Strategic Management Process

Strategic Management (M.
Com Third Semester)
Module 1
Strategic Management
Introduction
In an ever evolving and dynamic business environment, an organizations needs to manage an
array of objectives. Every step of management must be in tandem with the overall directives of
the organization. As business becomes more complex with each day passing by, new
perspectives of management are growing every day. Along with the generic activities of
management, new functional aspects viz. marketing, finance, production, etc. also needs to be
taken care of by the management. Management needs to contemplate on not only every move
that it takes but also the possible response that is expected from the competitors. Strategy is
commonly used to communicate a plan, a policy or a tactics considering the long term horizon. It
provides the organization with the direction, in which its every step should be directed at in the
process of accomplishment of organizational goals.
Meaning of Strategic Management
 What is Strategy?
 What is Management?
Strategy= Long term Plan
Management= Art of getting things by others
Meaning
It is managerial process of making strategies towards organisational objectives. Strategic
management is the art and science or formulating, implementing and evaluation of cross
functional decisions, which will enable an organisation to achieve its objectives.
Definitions of Strategic Management
SM is a stream of decisions and actions which leads to the development of an effective strategies
or strategy to help to achieve corporate objectives
------------------ William F Gluk
“SM is a set of decisions and actions resulting in formulation, implementation, evaluation and
control of strategies to realise the organisation strategy intent.”
---------- John and Richard
THIPPESWAMI H M.Com, KSET MOBILE NO: 8746022011 Page 1

Strategic Management (M.Com Third Semester)
Nature of Strategic management

1. Serves as a road map for the corporation
2. Enables long term decisions concerning the firm
3. Ensure optimum utilisation of resources
4. Prepares the firms to face the future
5. Helps acquiring competitive advantage
Strategists & their role Strategic Management
Strategists are individual or group who are primarily involved in the formulation,
implementation and evaluation of the strategies.
1. Role of Board of Directors
2. Role of CEO
3. Role of Entrepreneur
4. Role of Senior level management
5. Role of Middle level management
6. Role of Assistant Executives
Features of Strategic Management
1. Decision making process
2. Wider application
3. A continuous process
4. Resource management
Benefits of Strategic Management
1. It defines the goals and mission of the organisation
2. It helps organisations to be proactive instead of reactive in shaping the future
3. It provides framework for all major decisions of an enterprise
4. It prepares the organisations to face the future and act as path finder to various business
opportunities

Importance/Role/ of Strategic Management

1. Improvement in sales
2. Improvement in profitability
3. Improvement in productivity
4. Enhanced problem prevention capability
5. Provides a framework for decision making
Issues/aspects/factors in strategic decision making

1. Criteria for decision making(objectives)
2. Rationality in decision making
3. Creativity in decision making (new things)
4. Person related factors in decision making
5. Individual v/s Group in decision making(both are needed)
Limitations of Strategic Management
1. Environment is highly complex and dynamic
2. SM is a time consuming process
3. It is a costly process
4. The future does not unfold as anticipated
Strategic Planning Process

Strategic planning is the process of documenting and establishing a direction of your small
business—by assessing both where you are and where you're going. The strategic plan gives
you a place to record your mission, vision, and values, as well as your long-term goals and the
action plans you'll use to reach them.
Strategic Planning Process
1. Determine Strategic Position
2. Prioritize your objectives
3. Develop a strategic plan
4. Execute & manage Your Plan
5. Review & revise the plan

Levels of Strategy
1. Corporate Level Strategies

Corporate level strategy outlines what you want to achieve: growth, stability, acquisition or
retrenchment. It focuses on what business you are going to enter the market. It has two main
aspects- formulation of strategy (strategic planning) and strategy implementation. Major
financial policy decisions are taken by the top level management by involving acquisition;
diversification and structural redesigning belong to this level.
2. Business Unit or Strategic Business Unit Level Strategies
This level answers the question of how you are going to compete. It plays a role in those
organizations which have smaller units of business and each is considered as the strategic
business unit (SBU). Business level strategy is more likely related to a unit within the whole. It is
concerned with competition in market. Decisions at this level include policies involving new
product development, marketing mix, research and development etc.
3. Functional Level or Operational Level Strategies
This level concentrates on how an organization is going to grow. It defines daily actions
including allocation of resources to deliver corporate and business level strategies.
Functional/operational strategy involves decision making with respect to specific functional
areas-Production, marketing, Personnel, finance etc. While corporate & business level strategies
are concerned with “Doing the right things”, functional strategies stress on “Doing things

right”. Functional level strategies handling day to day tasks/activities of purchasing materials,
inventory control etc.
Concept of Strategy
In Military Principle
“Strategy” is derived from Greek word “Strategos”
Which means “Generalship” (Skills or Practices)
Strategy is a Plan of Action to win a war
In Business Principle
Strategy is an action that managers take to attain one or more of the organizational goals.
Examples
1. A cricketer have a strategy how to face the ball
2. Goal keepers have a strategy to stop the football.
A strategy is a plan of action, design to achieve the basic objectives of a business.
A strategy is a high level future plan of action, undertaken by senior management at a high
level of abstraction, to achieve one or more goals under conditions of the uncertainty.
Definitions of Strategy
 Strategy is a plan of action or policy designed to achieve a major or overall aim-------
Oxford Dictionary
 Strategy is the way in which management chooses and utilises the firm resources within
its environment to reach the objectives--- J Stand Ford
Features of Strategy
1. Future oriented
2. Deals with long term developments
3. Deals with the environment
Strategic Intents
 Vision
 Mission
 Goal
 objectives

Strategic Management Process

“Process of formulation, implementation, evaluation and control of strategies to realize the
organization’s strategic intent.” The strategic management process encompasses three phases,
which together involve a number of systematic steps.

Strategic formulation involves five important steps which are,

1. Determination of vision, mission ,objectives and goals
2. Analysis of strengths and weakness of the firm
3. Environmental opportunities and threats
4. Generation of alternative strategies and choosing the most appropriate strategies
5. Define the nature of business
Strategic Implementation involves four important steps which are,
1. Activating strategies
2. Designing structures and system
3. Managing the behavioural strategies
4. Operating strategies
Difference between Operational Management and Strategic Management

Operational Management Strategic Management
Operational management is concerned with the Strategic management is concerned with
day to today activities required to produce formulation and implementation of long term
goods and services plans, policies etc.
Operational management takes an internal Strategic management takes a holistic (both

view(controllable) internal and external) views
Operational management focuses on Strategic management focuses on effectiveness

efficiency and ability

Gap Analysis
Gap analysis involves the comparison of actual performance with potential or desired
performance. If an organization does not make the best use of current resources, or forgoes
investment in capital or technology, it may produce or perform below an idealized potential.
Gap analysis or strategic gap analysis is a process of comparing the performance (Actual
performance) with potential performance or desired performance i.e, current or present state to
future state of the organization.
In other words Gap Analysis is simple method of comparing the present state of something to a
desired state and then determines the steps that must be undertaken to improve that present state
of the organization.
Gap analysis is a formal study of what a company is doing currently and where it wants to go in
the future.
Definition of Gap Analysis
 It is a Technique for determining the steps to be taken in moving from current state to
desired future state.
 Gap Analysis is formal study of what business is doing currently and where it wants to go
in the future?
 Gaps can be found in any process, Department, Approach of an organization.

 GAP Analysis is one of best procedures to help a company to not only improve their
processes, but recognize which processes are in need of improvement
Steps in Gap Analysis
1. Measuring the Actual or present or current performance of the organization
2. Compare the actual performance with expected or desired performance
3. Understanding the gap between the actual and expected performance
4. Gap analysis can be used in any areas of the business or organization such as, Sales,
Financial, HRM, Productivity, Quality Assurance, Cost related aspects, Employees
satisfaction, Energy Conservation, Market competitiveness etc
5. Steps to be taken to fill up the gap existed between actual performances with desired
performance of the organization
Conclusion
Many businesses fail to plan strategically; they have the resources and competencies to achieve
their basic business targets but fail to realize their full potential. A strategic gap analysis could
help such a business bridge the gap between their current and potential performance levels.
Formal Planning
Formal planning is an articulated, written form of planning that states particular objectives and
methods. Formal Planning allows and provides options for distinguishing and aligning
themselves to the organization's goals and objectives. ... Common goals, objectives and strategies
are the result of formal planning. It encourages employees to share that vision and work
together hand-in-hand.
Differences between Formal Planning and Informal Planning
Formal Planning Informal Planning
It is a structured plan It is Unstructured plan
It has some procedure to follow It does not have any procedure to follow
Written record is followed in formal plan No record is maintained for future purpose
Ex: Five year plan of a country Ex: Five year plan of a country

Module -2
Corporate Mission and Objectives
Concept of Vision Statement
Vision statement is a sentence or short paragraph providing a broad aspiration image of the
future.
“An image of the future we seeks to create is vision”
Vision serves the purpose of stating what an organization wishes to achieve in the long run.
Definitions of Vision
MILLER and DESS defined vision as the “category of intentions that are broad, all inclusive
and forward thinking”
Examples
1. Envisioning the power of mind (“Dhiyo yo naha prachodayath“)---VSK University
2. My SBI: First in Customer Satisfaction---SBI
Features of Good Vision Statement
1. It indicates the whole corporate philosophy
2. At most clarity
3. Well anticipated but easy to understand
4. Realistic and achievable aspirations
5. Future focus
6. Providing guiding principle to the organization
Characteristics of Good Vision Statement
1. Brevity
2. Clarity
3. Challenging
4. States organization Purposes
5. Future Focus
6. Realistic & Achievable

Benefits of having Vision Statement

1. Good visions are inspiring statements
2. good vision statements having long term thinking
3. good vision helps in creation of a common identity
4. good visions are competitive, original and unique
Mission Statement
Mission statement is defined as short sentences or short paragraph written by the companies,
corporations or Business which reflects their core purpose, identity, values and principles. In
other words mission is what an organization is and why its exists.
Definitions of Mission Statements
According to Hunger & Wheelem defined as “purpose or reason for the organization
existences”.
Examples
1. To provide equality banking services with enhanced customer orientation, higher value
creation for stakeholders and to continue as a responsive corporate social citizen by
effectively blending commercial pursuits with social banking
------------ Canara Bank
2. To keep common man in sharper focus to encourage savings and investment habits
among them
--------------- UTI
Characteristics of Mission Statements
1. It should be feasible or realistic
2. It should be precise or specific
3. It should be clear and clarity
4. It should be motivating
5. It should be distinctive
Goals
Goal means “what an organisation hopes to accomplish in a future period of time”, they
represent a future state or an outcome of the effort that putting in now.
It is precise and measurable desired future state that a company attempts to realise.
Examples
Growth, innovativeness, high profits as a barometer of efficiency, highly involved employees
distinctively charge with pride----------------- Canara Bank
Features of Goal
1. Precise and Measurable(Quantitative)
2. Challenging and Realistic
3. Time Period (no goals are stated without time period)
Objectives/Aims
Objectives or aims that organisation wishes to achieve over a period of time. They are intended
end results that an organisation desires to achieve over varying periods of time. Hence objectives
may be set for long term, medium term and short term.
Features of Objectives
1. Understandable
2. Relating to time frame
3. Measurable & controllable
4. Objectives should co-relate each other.
Role of Objectives in Strategic Management
1. Objectives defined the organizational relationship with its environment
2. Objectives helps an organization to pursuing its vision and mission
3. Objectives provide the bases for strategic decision making
Process of Objectives Setting in Strategic Management
1. Analysis of Environmental Forces
2. Internal Analysis
3. Formulation of vision & mission
4. Preparing General Objectives
5. Observing Past Records(to look back any mistakes in previous journey)
6. Specific Targets

Corporate Governance
Corporate
A legal entity that is separate and distinct from its owners. Enjoy most of the rights and
responsibilities that an individual possesses e.g enter into contracts, loan and borrow money, sue
and hire employees, own assets and pay taxes, limited liability.
Governance
It refers to "all processes of governing, whether undertaken by a government, market or
network, whether over a family, tribe, formal or informal organization or territory and whether
through laws, norms, power or language.
It relates to "the processes of interaction and decision-making among the actors involved
in a collective problem that lead to the creation, reinforcement, or reproduction of social norms
and institutions.
Meaning of Corporate Governance
Corporate governance a system by which corporate is directed and controlled, corporate
governance refers to a set of systems, principles and processes by which the company is
governed. Corporate governance provides a guideline has to how the company can be directed or
control such that it can fulfill its goals and objectives in a manner that adds to the value of a
company.
Definition of Corporate Governance
According to OECD defined as “Corporate Governance is the system by which business
corporations are directed and controlled. The corporate governance structure specifies the
distribution of rights and responsibilities among different participants in the corporation, such as,
the board, managers, shareholders and other stakeholders, and spells out the rules and procedures
for making decisions on corporate affairs.
Hierarchy of a Company (Key players in CG)
 Shareholders
Own the company, do not run it.
 Board of Directors
Elected by and reporting to shareholders
 Management
Appointed by and reporting to directors

Includes executive directors
Need for Corporate Governance
1. To protect and serve individual interest of each stakeholder
2. To protect and serve the collective interest of all stakeholders
3. To ensure no one benefits at the expense of another
4. To ensure no stakeholder has monopoly of decision-making.
Why is CG Important?
1. Good reputation is good business
2. Protection of stakeholders’ interest
3. Support to capital markets
4. Support to society
5. Everyone wins
Ethics in Strategic Management
What is Ethics?
The term “ethics” is derived from “ethos” the Greek Word which can mean honesty,
trustworthiness, responsibility, custom, morality, habit and character.
At its simplest, ethics is a system of moral principles.
Ethics is a system of principles that helps us tell right from wrong, good from bad. Ethics can
give real and practical guidance to our lives.
The ethics deals with what is “good and bad” or what is “right and wrong”.
Need for Ethics in Strategic Management
1. Minimising business risk
2. Long term survival and success
3. Achieving sustainable development
4. Strengthening organisational structure
5. Increase public value and market shares

Importance of Ethics in Strategic Management

1. Business ethics is application of ethical principles to business relationships and
activities. When managers assume social responsibility, it is believed they will do it
ethically, that is, they know what is right and wrong.
2. Business ethics help in long-run survival of the firms. Unethical practices like paying
low wages to workers, providing poor working conditions, lack of health and safety
measures for employees, selling smuggled or adulterated goods, tax evasion etc. can
increase short-run profits but endanger their long-run survival. It is important, therefore,
for firms to suffer short-term losses but fulfill ethical social obligations to secure their
long-term future.
3. Ethical business activities improve company’s image and give it edge over competitors
to promote sales and profits.
4. Legal framework of a country also enforces ethical practices. Under Consumer
Protection Act, for example, consumers can complain against unethical business
practices. Labor laws protect the interests of workers against unethical practices. Legal
framework of the country, therefore, promotes ethical business behavior. Business houses
want to avoid Government intervention and, therefore, follow ethical practices.
Conclusion
Ethical management is a tool for corporate success. It is ever “chatting mantra” for healthy
business and corporate success. No management - No organisation. No strategic management -
No management success. No ethics – No Long term survival
“Winning is not everything, winning is right path is everything”

Module – 3
Business Environment (Corporate Environment)
Introduction
A business is an outcome of its environment. The functioning and growth of the business is
influenced by the environment in several ways. The totality of the conditions, events and
influences that affects the functioning of the business is known as business environment. It
is very essential for an organization to understand and appreciate the environment in which it has
to operate. There are two categories in which environment forces can be classified: Internal
Environment and External Environment. Internal environment refers to the conditions and forces
existing within an organization that influences its management. It includes organization culture,
mission and objectives, top management structure, image and human and other resources.
External environment comprises of forces and factors outside an organization. Thus, an
organization must have to adapt to the changes occurring in the environment in order to succeed
and survive in the long run.
Meaning
Business environment refers to totality of all forces of surrounding of a business and have a
greater impact on its activities.
Definitions
According to K Davis “environment of any organization means an aggregate of all conditions,
events and influences that surround and affect it.”
Characteristics/ Features of Business Environment
There are many characteristics that are exhibited by the business environment. These are:
1. Dynamic- The organizational environment is dynamic and keeps on changing.
Organizations are compelled to shift gears and change directions due to changes in
government regulations, technology, competitive forces etc.
2. Unpredictable- The changes in environment are not predictable. It is not an easy task to
forecast the future changes that may occur in the environment. When an environment
changes very fast, uncertainty rises.

3. Relative- Environment is a relative concept. It differs from region to region and from
country to country. For example, the political conditions of India are different from those
of China. Or North Eastern States have more markets for umbrellas than in Rajathan.
4. Composite- The environment of an organization is the totality of all the forces and
factors that are external to and greatly influence their functioning and growth.
5. Challenging- All organizations are influenced by the legal, political, technological,
economic and social systems. Jointly, these components constitute the macro
environment of an organization. The change in these forces presents innumerable
opportunities and threats to strategic managers.
Macro External Environment
1. Economic Environment
Economic environment comprises those economic factors which have an impact on the
operations of the business. Some of the main forces and factors that operate in the economic
environment are:
 The economic systems- capitalist, socialistic or mixed economy.
 The policies of an economy such as fiscal, industrial, monetary, export and import
policy.
 Economic infrastructure such as banks, transportation and communication facilities etc.
 Economic indices- GNP, per capita income, rate of saving and investment, export and
import value, position of balance of payments, distribution of income, price level etc.
 Product and factor markets.
Strategists have the knowledge about the impact of economic environment on their business.
They will have to observe all the economic indicators for various reasons. A reduction in interest
rate decreases the cost of capital for the organizations. Reforms in industrial and fiscal policies
have led to the development of new businesses such as leasing companies, mutual funds, venture
capital funds etc

2. Social and Cultural Environment

Social and cultural environment includes those factors which have a considerable influence and
are beyond an organization’s premises. These includes:
 Demographic factors such as population, age distribution, literacy levels, income
distribution etc.
 Social institution and groups.
 Customers, values, attitudes, beliefs, rituals and lifestyles.
 Tastes and preferences of people.
Social and cultural environment is highly important for an organization as its crucial decisions
depend upon cultural atmosphere in which the business functions. For example, due to increase
in the number of working women, the demand for life style products increases. This also increase
the demand for convenience foods, ovens, day care centres etc. due to their absence from their
homes.
The concept of nuclear families with single child have come up due to change in composition of
the family.
3. Political Environment
Political environment includes those factors that affects the formulation and implementation of
the strategies adopted by the organizations such as political system, the policies of the
government and attitude towards the business community. The business and related activities are
also influenced by the stability of the government to a great extent. Political decisions have
significant business and economic consequences. For example, Bangalore and Hyderabad
became the hub of information technology firm due to its supportive political climate. Similarly,
due to deregulation of capital markets, Initial Public Offers (IPO) have increased. The entry of
multinationals and FDI has increased due to abolishing of control over foreign exchange. Also,
the operations of business organizations are adversely affected by the strikes, lockouts and labour
disputes etc.

4. Legal Environment
The legal environment plays a very significant role in business. It provides the framework within
which every organization has to work. The important legislations that forms the legal business
environment includes:
 Companies Act 2013
 The Factories Act, 1948
 Industrial Disputes Act, 1972
 Essential Commodities Act,2002
 Competition Act, 2002
Apart from these, the following also forms the legal business environment:
 Provisions of the Constitution- the functions of business organizations are also
influenced by the provisions of the constitution such as principles, duties and rights of
the citizen, legislative powers of the state and central governments.
 Judicial Decisions- The activities of the business are also influenced by the various
judgments given by the courts related to trade and industry.
5. Technological Environment
Technological factors includes rate of technological change, new processes and equipment,
system of research and developments and approaches to production of goods and services. The
designing of the products is affected by the changing technological environments of different
countries. For example, Radio and Cinema are adversely affected by the introduction of cable
TV. The business prospects of Traditional watches are destroyed by digital watches.
6. Natural Environment
Natural environment consists geographical, ecological and topographical factors that affects the
operations of the business. These factors includes climate conditions, location of the place,
availability of the natural resources etc.. for example, those places are suitable for sugar factories
where sugarcane can be grown. It is advantageous to set up manufacturing units near the sources
of inputs. Also, the responsibilities of the business sector is increased due to the policies of the
government to maintain ecological balance, conservation of natural resources etc.
7. International Environment
International environment is essential for those industries that depends on export or imports. A
slowdown in foreign market may create problems for the exporters. Import liberalization may
assist some industries but may be unfavourable for other countries e.g. the market share of
domestic business firms like Videocon is adversely affected due to the coming of multinationals
such as LG in the electronic industry. The productivity of some domestic industrial units has
increased due to import liberalization of capital goods, technology, raw materials etc.
Also, due to certain developments such as hike in crude oil price, many industries such as cement
industry, fertilizer industry and automobile industry etc. has seriously affected. The business is
also affected by the various international political factors such as war, political tension etc. for
example, the trade between India and Pakistan has increased due to improvements in relations
between these two countries.
Environmental Scanning
It is a systematic process through which organizations monitor and understand their external and
internal environment so as to identify opportunities and threats that affects their business. This
helps the management to decide future direction of an organization. It involves analyzing and
evaluating the information about external and internal environment that can be obtained from
various different sources. Using environmental scanning, an organization can examine the
impact of different trends, events, issues and expectation on the process of strategic management.
Approaches to Environmental Scanning
There are three approaches which could be adopted for environmental analysis. These are:
1. Systematic Approach
In this approach, information is collected systematically for analyzing the environment.
Information about markets and customers, changes in legislations and regulations, policy
statements of the government related to organization business and industry is collected regularly
to monitor changes in the environment. Regularly updating such information is essential not only
for strategic management but also for the operational activities of the organizations.
2. Ad hoc Approach
In this approach, special surveys and studies are conducted by an organization to comprehend
trends in the environment from time to time. For example, organizations conduct such studies
when it has to launch new projects or to devise new strategies. Unpredicted developments may
also be scrutinized with respect to their influence on the organization.

3. Processed Form Approach

In this approach, an organization uses different sources to obtain information in a processed
from. These sources are available both inside and outside the organization. When an organization
obtains information provided by the government agencies and private institutions, it uses
secondary data which is accessible in a processed form.
SWOT ANALYSIS (OR) SWOT MATRIX
Meaning
SWOT analysis (or SWOT matrix) is a strategic planning technique used to help a person or
organization identify strengths, weaknesses, opportunities, and threats related
to business competition or project planning.
SWOT analysis is a quick way of examining your organisation by looking at the internal
strengths and weaknesses in relation to the external opportunities and threats.
A SWOT analysis helps you to understand the current state, determine where to go next and
inform the strategic actions that can be taken to achieve your organisations desired future state.

History
The origin of SWOT analysis is credited by Albert Humphrey. Who led a research project at
stand Ford University in the 1960s and 1970s using data from many top companies?
Goal of SWOT was to identify why corporate planning failed. Humphrey and the team used the
categories like
1. What is good in the present is satisfactory (strengths).
2. What is good in the Future is an opportunity
3. What is bad in the present is an fault or failure (weakness)
4. What is bad in the future is threat.
Hence, they came up with SWOT.
Overview
SWOT assumes that strengths and weaknesses are frequently internal, while opportunities and
threats are more commonly external.
 Strengths
It describes what an organization excels at and what separates it from the competition: a
strong brand, loyal customer base, a strong balance sheet, unique technology, and so
on.
 Weaknesses
Weaknesses stop an organization from performing at its optimum level. They are areas
where the business needs to improve to remain competitive: a weak brand, higher-than-
average turnover, high levels of debt, an inadequate supply chain, or lack of capital.
 Opportunities
It refers to favorable external factors that could give an organization a competitive

advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars
into a new market, increasing sales and market share, technology advancements,
expansion of product line, Govt supportive policies, etc.
 Threats
It refers to factors that have the potential to harm an organization. For example, a
drought is a threat to a wheat-producing company, as it may destroy or reduce the crop
yield. Other common threats include things like rising costs for materials, increasing
competition, tight labor supply and so on.

Limitations of Environmental Scanning
There are many limitations of environmental analysis which are given below:
1. Based on Assumptions- Forecasting is based on certain assumptions which may
prove to be wrong. Generally in forecasting it is assumed that events do not change
randomly, which may not good in all cases. Thus, forecasting become unreliable.
2. No Sufficient Guarantee- The forecasting techniques only predict the future trends
and does not give any guarantee that a particular trend will occur or not. Sometimes,
organizations have to face situations that they had not expected while environment
analysis.
3. Time Consuming and Expensive- This is very time consuming and expensive to
collect, analyze and interpret the data for forecasting.
4. Uncritical Faith- Sometimes, due to incorrect data, decisions on the basis of these
analysis may be dangerous for the business.
Strategic Groups Analysis
A Strategic Group is a concept used in strategic management that groups companies within an
industry that have similar business models or similar combinations of strategies .Strategic group
analysis aims to identify organisations with similar strategic characteristics.
According to Porter, a strategic group is the group of firms in an industry following the same or
similar strategy along the strategic dimensions. A strategic group is a set of business units or
firms that pursue similar strategies with similar resources. The classification of firms in the
industry into a set of strategic groups in highly useful in better understanding of the competitive
environment and enable to form a level playing field for competitive strategies.
Strategic groups are conceptually defined clusters of competitors that share similar strategies and
therefore, compete more directly with one another than with other firms in the same industry.
The theory of strategy groups emphasizes that within an industry, firms with similar asset
configurations will pursue similar competitive strategies with similar performance results.
The firms in strategic groups with high mobility barriers will have greater profit potential than
those in groups with lower mobility barriers. These barriers also provide a rationale for why
firms continue to compete with different strategies despite the fact that all strategies are not
quickly successful.
Benefits of Strategic Groups
1. It helps to identify who the most direct competitors are and on what basis they compete.
2. Strategic group analysis also is used to identify opportunities.
3. Strategic group analyses also help to identify strategic problems.
Implications of strategic groups
Thus, the implications of strategic groups are:
a. A company’s closest competitors are those in its strategic groups, not those in other strategic
groups. A major threat to a company’s profitability can come from within its own strategic
group. For instance, although Maruti Suzuki cars are in the automobile industry, it is not a
competitor of Mercedes-Benz or BMW.
b. Porter’s five forces can all vary in intensity among different strategic groups within the same
industry.
c. Individual strategic group members face similar threats and opportunities in the competitive
market. Furthermore, similar resource configurations form protective barriers around the
strategic groups.
Steps in Strategic Grouping

Step 1 – Identify the competitive characteristics that differentiate firms in the industry like price,
market share, quality, brand image etc.
Step 2 – Plot the firms on a two-variable map, using pairs of differentiating characteristics.
Step 3 – Classify firms that fall into same category into one strategic group.
Step 4 – Determine the position of each strategic group, by making proportional to the size of the
group’s respective share of total industry sales revenues.

The firms within a strategic group are in direct competition with each other than those in other
strategic groups within the industry. Firms in each of the strategic groups might have different
effects of the Porter’s five forces. The kind of opportunities and threats might vary across
different strategic groups. Many empirical studies observes that very weak evidence of a link
between strategic group membership and company profit rates in spite of the fact that strategic
group model predicts otherwise.
Internal Factor Analysis
Meaning
Internal factor Analysis is a strategic tool used to evaluate firms internal environment and to
revealed its strengths as well as weaknesses, strengths and weaknesses are used as the key
internal factors in the evaluation
Importance of IFA
1. Internal factor analysis helps to analyze its resources and functional strengths and
weaknesses.
2. Internal factor analysis helps to understand the factors and work upon those factors so as
to gain competitive advantage, growth, profitability in the firm.
3. Internal factor analysis helps to internally assess the organization and formulate,
implement, and evaluate the strategic plan and cross-functional decision so as to achieve
the company's primary objective of above-average return and competitive advantage.
4. Internal factor analysis explains the company's available resources or ease of access to
resources and whether those resources are rare, easily or hardly imitable, and substitute
available or not. Resources are defined by its type, nature, and amount. Internal factors
analysis helps to understand the organization internally and with a clear understanding of
its competencies and capabilities that are distinctive from other competitors.
5. Internal factors analysis not only helps to understand its strengths and weaknesses, but it
also helps in gathering, analyzing, assimilating, and distributing those resources
effectively and efficiently.
6. Internal factors analysis helps in understanding its past trends and activities and
understanding the room for improvement.

Module -04
Strategic Formulation and Implementation
Introduction
Strategic management involves formation or formulation and implementation of the major goals
and imitative taken by a company’s top level management on behalf of owners, based on
consideration of resources and an assessment of the internal and external environments in which
the organization competes.
Strategic Formulation
It is the process of developing the strategy and the process by which an organization chooses the
most appropriate courses of action to achieve its defined or selected goals. This process is
essential to an organizations framework for the actions that lead to the anticipated results or
outcomes.
Steps in Strategy Formulation
1. Setting or establishing the organizational objectives
2. Evaluating the organizational environment
3. Setting quantitative targets
4. Aiming in context with the divisional plans
5. Performance analysis
6. Choice of most appropriate strategy
Strategic Implementation
Strategy implementation is a process that put plans and strategies into action to reach desired
goals or objectives. It is a process through which chosen strategy is put into action.
Strategy implementation is the translation of chosen strategy into organizational action so as to
achieve strategic goals and objectives.
Steps in Strategy Implementation
1. Developing an organization having potential of carrying out strategy successfully.
2. Disbursement of abundant resources to strategy essential activities
3. Creating strategy- encouraging policies
4. Employing best policies and programs for constant improvement
5. Linking reward structure to accomplishment of results

6. Making use of strategic leadership
Relationship or Interdependence between Strategy Formulation and Strategy
Implementation
Strategy formulation and implementation are interdependent each other.
A. Forward Linkage
The influence of the strategy formulation on its implementation is called as forward
linkage. It means that at the stage of formulation of strategy itself the total
implementation activities are considered. It is an advance conditioning the process and
systems require of the successful implementation.
B. Backward Linkage
It is just opposing of a forward linkage strategy formulation has a backward linkage with
implementation because the organizations are tensed to adapt those strategies which can
be implemented with the help of existing structure and system.
Difference between Strategy Formulation and Strategy Implementation
Strategy Formulation Strategy Implementation
Strategy formulation is a rational or intellectual Strategy implementation is an operational
process. process.
Strategy formulation requires good constructed Strategy implementation requires special skills
integrative analytical skills. and motivating and managing others, i.e.,
people or employees.
Strategy formulation is an entrepreneurial Strategy implementation is an administrative
activity activity
It is an analysis and thinking process It is action or doing process
Without implementation, strategy formulation Strategy implementation is not possible
has no meaning without formulation
It is an responsibility of top level management It is an responsibility of middle and operational
level management

Organizational Structure
An organizational structure is a system that outlines how certain activities are directed in order to
achieve the goals or objectives of an organization. These activities can include rules, roles and
responsibilities.
Types of Organizational Structure
There are four types of organizational structure which are as follows:
1. Functional Structure
The first and most common type of organizational structure is functional structure.
Functional structure is breaking up a company based on the specialization of its
workforce. Dividing the firm or organization into different departments consisting of
marketing, sales, operations and distribution etc. functional structure is also called as
bureaucratic organizational structure.
2. Divisional or Multidivisional Structure
The second type of organizational structure is divisional or multidivisional structure. The
company that uses this kind of method structures its leadership team based on the
products, projects and subsidiaries as they operate. Example: Johnson & Johnson
3. Flatarchy Structure
Flatarchy , a new kind of organizational structure and it is the third type of organizational
structure used among many start ups, the hierarchy and chain of command and it gives lot
of autonomy to its employees. Companies that use this type of structure have a high
speed implementation.
4. Matrix Structure
This is fourth and last type of organizational structure. In this structure companies have
select employees across different superiors, divisions or departments for achieving
organizational goals of an organization. Example: Philips, Texas Instruments

Policies in Strategy Formulation and Strategy Implementation

Policies are designed to guide the behavior of managers in relation to the pursuit and
achievement of strategies and objectives. Policies are the instruments for strategy
implementation.
In other words, policies refers to specific guidelines, methods, procedures, rules, and
administrative practices established to support and encourage work towards stated or desired
goals.
Importance or Role of Policies in Strategy implementation
1. Policies reduce uncertainty in repetitive and day to day activities in the direction of
efficient strategy execution.
2. Policies limit independent action and discretionary decisions.
3. Policies helps to establish a fit between corporate culture and strategy
4. Policies help to shape the character of the working environment.
Commitment and Corporate or Organizational Structure
Introduction
Firms or organizations culture is one of the important parts of the strategic thinking and it can
impact on employees, customers, suppliers and other different targets. It also involves how
organizational culture affects its strategic decisions and options.
Meaning of Organizational Structure

Corporate culture refers the shared values, beliefs and behaviors that determine how a company’s
employees and management interact and handle outside business transactions. A company’s
culture will be reflected in its dress code, business hours, office setup, employee benefits,
turnover, hiring decisions and treatment of clients and every other aspects of the business.
organization culture refers to the unique configuration of norms, beliefs, way of behaving and so
on that characterize the manner in which groups and individuals combine to get things done.
Definition of Organizational Structure

Corporate Culture is a system of shared values, assumptions, beliefs and norms that unit the
members of an organization.-----Kathryn Bartol
Components or Elements of Corporate or Organizational Culture
1. Vision and Values

The backbone of an organizations culture is the organizations vision, how these things
will help it to survive and compete in the market. values describes the employee
behaviors and mindset required to achieve the company vision. Together the vision and
values serves as guidelines for how employees are expected to lead, behave and
communicate.
2. Management Practices and People
The most important component of the corporate culture is the people. because the
employee behaviors impact corporate culture, targeted skills training, can be used to
teach employees the behaviors that support the culture you want to build. employees
behaviors both innate and learned define corporate culture.
3. Environment/Place
The environment in which people do their work, collaborate and make decisions is a
critical component of corporate culture.
Determinants of Corporate Culture
1. Organizational Structure
2. Business Processes
3. HR Management and Compensation Mechanism
Strategy Activation or Activating Strategies
Activation is the process of stimulating an activity, so that it is undertaken effectively. Strategy

without execution is meaning less. Execution without engagement is impossible.
The strategy activation approach enables an organization to define an effective and

comprehensive plan to achieve its strategic ambition, weaving together strategy development and
elements of the implementation.

Four Dimensions of Strategy Activation
1. Defining the Strategic Plan

Making the right strategic choices based on a rigorous assessment of a business’s external
environment and internal capabilities.
2. Securing Value Delivery
Defining the clear financial goals establishing accountabilities to deliver and setting up
effective mechanism to track value realization.
3. Building Organizational Capabilities
Assessing constraints in the organizations, ability to execute the strategy, and defining
required changes to structure, processes, resources, roles, skills and system.
4. Generating Commitment to Change
Engaging both decision makers and future implementation leaders up front to foster real
ownership of the new strategy.

Chapter -05
Strategic Evaluation and Control
Introduction
Strategy evaluation is that phase of the strategic management process in which top management
try to assure that the strategy formulated is being properly implemented and is meeting its
objectives of the enterprise. A follow through on strategy and at implementation requires a
control system and effective information system, which provides managers with accurate and
complete feedback in real-time so that they can act on the data. Control and evaluation process
help strategic managers monitor the progress of a plan. Strategy evaluation is simply an
appraisal of how well an organization has performed. Adequate and timely feedback is the
cornerstone of effective strategy.
Meaning of Strategic Evaluation
Strategic evaluation is the assessment process that provides executives and managers
performance information about program, projects, and activities designed to meet business goals
and objectives.
Nature of Strategic Evaluation
The business environment is the current context in quite complex, volatile uncertain and
ambiguous. Change is inevitable and occurs very frequently. The organization has to continually
adapt itself to adapt to the changing requirements of the environment. Strategic evaluation is a
complex system to undertake for the effective implementation of management strategy and
analyses for strategic decisions. There is need of evaluation for the smooth functioning of
strategic decisions and checking to achieve the set objectives of the organization. It is essential to
involve and cooperation from all the people of the management. They should understand the
evaluation process for the effective implementing the strategy for the benefits of all stakeholders
of the organization.
1. Test the effectiveness of the strategy

2. Strategists formulate the strategy to achieve a set of objectives and then implement the
strategy

3. To check whether the strategy being implement will guide the organization towards its
objectives
4. It performs the crucial task of keeping the organization on the right track.
5. In its absence, there would be no way to find whether or not the strategy is producing the
desired effect.
Purpose of Strategic Evaluation
1. The purpose of strategic evaluation is to evaluate the effectiveness of strategy in

achieving organizational objectives.
2. To guiding the organization towards its intended objectives.
3. Check the validity of a strategic choice: it helps to identify the faults and errors in a
strategy.
4. Creating inputs for new strategy planning.
5. To overcome resistance change: it helps to identify the barriers of a given strategy and
take corrective actions wherever required.
Importance of Strategic Evaluation
Most of the time, strategists have only concentrated their efforts to formulate strategic decisions
and implementation. They might ignore or overlook the strategic evaluation and control process
until situation warns. It is essential to measure the strategic decisions effectiveness and
controlling process to ensure the right directions of strategic plans and policies. The importance
of strategic evaluation process may be described with the following points:
1. The strategic evaluation identifies the corrective steps and actions to achieve business
efficiency and effectiveness.
2. The strategic evaluation is not only focused to measure the result but also provides the
right paths and directions to achieve desired organizational goals
3. The output of strategic evaluation is feedback which provides essential inputs for the
future strategic decisions or plans and polices of the organization.

4. The strategic evaluation is also related with performance appraisal system for reward and
recognitions which leads the motivation of employees and boosts the morale of the
employees in the organization.
5. Strategic evaluation process is beneficial for all organizations whether small, medium, or
large.
Process of Strategic Evaluation
The process of strategic evaluation starts with formulation of strategic decisions and plans as per
the available resources and analysis of the business environment to achieve the desired
organizational objectives. After the formulation of strategic plan the next step is effective
implementation of strategic plans within available resources to achieve desired result within
stipulated time.
Strategic evaluation process is to measure the efficiency and effectiveness of strategic decisions.
It identifies the desired results achieved by the strategic decisions. The controlling process makes
sure about corrective strategies and actions that are required to achieve organizational goals.
Process or Steps in Strategic Evaluation
1. Fixing or Establishing Performance Standards (Benchmark)
This is the beginning steps of controlling process. The organization should develop the
standards of performances. While fixing the standards, precaution should be taken about their
specificity. Some standards may be difficult to quantify in explicit terms such as morale,
discipline, creativity etc. In such cases qualitative goals and design control mechanism are
useful for measuring the performance.
2. Measurement of Performance
The standard performance is a benchmark with the actual performance is to be compared. for
measuring performance, financial statements like balance sheet, profit and loss account must
be prepared on annual basis.
3. Analyzing the Variance

While measuring the actual performance and comparing it with standard performance, there
must be variances which must be analyzed.
4. To Take Corrective Actions
After the analysis and investigation, the final steps are arrived to take corrective actions for
remedy of the problem. The corrective actions should be consistant to the internal and
external environment of business. It should be as per the company’s culture, philosophy,
labour unions, rules and regulation, etc. the following guidelines should taken into
consideration while taking corrective actions
Participants of Strategic Evaluation
 Shareholders
 Board of Directors
 Chief Executive Officers
 External and Internal Auditor
 Corporate Planning Staff of Department
 Middle Level Managers
 Profit Centre Heads
Levels of Strategic Evaluation
Strategic Evaluation operates at two levels:
1. Strategic Level: wherein we are concerned more with the consistency of strategy with
environment.
2. Operation Level: where in the effort is directed at assessing how well the organization in
pursuing a given strategy.
Techniques in Strategic Evaluation
1. Gap Analysis
Gap Analysis: This is one of the techniques which can identify the gap between the
actual achieved performance and expected performance of the organization as per the
management strategy. With the various business tools and ratio analyze, it can easily

indentify the gap between actual and expected performance. Under the Financial
measures the gap identify with the help of various ratio, relationship of business variables
to each others such as Net Sales to Working Capital ,Current Ratio, Net profit to net sales
ratio, etc. Under marketing measures, the gap identify with the analyses of Sales, Market
share, Competitors performance, etc.
2. SWOT Analysis
This is one techniques of strategic evaluation to actual monitor the performance of
strategic decisions. SWOT describes as organization’s strengths, weaknesses,
opportunities and threats. The business environment is complex and dynamic nature and
consists of internal and external environment. It is an Unpredictable about the future and
accuracy of business environment. Internal Environment consists of organization’s
strengths, weaknesses and on other side external environment is only being provided only
opportunities and threats. The Evaluation system should analyze the internal and external
environment of business and plan organization’s strengths, weaknesses, opportunities and
threats for the effectively applicable business resources to achieve desired results.
3. PEST Analysis
PEST Analysis: This is one of the techniques used for the evaluation system of strategy.
The business atmosphere is highly sensitive and complex in nature. PEST denotes
Political, Economical, Social and Technological factors directly impact on the business.
These are essential factors should be considered while framing the strategy. The success
of strategic decisions is mainly depending on these factors. Political factors are
considered rules and regulation, legislatures, and environmental norms etc. Economical
factors exhibits the economic conditions prevailed in the market to identify opportunity
and threats for the business. Social factors show the behavior of customers, demographic
pattern of customers and about the values and tradition of people for adopted best suitable
strategy. Technological factors are highly sensitive and dynamic in nature. Today
technology will be stale for tomorrow exhibits the flexible or changing pattern of
technology. Due to rapid changes in technology cause the obsolete our plans and business
strategies, these factors should consider while framing the strategy of management .

4. Benchmarking
It is technique of strategic evaluation to identify whether the organization is achieved the
expected results or not. If it is failed to achieve the expected result, then what is the
difference between actual result and expected result. The organization must set the
Standard performance is benchmark for the measuring actual performance. The regular
monitoring and measuring the performance of strategic plan and collection of data that
indicates actual result of the given activity and set the benchmark of activity.
Barriers or Constraints in Strategic Evaluation
1. Limits of Control: It is never an easy task for ‘strategists to decide the limits of control.
Too much control may damage the ability of managers; on the other hand, too less
control may make the strategic evaluation process ineffective.
2. Difficulties in Measurement: The process of strategic evaluation is fraught with the
danger of difficulties in measurement. The control system may measure element which is
not intended to be evaluated.
3. Resistance: The evaluation process involves controlling the behavior of individuals. It is
likely to be resisted by managers.
Meaning of Strategic Control
Strategic controlling is the process of monitoring and checking the performance of strategic
decisions, ensuring the effective implementation of strategic plans and polices, identifying the
problems and to take corrective actions whenever required for achieving the desired
organizational objectives. In other words it describes the controlling system for the effective
implementation.
Definitions of Strategic Control
Schreyogg and Steinmann (1987) have described Strategic Control as “the critical evaluation of
plans, activities, and results, thereby providing information for the future action”.
According to Robert J Mockler, “Management control implies systematic efforts to set

standards to compare actual performance with the predetermined standards, to determine whether

there are any deviations and to measure their significance so as to take any action required to
assure that all corporate resources are being used in the most effective and efficient way.
Types of strategic controls

1. Premise Control
Premise control is being checked continuously and systematic whether the premises set during
the planning and implementation process is still valid. If any premise is not suitable to the
internal or external situation, the strategy would modify or change as per the requirement. It is
always established during the formulation of strategic planning process. It should be considered
two basic environment factors as follow.
• Environmental factors: It includes political, social, technological and economical factors are
prevailed in the external business environment
• Industry factors: It consists of Competitors, Supplier and Market conditions available for the
Industry
2. Implementation Control
Implementation control strategies are applied when the events are being started. It is involved
numbers of events, plans; acts are implemented to achieve organsational goals. It is further
divided into two types such as
• Strategic thrusts or projects:-It provides relevant information that would help to frame the
effective strategy decisions and plans.
• Milestone reviews:-It is process to monitor and review the progress of strategy through
specific intervals or milestone achieved.
3. Strategic Special Alert Control
It is applied at the time of unexpected events or occurring suddenly situations which would
impact on management strategy. It is special alert control system for the rapid and meticulous
reassessment of strategy. Strategic alert control system is useful during the emergency situation
such as natural disasters, plane crashes, product defects, hostile, chemical spills, etc.

4. Strategic Surveillance Control

Strategic Surveillance is concerned within and outside of the organization of various ranges of
events that would effect on strategic decisions and policies. The main aim of Strategic
Surveillance is monitoring of number of information systems as well as encouraged the untapped
information and opportunities for the effective implementation of strategy. It is also similar to
the environmental scanning to identify new information’s and untapped opportunity. It is also
helped to safeguard the established strategy.
Return on Investment (ROI)

Return on Investment (ROI) is a performance measure used to evaluate the efficiency or
profitability of an investment or compare the efficiency of a number of different investments.
To calculate ROI, the benefit (or return) of an investment is divided by the cost of
the investment.
Return on investment is a very popular metric because of its versatility and simplicity. if an
investment does not have a positive ROI, or If these are other opportunities with a higher ROI,
then the investment should not be undertaken.
Budgeting
 Budget is a quantitative expression of plans that identify an organizations objectives and
actions needed to achieve them.
 Budget can be used to compare actual outcomes with planned outcomes.
 A budget might be a forecast, it means allocating resources , a standard or a target.
 A budget is a quantitative expressions of a plan for a defined period of time
 it may include
a) Planned Sale Volumes and Revenues
b) Resources Quantity
c) Costs and Expenses
d) Assets, Liabilities and Cash Flows
Strategic Audit
Strategic Audit is a review of a company’s business plan and strategies to identify weaknesses
and short comings.

Strategic Audit Process

1. Review of existing material (documents relating to present and future plans)
2. Interviews with management team (comparing plans and personal opinions of managers)
3. Analyzing logic documents (Strategic Intents) and opinions are analyzed.
4. Management seminars and decision of audit results.
Feedback and Information System
Meaning of Feedback
Feedback is defined as a return of information about a result or the returned portion of a process.
An example of feedback is a judge in a dance competition giving constructive criticism after a
performance.
Feedback is the process of returning the information back considering the output of an action.
Feedback is getting input from output and it’s a flow of information for corrective action.
Stages of Information Flow

1. Input-Feed Forward Control: it involves evaluation of inputs and taking corrective
action before start of an operation.
2. Processing–Concurrent Control: taking corrective actions during the process of
carrying out of an operation.
3. Output-Feedback Control: Measurement of the results of an action. taking corrective
actions after performance of an operation.
Meaning of Information System

Information system, an integrated set of components for collecting, storing, and processing data
and for providing information, knowledge, and digital products.
Information System is used for different management functions including controlling function.
How Information System is used in Controlling Function

 information System is designed to provide information to management in various
functions.

 in controlling function, information system should provide information relating A)

Standard Performance B) Actual Performance
 information provided should be posses two (2) important characteristics
 Adequacy
 Timeliness

Previous Year Solved Question Paper

2016
1. Define Strategic Management Process?
The strategic management process means defining the organization's strategy. It is also
defined as the process by which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance.
2. What is Past Record?
It is written information to give proof of something or tell about past events in the
organizations. Organization performance or achievement which is known already
or recorded facts in past period. It is also known as historical record.
3. What is corporate governance?
Corporate governance is the structure of rules, practices, and processes used to direct
and manage a company. A company's board of directors is the primary force
influencing corporate governance. Bad corporate governance can cast doubt on
a company's operations and its ultimate profitability.
4. What is Economic Value Added?
Economic value added (EVA) is a measure of a company's financial performance based
on the residual wealth calculated by deducting its cost of capital from its operating profit,
adjusted for taxes on a cash basis. EVA can also be referred to as economic profit, as it
attempts to capture the true economic profit of a company. Economic value added
(EVA), also known as economic profit, aims to calculate the true economic profit of a
company.
5. Define Strategic Fit?
Strategic fit expresses the degree to which an organization is matching its resources and
capabilities with the opportunities in the external environment. The matching takes place
through strategy and it is therefore vital that the company has the actual resources and
capabilities to execute and support the strategy.
6. Define Cost Leadership?

Cost Leadership / Low-cost Business Strategy: A cost leadership strategy is an

integrated set of actions designed to produce or deliver goods or services at the
lowest cost, relative to that of competitors, with features that are acceptable to
customers.
7. What is Competitive Superiority (Advantage)?
Competitive advantage refers to factors that allow a company to produce goods or
services better or more cheaply than its rivals. These factors allow the productive entity
to generate more sales or superior margins compared to its market rivals.
8. What is RBV?
The resource-based view (RBV) is a managerial framework used to determine
the strategic resources a firm can exploit to achieve sustainable competitive advantage.
The resource-based view (RBV) is a model that sees resources as key to superior firm
performance. If a resource exhibits VRIO attributes, the resource enables the firm to gain
and sustain competitive advantage.
9. Define Strategic Audit?
A strategic audit is an examination and evaluation of areas affected by the operation of
a strategic management process within an organization. A strategy audit may be
needed under the following conditions: Performance indicators show that a strategy is
not working or is producing negative side effects.
10. What is Weighted Performance?
A balanced scorecard is a strategic management performance metric used to identify and
improve various internal business functions and their resulting external outcomes.
Balanced scorecards are used to measure and provide feedback to organizations.
11. Define Behavioral Implementation?
Behavioral implementation deals with those aspects of strategy implementation that
have impact on behavior of people in the organization. Since human resources form an
integral part of the organization, their activities and behavior need to be directed in a
certain way.
12. What Do You Mean By E-Business Strategies?

An e-business strategy defines a long-term plan for putting in place the right digital
technology for a company to manage its electronic communications with all partners -
that's internal through the intranet and externally through to customers, suppliers and
other partners.
2017
1. Define Strategic Management?
Strategic management is the management of an organization’s resources to achieve its
goals and objectives. Strategic management involves setting objectives, analyzing the
competitive environment, analyzing the internal organization, evaluating strategies, and
ensuring that management rolls out the strategies across the organization.
2. What is Operational Management?
Operations management (OM) is the administration of business practices to create the
highest level of efficiency possible within an organization. It is concerned with
converting materials and labor into goods and services as efficiently as possible to
maximize the profit of an organization.
3. What Do You Mean by Acquisition?
An acquisition is when one company purchases most or all of another company's shares
to gain control of that company. Purchasing more than 50% of a target firm's stock and
other assets allows the acquirer to make decisions about the newly acquired assets
without the approval of the company's other shareholders.
4. Give the Meaning of Strategic Group?
A strategic group is a concept used in strategic management that groups companies
within an industry that have similar business models or similar combinations
of strategies. The number of groups within an industry and their composition depends
on the dimensions used to define the groups.
5. What Corporate Capacity Analysis?
Capacity analysis is the process of modeling the capacity of infrastructure, facilities,
processes, services and machines. Capacity is the maximum output of an item based on
its design or constraints such as available resources.
6. Expand the Terms EVA and SAP.
EVA: Economic Value added, SAP: Strategic Advantage Profile
7. Why Gap Analysis is done?
Gap analysis is used to compare where you are against where you would like to be. This
helps you identify the gaps between these two states, and come up with an action plan to
close them. Basically, it helps you find solutions to issues that are holding you back from
growing as a business.
8. What do you mean by Focus strategy?
Focus strategy involves targeting your products to a niche market or targeted audience.
The idea behind focus strategy is developing, marketing and selling products or services
to a niche market, such as a particular type of consumer, a specific product line or a
targeted geographical area
9. What is Auditing System?
Auditing is defined as the on-site verification activity, such as inspection or examination,
of a process or quality system, to ensure compliance to requirements. An audit can apply
to an entire organization or might be specific to a function, process, or production step .
10. Name any four functional Strategies.
A functional strategy is concerned with different functional areas in an organization.
These include technology, marketing, finance etc.
11. What is Formal Planning
Formal Planning: Planning is formal when it is reduced to writing. When the numbers
of actions are large it is good to have a formal plan since it will help adequate control.
Formal planning is aims to determine and objectives of planning. It is the actions that
determine in advance what should be done.
12. What is Forward Integration?
Forward integration happens when a organization moves closer to the end users in the
of production stages, by allowing such firms more control over how the products and
service are distributed and sold to the markets. Sometimes, the firm established its own
distribution outlets for the sale of its own product.
2018
1. What is Core Competency?
Core competencies are the resources and capabilities that comprise the strategic
advantages of a business. Some personal core competencies include analytical
abilities, creative thinking, and problem resolution skills.

2. Define Strategic Intent.

Strategic intent is the term used to describe the inspirational plans,
overarching purpose or intended direction of travel needed to reach an organizational
vision. Beneficial change results from the strategic intent, ambitions and needs of an
organization. it includes Vision, Mission, Goals and Objectives in the organization.
3. What is Corporate Vision?
A "corporate vision" concretely describes how a company sees itself in the future,
and therefore must be realistic and attainable. In the current age of rapid change,
a corporate vision is of a more medium-term nature.
4. What is strategic analysis?
Strategic analysis refers to the process of researching an organization and it's
working environment to formulate a strategy. There are many other definitions
of strategic analysis with a different perspective. But they all involve a lot of
common factors.
5. What do you mean by SAP?
Strategic Advantage Profile (SAP) is a summary statement which provides an
overview of advantages and disadvantages in key areas likely to affect future
operations of an organization
6. Define SBU.
Strategic business unit, popularly known as SBU, is a fully-functional unit of a
business that has its own vision and direction. Typically, a strategic business
unit operates as a separate unit, but it is also an important part of the company. It
reports to the headquarters about its operational status.
7. What is Synergy Benefit?
Synergy is the concept that the combined value and performance of two companies
will be greater than the sum of the separate individual parts.Synergy, or the potential
financial benefit achieved through the combining of companies, is often a driving
force behind a merger.
8. Define Corporate Culture.
Corporate culture is the collection of values, beliefs, ethics and attitudes that
characterize an organization and guide its practices.
9. What do you mean by VCA?

Value chain analysis (VCA) is a process where a firm identifies its primary and
support activities that add value to its final product and then analyze these activities to
reduce costs or increase differentiation.
10. What are the elements of 7S Framework model?
The McKinsey 7S Model refers to a tool that analyzes a company's “organizational
design.” The goal of the model is to depict how effectiveness can be achieved in an
organization through the interactions of seven key elements – Structure, Strategy,
Skill, System, Shared Values, Style, and Staff.
11. What do you mean by Turnaround Strategy?
The Turnaround Strategy is a retrenchment strategy followed by an organization
when it feels that the decision made earlier is wrong and needs to be undone before it
damages the profitability of the company.
12. Explain the guidelines of formulating Objectives or objectives setting
process?
Introduction
The objectives of every organization are numerous. Even the major enterprise
objectives are normally multiple. At different levels of the organization also many
objectives are pursued. There is a feeling that a manager cannot pursue more
objectives at a time. Normally it is thought that if more than two to five objectives are
pursued than their effectiveness may be diluted, the minor objectives may get more
importance at the cost of major ones. Though this feeling may be true but it is
difficult to specify the exact number of objectives which a manager can pursue at a
time. It should be ensured that major objectives should not suffer at the cost of minor
ones.
Guidelines for Setting Objectives:
Before initiating the process of setting objectives the planner should study the conditions
prevailing inside and outside the organization. The strength and weakness of the concern
should also be considered. An attempt should be made to improve the inefficient spots.

1. Classifying the Objectives:
The first important thing to be done in setting objectives is related to the classification of
objectives. The objectives are classified into basic, outstanding, major or derivative etc.
The basic objectives are essential for the present. The outstanding objectives will need
more efforts than normal for their attainment. The major objectives will relate to the
organizations while derivative objectives are concerned with departments, sections or
individuals. The ultimate aim is to achieve organizational objectives and all other
objectives will mingle into main objectives.
2. Determining the Areas of Objectives:
The next thing in setting objectives is the specification of areas for which objectives are
to be set. The business is divided into functional areas such as production, marketing,
personnel, finance, etc. The objectives for each area are set differently. These objectives
are set in conformity with the major organizational objectives. The division of areas
enables a proper planning and control.
3. Coordinating Various Objectives:

The objectives of different departments are set separately. The objectives of various
departments are coordinated so as to plan main organizational goals. The objectives for
key-factor are decided first and then other departmental objectives are set. The key-
factor here means strategic factor. Finance may be a key-factor in one concern, output
may be in another, materials may be in third, etc. The planning of key-factors is
important because other objectives will depend upon it. All the factors should be
coordinated in order to achieve overall objectives.
4. Objectives should be Realistic:
The objectives should be realistic so that they may be attainable by the present men and
resources. The objective should take into consideration all the available resources
otherwise they will not be realistic. Too high goals will discourage the employees

because they will not be achieved. Too low objectives on the other hand, will not enthuse
the employees to give their maximum. So, objectives should be realistic and reasonable.
5. Possibility of Adjustment:
There should not be any rigidity in objectives because these are based on future
estimates. Any change in the circumstances will have an effect on the objectives too. The
objectives should be modified as and when a situation demands. The production object
may have to be modified if the raw materials of a particular type are not available. So,
there should be a scope for adjustment to make the objectives practicable.
13. Explain the Forces Driving Industry Competition in Strategic
Management?
Ans: Porters Five Forces Model
14. Explain the Key Issues in Strategic Implementation?
Key Issues in strategy Implementation are:
 Weak Strategy
 Ineffective Training
 Lack of Recourses
 Lack of Communication
 Lack of Coordination
15. Critically Evaluate the Guidelines for Successful Maintenance of
Strategic Control?
Guidelines for Successful Maintenance of Strategic Control are:
 Setting Performance Standards or Benchmarking
 Measuring the Performance or Past Events
 Analyzing the Variances
 Taking Corrective Actions
 Review Process if any Barriers

16. What do you mean by Cash Cow in BCG Matrix?

Cash Cow is a metaphor used for a business or a product, which exhibits a strong
potential in terms of returns in a low-growth market. The rate of return from this
business is usually greater than the market growth rate.
17. What is corporate set up?
A corporation is a legal entity that is separate and distinct from its owners.
Corporations enjoy most of the rights and responsibilities that individuals
possess: they can enter contracts, loan and borrow money, sue and be sued, hire
employees, own assets, and pay taxes.

Strategic Management Process

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Strategic Management (M.

Com Third Semester)

THIPPESWAMI H M.Com, KSET MOBILE NO: 8746022011 Page 1

Nature of Strategic management

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Importance/Role/ of Strategic Management

4. Enhanced problem prevention capability

5. Provides a framework for decision making

Issues/aspects/factors in strategic decision making

2. SM is a time consuming process

4. The future does not unfold as anticipated

Strategic Planning Process

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1. Corporate Level Strategies

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Strategic Management Process

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Strategic formulation involves five important steps which are,

Difference between Operational Management and Strategic Management

Operational management takes an internal Strategic management takes a holistic (both

Operational management focuses on Strategic management focuses on effectiveness

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Benefits of having Vision Statement

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Appointed by and reporting to directors

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Importance of Ethics in Strategic Management

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2. Social and Cultural Environment

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Approaches to Environmental Scanning

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3. Processed Form Approach

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It refers to favorable external factors that could give an organization a competitive

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Limitations of Environmental Scanning

Benefits of Strategic Groups

2. Strategic group analysis also is used to identify opportunities.

3. Strategic group analyses also help to identify strategic problems.

Implications of strategic groups

Thus, the implications of strategic groups are:

Steps in Strategic Grouping

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5. Linking reward structure to accomplishment of results

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Policies in Strategy Formulation and Strategy Implementation

Meaning of Organizational Structure

Definition of Organizational Structure

Components or Elements of Corporate or Organizational Culture

1. Vision and Values

Determinants of Corporate Culture

Strategy Activation or Activating Strategies

Activation is the process of stimulating an activity, so that it is undertaken effectively. Strategy