You are on page 1of 5

STRATEGIC MANAGEMENT

BBA
SEMESTER V

Prepared by: - Rashid mushtaq


Q1:- What is strategic management? How is it important?

ANS: Strategic management is formulation and implementation of the major goals and
initiatives taken by company’s top management on the behalf of owners, based on
consideration of resources and an assessment of internal and external environments in which
the organization competes.

In other words we can say that strategic management is the continuous


planning, monitoring, analysis and assessment of all that is necessary for an organization to
meet its goals and objectives. It involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating strategies and ensuring that
management rolls out the strategies across the organization.

Importance:-

1:- Setting goals: Strategic planning is the process that produces key decisions that dictate
the identity and purpose of a company or organization. This includes the formulation of goals.
These goals will direct the energy of a company in a specific direction. Without strategic
management and planning, most of the organizations will not achieve success.

2:- Designating resources: Once you have determined your goals and processes, you
should have an idea of what resources are required for both. The term “resources” can be
applied to anything you need to achieve your goals, for instance manpower; funding,
knowledge or skill sets etc. Strategic planning allows you to determine which resources’ you
require from the get-go, drastically easing the whole process of attaining your goals.

3:- Expecting the un-expected: As with any situation in life, unexpected scenarios arise;
same is the case with the business organizations that anything can happen in future which can
be either in the favour of business organizations in the form of opportunity, gains, profit or
sometimes it can be against the favour of business organization in the form of loss, risk etc. But
with the help of strategic management, it tells the business organization that you may need to
react to dynamic situations that you didn’t foresee. It prepares the business organization for
anything and everything for which they were not prepared.

4:-Helpful in organization’s flexibility:- Strategic management in an organization ensures


that goals are set, primary issues are outlined, time and resources are pivoted , functioning is
consolidated, internal environment is set towards achieving the objectives, consequences and
results are concurred upon, and thus organization remains flexible towards any external
changes.

5:- Improving overall performances: Apart from faster and effective decision making,
pursuing opportunities and directing work. Strategic management assists with cutting back
costs, employee motivation and gratification, converting threats into opportunities, predicting
probable market trends and improving overall performance.

STRATEGIC MANAGEMENT PROCESS


The strategic management process means defining the organizations strategy. It is also defined
as the process by which managers make of choice of a set of strategies for the organization that
will enable it to achieve better performance. Generally, there are five steps in the process of
strategic management.

Initial Situation Strategy Strategy Strategy


assessment analysis formulation implementation monitoring

1:- Initial assessment: The starting point of the process is initial assessment of the firm. At
this phase managers must clearly identify the company’s vision and mission statement.

Business vision answers the question; what does an


organization want to become? Without visualizing the company’s future, managers wouldn’t
know where they want to go and what they have to achieve. Vision is the ultimate goal for the
firm and direction for its employees.

In addition, mission describes company’s


business. It informs organization stakeholders about the products, customers, markets, values,
concern for public image and employee of the organization. Thorough mission statement acts
as guidance for the managers in making appropriate daily decisions.

2:-Situational analysis: When the company identifies its vision and mission, it must
assess its current situation in the market. This includes evaluating an organizations external and
internal environments and analyzing its competitors.

During an external environment analysis managers look into the key external forces i.e.
macro and micro environments and competition. PEST OR PESTEL frameworks represent all the
macro environment factors that influence the organization in the global environment. Micro
environment affects the company in its industry. It is analyzed by using poters 5 forces frame
work.

Competition is another uncontrollable external force that influences the company.


Firms assess their competitors by using competitors profile matrix and bench marking to
evaluate their strength and weakness and level of performance.

Internal analysis includes the assessment of company’s resources, core competencies and
activities.

As a result, situation analysis identifies strengths, weakness, opportunities and threats for
the organization and reveals a clear picture of company’s situation in the market.

3:-Strategy formulation: Strategy formulation is the process by which an organization


chooses the most appropriate course of action to achieve its defined goals. This process is
essential to organizations success, because it provides a framework for the actions that will lead
to the anticipated results. Strategy formulation forces an organization to carefully look the
changing environment and to be prepared for the possible change that may occur.

Strategy formulation is based on the inputs gathered through the environmental analysis
and specifically the strengths, weakness, opportunities and threats generated through the
SWOT analysis.

4:- Strategy implementation: Strategy implementation is the process that turns strategies
and plans into actions in order to accomplish strategic objectives and goals. At this stage
managerial skills are most important than using analysis. Communication in strategy
implementation is essential as new strategies must get support from all over the organization
for its best implementation.

To successfully implement your strategy several items must be in place. The right
place must be ready to assist you with their unique skills and abilities; you need to have the
resource, which includes time and money to successfully implement the strategy. The structure
o management must be communicative and open, with scheduled meetings for updates and
the environment in the workplace must be such that everyone feels comfortable and
motivated.

5:- Strategy evaluation:-Strategy evaluation is the final step of strategy management


process. It is defined as the process of determining the effectiveness of strategy in achieving
the organizational objective and taking corrective action wherever required. The key strategy
evaluation activities are:-

1:- Examining the underlying bases of a firm’s strategy.

2:- Comparing actual results with expected results.

3:- Taking remedial/corrective actions.

The participants in strategic evaluation are B.O.D, shareholders, chief


executive, financial controllers, external and internal auditors, middle-level-managers etc.ing
the underlying bases of a firm’s strategy.