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INTRODUCTION AND OVERVIEW OF STRATEGIC MANAGEMENT(04.01.11)

INTRODUCTION AND OVERVIEW OF STRATEGIC MANAGEMENT(04.01.11)

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AN INTRODUCTION AND OVERVIEW OF STRATEGIC MANAGEMENT

DEFINITIONS OF STRATEGY
1. Strategy is the determination of basic long term goals & objectives of an enterprise &
the adoption of the course of action & the allocation of resources necessary for carrying out the goals. - Chandler (1962) 2. Strategy is the pattern of objectives, purpose or goals and major policies & plans for achieving these goals, stated in such a way, so as to define what business the company is in or is to be & the kind of company it is or it is to be. - Kenneth Andrews (1965) Strategy is a unified, comprehensive & integrated plan relating the strategic advantage of the firm to the challenges of the environment. It is designed to ensure that the basic objective of the enterprise are achieved (through proper execution by the organisation) - Stanford Research Institute , USA & (Glueck & Jausch - 1984) Strategy is a course of action through which an organization related itself with the environment so as to achieve its objectives

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.Michael Porter (1996) 6.Peter Drucker .Ansoff (1984) 10. A company s strategy consists of the combination of competitive moves & business approaches that managers employ to please customers.Johnson & Scholes 9. Strategy is the direction & scope of an organization over the long term which achieves its advantages for the organization through its configuration of resources within a challenging environment to meet the needs of market & stake holder s expectations. . . Strategy is the the set of consistent behaviors by which the organization establishes for a time its place in its environment. Strategy is the creation of a unique and valuable position involving a different set of activities. Basically a strategy is a set of decision making rules for the guidance of organizational behavior.Thompson & Strickland 8. . Strategy of an organization is its theory of the business .Mintzberg (1998) 7. compete successfully & achieve organizational objectives . .5.

2. Strategy relates the firm to its environment Strategy is the right combination of factors Strategy is a combination of actions Strategy is forward looking with an orientation towards the future 5. 4. 3. Strategy may even involve contradictory action .FEATURES 1.

DIFFERENCE BETWEEN OPERATIONAL MANAGEMENT & STRATEGIC MANAGEMENT STRATEGIC MANGEMENT Ambiguity Complexity Non.wide Fundamental Organization specific Environment or Expectation driven Resource driven .routine OPERATIONAL MANAGEMENT Routine Organization.

Strategic Issues require top management decisions 2. Strategic Issues necessitate considering factors in the firm s external environment 7. . Strategic Issues are future oriented 5. Strategic Issues involve the allocation of large amounts of company resources 3. Strategic Issues usually have major multifunctional or multi business consequences 6.DIMENSIONS OF STRATEGIC DECISIONS 1. Strategic Issues are likely to have a significant impact on the long term prosperity of the firm 4. Strategic Issues require readiness to make non-selfgenerative decisions.

Deliberate attempts by management to offset competitors actions & thereby score over them 2. Act as guides to subordinates to control organizational behavior . Determined in advance to enable timely decisions to accomplish policies & objectives 8. To direct plan activities in most appropriate manner 5. Involve related decisions for implementation of company objectives & policies 6.CHARACTERSTICS & FUNCTION OF STRATEGIES STRATEGIES ARE 1. Over all plans to implement plans & policies 4. Special plans to deal with competitors 3. Devices to reduce business risk 7. Established on foundations of uncertainty 9.

DIFFERENT LEVEL OF STARTEGY LEVELS CORPORATE STRUCTURE CORPORATE OFFICE STRATECY CORPORATE .LEVEL FUNCTIONAL FINANCE MKTG PRODN PERS INFO FUNCTIONAL LEVEL .LEVEL SBU SBU A SBU B SBU C BUSINESS .

CORPORATE STRATEGY BUSINESS STRATEGIES FUNCTIONAL STRATEGIES .

Corporate Level Strategy is an overarching plan of action covering the various functions performed by different SBUs. The corporate plan while addressing the corporate goals would deal with the objectives of the company. allocation of resources made available to the SBU among different functional areas & cooperation between them for making an optimal contribution to the corporate objectives. .Level Strategy is a comprehensive plan providing specific objectives as laid down by the corporate level for the SBU. SBU. allocation of resources between SBUs & co ordination of SBUs for optimal performance of the organization as a whole.

.SHARPLIN(1985) . .GLUECK(1984) The process which deals with the fundamental organizational renewal & growth with the development of strategies.DEFINATIONS OF STRATEGIC MANAGEMENT A stream of decisions & actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives. structures . . . & with the organizational systems needed to effectively manage the strategy formulation & implementation processes.ANSOFF(1984) The formulation & implementation of plans & carrying out of activities relating to the matters which are of vital.HOFER & OTHERS(1984) A systematic approach to a major & increasingly important responsibility of general management to position & relate the firm to its environment in a way that will assure its continued success & make it secure from surprises. pervasive or continuing importance to the organization. & systems necessary to achieve such renewal & growth.

setting objectives. executing & then over time initiating whatever corrective adjustments in the vision. crafting of a strategy. strategy & execution are deemed appropriate. The term strategic management refers to the management process of forming a strategic vision.off between incompatible activities.According to Arthur Thompson. . & ‡ Creating a link between different activities to ensure they relate to each other. objectives. implementing. According to Michael Porter. The core of general management is strategy which consists of the following tasks: ‡ Developing & communicating the company s unique position ‡ Making trade.

doing organizational appraisal. ESTABLISHING HIERARCHY OF STRATEGIC INTENT a) b) c) d) creating & communicating a vision. 2. formulating strategies. considering corporate . Preparing a strategic plan.level strategies. considering business . .level strategies. setting objectives.ELEMENTS IN STRATEGIC MANAGEMENT PROCESS 1. undertaking strategic analysis. designing a mission statement. defining the business. exercising strategic choice. FORMULATION OF STRATEGIES e) f) g) h) i) j) k) l) performing environment appraisal.

and t) reformulating strategies . s) exercising strategic control. IMPLEMENTING STRATEGIES m) n) o) p) q) activating strategies. managing behavioral implementation.3. 4. managing functional implementation. designing structures & systems. operationalising strategies. PERFORMING STRATEGIC EVALUATION & CONTROL r) performing strategic evaluation.

business definition & objectives FORMULATION OF STRATEGIES Environmental Appraisal Organization Appraisal SWOT Analysis Corporate level strategies Business level strategies Strategic choice Strategic plan STRATEGY IMPLEMENTATION       Project Procedural Resource allocation Structural Behavioral Functional & operational STRATEGIC EVALUATION . mission.COMPREHENSIVE MODEL OF SM PROCESS ESTAB STRATEGIC INTENT S T R A T E G I C C O N T R O L Vision.

WORKING MODEL OF STRATEGIC MANAGEMENT PROCESS STRATEGIC INTENT SWOT ANALYSIS STRATEGIC ALTERNA-TIVES STRATEGY ANALYSIS & CHOICE STRATEGIC IMPLEME-NTATION STRATEGIC EVALUATION STRATEGIC CONTROL .

3. 7. 4.INDIVIDUALS / GROUPS INVOLVED IN SM 1. Board of Directors CEO Entrepreneurs Senior Management SBU. 8. 5. 2. 9.Level executives Corporate planning staff Consultants Middle level managers Executive Assistant . 6.

Roles performed by a Strategist ROLE OF A STRATEGIST Forecaster Sculptor Diplomat Guru Jail Buster .

Mc KINSEY s 7s STRUCTURE STRATEGY SHARED VALUES SKILLS SYSTEMS STYLE STAFF .

Advantages and Disadvantages of Strategic Management STRATEGIC MANAGEMENT ADVANTAGES Financial Benefits A Costly Exercise Problem Prevention Increased Interactivity Better employee Incentive Reduced Gaps & over laps in Activities Lesser reluctance Sense of frustration among employees Evading Responsibility DISADVANTAGES .

PRIOR HYPOTHESIS BIAS REPRESENTATIVENESS REASONING BY ANALOGY ESCALATING COMMITMENT ILLUSION OF CONTROL . 2. 3. 4.5 TYPES OF COGNITIVE BIASES 1. 5.

DECISION MAKING PROCESSES TO COUNTER GROUPTHINK DEVIL S ADVOCACY DIALECTIC INQUIRY EXPERT PLAN #1 (THESIS) EXPERT PLAN #2 (COUNTER THESIS) EXPERT PLAN DEVIL S ADVOCATE CRITICISES DEBATE (SYNTHESIS) FINAL PLAN FINAL PLAN .

but without precluding spontaneous voluntary coordination. The division of labour must permit / facilitate efficient performance of subtasks under some hierarchical allocation of authority to insure achievement. The Key tasks of the kinds of decisions required must be identified. task forces.. Information systems adequate for coordinating divided functions must be designed and installed. should be compared to budgeted performance and to standards in order to test achievement. and the adequacy of standards themselves. 4. . shorter . and other ad hoc units. A special staff unit attached to the President s (Chairman) office should be entrusted with arranging the tasks to be performed in a time sequence. Responsibility for accomplishing key tasks must be clearly assigned to individuals or groups. through a hierarchy of supervision. While long range plans may be in relatively general terms. 2. 3. Actual performance. budgeting process. as quantitatively reported in information system and qualitatively estimated through observation by supervisors and the judgement of customers. e. project and committee organizations. Formal provisions for coordination of activities are made in different ways.12 Guidelines for Implementation of Strategy 1.range plans will often take the form of detailed budgets to meet the need to establish standards against which future performance can be judged. 5.g. 6.

7. 8. In addition to financial and non financial incentives / rewards to motivate voluntary individuals achievement. the assignment of task may be adjusted according to the available skills. and penalties must be devised to contain non functional activity and to enforce standards. 10. . Apart from universally appealing incentives such as adequate compensation and favorable organizational climate. The leadership style must be natural and also consistent with the requirement of strategy and membership. special forms of recognition. 11. should be designed to fit individual needs and unusual achievement.financial. both formal and informal. controls. financial and non. Dynamic personal leadership is necessary for continued growth and improved achievement in any organization. 12. 9. All the same. Individuals performance evaluated both quantitatively and qualitatively should be subjected to influences (constituting a pattern of incentives) which will help to make it effective in accomplishing organizational objectives. Provision for the continuing development of technical and managerial skills through on-the-job development supplemented by intermittent formal training is a high priority requirement. Individuals and groups of individuals must be recruited and assigned to essential tasks in accordance with their specialist or supervisory skills.

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