1 introduction to strategic management
TRANSCRIPT
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Presentation by-: Ashutosh Tiwari ME+MBAJayant Nasa ME+MBA
Azad Singh Patel MLE+MRM
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THE BASICS
Strategic Management is all about identification anddescription of the strategies that managers can carry soas to achieve better performance and a competitiveadvantage for their organization.
An organization is said to have competitive advantageif its profitability is higher than the averageprofitability for all companies in its industry.
Strategic management can also be defined as a bundleof decisions and acts which a manager undertakes andwhich decides the result of the firmsperformance.
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THE BASICS
The managers must have a thorough knowledge andanalysis of the general and competitive organizationalenvironment so as to take right decisions.
They should conduct a SWOT Analysis (Strengths,
Weaknesses, Opportunities, and Threats), i.e.1. They must make best possible utilization of strengths
2. They should minimize the organizational weaknesses
3. They must make use of arising opportunities from the
business environment4. They shouldnt ignore the threats.
Strategic management is nothing but planning for bothpredictable as well as unfeasible contingencies.
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THE BASICS
Strategic Management is applicable to both smallas wellas large organizations as even the smallest organizationface competition and, by formulating and implementing
appropriate strategies, they can attain sustainablecompetitive advantage.
It is a way in which strategists set the objectives andproceed about attaining them.
It deals with making and implementing decisions aboutfuture direction of an organization.
It helps us to identify the direction in which anorganization is moving.
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WHAT STRATEGIC
MANAGEMENT DOES?Strategic management is a continuous process that-:
1. Evaluates and controls the businesses and theindustries in which an organization is involved
2. Evaluates its competitors and setsgoals and strategiesto meet all existing and potential competitors
3. Re-evaluates strategies on a regular basis to determinehow they have been implementedand whether theywere successfulor do theyneed replacement.
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IMPACT ON EMPLOYEES
Strategic Management gives a broader perspective to theemployeesof an organization and they can better understandhow their job fits into the entire organizational plan and how itis co-related to other organizational members.
The employees become more trustworthy, more committedand more satisfied as they can co-relate themselves very well
with each organizational task.
They can understand the reaction of environmental changes onthe organization and the probable response of the
organization. Thus the employees can judge the impact of such changes on
their own job and can face the changes in a better way.
The managers and employees need to be both effective as wellas efficient.
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MAJOR ROLES OF
STRATEGIC MANAGEMENT
To incorporate variousfunctional areas of the
organization completely. To ensure these functional areas harmonize and
get togetherwell.
To keep a continuous eye on thegoals andobjectives of the organization.
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WHAT IS STRATEGY?
The word strategy is derived from the Greek wordstratgos; stratus (meaning army) and ago(meaning leading/moving).
Strategy is an action that managers take to attain oneor more of the organizations goals.
Strategy can also be defined as A general direction setfor the company and its various components toachieve a desired state in the future. Strategy
results from the detailed strategic planning process.A strategy is all about integrating organizational
activities and utilizing and allocating the scarceresources within the organizational environment so as
to meet the present objectives.
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MORE ON STRATEGY
While planning a strategy it is essential to consider thatdecisions are not taken in a vacuum and that any act taken by afirm is likely to be met by a reaction from those affected,competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of thegoals, theuncertainty of events and the need to take into considerationthe likely or actual behaviour of others.
It is the blueprint of organizational decisions that:
1. shows its objectives/goals and plans for achieving the goals
2. reduces the key policies
3. defines the business the company is to carry on, the type ofeconomic and human organization it wants to be, and thecontribution it plans to make to its shareholders, customers and
society at large.
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FEATURES OF STRATEGY
1. Strategy is significant because it is not possible to foresee thefuture. The firms must be ready to deal with the uncertainevents which constitute the business environment.
2. Strategy deals with long term developments rather thanroutine operations, i.e. it deals with probability of
innovations or new products, new methods of productions,or new markets to be developed in future.
3. Strategy is created to take into account the probablebehaviour ofcustomers and competitors.
4. Strategy is a well defined roadmap of an organization. Itdefines the overall mission, vision and direction of anorganization. Its objective is to maximize an organizationsstrengths and to minimize the strengths of the competitors.
Strategy, in short, bridges the gap between where we
are and where we want to be.
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Private Organizations
Joint Venture
partners and
Alliances
Governments
Supply Chain
Associates
Local Communities
and Citizens
Regulatory
Authorities
Unions
Investors,Shareholders and
Lenders
Customers and Users
Employees
THE CORPORATION
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STRATEGY STATEMENT
The strategy statement of a firm sets the firms long-termstrategic direction and broad policy directions.
It gives the firm a clear sense of direction and a blueprint for the
firms activities for the upcoming years.
The main constituents of strategic statements are as follows:
Mission
Vision Goals
Objectives
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MISSION
Mission is the statement of the role by which an organizationintends to serve its stakeholders.
It describes why an organization is operating and thus providesaframeworkwithin which strategies are formulated.
It describes what the organization does (present capabilities),who all it serves (stakeholders) and what makes an organizationunique (reason for existence).
Examples: Microsofts missionis To help people and businesses throughout
the world to realize their full potential. Wal-Marts missionis To give ordinary folk the chance to buy the
same thing as rich people.
Mission statements always exist at top level of an organization,
but may also be made for various organizational levels.
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FEATURES OF MISSION
Mission must befeasible and attainable. It should be possibleto achieve it.
Mission should be clearenough so that any action can betaken.
It should be inspiring for the management, staff and society atlarge.
It should beprecise enough, i.e., it should be neither too broadnor too narrow.
It should be unique and distinctive to leave an impact ineveryones mind.
It should be analytical, i.e., it should analyse the keycomponents of the strategy.
It should be credible, i.e., all stakeholders should be able to
believe it.
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VISION
Vision identifies where the organization wants or intends to bein future or where it should be to best meet the needs of thestakeholders.
A vision is the potential to view things ahead of themselves. Itanswers the question where we want to be.
Examples:
Microsofts visionis To empower people through great software,any time, any place, or any device.
Wal-Marts visionis To become worldwide leader in retailing.
A vision statement is for the organization and its members,unlike the mission statement which is for the customers/clients.
It incorporates a shared understanding about the nature andaim of the organizationand utilizes this understanding todirect and guide the organization towards a better purpose.
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FEATURES OF VISION
It must be unambiguous.
It must be clear.
It must harmonizewith organizations culture and values.
The dreams and aspirations must be rational/realistic.
Vision statements should be short so that they are easier tomemorize.
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GOALS
A goal is a desired future state or objective that an organizationtries to achieve. Goals specify in particular what must be done ifan organization is to attain mission or vision.
Goals make mission more prominent and concrete. Theyco-
ordinate and integrate various functional and departmentalareas in an organization.
Well-made goals have following features-:
These areprecise and measurable.
These look after critical and significant issues.
These are realistic and challenging.
These must be achieved within a specific time frame.
These include bothfinancialas well as non-financial
components.
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OBJECTIVES
Objectives are defined as goals that organization wants toachieve over a period of time.
These are the foundation of planning.
Formulation of objectives is the task of top levelmanagement.
Effective objectives have following features :-
These are not single for an organization, but multiple.
Objectives should be both short-termas well as long-term. Objectives must respond and react to changes in
environment, i.e., they must be flexible.
These must be feasible, realistic and operational.
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STRATEGIC MANAGEMENT PROCESS
The strategic management process is defined as theprocess by which managers make a choice of a set ofstrategies for the organization that will enable it to
achieve better performance.
Components of Strategic Management Process
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ENVIRONMENTAL SCANNING
Environmental scanning refers to a process ofcollecting, scrutinizing and providing information forstrategic purposes.
It helps in analysing the internal and externalfactors influencing an organization.
After executing the environmental analysis process,management should evaluate it on a continuous basisand strive to improve it.
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CORPORATION
RESOURCE BASE
Investors: Shareowners & Lenders
Customers
& Users
Employees
INDUSTRY STRUCTURE
SOCIAL POLITICAL ARENA
Unions
Regulatory
Authorities
Supply Chain
Associates
Joint Venture
partners
& Alliances
Private
OrganizationsLocal communities
& Citizens
Governments
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STRATEGY FORMULATION
Strategy formulation is the process ofdeciding bestcourse of action for accomplishing organizational
objectives and hence achieving organizationalpurpose.
After conducting environment scanning, managers
formulate corporate, business and functionalstrategies.
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STRATEGY IMPLEMENTATION
Strategy implementation implies making thestrategy work as intendedor putting the
organizations chosen strategy into action.
Strategy implementation includes:-
designing the organizations structure
distributing resources developing decision making process
managing human resources.
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STRATEGY EVALUATION
Strategy evaluation is the final step of strategymanagement process.
The key strategy evaluation activities are: appraising internal and external factors that are the root
of present strategies
measuring performance
taking remedial / corrective actions.
Evaluation makes sure that the organizational strategyas well as its implementation meets theorganizational objectives.
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THANKYOU