__ Q_t~e ~ L-------------------------------------------- STRATEGIC MAN~~~ ~ ;__ _

(6) Module; J
Strategy Formula tion
Classes of decision in an organization; characteristics of strategic decisions; meaning of strategy and
strategic management; levels of strategy; strategic management process/framework - steps in strategy
formulation, implementation and evaluation and control; role of vision and mission in strategic
management; role of top management and corporate governance in strategic management;
benefits/limitations and relevance of strategic management.

1.lSTRA TEGY
The word "strategy" is derived from the Greek word "Strategos" ; stratus (meaning army) and
"ago" (meaning leading/m oving).

A method or plan chosen to bring about a desired future, such as achievement of a goal or solution
• t<: a
~ problem. Strategy is a well-defin ed roadmap of an organization. It defines the overall mission, vision
a!]__d

.
~ direction of an organizati on. The objective of a strategy is to maximize an organization's strengths and
minimize the strengths of the competito rs.
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to

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~ Strategy, in short, bridges the gap between "where we are" and here we want to be"

Features of Strategy
a • Strategy is Significan t because it is not possible to foresee the future: without a perfect foresight,
~ the firms must be ready to deal •.vith the uncertain events which constitute the business
~ environme nt.

a • Strategy deals wi,t,h long term developm ent rather than routine operarions , it deals with probabilit y

~ of innovations or new products, new methods ofpraduct iaos, ac new roackets to be developed in
future.
~
• Strategy is created to take into account the probable behaviour of customers and competito rs.
:)
Strategies dealing with employees will predict the employee behaviour.
;)
1.2 STRATEGIC MANAGEMENT
~
;) Systemati c analysis of the factors associated with customers and competito rs (the external , ,;
,'
environm ent) and the or anization itself the internal environme nt to rovide the basis for maintainin
~ g
optimum managem ent practices The objective of strategic management is to achieve better alignment
of
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corporate policies and strategic priorities.

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Strategic managem ent s anal zin

implemen ting them. Strategic management typically involves;
4
cross-functional business decisions prior to

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----:--:;;:,~mrem,1""' '""'"'' - Such strategies operate within the overall strategies of the organization. The corporate strategy sets
• Formulating action plans. the long-term objectives of the firm and the broad constraints and policies within which a SBU
• Executing action plans. operates, corporate level will help the SBU define its scope of operations and also limit or enhance
l'
• Evaluating to what degree action plans have been successful and making changes when desired
the SBUs operations by the resources the corporate level assigns to it. There is a difference between
resuhs are not being produced. corporate-level and business-level strategies.
Strategic management nei=sitates a commitment to straregic planning, which represents an
Corporate strategy is not the sum total of business strategies of tbe corporation but it deals with
organization's ability to set goals to determine the decisions and actions-that need to be taken to } different subject matter. While the corporation is concerned with and has impact on business strategy,
produce those resuhs. t the former is concerned with the shape and balancing of growth and renewal rather than in market
1.3 LEVHS OF STRATEGY
i execution.
f ► Functional - Level Strategy.
Stra:egy may operare at different lewis of an organization - corporate level, business level, and
i
functional le\'el. The ~ · changes based on the levels of sttategy.
i Functional stratc!gy, as is suggested by the title, relates to a single fimctionaJ operation and the
► Corporate La·el Strategy
i activities involved therein. Decisions at this level within tbe organi:ration are often described as
tactical. Such decisions are guided and constrained by some overall strategic considerations,
Corporate bel strategy occupies the highest level of strategic decision making and covers actions ~
Functional strategy deals with relatively restricted plan providing objectives for specific function,
dc:aling ~~ ~ objective of the firm, acquisition and allocation of resources ~d coordination of ~
allocation of resources among different operations within that fimctionaJ area and coordination
Slralegies of vaious SBUs for optimal performance. - ~
betweerrthem for optimal contnoution to the achievement of the SBU and corporate-level objectives,
Top management t,f the organization makes such decisions. The nature of strategic decisions tends to be ,ii
Below the functional-level strategy, there may be operations level strategies as each function may be
\7UUe-orienlcd, ~oceptual and less concrete than decisions at the business or functional level '
divided into ~eral sub functions. For example. marketing Slralegy, a functional strategy, can be
► Bmia~·d S ~·- ~
subdivided into promotional sales: distributional pricing strategies with each sub function strategy
Busiues-s in-el strategy is applicable in those ~i:_ganizations, which have different businesses-11!1? ~ contn'buting to functional strategies.
each businesis is treated as ~ i n e s s unit (SBU). The fimdamernal concept in SBU is to identify ~ 1.4 DEOSION TYPES
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the d ~ indqJcndeur product / market segmems served by an organization.
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t~ The following are the main types of decisions every organmttion need to take:
1. Programmed and non-programmed decisions:
.
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for Rcliana: Industries Lim.led operates in textile fabrics, yams, fibers, and a vanety of
pc:oodw:.nical produru_ for each product group, tbe nature of market in terms of customers, competition, 1 Programmed decisions are concerned with tbe problems of repetitive nature or routine l}'JIC matters. A
and mneting chaanef difftn. ~ standard procedure is followed for tackling such problems. These decisions are taken generally by
lower level managers. Decisions of this type may pertain to e.g. purchase of raw material, granting
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group,. 11w,; " ' - seu"""""' • .:l~
sec; !iCIS as ~ straregies ro make the best use of its resour~ (its strategic advantages),
leave IO an employee and supply of goods. and implements to the employees, etc. Non-p,-0g1annned
applied, each
decisions relate to difficuh situations for which there is oo easy solution.
gnien the environmem il faces. Al RJdJ a levef, strategy is a C0"1Jrehensive plan providing objectives for
seu., ""°""""of...._ - - \ """ and
optmaJ COdliuioo IO the adrievanaa of~ I ob_ieaives.
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These matters are very important for the organisation. For e:wnple, opening of a new branch of the
organisation or a large number of employees absenting from the organisation or introducing new
:, product in the market, etc,. are the decisions which are oormally taken at the higher level
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·t :, 2. Routine and strategic decisions:
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do not require much

STRATEGIC MANAGEMENT
Routine decisions are related to the general functioning of the organisati on. They
to lower ranks to take )
evaluation and analysis and c.an be taken quickly. Ample powers are delegated
decisions are important ', 1.5 STRATEGIC DECISIONS
these decisions within tbe broad policy structure of the organisation. Strategic
which affect objectives, organisational goals and other important policy matters.
These decisions ~ Strategic decisions are the decisions that concerned with whole environme
nt in which the firm operates;
usuaUy involve huge investments or funds. These are non-repetitive in nature
and are taken after i the entire resources and the people who form the company and the interface
between two.
careful analysis and evaluation of many alternatives. These decisions are taken
at the higher level of t Characteristics/Features of Strategic decisions
managemenL
These decisions may be
• Strategic decisions have major resource proportion s for an organization.
3. Tactical (Policy) and operationa l decisions:
others.
decisions. These are concerned with possessing new resources, organizing others or reaUocating
Decisions pertaining to various policy matters of the organisation are policy
s with the threats and
g of the concern. For • Strategic decisions deal with harmonizi ng organizati onal resource capabilitie
taken by the top management and have long term impact on the functionin
channels of distributio n opportunit ies.
example, decisions regarding location of plant, volume of production and
about what they want the
day-to-day functionin g or • Strategic decisions deal with the range of organizational activities. It' s all
(Tactical) policies, etc, are policy decisions. Operating decisions relate. to
organizati on to be like and to be about.
operations of business, Middle and lower level managers take these decisions.
~ • Strategic decisions involve a change of major kind since on organization
operates in ever-chan ging
An example may be taken to distinguish these decisions. Decisions concerning
employees are a policy decision. On the other hand if bonus is to be given to

payment of bonus to
employees , calculatio n
4 environme nt.
~ • Strategic decisions are complex in nature.
of bonus in respect of each employee is an operating decision. future, and involve a lot of
Q • Strategic decisions are at the top most leve~ are uncertain they deal with
4. Organisat ional and personal decisions: ¢ risk.
it is known as
When an individual takes decision as an executive in the official capacity, Strategic decisions are different from administra tive and operationa l decisions.
~
•
~pacity (there by strategic decisions or
Organisational decision. If decision is taken by the executive in the personal • Administr ative decisions are routine decisions which help or rather titcilitate
affecting his personal life), it is known as personal decision. ~ help execution of strategic
operational decisions. Operation al decisions are technical decision which
example, if an
0 decisions. To reduce cost is a strategic decision which is achieved through
operationa l decision of
Sometimes these decisions may affect functioning of the organisation also. For
~ will be administra tive
authority of taking reducing the number of employee s and how we carry out these reductions
executive leaves the organisation, it may affect the organisation. The
organizational decisions may be delegated, whereas personal decisions cannot
be delegated. 0 decision.
0 1.6 STRATEGIC MANAG EMENT PROCESS
and minor. Decision
5. Major and minor decisions: Another classification of decisions is major
are taken by top ~ The strategic manageme nt process means defining the organisati on's strategy.
It is also defined as
pertaining to purchase of new factory premises is a major decision. Major decisions
organizati on that will enable it
management. Purchase of office stationery is a minor decision which can be taken
by office ~ the process by which managers make a choice of a set of strategies for the
superinten dent,
~ to achieve better performance.
6. Individual and group decisiou1:
() Strategic manageme nt is a continuou s process that appraises the business
and industries in which the
Usually routine
When the decision is taken by a single individuai it is known as individual decision. ~ organizati on is involved; appraises its competito rs; and fixes goals to meet
the entire present and future
taken by individuals within the broad policy framework of the organiz.ation.
type decisions are
a standing committee .
~ competito r's and then reassesses each strategy.
Group decisions are taken by group of individuals constituted in the form of
this committee .
:, Strategic manageme nt process has following four steps:
Generally, very important and pertinent matters for the organisation are referred to
individuals in the ('
'The main aim in taking group decisions is the involvement of maximum number of
process of decision- making.
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I
ENVIRONMENT STRATEGY STRATEGY STRATEGY
EVALUATION
. ', used to realize those objectives. Thus, strategy is a wider term which believes in the manner of
SCANNING FORMUIATION IMPLEMENTATION ~ deployment of resources so as to achieve the objectives.
~ While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives and the
factors influencing strategic decisions have been determined, it is easy to take strategic decisions.
• Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and
❖ Evaluating the Organizational Environment: The next step is to evaluate the general economic and
providing information for strategic purposes. It helps in analyzing the internal and external factors
industrial environment in which the organization operates. This includes a review of the organizations
influencing an organization. After executing the environmental analysis process, management should
competitive position. rt is essential to conduct a qualitative and quantitative review of an
evaluate it oo a continuous basis and strive to improve it.
organizations existing product line. The purpose of such a review is to make sure that the factors
• Strategy Formulation- Strategy formulation is the process of deciding best course of action for
important for competitive success in the market can be discovered so that the management can
accomplishing organizational objectives and hence achieving organizational purpose. After
identify their own strengths and weaknesses as well as their competitors' strengths and weaknesses.
conducting environment scanning, managers formulate corporate, business and functional strategies.
• Strategy Implementation- Strategy implementation implies making the strategy work as intended or After identifying its strengths and weaknesses, an organization must keep a track of competitors' moves
putting the organization 's chosen strategy into action. Strategy implementation includes designing the and actions so as to discover probable opportunities of threats to its market or supply sources.
organization 's structure, distributing resources, developing decision making process, and managing ~ ❖ Setting Quantitative Targets: In this step, an organization must practically fix the quantitative target
human resources.
Q values for some of the organizational objectives. The idea behind this is to compare with long term
• Strategy Enluation- Strategy evaluation is the final step of strategy management process. The key
strategy evaluation activities are: appraising internal and external factors that are ~he root o_f present
~ customers, so as to evaluate the contribution that might be made by various product zones or
operating departments.
strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure ~
that the organizational strategy as well as its implementation meets the organizational objectives. 0
❖ Aiming in context with the divisional plans: In this made by each department or division or product
These components are steps that are carried, in chronological order, when creating a new strategic 0 category within the organization is identified and accordingly strategic planning is done for each sub-
management plan. Present businesses that have already created a strategic management plan will revert to ~ unit. This requires a careful analysis of macroeconomic trends.
these steps as per the situation's requirement, so as to make essential changes. ~
1.6.1 STRATEGY FORMULATION PROCESS ~
❖ Performance Analysis: Performance analysis includes discovering and analyzing the gap between
~ the planned or desired performance. A critical evaluation of the organizations past performance,
Stralegy formulation refers to the process of choosing the most appropriate course of action for
the realization of organiz.ational go~ls and objectives and thereby achieving the organizational vision. The
~ present condition and the-desired future conditions must be done by the organization. This critical
process of strategy formulation basically involves six main steps. Though these steps do not follow a
:, evaluation identifies the degree of gap that persists between the actual reality and the long-term
rigid chronological order however they are very rational and can be easily followed in this order. ~ aspirations of the organization. An attempt is made by the organization to estimate its probable future
❖ ~ condition if the current trends persist.
Setting Organizations' objectives: The key component of any strategy statement is to set the long-
term objectives of the Organization. It is known that strategy is generally a medium for realization of ~
❖ Choice of Strategy: This is the ultimate step in Strategy Formulation. The best course of action is
organizational objectives. Objectives stress the state of being there whereas Strategy stresses upon the ~
actually chosen after considering organizational goals. organizational strengths, potential and
process of reaching there. Strategy includes both the fixation of objectives as well the medium to be ~~ limitations as well as the external opportunities.
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1.6.2 STRATEGY IMPLEMENTATION
Strategy implementation is the translation of chosen strategy into organizational action so as to
achieve strategic goals and objectives. Strategy implementation is also defined as the manner in which an
organization should develop. utilize. and amalgamate organizational structure, control systems, and
culture to follow strategies that lead to competitive advantage and a better performance. Organization al
structure allocates special value developing tasks and roles to the employees and states how these tasks
and roles can be correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of
competitive advantage. But. Organizational structure is not sufficient in itself to motivate the employees.
An Organizational control system is also required. This control system equips managers
with
motivational incentives fur employees as well as feedback on employees and organizational performance .
Organizational culture refers to the specialized collection of values, attitudes, norms and beliefs shared by
organizational members and groups.
Following are the main steps in implementing a strategy:
✓ Developing an organization having potential of carrying out strategy successfully.
✓ Disbursement of abundant resources to strategy-essential activities.
✓ Creating strategy-encouraging Policies.
✓ Employing best policies and programs for constant improvement.
✓ Linking reward structure to accomplishment of results.
..... ....
✓ Making use of strategic leadership.
Excellently formulated stralegies will fail if they are not properly implemented. Also, it is essential to
note that stra1egy implementation is not possible unless there is stability between strategy and each
organizational dimension such as organizational structure, reward structure, resource-allocation process
etc.
Strat.egy implementation poses a threat to many managers and employees in an organization. New power
relationships are predicted and achieved. New groups (formal as well as informal) are formed whose
values, attitudes, beliefs and concerns may not be known. With the change in power and status roles, the
managers and employees may employ confrontation behaviour.
1.6.3 STRATEGY EVALUATION PROCESS
Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results. The managers
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' can also assess the appropriateness of the current strategy in today's dynamic world with socio-econom
political and technological innovations. Strategic Evaluation is the final phase of strategic management
.
ic,
The significance of strategy evaluation lies in its capacity to co-ordinate the task performed by managers,
groups, departments etc. , through control of performance. Strategic Evaluation is significant because
of
various factors such as - developing inputs for new strategic Planning, the urge for feedback, appraisal
and reward, development of the strategic management process, judging the validity of strategic choice
etc.
The process of Strategy Evaluation consists of following steps-
❖ Fixing 'benchmark of performance •·: While fixing the benchmark, strategists encounter questions
such as - what benchmarks to set, how to set them-and how to express them. In order to determine the
benchmark performance to be set, it is essential to discover the special requirements for performing
the main task. The performance indicator that best identify and express the special requirements
~
might then be determined to be used for evaluation. The organization can use both quantitative and
• qualitative criteria for comprehensive assessment of performance. A quantitative criterion includes
~ determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc.
0 Among the Qualitative factors are subjective evaluation of factors such as - skills and competencie
s,
~ risk taking potential, flexibility etc.
Q
❖ Measurement of performance: The standard perfonnance is a bench mark with which the actual
C
performance is to be compared. The reporting and communicati on system help in measuring the
0
performance. If appropriate means are available for measuring the performance and if the standards
~
are set in the right manner, strategy evaluation becomes easier. But various factors such as manager's
~ contribution are difficult to measure. Similarly, divisioaal perfonnance is sometimes difficult
to
~ measure as compared to individual performance. Thus, variable objectives must be created against
~ which measuremen t of performance can be done. The measurement must be done at right time else
evaluation will not meet its purpose. For measuring the performance, financial statements like
C -
balance sheet, profit and loss account must be prepared on an annual basis.
~
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❖ Analyzing Variance: While measuring the actual performance and comparing it with standard
J performance there may be variances which must be analyzed. The strategists must mention the degree
~ of tolerance limits between which the variance between actual and standard performance may
be
~ accepted. The positive deviation indicates a better performance but it is quite unusual exceeding the
target always. The negative deviation is an issue of concern because it indicates a shortfall
in
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performance. Thus in this case the strategists must discover the causes of deviation and must tak e •-j\; --------------------- --------------------- ------- - - - - - - - - - - - - - - - SJIIA"61CMA.•-
❖ Vision and mission statements spell out the context in which the organiz.ation operates and provides
J
corrective action to overcome it.
~ the employees with a tone that is to be followed in the organiz.ational climate. Since they define the
reason for existence of the organization, they are indicators of the direction in which the organization
❖ Taking Corrective Action: Once the deviation in perfonnance is identified, it is essential to plan for ~
must move to actualiz.e the goals in the vision and mission statements.
a corrective action. If the perfonnance is consistently less than the desired perfunnance, the strategists ~ ❖ The vision and mission statements serve as focal points for individuals to identify themselves with the
must carry a detailed analysis of the factor responsible for such perfonnance. If the strategists V organiz.ational processes and to give them a sense of direction while at the same time deterring those
discover that the organizational potential does not match with the perfonnance requirements, then the ~ who do not wish to follow them from participating in the organization's activities.
standard must be lowered. Another rare and drastic corrective action is refonnulating the strategy
~ ❖ The vision and mission statements help to translate the objectives of the organiz.aticm into wodc
'
which requires' going back to the process of strategic management; reframing of plans according to
structures and to assign tasks to the elements in the organization that are responsible for actualizing
new resource allocation trend and consequent means going to the beginning point of strategic
Q them in practice.
management process.
'
❖ To specify the core structure on which the organizational edifice stands and to help in the translation
6 of objectives into actionable cost, performance, and time related measures.
❖
~
Finally, vision and mission statements provide a philosophy of existence to the ~loyees, which
is very crucial because as humans, we need meaning from the work to do and the vision and
1. 7 ROLE OF VISION AND MISSION IN STRATEGIC MANAGEMENT "
ij mission statements provide the necessary meaning fur working in a particular organization.
1.7.1 Vision ~
It is for this reason that organizations spend a lot of time in defining their vision and mission
A vision is a vivid mental image of what you want your business to be at some point in the future based
~ statements ~d ensure that they come op with the statemems that provide meaning instead of being
..
on your goals and aspirations. Having a vision will give your business a clear focus, and can stop you w mere sentences that are devoid of any meaning.
heading in the wrong direction. ,:c · ~
1.8 ROLE OF TOP MANAGEMENT IN STRAITGIC MANAGEME:'liT
1be best way to formalise and communicate the vision you have for your business is to write a vision ~
The term "top management" refers to a relatively small group of people include president, chief
stll:anenL ~
executive officer, vice president; and executive vice president.. Because the insights of these
~
A vision statement captures, in writing, the essence of where you want to take your business, and can executives play such a critical role, a number of writers rum: sm::w:d the importance of matching the
inspire )'OU and your staff to reach your goals. ~ characteristics of these executives ""ith the firm's Sb'alegies.
I.7.2 Mission ~
The strategic management p = of today tends to be dominated by the chief executive officer
A mission statement is a brief description of a company's fundamental purpose. It answers the question,
"Why does our business exist?"
.
~ (CEO). For example. Kenneth R. Andrews descn"bed the chief e.xeculive's role as -chief E..'tCCUtive as
Architect of Purpose"
, """'
~ George Steiner summarized the role of the CEO in strategic management as follows:
1be mission staraneot aniculates the company's purpose both for those in the organiz.ation and for the
public. :;
• The CEO must understand that strategic management is his responsibility. Pans of this task, but
~
certainly not all of it, can be delegated.
Mission statements are as varie:d as the COmpanjes they descn"be as you'll see from the examples given
~
below. However, all mission statements will ·broadly describe an organization's present capabilities, • The CEO is responsible for establishing a climate in the organizalion that is coogeoial to strategic
activities and business makeup"
customer focus, ~ management.
:, • The CEO is responsible for ensuring that the design of the process is appropriate to the unique
s,,r B-5 CHOOL ]UIS ~ characteristics of the company.
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STRATEGIC MANAGEMEJIIT
• The CEO is responsible for determining whether there should be a corporate planner. If so, the Corporate Governance ensures transparency which ensures strong and balanced economic
CEO g,,=lly sho,ld appoml the pl_, (o< plmm=) a,d so, th,t th< office ;, ]oc,ted ,s dose \I development. This also ensures that the interests of all shareholders (majority as well as minority
to that of the CEO as practical.
• The CEO must get involved in doing planning.
• The CEO should have face-to-face meetings with executives for making plans and should ensure
"
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shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and that the
organization fully recognizes their rights. Corporate Governance has a broad scope. It includes both
social and institutional aspects. Corporate Governance encourages a trustworthy, mora~ as well as
that there is a proper evaluation of the plans and feedback to those making them.
\> ethical environment.
• The CEO is responsible for reporting the results of the strategic management process to the board
'1a)
of directors. ~
The chief executive officer (CEO) is responsible for the final decisions, but its decisions are the
~ 1.9.1 Benefits of Corporate Governance
culmination of the ideas, information, and analyses of others.
\} • Good corporate governance ensures Corporate success and economic growth.
~ • Strong corporate governance maintains investors' confidence, as a result of which company
1.9 CORPORATE GOVERNANCE
~ can raise capital efficiently and effectively.
Corporate Governance refers to the way a corporation is governed. It is the technique & which • It lowers the capital cost.
~
company are directed and managed. It means carrying the business as per the stakeholders' desires. It • There is a positive impact on the share price.
{II)
is actually conducted by the board of Directors and the concerned committees for the com~any's • It provides proper inducement to the owners as well as managers to achieve objectives that are
~
stakeholder's benefn. It is all about balancing individual and societal goals, as well as, economic and in interests of the shareholders and the organization,
social goals. Q • Good corporate also minimizes wastages, corruption, risks and mismanagement,
~ • It helps in brand formation and development.
Corporate Governance is the interaction between various participants (shareholders, board of
~ • It ensures organization in managed in a manner that fits the best interests of al I.
directors, and company's management) in shaping corporation's performance and the way it is
proceeding towards. The relationship between the owners and the managers in an organizat ion must Q
be healthy and there should be no conflict between the two. The owners must see that individual's Q -. Advantages of strategic management process:
actual performance is according to the standard performance. These dimensions of corporate 0 The process of strategic management is a comprehensive collection of different types of continuous
governance should not be overlooked.
~ activities and also the processes which are used in the organization. The strategic management is a
Corporate Governance deals with the manner the providers of finance guarantee themselves of getting ~ way to transform the existing static plan in a proper systematic process. The strategic management
can have some immediate changes in the organization The following mentioned are few pointers that
a fair return on their investment. Corporate Governance clearly distinguishes between the owners and
~
the managers. The managers are the deciding authority. In modern corporations, the functions/ tasks help you identify the relevance of strategic management and its benefits.
~
of owners and managers shou Id be clearly defined, rather, harmonizing.
~ ✓ Creating a better future:
Corporate Governance deals with determining ways to take effective strategic decisions. It gives :, There is always a difference between the reactive and proactive actions. When a company practices
ultimate authority and complete responsibility to the Board of Directors. In today's market- oriented the strategic management the company will always be on the defensive side and not on the offensive
(J
economy, the need for corporate governance arises. Also, efficiency as well as globalization is end. You need to come out victorious in the competitive situation and not be a victim of the situation.
significant factors urging corporate governance. Corporate Governance is essential to develop added
~ It is not possible to foresee each and every situation but if you know that there are chances of certain
value to the stakeholders. ~ situations then it is always better to keep your weapons ready to fight the situation.
✓ Identifying strategic directions:
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The strategic management essentially and clearly defines the goals and mission of the company. The
main purpose of this management is to define realistic objectives and goals. This has to be in line with
~
the vision of the company. The strategic management provides a base for the Organization on the
~
basis of which progress can be measured and on the basis of the same, the employees can be ✓ Avoiding competitive convergence:
~ \
Most of the companies have become so used to focusing on the competitors that they have started
compensated.
~ imitating their good practices. It has become so much of competition that is becoming difficult to part
✓ Make Better business decisions:
~-.l the companies or identify them differently. With the help of strategic management this magic is
It is important to understand the difference between a great idea and a good idea. If you do have a ~ possible - try and learn all the best practices of a company and become a unique identity which will
proper and clear vision of your company - then having a missio n and methods to achieve the mission ~ keep you apart from your competitors.
always seems to be a very good idea. Here comes the benefits of strategic approach. It turns into a (~
great idea when you decide what is the type of project that you want to invest your money; how do ✓ Financial benefits:
~
you plan to invest your time and also utilize the time of your employees. Once you are clear with your The firms which follow the process of strategic management prove to have more profits over a period
f..>
ideas about the project and the time each of your employee and yourself will have to allocate, you of time as compared to the companies that do not opt for the strategic management decisions. Those
will need to focus your attention on the financial and human resources.
f..> firms which are involved in using the strategic management use the right method of planning these
{;, companies have excellent control over their future. They have a proper budget for their future
✓ Business Longevity: (;) projects; hence these businesses continue for a long time in the industry.
The times are changing fast and there are dynamic changes happening every day. The industries t.3
worldwide are changing at a fast pace and hence survival is difficult for those companies which do ~ ✓ Non-financial benefits:
not have a strong and perfect base in the industry. Companies using the strategic management also provides various financial and non-financial benefns
~
The strategic management ensures that the company has a thorough stand in the related industry and of strategic management. The experts informed that the firms which practice strategic management
;:,
the experts also make sure that the company is not just surviving on luck and better chances or are always ready to defeat the external threats. They have a better understanding of the strengths and
opportunity. When you look at various studies you would know that the industries which are not
~ weakness of the competitor and hence they are able to withstand the competition. This paves way for
following the strategic management will survive for not more than five years. ~ better performance and rewards for the company over a period of time.
This suggests that the companies should have a powerful focus on the longevity of the business. This ~ The main feature of this management system is that it has the capacity of problem prevention and
suggests that without strategic management, it is not possible for a company to survive in the Jong ~ problem solving skills It also helps in bringing about discipline in the firm for all types of internal and
run.
~ external processes.
✓ Increasing market share and profitability:
~ ..i. Disadvantages of Strategic Management Process:
~
With the help of strategic management, it is possible to increase the market share and also the
profitability of the company in the market. If you have very focused plan and strategic thinking then it
p The process of strategic management includes a set oflong term goals and objectives of the company
using this method helps the company in facing the competition in a better manner and also increase its
is possible for all the industries to explore better customer segments, products and services and also to
p
capabilities. These are definitely some of the strategic management benefits but every coin has two
understand the market conditions of the industry which you are operating in.
The strategic management skills will help you to approach. the light-target market. The experts will
guide for better sales and marketing approaches. You can also have a better network of distribution
"'
f'
sides - same is the case with strategic management. Here are some of the limitations of strategic
planning in management.
❖ Complex process:
and also help you to take business decisions which at the end of the day results in profit.
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---------------------------------------------------------------------------------------- --5-i) ----------------------------------------------------------------·- STRATElllC MANi\t.ll' Ml'NT
'The strot~ic mnnngeml"nt indudl"s vnrious t~"JX"S 1,f rontinuous proce:-.~ of mi\ior crit icn l ~ompo ne nt s_
procc!-.~cs in \) the co mpnny.
This includl"s tl\C' inu.-.rnal nnd l":l.1emal environment!-. long tern, ond short tern, gon ls. strnteg ,c cont ro l o f ,
the company's resources nnd lost hut not the least it olro hRs to check the c,rganiznt ionol structure. T his is ~ ❖ Proper pbmning:
a lengthy proce8$ hecause a chonge in c,ne component can nflbct nil the factors. ~ Whe n we sny mnnngeme nt systems then it cnlls for perfect plnnning. You just cnnnot thing on pnper
He~ it is vital that one understands the issues with all the concerned fnctors. This gencrn lly takes time \I nnd lenve them. This cnlls for proper practicnl plnnning. This is not possible by just one person but it
and at the end, the grcm1h of the compRny is aflected. Being a complex process it cn lls fo r lots of \» is a tenm effort. When these types of processes ore to be impleme nted then you need to sideline
pat ience and time from the management in order to implement the strategic mnnagement . In order to have '-) vnrious regulnr decision mnking nctivities which would ndversely nffect the business in the long run.
proper strategic managem ent. there should be strong leadership and proper structured resources. "
~
~ Time consuming process:
In order to implement the strategic management. it is necessary that the top management spends proper ~
quality time in order to get the process right. The managers, have to spend lot of t ime researching " '
·~
·-~~
preparing and informing the employees about this new management. Th is type of long term and time
"
~
consuming training and orientation would hamper the regular activities of the company. The day to day
operations are negatively impacted and in the long term it could affect the business adversely. For e.g.
there are many issues which requires daily attention but this is not taken care because they are busy
researching the details about the strategic management.
~
In case, proper resolution of the problems is not done on time then there could be great amount of
attrition increase. Besides this the performance of the employees will also go down because they are not
getting required resolution of their problems. This type of situation may lead the management to divert all
.~
,~
~
.~
their critical resources towards employee motivation and performance while doing this your strategic
management process will be sidelined. t3
❖ Tough implementation:
~
When we speak the word strategic management then it seems to be a huge and large word. But it is also a ;-3
fact that 'the implementation of this management system is difficult as compared to other management
~
techniques. The implementation process calls for perfect communication among the employees and
employer. ~
The strategic management has to be implemented in such a way that the employees have to remain fully
:.,
attentive; there should be active participation among the employees and besides this the employees have
;.,,
to be accountable for their work. This accountability is meant not only for the top management but for all ..,...,
~
employees across the hierarchy. The experts mention that implementation is difficult because they have
to continuously strive to make the employees aware about the process and benefits of this system.
For e.g. ifa manager was involved in forming of the strategic process and he/she has not been
~.,
involved in the implementation process then the manager will never be accountable for any
~
~
S~ll B-St' H OOL 1018 Page 116
r.
i?
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 .
'- Er. CHIPPY R.S.
~TU -~1SU8
-·- - ........ .,.._~ ... - _,. _____ .. __________________ .,. .. ---- __ .. ---- -·~
q'fVl1171lfr MANA<1T'\llf,1
. ..,_ ............ .,. 1st.ant Proh!uo,
"
STll-\THik.' ~t.'\N •\ CirMFNT
-··········-- ----·------ -----·---- ---- ~of8u st"~--------------- --------·- ---------
MmlJlJu ~ • ~e~i11g allld Cf)fflm•nlott n• plannln1 p~iM!r. Plorm.lll@ prcmi!u:s t.an ~ ~ibed a.,
the
expected environmental tiicrnr1 in which rhc pl_n.n, ore g.-,ing tP P~ t e. The-~ a.,.l!Umpt it•~ ha11e
b111,lemen111tiot1. Enluotfon und C'untml uf Stretcgy \,
S!ep., tr, l1t'at~ · rrtf{)iMlfC'•rJr,rir,n .
frrt1Jlr1'K'ntat1<'n or
mle of orwm1zmmnal ,\'/1.,,r,ure and IN1drr,, h/p In lflralrKJ• ... to be made by tilt- manlllftT5 while they - furmulating p!nn5 mr the future. The mama@.cf5 are
ai,o required M dc\.~lnp the pmni~ that ~ ,i!!f1 Hicant for tilt- plan! and the dccisiort5- At lhe
7i'f)('•
etr<·<:11vi· <'l'C1luat1nn am:/ ronrml
.,'fratf'J[tr and nricnflional controls: contra/ proce.
1 ·,t ; e,t,enlinl /ea/Ure.
~ of 'w same time. the ~egie, , hould a.l,n he t"'lplair:K'd to all the pcrwtm who urc a pwt e>f this
cord; change managemenl.
11·~1r'm. halancC'fi ,\'('Ol'l' ·
'It dec~ion--mak ing chain On the llthcr har>d if t ~ Pf"?m•- - oot prcr,mt. tbc de\:isiom• mode
'1lll by the manager, will he ba~ 0 11 tht-ir J)t'"f'nnl ~'"U.'"lrt~ and pm;l.ict!Cln!" 1111d c,,r,~uenlfy .
titnat., an,lente1u11tiou i~ th.c sum total of th.c activitie~ nnd choices req~_rcd for the exccut Ion :'
lltretep. plan
fa
II ,~ th,: l)"!\..n~ b~ u·liicli o~ectivcb. 5trategieb. and policieb nre put into action thr~ugh the
.... the plans mey al'lO prove to he u.n-connline1cd.
<k~k,pme111 ,1r f'l\•~m~ end Ull'IK:b. budget5. and procedures. Although implementation is often ~ • R"iewmg rtnttJies ~ • ~: ", ,Ir.JI~ adni,tcd ~ tlw 1.>rpr>tllll1on need!, to be> fTvic-wed
'
u111...dered <.>nl~ eficr *"''ell-) h11~ been formulated. implementation is a key part of strategic ~ regularly. FOf e"ample. there can l:,c a chan~ ,n the- C..lriditl(>!l" ur rt. ~1011!1 v n whil;h
the
~ form11l11tK>ntmd strateiy implementation should thus be cons idered as two sides of
- ~,_<!:@:~ ~ !llralegy had been~~ upon. fht-relt>rc. ,f !1-e <tnltt't(~ - ,rt suhbly c ~ IO deal with
,,
t
the changed cin:um.~hlnces. ~ may It>~ thcif ~ ,n the,_ IXJ'NfitioM. J'~kl'f1t. tile
lhc !ill."1e ()<)i.r, . )
comaant ITVteW of !he 'ltrnle1!111!9 hell"' ,n Uf".1111111!( them w ~ l.._ llftd . , - .
l>ct,endtl1€ oo no"' e 0<'f1'<lnltion b organi1.cd. tho!iC who implement strategy will probably be a much
• Ondopi11a _,i11 ..11t .tnl..Nl!I! II 15 <Jlwa~ P"'"il'>t. t'- • c ~ IWIIIY lllk• plw:• in the
ffl<lflt' ..1,ven;c 11e1 ,of 9«>plc then those who formulate it. In most large, multi -industry
corporations, the '1J external m-,,ironrncnt of the o~anuaa,on ,,, 11, ~ i t , - . . 6iictof". Tlllfflo,., It l!I ~ y 1hat
~en: ~ in the organi,..ation. Vice presidents of func1ional areas and directors of •~ the manasen
.~
should al'!O furmut.iaa '<lftlteltll'J rt,, ..... C(lf'ltl~--- Ttw ~l'tlnnly of
d1\1Moifll, « .,.qi..,. 4'usine,, unil, (SBl Js) wori< with their subordinates to put together large-scale , -, cnvironmfflt can never be Dpccled. T~lbrw. IMlft if the ,,bject,1re11 ....i l ' N ' ~ hli!-..e l'>ec,.,me
emr'-"'al«tt ,
~ f)lllllll.

f)IM11, t>lan, m,inagcn.. project managers, and unit heads put together plans for their
<klfWltll<lOlS. end un~. 1 hercforc. every operational manager down to the first -line
:.J ob!oolac in II l'l:!Mllt of Lhne chlanvC'. the ~ - rt11.1u....,J ~ p r . ~ ,.,,lh ,tw mo,..a ;;ti>\hblc
prcmnes thll •c pouible. In thia way the pre~ • ►t wnt~y l)UIM ..:4111 ~ 11\c man.1~"1"1 in
IUp«\isni and <'\/Cl;
funort<'MUl ~ICl>.
employee i~ involved in some way in the implementation of corporate, business, and
,3 •
such siluariuM.
Oriu izatioaal llnct■ N • •Id be .....Ma: rhc
~ ol 1n. , ~ I U I ~ ~ I<> be,
2.1 IMPU.MFl\'T A TION OF A STRA Tf:GY ~3 de\'Cloped in sw:h a wa,- Ullll it help. in the 1t1Uilbnffll ,) I LM ~.aa ,,, ti. utjal\iAh)A. Sam,llll'ly,
\Uiilc. ., ., -,_ llllf)<>l1Mlt ,lha1 a good Slrlllcgy should be formulated, it is also very important that a ,.t~, it should aL..o help ~ ITl4iwt!'--n in lllilli.dli ..pp,upriiilc ..,.,.,.,,,. .,11J ~•••'¥ thciir pl.u-. inw
..,~ ehould ht- unplcnlCnled properly. Therefore, tht' below mentioned steps can help in
~ 41 ~ properly.
,·, effect. lf ~ . each pa:nun ..huukt bs '1ltCII tbc tea,p)naib1l•) ul -.A•'-"'ll _. pw,icular
and impleme,_ing the SUll&.:tjin llllt'IIRIIJ Im M,.ftac\oiatl ...Jl •
li(-.1
ifia.l \t the 'iMICI l"""1. tho ~
i·- , are.ti and the enJ ~Its shuuld m,.i ill: 1Jim11r'icJ. ~ib•I• -
•-..akt bs 11111111,.; to ttna;lc
,·.,
,,.,
• Prr,pe, -•uica1ioJ i of 1tr1uq:y: Tilt! lirst step that needs to be ensured in the proper pos.i&~ in the o,pniz.tlaHI .ia lilr • i - , ~ \a• lllM6iL. II)' .lrJoplolll lhlli ()SIS ,,f ,.,~iaii{Jna l
i m p ~ o( 11 lilrlil.cg} i~ 1.ha.1 i1 should ht- etTeccively communicated 10 tJ1e managers \\ho suuau,e, the Sttatr:gics ma~ pro11e w ltc 1111Jn: ~ 111 .11.b•""'l 'bi:• \lb.J'ICll'ID.
,.
1111w the rc,,pon~b,lp ~ o( maJ..me dw:1 .. iom in lhe orgunizatiun . It i& very necessary that the • s,...~ - iapiwan.l&liua. w~ 1111pkl~ • .....111 rem.111 tho k'P! vi CUNIWll
lilnlk'i~,. .-.:lofll.a1 b) the Of£l111i1a1ion .are c.ummunicut.:d and under~lood in the r.an e \\ II) in
1 ,9
~ io *
vC"'"'LU.JULIB. .\1Uluua9',. (Jlii,. llc JllTh;lal IU t,:p,ms UIC ...... \JbjQ:lM ap,n
and
which the lr411H&:1'a. ol Lli.: ar111c~ 11,,IIJlt IJ11;;m to be, otht:rwii.c de,iri:d ri:ou hb cunnllt be 8(:hien)d ~-~~~\ a• ~llt-:~111,- n.:tp in .i.;)uc,.lfttl t.br. Join:.& ~lb. Ole ft:11.iOn ii thiil ncn ifa
!'tum lhesc- Slrlikg1ei,. fur e.\b.mplf, Ult 1up-L:vel m11n11gemi:111 of the cun1pun) ib d.: r rc~arJing
11
IJK" SI.rill~ and IJ11: rcMJ.J~ tJw 1are e.i.pel.'1.:d to he IIChieved b) liu.:h II s t1 c1h:ll) but if thu,
,, " ~ " " ~ lw:, b..-.:11 tLJrnwt;au:J. 1.1· -.II ,,U.i4qj) 11o llllt lHlplcffll:Slh:li pmp:rl),
~.I&: W llt-'b:-\i: ib 1Jbjl:t..'li~o:a..
il "' 111 no& be
....
infarma11un ha:. nur bt:.:iJ propc:rl}• c..umm1.mii.:a1.:d LU lhi: rd:-v11.111 n11111111,1'11l., lhtlie ubJcctiw~
lllii) t 'I li • .u-~¥) r.ui.. iJ •~nw!I~ l'all&> 111 Iha: lftlpi""111!ru.tllliO,C:llC\.uUun pt.-. Thal'• •h) •·• impo11anl
nor hr acl1 ic vctd h) 1he Slrllk' fil .
",' i I ff !, l 11 ,11, I • " ' ~ ~ aauo.lt ti,a.: pi.,111~ ,..,.,, 1111pl.:t111C1IIJIIUII . . }'OU ~ Jc,,c:Jop11111 ~our cnuo.
l· ,•i; I I ll P .. ,~ I 1t
 ).}
• STRATEGIC MANAGEMENT "-al S1RATEGJC MANAGEMENT
-------------------------------------------------------------------------. - --------~ ---------------------- ------------------------------------------------- -
We help businesses and organizations aggressively drive their strategies forward by helpmg them to : C..., An organization and its structure vary from company to company. Depending upon the objectives, an
)W
organization can be structured in different ways. The structure ofan organization determines the way
• Detennine what tactics will best support their overall strategic goals ~
Establish tactical plans with actionable projects and steps placed on agreed-upon timelines to ~ in which it operates and performs.
T he structure in a way contributes to the achievement of common aim. Most of the organizations
•
provide strategic momentum
Assign unambiguous accountabilities for project and step completion, so that the responsible
~ have structures which are hierarchical in nature, but not all. Organization structure allows for
person knows he or she is up to bat ~ different functions and pressures to different _e ntities, viz., departments, branches, work groups or
• Establish a simple, non-invasive management system to measure ongoing strategic accountability individual. Individuals are normally employed or hired under time-limited work, contracts or work
orders, or under permanent employment contracts. Organization structure can be formal or informal.
and results
• Refine and adjust the strategy as necessary to adjust to changing conditions in the organization, 2.2.1 Organization structure types:
the marketplace, and the external environment
• Develop and identify the necessary operational, financial, personnel, technological and process
• Pre-bureaucratic Structure: Centralized. Seen in small companies. Lacks standardization of
tasks. Suits new organizations for owner to have total control.
resources to keep strategic implementation on track
• Bureaucratic Structure: Some standardization is seen. Ideal for complex and large
The diagram below indicates the steps in a typical strategic implementation plan. A good leader explains
organizations. Suits hierarchical organizations.
his or her vision of what the organization should become, and then involves employees from all levels in
• Post-bureaucratic Structure: Not bureaucratic in functions. Decisions are taken on consensus,
developing the strategy. The implementation plan is clearly, consistently communicated throughout the
and dialogue than on authority. More a net-work than hierarchy. Horizontal decision making
organization, with specific steps, deadlines and accountabilities. Because employees have participated in
process. More of participation and empowerment.
the planning, they arc more committed to a "hit-the-ground-running" approach and take more ownership
• Functional Structure: Each division/employees function for specialized tasks. Could lead to lack
of the results. In-progress monitoring allows for adjustment of the strategy to better serve the changing
needs of the organization. of communication and being slow.
"~"~
Divisional Structure: Divisions can be geographical or in product/service basis. Each division
Adjust within a divisional set-up contains all resources and functions within.
• Matrix Structure: This groups employees by both function and product. Uses groups of
~~
,~ employees for the strengths and to make up for the weaknesses. Matrix structure is one of the
,,t,
rr-~
best form for an organization.
~
..... • Flat Structure: Common in entrepreneurial start-ups. Later becomes hierarchical; becomes
/w·~ ,,____
bureaucratic.
Implementation
Deadlines
Monitoring
~, • Team Structure: This is flexible type, and as a team performs designated tasks. The team defines
Involve

Plan Systems
~., the entire organization. Even large bureaucratic structure use team structures to benefit
Communicate t!, • Net-work Structure: Contracts are out-sourced, and the business functions can be done better and
Ownership cheaply. Electronic means are used for coordination and control of external relations.
Specify ~'t
Act • Virtual Structure: Inter-net is used for boundary less organization. A small organization can
t!;.•
~·
operate globally to be a market leader in a niche. A number of niche markets make the company
2.20RGANIZATION STRUCTURES FOR STRATEGY IMPLEMENTATION
►• highly profitable and the cost of reaching the customers and clients is dramatically cheap.
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STRATEGIC MANAGEMENT ~ STRATEGIC MANAGEMENT
-------------------------------------------------------------------------------------------';:).) ------------ -------------------------- ------------ ------------------------------
2.3IMPORTANCE OF ORGANIZATIONAL STRUCTURE S TO STRATEGIC ~ Organizational structures are often important in gaining consensus for a strategy. rfall the parts of
an organization aren't onboard with a given strategy, it will stand less of a chance of succeeding.
IMPLEMENTATION ~ The structure of an organization will have much to do with gaining consensus because it will
Organiz.ational structure is important for any growing company to provide guidance and clarity on ~ determine who has to be appeased in management and how power is aligned. Different personal
specific human resource issues, such as managerial authority. Small-business owners should begin
thinking about a formal structure early in the growth stage of their business. There are a number of
~ interests will often conflict and need to be addressed.
factors that differentiate small-business operations from large-business operations, one of which is the
~
❖ Overcoming Disadvantages
implementation of a formal organiz.ational structure.
An organization that has been failing to compete effectively will often need to go through an
Organiz.ational structure is important for any growing company to provide guidance and clarity on
organizational restructuring to change its focus. It wiJI need to change its organizational structures
specific human resource issues, such as managerial authority. Small-business owners should begin
to move away from tasks that it is not suited for. This sort of structural shift can be traumatic for
thinking about a formal structure early in the growth stage of their business. Strategies do not take
an organization and requires great resources of will. Often an organization must have reached a
place against a characterless background but must take account of the features of the organization in
crisis before this type of strategy can occur.
which they will be implemented. Organiz.ational structures determine what actions are feasible and
most optimal. The importance of organizational structures in the implementation of a strategy is hard
to overemphasize. Good strategy involves taking account of where a company finds itself in terms of
the external market and its internal organiz.ational structure. Strategy and implementation must
cohere.
~·;
❖ Centralu.ation ,3
~1
Some organiz.ations have a more centralized structure already in place before a strategy has been
implemented. When this is the case, it makes implementing certain str;tegie; more feasible.
Change is always difficult to implement as a part of strategy; the fewer people involved in
decision-making, the easier it is to gain consensus. More dramatic strategies are aided by a
,,¢f
_,"i
centraliz.ed organizational structure. Dramatic strategies can mean changing the basic ways an
organiz.ation does business.
❖ Innate Advantages
~,;;
~.,
The best strategies often seek to take advantage of the innate advantages that an organization
already possesses. Most organizations have certain departments that are particularly effective and
,j
certain tasks that it is already adept at doing. Strai:egies of this sort seek to rearrange
~1
organizational structures so as to better benefit from innate advantages. These strategies involve
;~
?1
taking steps such as expanding parts of the organization that are successful and shrinking those
that are not. .:-,
❖ Consensus
•
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~1'RA1H1lt' MANAOl!Mf'Nl'
'"" '
---------------------~------·---------------~---~------------------------------------
STR.AfH;!C MANA.Cll'.Ml:."Nr
2.4ROLE OF LEADERSHIP IN STRATEGY IMPLEMENTATION ~ It the new requirements. In this menncr, strategic contro ls arc early warn ing systems and differ from
post-action controls which eva luate Onl y after the Implementat ion has been completed.
Leadership i_s responsible fo r devclopml'nl of s1ro1egics 10 achieve the vision. Basically slratcgy ~ It Important types of strategic controls used in organillltions are:
fo rmulat ion means is to provide road mar and this road map should be clear and focu~cd. It Is the ~ II
duty of leaden.hip 10 relate 1hr .vlrategy pmce.1·.v with the v/.,·ion . II should develop a cu lture of t. I ~ . , Strlhtle C.,,W I
learning by provid ing a clear sci of values for the organization. Values demonslrate the behavior of '-
l~-'
,.•
the orgahization and lead the organization towards right. Both vision end strategies should reflect
these values. Once the leader understands lhe importance of values the process of strategy -
I I t
.... ..........
fonnulation and implementation becomes easy. The most important role of the leadership is to '• I
inre1{1'ute the people with the ~1rategic managemenl process. II should involve everyo ne to ensure
I ..
''"""' Coftt,el ""' ~
Cofttret ~
Jtt•• c-t,ol
responsiveness towards cha~e.
. ·1·1cant rot,,.
. ltas e stgni
Leadership "' pla", in thefiormation and carrying oul ofstralegies. It is. termed
. as a
.,
~
link.age which ronnecrs tne s1raregic managemenl proce1,s•, II,ifh 1he aim and v1s1on of • the
., ► Premise Control: Premise control ill nee~ to identify the key 115SWT!ptions. and keep truck of
assess their impact on str.acgy arid its implememati..,n. Premi!'e
,,,.,
any change in them so as 10
. • . II
Ol"JIOnlZ0/1011 beg'10S the "u - e ic thought by offering vision. After that, it works as a foundation to
«•at.,.,
control serves the purpose of continually testing the as,,;umptions 10 lind out whether they ~ lllill
• cukure where everyuuu)
cushlQn · what are the ways to do, and what are the prevalent values
.._,__, , rea 1tzes , . .J
valid or not. This enables the strategists to take corrective action 1111 the right lime rather lhan
regardill@ the lirm. Fundamentally. values offer the direction. The responsibility lies on ~he leadership
continuing with a strategy which is ta'!Cd on ermnrom ~umptions. The ~ i t nlity k>r
to fiunil•iz.e the values or il culture pertinent to corporate. The vision of the leader itself proffers
bur line ~.rat~ format ion and the pledge of the leadership makes sure the enactment of strategy. : ~~
premise control can be usigned
and keep a regular check on their validity.
to the ct>fl'l>l"llte planning '<luff that can identify key ¥~mptio0$
hnnuhncd '1ralcgies can·, be impl~mented without the involvement of every one. Everyone should
undenhnd the need of dlange and should contribute their effort to efficiently implement the ,~
- .J
► Implementation Coatrol: lmpleme11ta1ion control may be put "'10 p r ~ thn,ugh the
-,~~,
identification and monitoring of !llnW:gic thru!tls -.:h a., an ~wnena of ti. mark..:tu,v IIUCCC11.'1
ltrlleg~. And onlf 1Radersh1p can inspire and molivale !he people lo bring change because people
of a new product after prc-lding. or chcl:king the li:asibilit)' ut' a J1\/Cf~lic.ilion pr(>jfillMlO alter
.tway1 resisr dwnge. Leadership works to find out the gaps by carefully scan the environment both
making initial attempts al seek.mg ta:hnolugical i:ollabora&Kln.
illlcmal and c>a.cmaJ. And develop plans to fill these gaps by implementation of plans.
,:- , ► Strategic Surnillucc: Slralegic "'""cillam:e can be do~ tl•o~h a llroaJ-ha.<icJ. g,;neral
1.SSTRATEGIC CON'TROL PROCESS
"It ii, thi- proee~ by which managers moniUJr t.he ongoing (Jclivilies of an qrga11i,.atior, and ifs
~, monitoring on the basis of se!C\.ud inlon1111&ion 10un:o to uncover ~ ttlal
the strategy of an organization.
a,e likely 10 ~ff«.1
mem~rs w evalUJJt,• wh,,rlwr ac1i11it1el! a,·e bei1tR fJIJr/urmed efficimily .and effectively and to take
:., , ► Special Alert Coatrol: S~ial alert conuul i» t.lil:lll un tl'lflMCJ ma;hlmwn IOI' 11111id ~ and
ror,rc1iw action to improVt.• fJl!rfumumce if !hey are no!" - Sam Walton :.., immc:diale ~ n t of s&rlllqo in lhc lith& .Jt' 1Wk1cn MIil Ullellpc!l;,kld ~

\fl.-C
~lied crises.
Mlllll@Cl'5 ncrdsc: ill'Slegic control when they work with the part of the organisation they have (. 't Crises are critical siluationi. lhill iA'l:ur WIC\flC'-t.:\11) .ulll UftMIICn I.he .:o~ ot' a !ll..,.egy.
influence over IO ensure d1at it achieves the strategic aims that have been se1 for it. To do this
ctTcctivcly, the IIWlll{ter, need liOnlf' decision making freedom: either to decide what needs to be
~.
...~-"-.
~ <I A

Organisations lNl hiJpi: tor thi: bi:st anJ

1&11)" cri:.i.-..
pn:Jllll'C li>r !he ,.-.una •Ill.a "an~ pl)iilll~n lO handlo
...
achieved or ho\\' best IO go a.bo111 achieving the itrategic aims. Such decision making freedom is one
o( rhe charac1cris1ics lhat diffi:ri:miate il.rlllc.:gic control from other forms of cumrot exercised b)'
...,!. 2.6PRO< '[SS ot· STllAT[GlC <.'Ol\ TROL
managers (e.g. Operational control • thf' ITUU18gi:ment of opc:nuiun11I proce~t.c:i.), SU'dlt:fic '-"Otllrul PM-~ (flD&lf\: dlll1 thi: ,a;tiun.1"C14u1rcJ to ~hie"" stralqlil: pl11ft carried ou1.
~
S1ra1e8iC conunl.s Lake into BCCoum 1hr cbiingini;: wumprion~ 1h111 determine a lllrukl!)', continuully 11111 1:hi:\:._~ IA.> ~ lltiM thi:c ..,1.,.. .v1: tw1o11111 uw Mjutn:J imp11L1 on the oraanilation. An
eva/uarc !he SU'ategy as it is being implemcmc.:d, and tal.c thr nci:cawary ilupi. to udju~, the 11tr&1tej)
I ff 10 -r"
i%
; ,. I 8 j> d gt'
', \ I l II. , l Ii IJ 111 ,- , i .. ) \ 1. 'I• I' t
' •• • IZI
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 'h.l
STRATEGlC MANAGEMENT ~ STRATEGIC MANAGEMENT
------------------------------------------------------------------------------------------~ ------------ ----------------------------------------------------------------------
effective strategic control process should by implication help an organisation e_nsure that is ~etting out ~ After the establishment of standards, the next step is the measurement of actual performance. Finding
--~
to achieve the right things, and that the methods being used to achieve these thm.gs..ate working. ~
~
out deviations becomes easy through measuring the actual performance. The measurement of
Control is a continuous process. It is an integra.l part of management. It is concerned with monitoring I,! Performance level is sometimes easy and sometimes difficult. The tangible standards can be
and evaluating perfurmance so as to obtai~ .Qi~ bestresultsJtom manager-ial etfu_rt_§,_lt ensures work ~ -' measured in an easy way as it can be expressed in units, cost, money terms, etc. If the performance of
accompli;hm~n; ;c~ording to plans. It -is al~o the process of guiding and supervising the events in the ~\) manager has to be measured the quantitative measurement becomes difficult. The Performance of a
organiz.ation. The process of control consists of the following elements: ~ manager cannot be measured in quantities. The measurement of qualitative performance such as
~
human relations, employee morale, etc. can be done through psychological tests and surveys. The
measurement of performance is an important part of the control process.
Fixing the
Standards ~ ❖ Comparing Actual and Standard Performance
~
The third step in control process is the comparison of actual performance with the standard set. It is
/ very important to compare the actual performance with the planned targets. The deviation can be
defined as the gap between actual performance and the planned targets. When things are going as per
Measuring
the Actual plans or within the allowable limits then top management is not required to take any note of it. But on
( Follow-up )
Performances the other hand, if performance is not up to the level then top management is brought the notice to take
\
Control Process
) t corrective action. If the manager gives attention to every deviation then he will not be able to give
enough time. for, .important things. · The major deviations like replacement of machinery, an
appointment of workers, quality of raw material, rates of profits, etc. should be looked upon
.: ~et::~~~ l~
consciously. Minor deviations have to be ignored.
.~Ci-;
Corrective
Comparision
(, L
¢~ ❖ Taking Corrective Action
Action
~
,~~~
,,,,
The last step of controlling process is to take corrective action on the result of the comparison. The
'
purpose of control is not only to analyze the deviation but also to initiate remedial measures to take
corrective actions. After taking the corrective measures, if the actual perfurrnance is not in conformity
❖ Setting of Control Standards with plans, the manager can revise the targets. The corrective action generally involves top
1be first step in any control process is to set the control standards against actual performance so the
~, management. Some people who are taking corrective action is not a part of the control It is a separate
results can be controlled. Standards represent the criteria against which actual performance is
measured. The standard of control may be quantitative or qualitative. Here, the goals are converted
.
,ii
>'
:..,
~
managerial function. The overlapping function of control shows the unity of manager's job only. It
shows that managing process should be integrated one. But, it is only through taking corrective
into quantity, value, man hour etc. Controlling becomes easy through the establishment of these
standards because controlling is exercised on the basis of these standards. The standards which are .;-,
...,
.1,1

measures, a manager can exercise controlling.

2.7STRATEGY EVALUATION
measured and expressed is known as measurable standards. They can be in the form of cost, output,
expenditure, time, profit, etc.The achievement of various targets can make the specific persons :l• Strategy Evaluation is as significant as strategy formulation because it throws light on the efficiency
and effectiveness of the comprehensive plans in achieving the desired results. The managers can also
.:,'t...
responsible. The levels of achievement are also decided in advance. The Control standards should
assess the appropriateness of the current strategy in todays dynamic world with socio-economic,
also be consistent with the organizational goals. .i 't
❖ Measurement of Performance
S "II IT B - S C H O O I. 2 0 I 8
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•.
':J
political and technological iMovations. Strategic Evaluation is the final phase of strategic
management.
S N I l II • S t II CJ O I. 2 U I K
Page 127
r ~
STRATEG IC MANAGEMENT ~
STRATEGIC MANAGEMENT
-----------------------------------------------------------------------------------------~ ----------- -----------------------------------------------------------------------
~
The significance of strategy evaluation ties in its capacity to co-~rdinnte the task performed by ' on the learning from these reviews, strategy gets updated. Thus, the four important steps in BSC
managers, groups, departments etc, through control of performance. Strategic Evaluation is designing and implementation incJude:
significant because of various factors such as - developing inputs for new strategic planning, the urge ~-» 1. Translating vision into operational objectives
for feedback, appraisal and reward, development of the strategic management process, judging the ~ \) 2. Communicating the vision and linking it to the individual performance
~ \)
3. Planning and adjusting the strategy based on feedback
validity of strategic choice etc.
'-\J
r 4. Learning.
Importance of Strategic Evaluation
~ The concept of Balanced Scorecard was explained by Kaplan and Norton (1996) as:
•
•

Strategic evaluation helps to keep a check on the validity of a strategic choice.

An ongoing process of evaluation would, in fact, provide feedback on the continued relevance of r"
'~
I

Balanced Scorecard complements financial measures of past performance with measures of the
drivers of future performance. The objectives and measures of the scorecard are derived from an
the strategic choice made during the formulation phase. This is due to the efficacy of strategic
evaluation to determine the effectiveness of strategy.
4" organization's vision and strategy. The objectives and measures view organizational performance
from four perspectives: financial, customer, internal business processes, and learning and
• · ed to take scores
During the course of strategy implementation managers are requrr . of decisions. growth. These four perspectives provide the framework for the balanced scorecard. Corporate
• Strategic evaluation can help to assess w hether the decisions match the mtended strategy executives can now measure how their business units create value for current and future customers
requirements. . and how they must enhance internal capabilities and the investment in people, systems, and
• •
In the absence of such eva 1uat1on, manaooers would not know explicitly how to exercise such procedures necessary to improve future performance.
discretion. _ Instead ofrelying on just one instrument or measure, using a balanced set of measures ensures that all
• Strategic evaluation, through its process of controi feedback, rewards, and review, helps in a the aspects of the employees' performance are covered and provide relevant support for the decisions
successful culmination of the strategic management process. taken. Therefore, it is necessary that the manager should be capable to observe and note the several
• The process of strategic evaluation provides a considerable amount of inforrn_ation and experience
to strategists that can be useful in new strategic planning.
i: instruments and measures simultaneously. The four perspectives given by Kaplan and Norton are;
2.7.1 Importana! of Strategic evaluation and control
✓ There is a need for feedback, appraisal and reward
✓ To check on the validity of strategic choice
✓ Congruence between decisions and intended strategy

-~
l~
,,,
✓ Creating inputs for new strategic planning i'_,
~ ~
S<o...,a,d (BSq A Stut,gic Managom,~t Tool ,
~,
~
Balanced Scorecard is a strategy management system that helps_~~nagers to translate organi:~tion
?
.,
strategy into operational objectives and implement it. BSC framework looks at the strategy from fo~
~ ; . ~ ~ t i v e ~ i.; -fin~cial,- c~ui~er, internal business processes and learning and g;owth.· ~
~ ~ . -
Thus, it brings in the necessary clarity to strategy. Further, implementation of BSC ensures that
strategy gets communicated to all the employees suitably to facilitate implementation by them. ::,
Measuring organizational performance through BSC reviews remain integral to BSC concept. Based
~
~
A Page 129
g
S'- / T B - St'IIOO/. 2 0 18 SNll II-SCHOOL 21118
Page IZB
 ~
"-
STR/\ rnrnc M/\N/\GEMENi ►~
------------------------------------------------------------------------------------------►-.a ________________________ -------------------------------------------- STRATEGIC Mi\N/\Ol>MENT __ _
l. t
The financial perspecth·e exrunincs if the company's implcmcnt etion and execution of its profitable) customer groups. The measures that are selected for the customer perspective
t -»
strategy are contributing to the 1,ott{lm-line improvement of the company. It represents the shou ld measure both the value that is delivered to the customer (value position) which may
t ..»
long-te.nn strategic olliectives of the organization and thus it incorporates the tangible involve time, quality. performance and service and cost and the outcomes that come os o result
outoomes of the strategy in traditional financial terms. The throe possible stages es described , "' of this va lue proposition (e.g., customer satis fact ion. market share). The value proposition con
by Kaplan end Norton are rapid growth. sustain and harvest. Financial objectives and ";" II be centered on one of the three: operational excellence. customer intimacy or product
measures fur1be gro\,th stage will stem from the development and growth of the organization ~ -I leadership, while maintaining thresho ld levels at the other two.
which will lead to increased sales volumes. acquisition of new customers. growth in revenues '----I 111. The internal proce" perspective is concerned with the processes that create and deliver the
etc. The sustain stage on the other hand will be characterized by measures that evaluate the l, .I customer value proposit ion. It focuses on al l the activities and key processes required in order
efrecli\'e~ of the organization to manage its operations and costs. by calculating the return
.
on mvestment. the return on capital employed. etc. Finally. the harvest stage will be based on
lt
'J
. for the company to excel at providing the value expected by the customers both productively
and efficiently. These can include both short-term and fong-tenn objectives as well as
cash flow analysis with measures such as payback periods and revenue vo lume. Some of the
most common financial measures that are incorporated in the financial perspective are EVA,
.,
.I incorporating innovative process development in order to stimulate improvement. In order to
identify the measures that correspond to the internal process perspective.. Kaplan and Norton
-J
reven11e growth. costs. profit margins, cash flow, net operating income etc. _,, propose using certain clusters that group similar value creating processes in an organization.
The clusters for the internal process perspective are operations management (by improving
~ asset utilization, supply chain management, etc). customer management (by expanding and
~ deepening relations), irmovation (by new products and services) and regulatory & social (by
establishing good relations with the external stakeholders).
l,
t>
ti• ~
IV. The innovation and learning perspective is the foundation of any strategy and focuses on
the intangible assets of an organization, mainly on the in1emal skills and capabilities that are
;i.,'. required to support the value creating internal processes-. The innovation and learning
~~
~, Perspective is concerned with the jobs (human capital). the sySlems ( in format ion capital). and
-~
t,
~
the climate (organization capital) of the enterprise. These chree factors relate to what Kaplan
and Norton claim is the infrastructure that is nc:eded in order !O enable ambitious objectives in
the other three perspectives to be achieved. This of course will be in the long tenn, since an
;, improvement in the learning and grov.th perspective will require certain expenditures that may
~, decrease short-tenn financial results, whilst contributing to long-term !lleceu.
:.. , Though, initially, Balanced Scorecard emerged as a perfi>nnance management sySlem, over a
.: 'I period of time it has come to be knov.n as a smuegy management system. with its ukimatc aim
:,., being the achievement of long term financial performance. Balanced !ICorecard is seen as a
;., strategic management system enabling business k:aJers to 111e1:t the challenge of strategy
,.:.~••.,
execution
n.
·~
The customer perspective defines the value proposition that the organization will apply in
SNIT

order to satisfy customers and thus generate more sales to the most desired (i.e. the most
Jl -S l'J/001 1018
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~ ~'\II ti \'-IIOUl J 11t d,
Pase 131
 ~:"
~ .
smATEGIC MANAGEMENT .,.. " ' STRATEGIC MANAGEMENT
·-----------------------------------------------------------------------------------------':-, ----------- -----------------------------------------
Module 3
Internal and exrernal analyses: SWOT analysis; benefirs and pitfalls of SWOT analysis; l'ole of SWOT
~"
While in external analysis , three correlated environments should be studied and analyzed -
';-'-i ► immediate/ industry environment
analysis in strategic managrment. Gap analysis, ol'ganizational capability profile; strategic advantages ~ ► national environment
►
~
broader socio-economic environment / macro-environment
profile: core comperencies; McKinsey·s 7 Sji·amework
~ Examining the industry environment needs an appraisal of the competitive structure of the
3.lENVlRONMENTAL SCANNING- INTERNAL & EXTERNAL ANALYSIS
~ organization's industry, including the competitive position of a particular organization and its main
rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is essential. It
~ also implies evaluating the effect of globalization on competition within the industry. Analyzing the
OF ENVIRONMENT
national environment needs an appraisal of whether the national framework helps in achieving
. te n1al fuctors · Environment must be
· of both extema I an d m
0 anizational environment consists . . I
competitive advantage in the globalized environment. Analysis of macro-environment includes
. development and forecasts o f fuctors that will influence orgamzat1ona
rg so as to determine .
exploring macro-economic, social, government, legal, technological and international factors that
scanned . an d utilization of information about
ccess En,·ironmeotal scanning rcfen to possession
may influence the environment. The analysis of organization' s external environment reveals
su . .
on:as1ons, p»." ern s, t-nds and relationships within an organization's internal and external
• ~ ' .
opportunities and threats for an organization.
. must
en,·iroo meot. It helps the managers to dec1"de the future path of the organization. Scanning
identifv the threats and opportunities existing in the environment. While strategy formulation, an Strategic managers must not only recognize the present state of the environment and their industry but
organ~tion must take advantage of the opportunities and minimize the .threats. A threat for one
t: also be able to predict its future positions.
+-~
organization may be an opportunity for another.
r O T Analysis - A Strategic Planning Tool
IDtffllal aoah·sis
• of the eo,·ironment is the first step of environment scanning. Organizations should
SWOT is an acronym for internal Strength (S) and Weakness (W) of an organization, and
t--- ~
obselw the internal organizational environment. This includes employee interaction with other - - - - -· --.J•, .. - -
~
-
external Opportunities (0) and Threats (T) facing that organization. A merging of the organization's
employees, employee interaction with management, manager interaction with other managers, and - ---~ -- ~ -
res9urces with the opportunities in the envTtonment results_i_~. an assessment of the organization' s
nwiagemcnt interaction with shareholders, access to natural resources, brand awareness,
organizational soucture, main staff, operational potential, etc. Also, discussions, interviews, and
'-'
(,. ~
opportuniti~s. This m~rging is frequently called SWOT analysis because it br~gs together the
organization,'s Strerygths, Weakness, Opportunities, and Threats in order to identify a strategic niche
surveys can be used to assess the internal environment. Analysis of internal environment helps in
t, that the organization can explo~. SWOT analysis provides information that is helpful in matching the
identifying strengths and weaknesses of an organization.
.:. , firms' resources and capabilities to the competitive environment in which it operates and is therefore
As business bea>mcs more competitive, and there are rapid changes in the external environment, .:, , an important contrjbytjon to the ~ra!«:&i~lannJng_.P~~ess. Having completed the SWOT analysis,
...
information from external environment adds crucial elements to the effectiveness of long-term plans.
As environmem is dynamic, it becomes essential to identify competitors' moves and actions.
Organizations, have also to update the core competencies and internal environment as per external
,~,.
.:,.,
the organization reassesses its mission and objectives.
In the light of the SWOT analysis and identification of the organization's opportunities, management
reevaluates its mission and objectives. Are they realistic? Do they need modification? If changes are

•
environment. Environmental factors are infmite, hence, organization should be agile and vigile to
accept and adjust to the environmental changes. For instance - Monitoring might indicate that an
original forecast of the prices of the raw materials that are involved in the product are no more
credible, which could imply the requirement for more focused scanning, forecasting and analysis to
create a more trustworthy prediction about the input costs. ln a sinlilar manner, there can be changes
in factors such as competitor's activities, technology, market tastes and preferences.

~·
►'
l,.r't
~,
needed, in the organization's overall direction, that is where they are likely to originate. On the other
hand, ifno changes are necessary, management is ready to begin the actual formulation of strategies.
Strength: Strength (internal) is a resource, skill, or other advantages relative to competitors. It is
distinctive competence that gives the organization a comparative advantage in the market place.
S"llf B-SCIIOOL 10 18
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~ ~ N I I U • S l . 11 O O I 2uI¥ Pagel33
 ~-
• Iii
(,.._
STRATEGIC MANAGEMENT F "
------------------------------------------------------------------------------------------.C.... STRATEGIC MANAGEMENT
Market leadership. public image. experience. financial and human resources. organization network ( )J ----------- -------------------------------------------------------
organizational strengths and weakness. This process of optimal matching is essential for developing
and alliances, etc.. is examples of organizational strength Iii
~
• appropriate course of action.
lntcrn'11 ~ -11
~Ii
, The SWOT process
~
f .,
c....,.
'Strengths
,
~ -
t
h,1
. Internal analysis
l
External analysis
!
Q) zct) •
h,1
Internal strenght and
weaknesses
External opportunities
and threats
>
~
~ /
(0
en
0
Q. -<'
Q)
ct) _, ~
u
lO

Identification of the
key strategic issues
~
,,,u
•
.a
,:, l .D
-0
~
GI
Opportunities <V
•,
.! Evolution of options and .!
"iii selection of strategy iv
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C ::J
·..:; C
~L ~ u
C
0 l .:;
C
0
u
Implementation and
','--,1 management of the
~~
chosen strategy
External
Weakness: A weakness (internal) is a limitation or deficiency in resources, skills, and capabilities
~, 3.2.1 SWOT Analysis of Google
~~
that seriously affect performance. Lack of facilities, resources, management capabilities, marketing
skills, etc. are sources of weakness. ~, Google is probably the world' s best-known company for pioneering the search engine revolution
~, and providing a means for the internet users of the world to search and find information at the click of
a mouse. Further, Google is also known for its work in organizing information in a concise and
Opportunities: An opportunity (external) is a major favorable situation in the organization ' s
environment. The example of an opportunity could be new market, reduction in compaction, higher
~, precise manner that has been a game changer for the internet economy and by extension, the global
economic growth rate, technological changes, and so on. ~~ economy because corporations, individuals, and consumers can search and access information about
anything anywhere and anytime. Moreover, Google also goes witl}.-lhe-motto of "Do _not be Evil'.'
(.~. ,
Threats: A threat (external) is a major unfavorable situation in the organization's environment. The
~, which means that its business practices are geared towards enhancing infonnatio~ _and actualizing
entry of a new competitor, increased bargaining power of the suppliers and buyers, major changes in
technology and government regulations, slow market growth, etc are some examples of
.:,., ~ctice~_!la.!._woulc!_ ~elp people fyld and search information. Though its business practices in
China and elsewhere where the company was accused of being complicit with the authoritarian
organizational threats.
'-"
~., regimes in censoring information were questionable, on balance, the company has done more good
than harm in bringing together information and organizing it.
SWOT analysis p ~ s e f u l framework_Jgr m~~g the best strategic choj£:!.. ,\ business strategy
~~ ❖ Strengths
can be seen as an optimal match between the external opportunities and threats, and the
SNIT 8-St'HOOL 2018 Page 134
~., • Market Leader in Search Engines
'6,r. SNll 8-S("IJOOL 2018 Page f35
(.;,,,,.,,
 STilATEOlC MANAGEMENT - w
~------------------------------------------ ---------------- ---------------~
~ ---------- ----------------------------------------STRATEGIC MANAGEMENT
Perhaps the biggest strength of Google is that it is the undisput.ed leader in search
engi1~es, -
cost the company dearly (literally as well as metaphorically). The point here
which means that it has a domineering and lion' s share of the mternet searches is that Google
worldwid e. '--.
has to devise a more robust business model that embraces e-commerce and mobile
Google has more than 65% of the market share for internet searches and the competito commerce
rs do , ii
~
along with its current business model that is based on ad revenues alone.
not even come close to anywhere that Google does.
~
• Lack of Compatibility with next generation devices
• Ability to Generate User Traffic
Another weakness for Google is that it is not compatible with many next
Google is a household brand in the world, its ability to drive internet user traffic generation
is legendary, ~I] I
computing platforms including mobile and tablet computers and this remains
and this has helped it become one of the most powerful brands in the world. Indeed,
Google ~ I concern for the company.
an area of
averages more than 1.2 Billion hits a month in tenns of the unique searches that users perform ~ ❖ Opportunities
on the site. This gives it an unrivaled and unparalleled edge over its competitors
in the market. ¼' • Android Operating System
• Revenue from Advertising and Display
Its revenue model wherein it gamers humungous profits through
~ Perhaps the biggest opport~nity for Google lies in its pioneering effort in
providing the
partnershi ps with third party
~
' Android OS (Operating System) which has resulted in its becoming a direct
sites has held the company in good stead as far as its ability to mop up resources competitor to
and increase Apple and Samsung.
both its top-line as well as bottom-line is concerned . This is another key strength
of the ~ • Diversific ation into non-Ad Business Models
company that has helped it scale greater heights.
~ As discussed earlier, the company has to diversify into non-ad revenues if
~~
• Introduction of Android and Mobile Technologies
it has to remain
profitable and current indications are that it is adapting itself to this as can be
seen from the
The last of the strengths discussed here relates to its adoption of Android
and Mobile "-r~ push towards commercial transactions using its numerous sites like Google Books,
Google
technologies, this has resulted in it becoming a direct competitor of Apple as
far as these '-.;-, Maps etc. '
devices, and operating systems are concerned.
~3 \. • Google Glasses and Google Play
❖ Weaknesses
<f ~ /
~~ The introduction of Google Glasses and Google Play promises to be a game changer for
• Excessive Reliance on Secrecy
~I ~ Google and this is a significant opportunity that the company can exploit. Indeed,
this very
Google does not reveal its algorithm for searches or even its basic formula as far as internet
~, aspect can make the company take the next evolutionary leap into the emerging
nano-computing.
world of
searches are concerned leading to many experts slamming the company for being "-.~
hiding behind the veneer of secrecy. However, in recent years, Google has
opaque and
taken steps to ~, • Cloud Computin g
•
redress this by providing a bare bones version of its unique search engine algorithm
Falling Ad Rates
. ~, Cloud Computing remains a key opportunity for Google as it is already experienc
providing storage and cloud solutions. Indeed, if not anything, it can move into
ed in
the enterprise
In recent years and especially in 2013, the company has been faced with declining
',> market using the cloud-computing paradigm.
revenues ~~
from ads and as a result, the profitability of the company has taken a hit. This is
the ongoing global economic slowdown and partly because of competitors snapping
partly due to
at its
~., ❖ Threats
~ > • Competiti on from Facebook
heels in a more aggressive manner. Indeed, Apple has already taken steps to gamer
engine revenues in its devices and hence, Google must be cognizant of the challenge
search
~., The advent of Social Media has seriously threatened Google' s dominance in the
internet world and
~·~--
s that lie the company has to pull an ace to deal with the increasing features available
on Facebook and
ahead.
h• I
Twitter.
• Overdependence on Advertising
• Mobile Computin g
Google' s business model relies heavily on advertising and the numbers reveal that
it gets more Another threat to Google is from the emerging area of mobile computing that
threatens to pass the
than 85% of its revenues from ads alone. This means that any potential dip in revenues
would ~'t company by as newer companies seize the opportunity to ramp up their mobile computing
~"IT 8-SC l·J OOL 20 1 8
Page 136 ~,. S N l 'I II - SCHOOi. 2 u1s

presence.
Page 137
 ~
----------------------·- ---------------------------------
STRATEGIC \.fA,'IAGE\.f~>ll
---------------------" "
,
-------------- - --------------·---------------------------------------------------
✓ Nike is per-ceived by 90me COf15Ultler! as being too premium and a mwcy brand. While this is

STRATEGIC 'lfANAG~ll.."'IIT
~ necessarily not a bad thing. the currem market ~ i o is web thal ooa.!UIJlen are migrating to the
""
3.2.2 SWOT AnafyJJi:s of !'iike middle tier of the luxury scale as they are becoming pra:c conscious and quality iJcmcd.
~ Strengtlu
✓ TIie bigge5t strength afl"i"ike is that it is an extremely competitive organization with its approach of
\I ❖ Opportunitie!I
~,uM Do It~ slogan for its brand epitomizing il.!i attitude towards business. The company was founded \I ✓ The biggest opportunity tor Nike i5 from the emerging marlccts of China and India whctt the B illion
oo the principle that ii would make shoes for anyone who could walk or run and this has been the
guiding philosophy behind Nike. Coupled with il.!i iconic "Swoosh"' logo and its equally catchy
tagJinc, ~-ike·, arength is that it 1w emerged as a "Can Do" company.
✓ Sltmgth ofthe ~ n y it that it has outsourced all aspects of its production to overseas facilities and

~
~
" '

Plus new consumers are now aspiring to west.em lifestyles which meam that thry would be mme
receptive to brands like Nike. As the company is as50eiared with premium brandtr>! and
segmentation, it can be said that capturing the ..emerging rnaril;et newly affiumt ~ • pr-ize-
could well be a game changer for lhe company.
thereby. doa not have any manufacturing outlet of its own. This has helped the company focus on
h-igher value adding activitiet, like design and research and development and at the same time, it has ";. ✓ Jn recent years, Nike has begun to divenify into accessories and other premium products a.pat its
sig nature footwear segment. This is a step in the right directxm and ~mcthing.. whteh wou.ld acand the
:;."
111wd the high labor COIU that are part of the traditional manufacturing sector.
company in good stead as it attempts to look for revenues beyond its traditional offering......_
✓ Apart lrom this. the other big strength of111ike is that it is a globally recogniz.cd brand that has top of
✓ The emphasis on design of higher end footwear ,eenu to be paying off' lor ""ikc !hill ~ --.-r~111gly
the mind recall anion, consu.men. and the youth in particular. Further, the Nike brand is synonymous
~ being seen as a must have product for anyone who walks or rum and • the company W¥ iourad on
• ·id! quality and resilience a. well• endurance and fitness, which makes it the brand of choice for I
~ the principle that it would serve anyone with leg,, this 1tnlkgy .ems 10 have mt the right note9.
adllelft and anyone who wishe!. to run.
~ ✓ Nike has the unique advantage of offering value for money and rhis can be ~lltJed to I.he h,11 • the
✓ f inalt)', NM _ . . co benefit from the current disarray among its competitors because of the I
~Jfl
alDllflhent.
Qflhe market wherein Nike w ith its USP or Unique Selling Proposition can standalone
(,a
.
~ company begins to make inroads into the aewer consumer qmen15, which want qualil)' at an
affordable price.
• ,..,_t:n ~ ❖ Threats
:, ✓ The fact that the company has a globeJ supply chain , _ . cha& it is SIIOJCCl 10 the vici._.udn of
; NM it atmott ~lu11ively driven by iUi footwear bus inesi and therefore, the footwear market I
~ international trade practices including labor !llrikes in il!i o ~ kxa&IOM. CUffl:IIC) fh.actuauom that
~ w • lion '11 wre of ru. revenues making it dependent on this segment for its survival. In
thac- l'-..io,uuy times, h i• not a ~ but.inc~ practice to be overly dependent on one segment and 1 decrease its margins, as well as lack of control over the gcopoliiicaJ ~ happcnina aound lhc-
hence, NM ou,dll co diven;ify horiwntally a, well as; vertically and include apparel and other ~ world which have the potential to dil.rupt its gk,bel !1Uppl) chain.
~ - ~ ✓ Nike must improve on its image wherein it i5 bc-111g scco w; raoning ro ,aploiuuvc blaaincu pr-."liccs
I
fflelallhorica.lly)
✓ Thou,it, ~ have memiontd the fact thst it~ out110urccd its manufacturing aspects completely as ~
in its overseas outlets. Already, it had to pa) a heaV) price (rnuncwil) a11 ~ • •
•rcngrh, the ncp1ivc publicity thai Nike sot ~use of labor unfrie ndly conditions in its overseas ., because the emerging generation of consumc:rs an, --iall), and cm,ironmcmall) cu~ioua which
.,.~
means that they would not Like to buy a produ""l thiu is the n:sub uf Jubww; busins:g practica.
outlet, ha, badly dented it, brand image. Indeed, the name ''S wc111shop11" iB used to mockingly ' tuU un !'liika: 1,1,iJh ~ - o ~ bocomin11 mon: pn.:e conscious
dew:ribe the ahoo"em condition• in ii. overloelUo munufacturing faclli1ies . I ✓ The ongoing re~ssion has taken a h&:11ry
✓ The company dt>t• it• lx,• inelij through rc,11iiler11 who J1U1ck other br11nd11 llli well. mariiiru.. Th&: cumbinauun ut retailing lhird part) outicu and
.,-~
This means 1hat the and rc1aifer5 <krnanding hig~r in
asi.iduously cultivau;:d exclu1,ivi1y /111K1met.ime• i®rificed bec11u&o il hltB not yi,i sprelld ;1 11 wings to competing brand:. cutting pri&:.:t. hi1I> mwJc lbc: iioinll wutih hlr l"liika:.
include e,iclusive retailer out~* b p11n of it• bu&ine11& 111r111cgy. ✓ finally, Nike has to cnsun: th.ti. it Joc:i. lll>t Jilutc ib kh:u11 like lol.llTII! 1.1f llS cumpctilon ""IK> lftl "°"" in
...
~ the doldrums. For instance, R«bllk t.lUll prumUM:J a k.Jl iUld ~~ inlenliCI) cumpctili~c wilh Nike hu
:-
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seen its fortunes sag and hence. Nike must not go Reebok 's way and instead, must define its core . • Searching a new market for the product which is not having overseas market due lo import
\I restrictions; etc.
~
competence and implement its strategies accordingly.
"
3.2.3 Advantages of SWOT Analysis Internal limitations may include-
SWOT Analysis is instrumental in strategy formu lation and select ion. It is a strong tool, but it \I • Insufficient research and development fucilities:
involves a great subjective element. It is best when used as a guide, and not as a prescription. ~ • Fauhy products due to poor quality control;
Successful businesses build on their strengths, correct their weakness and protect against internal
~ • Poor industrial relations;
r ~
weaknesses and e,.-ternal threats. They also keep a watch on their overall business environment and • Lack of sk illed and efficient labor; etc.
recognize and exploit new opportunities faster than its competitors.
Analy,0 h<~• ID stra~gk pl~•fflg ;, followmg m,...,,. "
~
_J,J ~ P ANALYSTS
Gap analysis is a tool that organizaJional managers can use to work out the size. and sometimes the
• lt is a source of information for strategic pl~nning.
~ shape, of the strategic tasks to be undertaken in order to move from its current stale to a desired,
~
• Builds organization 's strengths. future state.
• Reverse its weaknesses. Analysis of gaps is a very effective technique for guiding the planning team in looking for corporale
• Maximize its response to opportunities. strategies to achieve targeted levels of corporate perfonnance.
f
• Overcome organization 's threats. Gap analysis compares two things, to measure the difference between them. Often gap analysis helps
• It helps in identifying core competencies of the firm. in comparing two different states of something - the c:urmll Slale and the future stale. Once the gap is
• It helps in setting of objectives for strategic planning. identified, one can look for ways of bridging the gap.
• ft helps in knowing past, present and future so that by using past and current data, future plans
can be chalked out.
.3.2.4 Limitations of SWOT Analysis
" . • ~- :, , , , ,. f
~
g 't~
SWOT Analysis is not free from its limitations. It may cause organizations to view circumstances as ~ Plrl'D,,-Q
~
very simple because of which the organizations might overlook certain key strategic contact which I &.
may occur. Moreover, categorizing aspects as strengths, weaknesses, opportunities and threats might ~
be very subjective as there is great degree of uncertainty in market. SWOT Analysis does stress upon ~ u
Time
a
the significance of these four aspects, but it does not tell how an organization can identify these
f ❖ Requirements for effective gap ana.lysia
'
aspa;r.s for itself.
✓ Clearly agreed indicators of overall corporare p:rtonnance; it is highly desirable thal rhill the
There are certain limitarions of SWOT Analysis which are not in control of management. These ~ indicator of overall corporate perfonnance should be IJ'IICcable through a range of business
.,.f,
include-
performance metrics, in the funn of simple cause and ctfcct relationships. sorne1imes called a
• Price increase; I
value driver tree.
• Inputs/raw materials; 1 ✓ Sound data teeding the ~ults rni:asured by the key p«lormance indicators (KPI) used in the
• Government legislation; org1111izatio~ including data on~ perto1'11111111:e ofth.: organization fur du, pas& few years.
• Economic environment;
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✓ An agreed time span fur the strategic planning exercise fur comparing furecast performance under • Information and
different assumptions. These various sets of assumptions may be trialled in a process of scenario ~ • General management
planning.
✓ Before performing an analys is the strategic planning tean1 needs to undertake target setting. The
~
J ❖ Financial Capability:
targets fur desired future performance of the organization need to be set using the corporate ~ Financial capability factors relate to the availability, usages and management of funds and all allied
performance indicator mentioned above. Target setting should be done with possible risks of }I aspects that have a bearing on an organisation's capability to implement its strategies. Some of the
corporate collapse in mind. ~ important factors which influence the financial capability of any organisation are as follows:
✓ The availabilit y of forecasting techniques. fur the strategic planning team to use in the business
~ • Factors related to usage of funds capital structure, procurement of capital, controllership,
financing and relationship with lenders, banks and financial institutions.
forecasting of likely corporate results under various scenarios. This may sometimes warrant the
f • Factors related to usage of funds capital investment, fixed asset acquisition, current assets, loans
~
employment of business fo recasting software.
and advances, dividend distribution and relationship with shareholders.
In summary gap analys is consists of-
• Factors related to management of funds financial, accounting and budgeting systems;
o listing of key fuctors such as performance levels of key value drivers as well as the overall management control system, state of financial health, cash, inflation, credit, return and risk
level of corporate perfurmance of the current strategies or "what is", and management; cost reduction and control and tax planning and advantages.
o staling factors involved driving outcomes for the future "what should be", and then,
o highlighting the gaps that exist and need to be fill ed.
i' ❖ Marketing Capability:
Marketing capability factors relate to the pricing, promotion and distribution of products or services,
Gap analysis furccs an organization to be clear on its current identity and performance, and challenge
itself about what it wants to be in the future. It does so in clear, specific, measurable terms. This helps t and all the allied aspects that have a bearing on an organisation's capacity and ability to implement its
strategies. Some of the important factors which influence the marketing capability of any organisation
in designing or selecting specific strategies to fill the gaps.
are as follows:
3.4 Organisational Capability Profile (OCP) • Product related factors- variety, differentiation, mix quality, positioning, advantages, etc.
Capabilities are most often developed in specific functional areas such as marketing or operations or • Price related factors- pricing objective, policies, changes, protection, advantages, etc.
in a pan of a functional area such as distribution or research & development. It is also feasible to • Place related factors- distribution, tranSportation and logistics, marketing channels. marketing
measure and compare capabilities in functional areas. Thus, a company could be considered as
~ intermediaries, etc.
inherently strong in marketing owing to a competence in distribution skills. Or a company could be ~ Promotion related factors- promotional tools, sales promotion, advertising public relations, etc.
•
~
competitive in operations owing to superior research and development infrastructure. Integrative and systemic factors- marketing mix. market standing, company image, marketing
•
Organisational capability factors are strategic strengths and weaknesses existing in different organisation, marketing system. marketing management infurmation system, etc.
functional areas within an organisation, which are of crucial importance to strategy formulation and ?
implementation. ~
❖ Operations Capability:
~
Operations capability factors relate to the production of products or services, use of material resources
Thus organi7.ation is categorized into six largely accepted and commonly understood functional areas and
and all allied aspects that have a bearing on an organisation's capacity and ability to implement its
they are:
strategies.
• Finance Some of the important factors which influence the operations capability of any organisation are as
• Marketing
follows:
• Operations
• Personnel SN ll 11 -S l'IIOOI. ~u·, s Page (43
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work systems, degree of ~ • Transmission and dissemination- speed, scope, width and depth of
coverage of information, and a
Production system- Capacity, location, layout, product or service design,
•
willingness to accept information.
•
automation, eA1ent of vertical integration, etc.
Operations and control system- aggregate production planning , material
supply, inventory, cost ~
and quality control, maintenance systems and procedures, etc. "
R&D system- personnel facilities , product development, patent rights,
level of technology used,
" ❖ General management Capability:
~
• tion and direction of the functional
General management Capability relates to the integration, coordina
technical collaboration and support, etc. a bearing on an organisation's
capabilities towards common goals and all allied aspects that have
~ capacity and ability to implement its strategies.
Some of the important factors which influence the General
management capability of any
'
❖ Personnel Capability: organisation are as follows:
resources and skills, and all s related to setting strategic
Personnel capability factors relate to the existence and use of human • General management system- strategic management system, processe
to implement its strategies. strategy evaluation system,
all.ied aspects that have a bearing on an organisation's capacity and ability intent strategy formulation and implementation machinery,
and incentives system for
y of any organisation are as manageme11t information system, corporate planning system, rewards
Some of the important factors which influence the Personnel capabilit
top managers, etc.
follows:
personal goals, competence,
• General managers- orientation, risk propensity, values, norms,
, development, compensation,
The personnel system- systems for manpower planmng, selection
t
• capacity for work, track record, balance of functional experience, etc.
ent within the organisation,
communication and appraisal, position of the personnel departm ent, regulatory agencies and
• External relationship- influence on and rapport with the governm
procedures and standards, etc. philanthropy, public image as
, financial institutions; public relations, sense of social responsibility,
of managers, staff and
Organisational and employees characteristics- corporate image, quality
~
• ·corporate citizen, etc.
workers perception about and image of the organisation
as an employer, availability of
and weakness in key resuh areas
developmental opportunities for employees, working conditions, etc.
., ') • . ,. -~-- ~-' -· OCP is summarised statement which provides overview of strength
in this profile may be presented in
g, safety, welfare and likely to affect future operation of the organisation. Information
• Industrial relations- Union management relationship, collective bargainin
security, employee satisfaction and morale, etc. qualitative terms or quantitative terms.
❖ Information management Capability:
and management of the flow of
~ After the preparation of OCP, the organisation is in a position
to assess its relative strength and
weaknesses vis-a-vis its competitors. If there ~ any gap in area,
suitable action may be taken to
about company's potential and
lnfonnation management Capability factors relate to the design overcome that OCP shows the company's capacity. OCP tells
of decision-making and all
information from outside into, and within an organisation for the purpose capability. OCP tells what company can do.
ability to implement its strategies.
allied aspects that have a hearing on an organisation's capacity and
management capability of any 3.5 Strategic Advantage Profile (SAP)
Some of the important factors which influence the Information
organisation are as follows:
• Acquisition and retention of information- sources, quantity, quality
and timelines of information,
r Every firm has strategic advantages and d~advantages. For example
strength but they tend to move slowly, compared to smaller firms.

, large firms have financial

and often cannot react to changes
every firm has strengths as well
retention capability and security of information. quickly. No firm is equally strong in all its functions. In other words,
es or strengths of the firm to be
• Processing and synthesis of information- database management, compute
r systems, software as weaknesses. Strategists must be aware of the strategic advantag
they must regularly analyse their
• capability and ability to synthesis of information able to choose the best opportunity for the firm. On the other hand,
threats effectively.
ateness of information formats, and strategic disadvantages or weaknesses in order to face environmental
• Retrieval and usage of information- Availability and appropri
capacity to assimilate and use information. Page 145
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SAP d,~,;t,,, ""' ,ra,.;~1;0,·, romp«•;~ po,;rioa mfie m"ke~- A comp.,;ooo of SAP ..:~· ·},
OCP shows thaL OCP indjcates what the organisation do base on its capability; SAP indicates what Structure L
the organisation has done or is doing in comparison to its _c_~!P! t~ors to generate competiti~e
-
advantage_fur itseU: Thus, OCP is internal-oriented, while SAP is external-oriented. Ln preparing SAP
3 factors are important:
-
- 'Hard Ss'
Strategy

~ I
I // _± "-.. .

) ~dSs'
(
! Systems
.
► The organisation should identify the factors which are relevant for determining success in the
industry concerned. These factors are known as KSF.
► Organisation should measure its performance on these factors in comparison to its competitors.
Based on comparison. the organisation can find out whether it has advantage or disadvantage in
Skills
terms of various factors.
► After identifying advantage, the next step is to measure their sustainability because any advantage
may tum into disadvantage due to change in environmental factors. 'Soft Ss'
Staff
Strategic Stretch
Strategic Intent is seen as going beyond Business as Usual Seen as Core Competency in Practice
The model can be applied to J'Q,3ny situations and is a vah•ab~hcn organizational design is at
Apple and Honda's strategic intent was global dominance. Compare with Strategic Fit which doesn't
question. The most common uses of the framework are:
have a long term component. Basically they used their core competences to achieve Strategic Intent.
The difference between Intent and Resources is call ~~tretch. ,.•
•
To facilitate organiz.ational change.
To help implement new strategy.
---
Examples: ~ ~- J '
I ( ! .../_.
~ /,,
... (1. ......
' -
I
' . Apple beaJ Microsoft in mobile apps market
', •
•

To identify how each area may change in a future.

To facilitate the merger of organizations.
• Google bear Microsoft is search and cazegorization of networked information
'
3.6.1 7s factors
Managers require their frame of reference from the culture of the company, business school
In McKinsey model, the seven areas of organization are divided into the •soft' and ·bard' areas.
education, peers, consultants and their own experience. They therefore frame their competitive
stratagems from these managerial frames. Strategy, structure and systems are hard elements that are much easier to identify and manage when
compared to soft elements. On the other hand, soft areas, although harder to manage, are the
3.6 McKinsey's 7 S framework
foundation of the organization and are more likely to create the sustained competitive advantage.
McKinsey 7s model is a tool chat analyzes firm's organiz.ational design by looking at 7 key internal
elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they 7s factors
are effectively aligned and allow organiz.ation to achieve its objectives. Soft S
Hard S
Strategy Style
Staff
Structure
Skills
Systems
Shared values
SNITH - S C HOOL 2 0 18
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✓ Strategy is a plan developed by a firm to achieve sustamc

STnATEOIC MANAOm,ff'.Nl ·~
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.
1
· d competitive advantage nnd
.

\I
~
'

o~~r
______ ~ ---- \ ~ - -- ------------
--- (Ji?}, .i-,'1>'~
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----;:;~;:~---------------------------------------
~
. Wh at does a well-aligned strategy mean . m 7s McK1nscy \I
successfully compete m the market.
. I
model? In general, a sound strategy is t ,c one
that's clearly articulated, IS long-term. helps lo
. . .'
r
\I Competitor Analysis and Strategies
· r.
. . advantage an d 1•s rem,orcc d by strong vis ion, m1ss1on and values. But 11 s -
achievc compet1t1ve 1 ,, , •· compe11·1or re.vpon.ve proJ1
Pu,po.ves o·'J' competilor analvrls ·
,;:•t e; Michael Porter's analysts ·
· of compet//rve
hard to tell if such strategy is well-aligned with other clements when analyzed alone. So the key in ~ s/ruoture of Industry; generic competitive .vtrategie.v; blue ocean strategy.
7s model is not to look at your company to find the great strategy, structure, systems and etc. but t
to look if its aligned with other elements. For example, short-term strategy is usually a poor f 4.1 Competitor Ana!ysis - Meaning, Objectives and Significance
but if its aligned with other 6 elements, then it may provide strong results. · Organizations must operate within a competitive industry environment. They do not exist in vacuum.
choice for O company
✓ Structure represents the way busi ness divisions and units are organized and includes the Analyzing organization's competitors helps an organization to discover its weaknesses, to identify
information of who is accountable to whom. In other words, structure is the organizational chart opportunities for and threats to the organization from the industrial environment. While formulating an
of the firm. It is also one of the most visible and easy to change elements of the framework . organization's strategy, managers must consider the strategies of organization' s competitors. Competitor
✓ Systems are the processes and procedures of the company, which reveal business' daily activities analysis is a driver of an organization's strategy and effects on how firms act or react in their sectors. The
and how decisions are made. Systems are the area of the firm that determines how business is organization does a competitor analysis to measure / assess its standing amongst the competitors.
done and ii should be the main focus for managers during organizational change. Competitor analysis is a Strategic technique used to evaluate outside competitors. The analysis seeks to
✓ Skills are the abilities that firm 's employees perform very well. They also include capabilities and identify weaknesses and strengths that a company's competitors may have, and then use that information
to improve efforts within the company. An effective analysis will first obtain important information from
competences. During organizational change, the question often arises of what skills the company
will really need to reinforce its new strategy or new structure. competitors and then based on this information predict how the competitor will react under certain
✓ Staff element is concerned with what type and how many employees an organization will need circumstances.
and how they will be recruited. trained, motivated and rewarded. Competitor analysis begins with identifying present as well as potential competitors. It portrays an
essential appendage to conduct an industry analysis. An industry analysis gJVes mformat1on regarding
✓ Style represents the way the company is managed by top~level managers, how they interact, what
probable sources of competition (including all the possible strategic actions and reactions and effects on
actions do they take and their symbolic value. In other words, it is the management style of
company' s leaders. profitability for all the organizations competing in the industry). However, a well-thought competitor
analysis permits an organization to concentrate on those organizations with which it will be in direct
✓ Shared Values are at the core of McKinsey 7s model. They are the norms and standards that
competition, and it is especially important when an organization faces a few potential competitors.
guide employee behavior and company actions and thus, are the foundation of every organization.
Michael Porter in Por.ter 's Five Forces Model bas assumed that the competitive environment within an
Mckinscy's 7S Framework is most often used as a tool to assess and monitor changes in the internal
industry depends on five forces- Threat of new potential entrants, Threat of substitute product/services,
situation of an organisation. The model is based on the theory that, for an organization to perform · · f 1·e s bargam·m·g power of buyers, Rivalry among current competitors. These
bargammg power o supp I r,
well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to five forces should be used as a conceptual background for identifying an organization's competitive
help identify what needs to be realigned to improve performance, or to maintain alignment ( and ts to and opportunities for the organization from its competitive
st rengt hs and weak nesses and threa
performance) during other types of change. Whatever the type of change _ restructuring, new
environment.
processes, organizational merger, new systems, change of leadership, and so on _ the model can be • · lysis can be summarized as follows:
The main objectives of domg competitor ana
used to understand how the organizational elements are interrelated, and so ensure that the wider
• To study the market;
impact of changes made in one area is taken into consideration.
. · •s demand and supply;
• To predict and forecast organization
• To formulate strategy;
• To increase the market share;
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