Strategic Management

By Ms. Swati Sharma

 Meaning of Vision
• The vision is the source and the main idea of a company.
• Vision refers to what an organization aspires to be in the future.
• It acts as a company’s roadmap and depicts what a company wants to become.
• Nanus, (1992) defines vision as a realistic, credible, attractive future for an
organization.
• Over decades management researchers and practitioners have argued that vision
is important to leadership, strategy implementation, and organizational change.
• Clarifying the vision of the company and communicating it to the employees of an
organization can have powerful results.
 Meaning of Vision
• Visionary organizations are capable of leading change when the leaders realize
that their visions of the future are not firmly fixed and remain flexible to
accommodate change.
• On the basis of a vision statement, the organization aligns all its activities. In
simple words, we can say that a vision of an organization tells where the
organization wants to reach in future.
• A vision statement of the organization is in written format. The vision statement
of an organization should be inspiring and provide a base to frame a strategy for
achieving the ultimate vision of the organization.
• The normal life span of a vision statement is 10 to 20 years and it articulates the
ultimate long-range goal of an organization.
 Meaning of Vision
• The vision of NTPC (National Thermal Power Corporation Limited) is “To be the
world’s largest and best power producer, powering India’s growth.”

• The vision of ITC is “Sustain ITC's position as one of India's most valuable
corporations through world-class performance, creating growing value for the
Indian economy and the company's stakeholders”.

• The vision of Google is “Organize World’s information and make it universally

accessible and useful”
 Meaning of Mission
• Mission gives the answer of why organization exists and also defines the path to
achieve vision of an organization.
• A firm’s mission describes the organization in terms of business it is in, the
customers it serves, and the skills it intends to develop to fulfill its vision.
• the mission statement is the heart of a company.
• For example, the mission of Harley Davidson is “More than building machines,
we stand for the timeless pursuit of adventure. Freedom for the soul.”
• Coca Cola puts its mission as “To refresh the world..., To inspire moments of
optimism and happiness..., To create value and make a difference.”
Difference between Mission and
Vision
 Goals and Objectives
• A goal is an overarching principle that guides decision-making. A goal illustrates
what is to be achieved in some future time. Goals are related directly to vision
and mission and they direct everyday actions and decisions.
• Objectives are specific, measurable steps that can be taken to meet the goal.
They specify organizational issues and milestones. The objectives should fulfill the
SMART criterion which stands for Specific, Measurable, Attainable, Relevant, and
Time-Bound. For example, a company could set its objective as “We want to
increase our sales by 35% in the next 12 months” or “We will recruit 35 new
engineers from a premier technical institute and they will start working on the
new projects by the end of the current financial year”
Goals and Objectives
Goals and Objectives
 Evolution of Business Policy
1. First Phase (till mid-1930s): Paradigm of Ad hoc Policy

2. Second Phase (1930s – 1940s): Paradigm of Planned Policy

3. Third Phase (1960s): Strategy Paradigm

4. Fourth Phase (1980s): Paradigm of Strategic Management

 First Phase (till mid-1930s): Paradigm of Ad hoc Policy

• Attempts were made to forecast a comparatively longer future period and to

prepare the organization for that.
• Replaced informal control and coordination by introducing the concept of
budgeting and control systems.
• Policy formulation was limited to functional areas wherever the need was felt.
• The system of policy formulation was not integrated and the ad hoc approach
persisted.
• Adhoc Policy making necessitated by the expansion of American firms in terms
of product markets and customers and the consequent need to replace informal
controls and coordination by framing functional policies to guide managers.
 Second Phase (1930s – 1940s): Paradigm of Planned Policy

• Long range planning

• Integrated policies replaced adhocism in policy formulation.
• More emphasis was put on the integration of policies in different functional areas
in the context of environmental needs.
• At the initial stage, plans used to be prepared by corporate planning staff
independently and forwarded to top management for appropriate actions.
Third Phase (1960s): Strategy Paradigm

• Strategic Planning
• Rapid force of environmental changes and increasing complexity of managerial
functions demanding a critical look at the concept of business in relation to its
environment hence the need for strategic decisions.
• More strategies are framed to meet the competition.
Fourth Phase (1980s): Paradigm of Strategic Management

• With the globalization of the economy now, the strategic planning limited to only
competitors within the country was not successful in this environment.
• Shifting of focus to the strategic management process and the responsibility of
general management in resolving strategic issues.
• Direct involvement of top management in strategy formulation.
• Resolving strategic issues and comprehensive environmental analysis to develop
likely future business scenarios.
• Emphasis was put on developing contingency strategies to be implemented in
relevant scenarios.
 Strategy: A Game Plan
• The word strategy comes from Greek strategos, which refers to generalship (the skill or
practice of exercising military command).
• The concept and practice of strategy and planning started in the military, and over time,
was applied to business and management. The key objectives of both business strategy
and military strategy are the same, i.e. to secure a competitive advantage over the rivals.
• In simplified terms, a strategy is the means to ends. They are the things that businesses
do, the paths they follow, and the decisions they take, in order to reach certain points and
levels of success. It relates to developing the long-term scope of an organization, in such a
way so as to deliver a competitive advantage to the organization.
• Strategy is a tool for utilizing resources and skillsets dynamically in a changing
environment and thereby, meeting market needs and fulfilling stakeholders’ expectations.
 Strategy
• Thompson and Strickland (2001) have given a comprehensive definition of
strategy as: “A company’s strategy consists of the combination of competitive
moves and business approaches that managers employ to please customers,
compete successfully, and achieve organizational objectives.”
• Miller & Dess (1996) Strategy is a set of plans or decisions made in an effort to
help organizations achieve their objectives.
• Porter (1996) Strategy means performing different activities to those performed
by rivals or performing the same activities differently.
• Strategy, in short, bridges the gap between “where we are” and “where we
want to be”
 Tactics
• Another term tactic is also at times confused with strategy, however, from an
overall strategy, a number of sub-strategies follow. These sub-strategies are
referred to as tactics.
• Tactics are the specific activities that deliver and implement the strategies in order
to fulfill objectives and pursue the mission.
• Often short term; they can be changed frequently if necessary.
Levels of Strategy
Overview of Strategic Planning
Process
Vi
si
o
Mission
n
Goals
Objectives
Strategies
Tactics
 Strategic Management
Strategic decision-making is done through the process of strategic management,
which has been defined by different authors.
• The following three definitions present a complete overview of the concept.
‘Strategic management is that set of decisions and actions which leads to the
development of an effective strategy or strategies to help achieve corporate
objectives.’– W.F. Glueck
• ‘Strategic management is primarily concerned with relating the organization to its
environment, formulating strategies to adapt to that environment, and, assuming
that implementation of strategies takes place.’ – Pearce & Robinson
 Phases in Strategic Management
Process (SMP)
“Strategic management is the dynamic process of
formulation, implementation, evaluation, and control of
strategies to achieve the organization’s strategic intent.”
This definition emphasizes on four stages of the strategic
management process namely formulation,
implementation, evaluation and control.
Phases in Strategic Management
Process (SMP)
 Elements of SMP

Each phase of the strategic management process consists of a number of elements,

which are discrete and identifiable activities performed in logical and sequential
steps. The following are considered as essential elements of SMP –
A. Establishing the hierarchy of strategic intent –
1. Creating and communicating a vision
2. Designing a mission statement
3. Defining the business
4. Adopting the business model
5. Setting objectives
 Elements of SMP

B. Formulation of strategies –
6. Performing environmental appraisal
7. Doing organizational appraisal
8. Formulating corporate-level strategies
9. Formulating business-level strategies
10. Undertaking strategic analysis
11. Exercising strategic choice
12. Preparing strategic plan
 Elements of SMP

C. Implementation of strategies –
13. Activating strategies
14. Designing the structure, systems and processes
15. Managing behavioural implementation
16. Managing functional implementation
17. Operationalising strategies
 Elements of SMP

D. Performing strategic evaluation and control –

18. Performing strategic evaluation
19. Exercising strategic control
20. Reformulating strategies