at which they are building competencies one has to focus on existing position. 7) Strategic intent leaves room for creativity.

Thus Strategic intent is what the organization strives for e. One has to make use of Innovation and resources. It’s an obsession to an organization & it is to win at all levels of the organization. Former is done through building a balanced portfolio of cash generating and cash consuming business and in the latter a well balanced and sufficiently broad portfolio/ collection of advantages is assured. 12) Companies with good strategic intent know the importance of documenting failure but instead of blame fixing and nailing people they are more interested in the management reasons and the orthodoxy. that may have led to future. 11) One important parameter is reciprocal responsibility . Strategic fit is conservative and seems to be more realistic but u may not be aware of the potential. idealistic but under fit strategic something far beyond possibilities and look at the potential possibilities.it will force inventiveness and the management will keep on involving challenges and they give time to digest one challenge before launching another. Under stretch & leverage Strategic extent could be impossible. 10) Since the current capabilities & resources are not------. 9) It implies a seryable stretch for an organization.Which means equal blame & credit for both operating levels & top management. Leverage: Refers to concentrating on the resources to achieve strategic intent. sustaining that obsession is in quest for global leadership. Fit: Strategic fit is the traditional way of looking at strategy. Stretch leads to leverage. 12 .g. Stretch: To Achieve strategic intent one has to stretch forward and has to look at the resourcefulness instead of looking at resources. Canon wanted to beat Xerox. accumulating. Conclusion.8) There must be a balance between resources as a Constrain Vs Resource as leverage so as to reduce risk. experiences & Competencies in a manner to meet the aspirations by stretching the scarce resource that an organizational resource to the environment. Instead of allotting the competitors blindly & taking their head companies must leverage the resources. learning.

Quantitative. and clear& Consistent with each other. which it is being set. otherwise it may lead to confusion & Contradictions. Employee satisfaction. These Goals must be clear and unambiguous. challenging but controllable. Quantitative in specification. specific. g) Objectives are invariably Quantitative and provide clear measures and standards for performance. k) There must be co-relation with other objectives. j) It must be measurable. Goals: Goal – Target a) It’s a target that a company wants to achieve in a future period of time. d) Goals should be limited. d) Objectives are set in a way that what the organisation has to achieve for its employees. returns on assets/equity. e) Objectives are in relation with the environment. It should not be either too narrow or too broad. Customer satisfaction. b) They are concrete and specific and they are in contrast with the goals. b) An organization sets a combination of goals. l) While setting objectives these are the factors to be evaluated. It should be specific at the level. customers etc. Objectives: a) Objectives are the ends that specify how the goals shall be achieved. shareholders. profits. c) Objectives make the goals operational and tend to Quantitative in specifications. 13 . actionable. manageable. e) Goals may be Qualitative. They are the brains of Strategic Decision Making. i) Objectives should be concrete. and understandable & should have clearly defined time frame. and Financial & Non Financial. which might be Qualitatively. h) It helps to see whether the Organisation is in right track or not. c) On an organizational level goals are broad in nature and they could set goals on turnover. market share. f) They are framed in line with the vision/mission of the organization and it helps to pursue them..6) Write a detailed note on Goals and Objectives.

factors & influences under which someone/something exist.. 7) What is Environment ? How is it Changing? Introduction : Environment means the surrounding. Environment – Changes: According to Michael Hommer and James Chapey. Environment : 1) The Environment of an organization is the aggregate/total of all conditions events that influences itself & it’s Surroundings. the rate of technological change. o) Since its in relation with the environment it needs to check whether they are fulfilling the needs of customers. 6) But in today’s world. including policies & lower relationship. Customers : Earlier days. 4) Few Companies are rigid. 2) The dynamic & has relationships with each other. American Companies became best in the world after applying the principles. medium term. 7) Market growth. “The Wealth of Nations. share holders etc. 8) The three forces that drives company are Customers Competition & Change. It includes both internal and external objects. These days customers come with more specifications and they demand for 14 . and nature of competition keeps changing. Conclusion: Thus an organization is set up to make Prompt and Accurate decision. 1) An Organisation must be flexible enough to adjust quickly with this changing environment. 3) It requires co-operation & Co-ordination within the organization.” The Principle of division of labour for increasing the productivity and there by reducing the cost of goods. and long term & should be linked & consistent. 3) The factors in environment may affect the company and visa versa. 2) The Efficiency of the company comes at the expenses of the efficiency of the company as a whole.m) There need to be multiplicity of objectives. customer demand. Customers had little choice they used to buy the product that was offered to them. p) It should be In reality with the organizational resources and internal constraints. nothing is constant or predictable & these principles don’t work. n) It should be formulated at different time frames like short term. inefficient and losing money because they are not able to adjust themselves with the changing environment. non-competitive. 5) In 1776 Adam Smith described in his book. 4) It has a great impact on the company. Hence goals & objectives are set for the accomplishment of an organization.

It’s difficult for an organization to survive in the long run unless they satisfy customers needs. Changes : Changes has become both pervasive and persistent because companies face a greater competitors and each one introduces a product and service innovation to the market with the globalisation of the economy. But these days customers prefer high quality at lowest price. the competition rises. The Company. 15 . CONCLUSION: In today’s environment nothing is constant and predictable hence for a company to survive in the long run.customized products and they want individual attention. They offer good quality of products at lesser price and consumers prefer such products. which offers these at best price. it has to satisfy customer needs and cope with the changes in the environment at a faster rate. Earlier the company could get into market with an acceptable product/service at the best price would go to sell. Hence the companies need to move fast in pace with the changing environment otherwise it’s difficult to move. goes high quality and best service becomes standard of all the competitors. Competition : As many companies emerges. Hence customers have upper hands these days.

E. CONCLUSION 16 . offers stiff competition to the existing companies in an industry.g. The external environment gives rise to opportunities. which becomes threat to the organization. E. For an organization to be a success it requires strength and it gives strategic advantage to gain more than the competition.Opportunity T – Threats Strength: –It is an inherent capacity that is in relation to the environment. 2) Lack of capabilities for the development of new product.g. Due to opening up of economy. It’s a favorable condition for an organization in its environment. Innovation and new products are required for superior research and development facilities. E. which can be accomplished. It helps in strengthening its position. conditions that influences outside the organization. E. It is unfavorable condition for the organization. which are stronger and has good resources. the emergence of multinational companies. OPPORTUNITY: can be accomplished and can help to consolidate and strengthen the organization.1) In a mature market over dependence on a single product line. Due to better GDP growth a company provides increase in demand for the products/services. which is potentially risky for a company during the time of crisis. THREATS: when the opportunities are not utilized properly it can cause problem to the to the organization which causes threat. It gives strategic disadvantage and something that required for success is missing. or it may cause problems to the organization. Weakness: . S – Strength W – Weakness O.g.Q8) Explain the process of SWOT analysis? Elaborate what you would study in the environment? INTRODUCTION The external environment is made of factors.g. It causes risk/damage to an organization. These factors may impart strengths that can be utilised by the organization or cause weakness. It leads to competition where weakness can be used to gain more due to inherent limitation / constraint/inadequacy. SWOT ANALYSIS: The internal environment refers to all factors within the control of and within the organization.It is an inherent inadequacy that is again in relation to the environment.

growth and profitability of an organization. Pollution Control. 3) Competencies develop over a period of time. which their combined lead to synergistic effects. In terms of organizational competencies it manifest themselves in advantages over competition. Q9. E. 2) Synergy – Total (is greater) sum of the parts. E. 4) Expectations: are the demands made by interested groups in light of their concern. threat. capability and resources) develops certain strength and weakness.An understanding of both internal and external environment in terms of opportunities.g. Business ethics after scams. 3) Issues: are the current concerns that arise in response to events and trends. 2) Trends: is the way the environment is shaping up. Environment to be studied 1) Events: Is some specific occurrence that takes place in different environmental sectors. 17 . They are he course of action along which events take place like global warming. nuclear families etc. strength. Like corporate governance.e. What are the core competencies and organization capabilities? CORE COMPENTENCIES: 1) An organization with its resources and the capacity of converting the resources in to outputs and the behaviour of there (i.g. stricted auditing norms. Bilateral agreement between 2 countries in which the company is operating and facing competition from local companies. greater transparency. A systematic approach and understanding the environment is SWOT analysis all about. weaknesses important for existence.

Price Place & Promotion related factors how it generates systematically. What are not easily visible and apparent – are the core products and leaves. 10) Core competencies are the glue that binds existing business and guide market entries instead of market attractiveness. 5) Core competencies have joined greater currency and popularity as per C. production & Control Systems. 5) Factors leading to personal Capability are industrial & personnel relations. 4) Factors influencing personal capability are R & D System. and Information Management & General Management. 6) Factors that lead to information management capability are integrative. 6) In short run competencies for a company is derived from the price performance and in longer run it’s the ability to build at lower cost and speedily than others. 8) Root is akin to “Core Competence”. 3) Strategist would like to know what capacity exist within the organization & what potentials should be developed so that opportunities can be exploited & how it can face threats. 2) It’s comparable & it’s very difficult to measure the capability of an organization. Personnel. 12) Building competencies are not sharing costs by SBU’ (or) out pending rivals on R and D 13) By not building competencies in emerging markets you may lose the chance of competing in existing markets. Operations. fruits are the end product. Financial Capability: 1) Source of Funds – How well the company can raise funds. 3) Factor governing marketing capability are the from P’s i. Product. It’s important to maintain the competencies even it not active in the market. organizational & employees Characteristics. 11) Core competencies can be identified by conducting 3 tests i. 7) A diversified company is like a large tree. 2) Management & use of funds – how optimally it utilizes the funds where and how they are used.e. systematic & supportive factors.K Prahaled and Gary Hamel. The capability of using these competencies to exceed well turns them into core competence. Marketing. 4) ORGANISATIONAL CAPABILITY: 1) It’s the inherent capacity of an organization to use its strengths and overcome weakness to exploit opportunities and face threats in the external environment.It’s a fine art of competing with its rivals over a period of time and it uses these competencies to exceed well. It’s a portfolio of products/services/different business. their cost & availability. 9) Core competence is communication.e provides potential access to wide variety of markets and significant contributions to the benefit of the end product difficult for competitors to imitate. flowers. collective learning and co-ordination of diverse production skills and deep involvement and commitment to work and delivery of value across all levels and functions. 18 . 4) Organisational capability includes Financial.

10) 19 . To carry at the organizational study internal analysis tools can be used as mentioned below.The retrieval. Comprehensive Analysis using new tools Balance score card/key factor making. 1) 2) 3) 4) Value Chair Analysis Qualitative & Quantitative analysis both financial non financial. usage. industrial norms. processing. General Management methods & Techniques. Comparative analysis. Q. synthesis. Acquisition. transmission & dissemination of information. bench marking. Conclusion: These are the factors that influence them.

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