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Strategy Management

RITU RANJAN BBA Final year

What is Strategy?
A strategy is a comprehensive action plan that identifies long-term direction and guides resource utilization to accomplish organizational goals with sustainable competitive advantage.

Strategic Management
Process of formulating, implementing, and evaluating, strategies to accomplish long-term goals and sustain competitive advantage. The set of managerial decisions and actions that determines the long-run performance of a corporation. It includes: environmental scanning (internal & external) strategy formulation strategy implementation evaluation and control

Benefits of Strategic Management
Improved understanding of rapidly changing environment o Nonfinancial Benefits
o

o Enhanced awareness

of threats o Improved understanding of competitors’ strategies

Benefits of Strategic Management Cntd..
Clearer understanding of performance-reward relationship o Enhanced problem-prevention capabilities o Reduced resistance to change o Increased employee productivity
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Key Strategic Questions
 

Where is the organization now? If no changes are made, where will the organization be in one, two, five or ten years? Are the answers acceptable? If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved? What are risks and payoffs involved?

Basic Model of Strategic Management
Environmental Scanning Strategy Formulation Strategy Implementation Evaluation and Control

Environmental Scanning
Monitoring, evaluating and disseminating information from the environment to key people within the corporation. Scan via SWOT analysis: Look for opportunities/threats in the external environment Look for strengths/weaknesses in the internal environment

Strategy Formulation
The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses.
Composed of: Mission  Objectives  Strategies  Policies

Mission
The purpose or reason for the corporation’s existence. It tells who the company is, what they do as well as what they’d like to become.

Objectives
The end results of planned activity. They state WHAT is to be accomplished by WHEN. They should be quantified, if possible.

Strategies
A method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem.

Policies
The set of basic principles and associated guidelines, formulated and enforced by the governing body of an organization, to direct and limit its actions in pursuit of long-term goals.

Strategy Implementation
The process of putting strategies and policies into action through the development of:

◦ Programs - statements of activities or steps needed to accomplish a single-use plan.
◦ Budgets - statements of a corporation’s programs in monetary term. ◦ Procedures - systems of sequential steps or techniques that describe in detail how to perform particular tasks or jobs.

Evaluation and Control
The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance.

Hierarchy of Strategy
Corporate Headquarters Corporate Strategy

Strategic Business Unit

Strategic Business Unit

Strategic Business Unit

Business (Division Level) Strategy

Manufacturing

Finance

Marketing

Research and Development

Human Resources

Functional Strategy

Why Some Firms Do No Strategic Planning
Lack of knowledge of strategic planning  Waste of time  Too expensive  Laziness  Content with success  Fear of failure  Overconfidence

Why Some Firms Do No Strategic Planning Cntd..
Prior bad experience  Self-interest  Fear of the unknown  Honest difference of opinion  Suspicion

Effective Strategic Planning is:
A people process more than a paper process  A learning process  Words supported by numbers  Simple and non-routine  Varying assignments, team membership, meeting formats, and planning calendars