Strategic Management: Top 7

Essays
Essay Contents:
1. Essay on the Definition of Strategic Management
2. Essay on the Process of Strategic Management
3. Essay on the Stages of Strategic Planning Process
4. Essay on the Characteristics of Strategic Management Process
5. Essay on the Factors and Elements of Strategic Planning Process
6. Essay on CEO’s Role in Strategic Management
7. Essay on CEO’s Functions in Strategic Management

Essay # 1. Definition of Strategic Management:

The term ‘strategic management’ has been defined differently by
different scholars of management.

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Some of them are:

1. Strategic management is “a set of decisions and actions
resulting in formulation and implementation of strategies
designed to achieve the objectives of an organisation” (Pearce
and Richard Robinson).
2. Strategic management is “the manner by which organisations plan
to deal with various aspects of management like problem perception,
divergent thinking, substantial resources, decision making,
innovations and risk-taking” (Cunningham).

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3. Strategic management is “the means by which management

establishes purpose and pursues the purpose through co-
alignment of organisational resources with environment,
opportunities, and constraints.” (Bourgeois).
4. Strategic management can be defined as “the art and science of
formulating, implementing and evaluating cross-functional decisions
that enable an organisation to achieve its objectives” (Glueck).

Thus
(a) Strategic management is an on-going process of analysis, planning
and action. It attempts to keep an organisation aligned with its
environment while capitalising on organisational strengths and
environmental opportunities and minimising or avoiding
organisational weaknesses and external threats, and

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(b) Strategic management is also a future-oriented provocative

management system. The managers, who use strategic management
skills, are seeking a competitive advantage for their organisations and
long-term organisational effectiveness.

It is, therefore, a complex function covering all activities connected

with formulating, implementing, recycling and reformulating
strategies.

In short, an effective strategic management translates a sound strategy

into action. As otherwise, even a sound strategy would be rendered
ineffective if it cannot be converted into action.

Hence, it is the duty of the strategic managers to do environmental

scanning, assess internal strengths and weaknesses, set goals, mobilise
resources, design action plans, implement actions, monitor progress,
and control resources and deviations from goals for the achievement
of goals and key results areas.

Essay # 2. Process of Strategic Management:

The strategic management process is most often described as a
rational and analytical one.
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The process consists of the following activities in different

phases:

(i) Environmental Scanning:

Threats and opportunities analysis.

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This involves analysing each threat and opportunity according to its

time frame (i.e., short term or long term). Significance and likelihood
of occurrence can help focus on the’ most important threats and
opportunities.

In identifying them in the organisation’s environment, three

questions need to be kept in mind:
(i) Which threats are critical and  how can they be avoided in order to
derive opportunities?

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(ii) Which opportunities are critical and must be exploited?

(iii) Which threats and opportunities are short-terms and which are
long-term?
(ii) Organisational Analysis:
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Mission, Strengths and Weaknesses analysis.

An organisational analysis begins with an analysis of how the

organisation is performing and why. A broad statement about
purpose, philosophy, and goals would guide executive actions, by the
processes of evaluation.
(iii) Strategic Goals Setting:
Understandable, measurable, achievable and challenging long-term
goals.

It is necessary to set annual objectives in line with long-term

objectives as well as specifying functional strategies consistent with
the company’s grand strategy Such goals should be measured in terms
of quality, cost, and time-frame.

A chart below classifies and explains the ‘Goals’:

Given the mission and objectives and having done the SWOT analysis,
the strategic manager should proceed to generate possible ‘strategy
alternatives’. There may be different ‘strategic options’ for
accomplishing a particular goal. It is necessary to consider all possible
alternatives to make the base for a choice.

The purpose of considering different ‘strategic options’ is to adopt the

most appropriate strategy as ‘goal’. This necessitates the evaluation of
the ‘strategy alternatives’ with reference to the criteria like suitability,
feasibility and acceptability.

(iv) Strategic Actions Formulations:

An action plan to achieve the goals.

Strategic actions flow from the goals of the organisation. A strategy

sets forth a general programme of action and an implied development
of employees and resources to obtain goals.

This strategic action can be taken from three approaches:

(a) Functional approach,

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(b) Product approach, and

(c) Business Units grouping approach.

Here, ‘business units grouping’ approach works well in diversified

enterprises. All these approaches involve choosing target markets, and
product and product development plans, capital expenditure plans,
and marketing plans. For all major actions, the aspects of timing and
sequencing should be considered.

(v) Strategy Implementation:

Spelling out effective policies or operating procedures to initiate
actions for implementing strategy.

This involves translating the strategies into organisational actions.

This requires ‘strategic leadership’ i.e., identifying policies, rules, and
key results areas; allocating responsibilities; and making operational
plans and day-to-day decisions.

Strategy implementation is, thus, the action phase of the strategic

management process. This step, therefore, encompasses the
operational details to translate the strategy into effective practice.

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A simple chart below sums up the implementation phase:

(vi) Strategy Evaluation and Control:
Monitoring progress of strategic actions and controlling the resources.

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This includes both monitoring progress and control resources—

human/physical/ financial—by analysing the deviations from
standards and goals and providing the feedback for modifications.

It is important to note that traditional control parameters are not

adequate here as they delay the results and thereby become a useless
exercise to face the environmental risks and uncertainties. In contrast
to ‘past-action control’, strategic control is forward looking and
attempts to steer the company on a long-term basis.

Essay # 3. Stages of Strategic Planning Process:

Stage 1. Defining the mission.

Stage 2. Assessing organisational Resources.

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Stage 3. Evaluating Environmental risks and opportunities.

Stage 4. Establishing long-term Objectives.

Stage 5. Formulating strategy.

Stage 6. Establishing Annual Objectives.

Stage 7. Establishing Operational Plans.

Stage 8. Implementing the Plans.

Stage 9. Implementing, Monitoring and Adapting.

These stages seldom occur in a fixed sequence, and some may take
place simultaneously, but given the flexibility needed for a bit of
cycling— revising, seeking authorisations and coordinating—some
rationale exists for considering the stages in the order presented
(Williams, Du Brin & Sisk, 1985).

Strategies are designed by top management of an enterprise. They

come to be as a result of the strategic planning process.

Essay # 4. Characteristics of Strategic Management

Process:
The basic characteristics of the strategic planning process
may be as follows:
1. It is the place where decisions of highest importance to a company
are made. Here is where the basic thrust and direction of the company
is determined and the major approaches are decided.

2. The time spectrum covered ranges from the very short range to
infinity. Although the general thrust is long-range, a decision can be
made in this process to stop producing Product X tomorrow or start to
build tomorrow a new plant to produce the Product Y.

3. The process may produce a written document on a periodic basis,

say annually—yet the process is a continuous activity. Top
management cannot, of course, develop a strategic plan once a year
and forget strategy in the meantime.
4. Compared with medium-range and short-range planning, the
results of strategic planning process are not usually neatly
incorporated into a prescribed form.

5. Strategic planning covers any element of the business that is

important at the time of analysis and embodies details that are of
sufficient scope and depth to provide the necessary basis for
implementation.

6. The format of strategic plans is much more flexible and variable in

content, from time to time, than for other types of plans.

7. Strategic planning process has many starting points, each different

from the other.

8. Strategic planning is especially appropriate in volatile industries,

such as the computer or telecommunication or anti-pollution
industries where technological change is rapid and international
competition is fierce.

9. Strategic planning is uniquely suited for providing ‘a broad

managerial perspective which rescues management from the tunnel
vision of unanalysed assumptions and fuzzy objectives’.

10. Strategic planning, even if the methods as well as the human

resources and other situational variables differ greatly from one firm
to another, is an increasingly necessary aspect of effective
management.

Essay # 5. Factors and Elements of Strategic Planning

Process:
From the above, we see that the general contents of strategic
planning process are:
(i) Objective of enterprise,
(ii) Basic mission,.

(iii) Basic strategies, and

(iv) Operational plans.

The factors and main elements of strategic planning process

can be best identified and shown in a model below:

As we can see, strategic planning involves the development of

objectives (step 1 in the planning process). Next the top management
searches for the environment.

Next top management weighs the advantages of the several strategies

considered and chooses one. It outlines the general organisational and
policy changes necessitated by its strategic choice. It then delegates
detailed planning and implementation activities to its middle
management. Top management also sets budget levels and indicates
general usage of funds; detailed budgeting is done by middle
management.

Strategic planning is exciting. It involves decisions like: Xerox

Corporation’s decision to enter (and leave) the computer field,
Reliance Industries’ decision to get out of textiles and become a
conglomerate, or Cadbury chocolate’s decision to become Cadbury
Foods (all hypothetical).

Essay # 6. CEO’s Role in Strategic Management:

The increasing time demands of strategic management have nowadays
forced top managements among the larger companies to delegate
more and more of the operating authority for running the business to
lower-level managers.

Some companies today have Chief Executive Officers (CEOs) who are
concerned essentially with outside environmental forces, and Chief
Operating Officers (COOs) who are concerned primarily with running
the day-to-day affairs of the business. In these cases as well as in
others where there is no COO or its equivalent, more authority is
usually being delegated to middle managers.

This does not mean that top managements remain unconcerned about
the day-to-day operational matters. Only thing is that, in the changing
environment from that of the past, the top managements are forced to
spend much less time on routine operating matters and to devote
much more time on strategic issues.

The most important case in point is that managerial strategies in

large-sized organisations are considerably different from the
operational strategies needed. After all, corporate level strategy in the
changing environment is essential for success and growth, and for
competitive advantage. Herein, comes the role of the chief strategist,
the CEO.
The chief strategist is faced with three basic questions:
(1) What business are we in?

(2) How are we to match the best product-market opportunities?

(3) How are we to make best use of the company resources?

The first two questions are concerned with corporate-level strategies,

while the third question relates to operational-level strategy. The CEO
must conceptualise the whole strata of strategy as he is at the top. CEO
is responsible for relating his organisation to a changing environment.

He alone is responsible for assuring the proper balance among various

competing subsystems in the organisation. He alone is responsible for
determining the total thrust of his organisation and for assuring that
performance matches with his design. So, the role of the CEO is
unique and so is his way of thinking.

Again, the CEO is expected to concentrate on the total enterprise

rather than parts of it, and in the process ‘entirely new phenomena
take place’.

CEO has to think in these terms. The thought processes, the attitudes,
the perspective, the methods of analysis and the skills in the total
strategic management process are unique and of demanding nature
and call for higher level dynamism and initiative. CEO, as the chief
strategist, has to have widest vision in these respects.

Essay # 7. CEO’s Functions in Strategic Management:

Mintzberg’s classification of ‘Ten Managerial Work Roles’
vis-a-vis the functions/roles that concern the chief strategist
is given below for better comprehension:
From the above, we find that ‘Decisional Roles’ and ‘Functions’ fit well
with the CEO as the Chief Strategist.
In looking at the entirety of an organisation, the CEO also approaches
decision making differently than major division line managers. For
example, the divisional manager may ask for a capital allocation to
meet the needs that the CEO may not grant because of other higher-
level priorities of the total organisation.

The CEO also thinks differently than functional managers. For

example, the sales managers desire to place greatest emphasis on
increasing sales, market share, and customer reputation—may be at
the expense of profits.

The financial managers tend to think in terms of profit, liquidity, low

risk, and high ROI. This viewpoint, if not balanced and harmonised,
may stifle growth and reduce risk-taking and initiative. Other
functional managers may have different driving motivations. All must
be related to and integrated in the larger organisation of which they
are a part, and that is done by the CEO.

To illustrate a case in point in relation to strategic planning process,

let us consider the CEO’s job descriptive role, as someone has put
it, “The CEO is the chief architect of the firm’s future and the
chief planner.”
In this role, the CEO has several fundamental
responsibilities as to the functions like:
1. Making sure that the climate in the firm is congenial to doing
effective planning;

2. Ensuring that the system is organised in a fashion appropriate to

the company;

3. If a corporate planner is engaged, seeing to it that he is the right

person for the job;

4. Getting involved in doing the planning; and

5. Having face-to-face meetings with those who draw up plans for the
CEO’s review and approval.
In essence, the CEO has to play different roles and carry out different
functions from the phases of strategic directions to strategic guidelines
and implementations and control in complex organisations as
compared with very simple ones.