What is strategy.

Strategy is a planned or emergent course of action that is expected to contribute

to the achievement of organizational goals.
Alfred D. Chandler defines strategy as, “the determination of the basic long-term
goals and objectives of an enterprise and the adoption of the courses of action and
the allocation of resources necessary for carrying out these goals.”
According to Glueck, "Strategy is the unified, comprehensive and integrated plan
that relates the strategic advantage of the firm to the challenges of the
environment and is designed to ensure that basic objectives of the enterprise are
achieved through proper implementation process."
Michael Porter defines strategy as ―creation of a unique and valued position
involving a different activity from rivals or performs similar activities in different
ways.

Strategic Management

Strategic management is a set of management decisions and actions that

determines the long-run performance of a corporation.

According to Fred R. David strategic management is an art and science of

formulating, implementing and evaluating cross functional decisions that enable
an organization to achieve its objectives.

As per Channon, strategic management is defined as that set of decisions and

actions that result in formulating of strategy and its implementation to achieve the
objectives of the corporation.

Features/Characteristics of strategic management

Features/Characteristics
a. Future Oriented Strategy is Significant because it is not possible to foresee
the future without a perfect foresight; the firms must be ready to deal with the
uncertain events which constitute the business environment. Therefore, we can
say that strategy is future oriented.
b. Long -term Strategy deals with long term developments rather than routine
operations, i.e., it deals with probability of innovations or new products, new
methods of productions, or new markets to be developed in future.
c. Deals with uncertainties: Strategy is created to take into account the probable
behaviour of customers and competitors. Strategies dealing with employees will
predict the employee behaviour.
d. Includes both external and Internal environment: Strategy is a blend of
internal and external factors of the organization i.e. (SWOT) analysis of the
organization.
e. Strategy provides overall framework for guiding organizational thinking and
action.

f. Redefines direction towards common goals

g. Specialized plan to outperform the competitors.

h. Enable effective mobilization of resources.

Importance of Strategic Management

1. Accomplishment of Long-Term Objectives:

Business environment changes rapidly. A business concern cannot achieve its
long- term objectives of profitability, a higher rate of return, productivity,
technological leadership, market standing, market leadership, industry leader etc.,
without formulating an appropriate strategy and without implementing it
effectively. Strategic management thus enables to achieve the long-term
objectives of an organisation through its strategic management processes.

2.Helpful to Study the Business Environment:

Strategic management is helpful to a business concern to study the external
business environment accurately because every incident or change in the business
environment will have either positive or negative impact on the business. Such a
study enables the business concern to formulate a suitable strategy to exploit the
opportunities or manage threats.

3. Helpful to Identify Business Opportunities:

Strategic management is helpful to a business concern to identify the
opportunities systematically with the help of its analytical tools, SWOT analysis,
BCG matrix etc., so that the business concern can formulate an appropriate
strategy.
4. Suggestions to Overcome Internal Weakness:
Strategic management suggests a business concern how to overcome internal
weaknesses through its tools of strategic analysis. Such analysis will enable the
business concern to choose the growth strategy of vertical integration or
conglomerate diversification externally when the external business environment
is favourable.

5. Strategic Fit:
Strategic management matches the external business environmental opportunities
to the internal strengths of an organisation. This will enable the business concern
to deploy effectively its resources to exploit the opportunities.

6. Helpful to Face Competition Effectively:

Strategic management suggests a business concern to select a suitable strategy in
order to face the competition effectively. This will enable the business concern to
survive, grow, and prosper in the industry.

7.Sustained Competitive Advantage

It’s necessary to have a sustained competitive advantage in today’s market. To
do well compared to other players in the market and avoid failure when faced
with setbacks, build a plan that’s viable and long-lasting.

8.Effective Control:
Strategic management ensures an effective control in an organisation by
providing continuous monitoring system and tracking the strategy. This will
enable the organisation to implement the strategy successfully and to achieve the
desired results.

Process of Strategic Management

Step 1-Defining Strategic Intent

lt includes vision, mission, and objectives of an organisation.

Vision- Vision is the statement that expresses where we wish to reach in long run,
it is what the firm ultimately like to become. Vision once formulated is for forever
and long lasting for years to come. Vision is closely related with strategic intent
and is a forward-thinking process.

Example: Microsoft- A computer software on every desk and in every home in

next 10 years.

Mission-It tells who we are and what we do as well as what we'd like to become.

Mission is the fundamental, unique purpose that sets it apart from other firms of
its kind and identifies the scope of its operations in product and market terms.

E.g., Microsoft “Empower every person and every organization on the planet to
achieve more.”

Objectives-These are the end results of planned activity that state what is to be
accomplished by when and should be quantified if possible and their achievement
should result in the fulfilment of a corporation's mission

Objectives state specifically how the goals shall be achieved. Following are the
areas for setting objectives profit objective, marketing objective, production
objective, etc

2.Strategy Formulation
Strategy formulation refers to the process of choosing the most appropriate course
of action for the realization of organizational goals and objectives and thereby
achieving the organizational vision.

For choosing most appropriate course of action, appraisal of organization and

environmental is done with the help of SWOT analysis.

It includes both environmental and organizational appraisal.

Environmental Appraisal- The environment of any organization is "the

aggregate of all conditions, events and influences that surround and affect it". It is
dynamic and consists of External & Internal Environment

The external environment includes all the factors outside the organization which
provide opportunities or pose threats to the organization.

The internal environment refers to all the factors within an organization which
includes strengths or cause weaknesses of a strategic nature.

Organizational Appraisal is the process of observing an organizational internal

environment to identify the strengths and weaknesses that may influence the
organization's ability to achieve goals.

The analysis of corporate strength and weaknesses becomes a pre-requisite for

successful formulation and reformulation of corporate strategies.

3-Strategy Implementation: Strategy implementation is the action stage of

strategic management.

It refers to decisions that are made to install new strategy or reinforce existing
strategy.

Designing structure, process & system- Strategy implementation includes the

making of decisions with regard to organizational structure, developing budgets,
programs and procedures in order to accomplish certain activities.

Functional Implementation: Functional implementation is carried out through

functional plan and policies in five different areas marketing, finance, operation,
personnel and Information management.

Behavioural Implementation- It denotes mobilizing employees and managers to

put strategies into action and require personal discipline, commitment and
sacrifice. It depends upon manager's ability to motivate employees.
Operationalizing strategy-It includes establishing annual objectives, devising
policies, and allocating resources.

4. Strategic Evaluation: It is the primary means to know when and why particular
strategies are not working well.

It is the process in which corporate activities and performance results are

monitored so that actual performance can be compared with desired performance.
Thus, strategic evaluation activities include reviewing external and internal factors
that are the basis for current strategies.
5. Strategic control-

In this step, organizations determine what to control i.e., which objectives the
organization hopes to accomplish, set control standards, measure performance.
Compare the actual with the standard, determine the reasons for the deviations and
finally taking corrective actions and review the policies and activities if needed.

What is Strategic Intent

Strategic Intent is defined as compelling statement about-
Where an organization is going?
What an organization wants to achieve in the long run?

Definition: Strategic Intent can be understood as the philosophical base of the

strategic management process. It implies the purpose, which an organization
endeavours to achieve. It is a statement, that provides a perspective of the means,
which will lead the organization, reach the vision in the long run.

Components of Strategic Intent

There are different levels of Strategic Intent

1) Vision: Vision implies the blueprint of the company's future position. It

describes where the organization wish to land in future. It depicts the
company's aspirations for the business.
Every single component of the organization is required to follow its vision.
Example of IKEA- "To create better everyday life for the many people.
NIKE- “To bring inspiration and innovation to every athlete in the world.”

2) Mission: It explains the reason for the existence of the business.

A mission statement helps to identify what business the company
undertakes.
It defines the present capabilities, activities, customer focus as well.
 It is designed to help potential shareholders and investors understand the
purpose of the company.
Example IKEA - "Our business idea supports this vision by offering wide
range of well-designed, functional home furnishing products at prices so
low that as many people as possible will be able to afford them.

NIKE- “do everything possible to expand human potential. We do that by

creating ground breaking sports innovations, by making our products more
sustainably, by building a creative and diverse global team, and by making
a positive impact in communities where we live and work.”

3) Business Definition: Business can be defined in terms of

• Product
• Customer
• Technology

Most of the strategic choices are made based on the business definition of
the company.
Example: HUL to meet the everyday needs of people everyone with
branded products

4. Business Model: Business model, as the name implies is a strategy for

the effective operation of the business,
How company will get funds? How company operate to make profitability?
What are the different processes involved in the business operation to
ensure optimum utilization of resources.

4) Business Goals and objectives: These are the base of measurement. Goals
are the end results, that the organization attempts to achieve. Goals are
specific and measurable. Goals are closed-ended statements.
Goals could be like in 2022 of ICICI Bank in relation to customer service
is to complete each transaction of customer in less than 10 minutes time.
On the other hand, objectives are time-based measurable actions, which
help in the accomplishment of goals. Objectives can be long-term as well
as short term. Long range objectives prefer targets normally of less than
one year’s duration. Short term objectives These are the end results which
are to be attained with the help of an overall plan, over the particular period.
All these components of strategic intent help in establishing the philosophy of a
company which guides the organisation formulate strategies at different level at
different time. Irrespective of Size and Structure, Organisation must have strategic
intent.

Need and Importance of Mission Statement

A mission Statement outlines a company's goals and position in the industry for
its customers, competitors, and other stakeholders. It also helps the organization
focus and stay on track to make the right decisions about its future.

A mission statement, is a summary of an organization's goals and values. The

quality and content of a company's mission statement can affect every part of a
business, including its customers and its staff. Employees can benefit from
understanding why a mission statement is important in their work and the overall
success of the company they work for.
1.Creating identity
Mission statements create the core identity of a company and establish a basis for
everyone in the company to make decisions. Mission statements contribute to a
company's brand and encourage unity among everyone who supports or works
with the company.
A company's identity differentiates it from competing organizations, and the
mission statement is one of the most defined ways to express that identity to
others.

2.Attracting talent
When looking for a job, many people use a company's mission statement to decide
if they want to apply. A strong mission statement that people can relate to
encourages talented people to get involved with the company. Mission statements
allow like- minded people with similar goals to naturally work together on projects
that are most important to them.

3. Guiding culture
A company's mission statement provides a guide for the company culture and
workplace environment to develop positively. The values, norms and beliefs of a
company create a unique cultural environment, and mission statements provide an
official method for expressing that culture. A mission statement should clearly
reflect these values to guide employee actions and organizational initiatives.

4. Developing purpose
A strong mission statement gives employees purpose and improves engagement
in their work. Mission statements help employees see the meaning and purpose of
their work by giving them clear reasons their job benefits a larger goal.
Mission statements help employees see the positive aspects of their daily
activities, boosting morale and creating long-term employee investment in the
workplace culture.

5. Improving performance
Mission statements provide a clear goal for employees and can improve their job
performance. They are a great way to motivate employees to work towards a
company's long-term plans for growth.
A good mission statement creates an environment that encourages everyone to
produce high-quality work and hold high standards for themselves. Employees
can engage with a company's core values by reading its mission statement and
applying those ideas to their work.

6. Envisioning the future: A mission statement provides an ideal vision for the
company's future and directs its growth. Mission statements encourage
employees to think about how their actions will impact future business success
and positive company culture.

Because mission statements direct employee actions, they can have a significant
impact on people's futures within the company and how the organization itself
will grow over time.

7.Aligning behaviours: Mission statements help everyone on a team align their

behaviours toward the same goals. They can use mission statements to evaluate a
business structure or make decisions about policies and procedures.

Following a mission statement makes sure different departments work together

and that every aspect of the workplace contributes to progress. Mission statements
keep behaviours consistent with ideal outcomes, regardless of the situation.

8. Encouraging critical thinking

Mission statements encourage people to think critically about the influence their
actions will have on company goals in both the long and short term. Having a clear
mission statement helps people consider how the company could grow in different
contexts while still upholding their values.
A mission statement is important because it provides a concise strategy and
philosophy that applies to any situation within a company.
Different Levels of Strategy

Strategy can be defined as the effective path to achieving organizational goals

and objectives in the best possible way. In organizations, there exist three levels
of strategy namely corporate level, business level, and functional level.

All levels of strategies have a significant role in achieving the overall targets of
the organization. In nut shell, the functional level strategy helps business-level
strategy and business to corporate-level strategy and corporate to achieve vision
and mission – they all are linked and managers need to carefully set strategies at
each level.

Corporate Level Strategy

Corporate level strategy is the highest level of all three levels of strategy: The
corporate level strategies are used to define and guideline the direction for the
company in the big picture. Corporate level strategies affect the strategies and
operations of all business unit and functional level units. The corporate strategy is
the main theme of all strategies within an organization.

There are three main themes of the corporate level strategy includes growth
strategy stability strategy, and retrenchment strategy.

• Growth strategy is a strategy that focused on expanding the business to

increase the revenue in various ways find new customers, selling existing
products to the new market, merger acquisition, and diversification. The
growth strategies are simply found in the Ansoff Product market matrix.
• Stability strategy is a strategy that focus on stability of the business to
improve the current business without investment or divestment.
• Retrenchment strategy is a strategy that focus on stability of the company's
financial position by stopping unprofitable operations to cut the company's
expenses.

Business Level Strategy

Business level strategy is how the company competes with others in the market
with its products or services. For the business level strategy, the company needs
to determine what is the competitive advantage for each business unit.

There are 4 types of competitive advantages for the business level strategy
following the Porter's generic model: cost leadership, differentiation, cost focus,
and focus differentiation.

• Cost leadership is a strategy that the company produce products in huge

amounts or with low- cost labour to compete.
• Differentiation is a strategy that seeks advantage from the difference by
developing brands that stand out from the competitor.
• Cost focus is similar to the cost leadership strategy but focused on the niche
market instead of the mass market.
• Focus differentiation is similar to differentiation strategy but focused on the
niche market instead of the mass market.

Functional Level Strategy

The functional level strategy is a strategy that is implemented by each function in

a business to support the business-level strategy. Functional level strategies
typically are developed by functional area executives. A business functional area
includes accounting, finance, production, marketing, procurement, service,
research and development (R&D), human resources, and logistics etc.
To put it simply, the functional level strategy is a strategy that uses in each
department of a single business unit.