UNIT I

STRATEGY AND PROCESS

• Strategy is the determination of the long-term
goals and objectives of an enterprise and the
adoption of the courses of action and the
allocation of resources necessary for carrying
out these goals. Strategy is management’s
game plan for strengthening the organization’s
position, pleasing customers, and achieving
performance targets.
•  
• Strategy can be formulated on three different
levels:
– corporate level
– business unit level
– functional or departmental level.
• Definition:
• “The determination of the basic long-term
goals & objectives of an enterprise and the
adoption of the course of action and the
allocation of resources necessary for carrying
out these goals”.
 STRATEGIC MANAGEMENT

• Strategic management is defined as the art

and science of formulating, implementing, and
evaluating cross-functional decisions that
enable the organization to achieve its
objectives." Generally, strategic management
is not only related to a single specialization
but covers cross-functional or overall
organization.
Benefits of Strategic Management
Strategic management allows organisations to
be more proactive than reactive in shaping its
own future.
The principal benefit of strategic management
has been to help organisations formulate
better strategies through the use of a more
systematic, logical and rational approach to
strategic choice.
• A major aim of the process is to achieve the
understanding of and commitment from all
managers and employees.
• Understanding may be the most important
benefit of strategic management followed by
commitment.
• They become creative and innovative.
• A great benefit of strategic management then
is the opportunity that the process provides to
empower individuals.
• Empowerment is the act of strengthening
employees sense of effectiveness by
encouraging them to participate in decision
making
• More and more organisations are
decentralizing the strategic management
process, recognising that planning must
involve lower-level managers and employees.
• Eg Walt disney
 Financial Benefits
• Organisations using strategic management
concepts are more profitable and successful
than those that do not.
• It shows significant improvement in sales,
profitability and productivity compared to
firms without systematic planning activities.
 Non-financial benefits
• Tangible benefits
• Enhanced awareness of external threats, an
improved understanding of competitors
strategies, increased employee productivity,
reduced resistance to change and a clear
understanding of performance – reward
relationships
 Other benefits
• It allows for identification, prioritization and
exploitation of opportunities
• It represents a framework for improved
coordination and control of activities
• It encourages forward thinking.
• It encourages a favourable attitude toward
change.
• It gives a degree of discipline and formality to the
management of a business.
 Disadvantages
• Poor reward structures
• Waste of time
• Too expensive
• Fear of failure
• Overconfidence
• Prior bad experience
• Fear of the unknown
• Suspicion – employees may not trust management
 SBU
• STRATEGIC BUSINESS UNIT
• It is understood as business unit within the
overall corporate identity which is
distinguishable from other business because it
serves a defined external market where
management can conduct strategic planning
in relation to products and markets.
• The idea was developed by Mckinsey & Co &
General Electric in 1971
 An SBU has three characteristics
• It is a single business or collection of related
businesses that can be planned separately
from the rest of the company.
• It has its own set of competitors
• The purpose of identifying the company’s
strategic business units is to develop separate
strategic and assign appropriate funding.
• Eg Unilever, Apple
INTENDED AND EMERGENT STRATEGIES
• An intended strategy is the strategy that an
organization hopes to execute. Intended
strategies are usually described in detail
within an organization’s strategic plan. When
a strategic plan is created for a new venture, it
is called a business plan. 
•  Smith started Federal Express (FedEx), a
company whose strategy
• An emergent strategy is an unplanned
strategy that arises in response to unexpected
opportunities and challenges. Sometimes
emergent strategies result in disasters. 
• In the mid-1980s, FedEx deviated from its
intended strategy’s focus on package delivery
to capitalize on an emerging technology:
facsimile (fax) machines. 
• Basic components: Basically, a marketing plan
consists of several steps: situational analysis,
objectives, strategy, tactics, budget, and controls.
• Organizational Mission:The industry mission is a
generally defined, enduring statement of
purpose that distinguishes a business from
others of its type. It should proclaim the type of
business in the company and “what business
does it want to be in?”
• Objectives: Objectives represents expectation
of the organization with its marketing efforts.
As with the mission, objectives also flow from
the senior management level of the
organization to down to the marketing
department.
• Environmental scanning includes internal and
external scanning
• PEST analysis Political, Economical, Social and
Technological factors.
• Corporate level – overall direction of
company and management
• Business Level – Competitive and cooperative
strategies
• Functional level - Maximize resource
productivity through all functional areas.
• STRATEGIC INTENT
• Strategic intent takes the form of a number of
corporate challenges and opportunities, specified
as short term projects. The strategic intent must
convey a significant stretch for the company, a
sense of direction, which can be communicated to
all employees. It should not focus so much on
today's problems, but rather on tomorrow's
opportunities. Strategic intent should specify the
competitive factors, the factors critical to success
in the future.
• Environmental Scan
• The environmental scan includes the following
components:
• Analysis of the firm (Internal environment)
• Analysis of the firm's industry (micro or task
environment)
• Analysis of the External macro environment
(PEST analysis)
• Strategy Formulation
• Strategy Formulation is the development of
long-range plans for the effective management
of environmental opportunities and threats, in
light of corporate strengths & weakness. It
includes defining the corporate mission,
specifying achievable objectives, developing
strategy & setting policy guidelines.
• Strategy Implementation
• It is the process by which strategy & policies
are put into actions through the development
of programs, budgets & procedures. This
process might involve changes within the
overall culture, structure and/or management
system of the entire organization.
• Evaluation & Control
• After the strategy is implemented it is vital to
continually measure and evaluate progress so
that changes can be made if needed to keep
the overall plan on track. This is known as the
control phase of the strategic planning
process.
• While it may be necessary to develop systems
to allow for monitoring progress, it is well
worth the effort. This is also where
performance standards should be set so that
performance may be measured and
leadership can make adjustments as needed
to ensure success.