ppt+sm+unit2

8/11/2019 PPT+SM+UNIT2

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MBA (IV) Sem

STRATEGICMANAGEMENT

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BUSINESS POLICY:

“Business policy is the study of functions andresponsibilities of management, the problems anddecisions that determine the direction of the organization” .

Christensen.

Historical evolution of Business policy

1930’sAd HocPolicymaking

1940’sPlanned

Policy formulation

1960’s

Strategy

1980’sStrategic

management



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Business Policy:

Nature of Business policy:1. It is the study of functions and responsibilities of senior

management related to organizational problems.2. It determines future course of action.3. It defines the character and identity of an organization.4. It is concerned with mobilization of resources to help an

organization achieve its goals..



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Business Policy:

Purpose of Business policy:1. It integrates knowledge & experience gained in various

functional areas of management.

2. It deals with constraints and complexities of real-lifebusiness.3. It helps to bring long-term view of the environment.4. It helps to understand the linkage within sub-systems

of the organization..



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Business Policy:

Importance of Business policy:1. For learning purpose : It integrates the knowledge &

experience. It cuts the narrow financial boundaries. Itmakes the study of management more meaningful.

2. For understanding business environment : To understandhow policies are formulated. It makes the task of policyimplementation simpler.

3. For Understanding the organization : It presents a basicframework for understanding strategic decision-making.

4. For personal development: To understand the impact ofpolicies on position. To understand the senior manager’s viewpoint. To identify growth areas for development..



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STRATEGY:Strategy (Strategos= direction of military force).

What is strategy?

1. “Determination of basic long-term goals & objectives of anenterprise and adoption of course of action and allocation ofresources to carry out these goals. ”

Alfred Chandler (1962)

2.“Pattern of objectives, purpose, goals and major policies & plansto achieve these goals to define the current and desired policiesof the organization. ” Andrews (1965)

3.“It is the common thread among the organization’s activities andproduct-markets that defines the nature of business. ”

Igor Ansoff (1965)..



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What is Strategy?

4. “It is a unified, comprehensive and integrated plan designed toassure that the basic objectives of enterprise are achieved. ” William Glueck (1972)

5. “It is a pattern in a stream of decision and actions. ” Henry Mintzberg (1987)

6. “Developing and communicating the company’s unique position,making trade-offs and creating a fit among activities. ”

Michael E. Porter (1996)..



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Levels of Strategy:

CORPORATE OFFICE

Strategic Business UnitA

SBUB

SBUC

HRM Marketing Finance Production Systems

Corporate levelstrategy

Businesslevel

strategy

Functionallevel

strategy

SBU is a business unit within the overall corporate identity which isdistinguishable from other business.When companies become large, they are composed of a number ofbusinesses (or SBUs). Eg



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STRATEGIC MANAGEMENT:

What is strategic management?

1. “It is a stream of decisions and actions which leads to strategydevelopment to achieve corporate objectives. ”

William Glueck

2.“It is the formulation and implementation of plans and carrying

out of activities relating to important matters of theorganization. ” Sharplin.

3. “It is a process through which organizations analyze and learnfrom their internal & external environment, establish strategicdirection, create strategies to help achieve goals and executethem. ” Harrison & St. John..



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Process of Strategic management:

Phases of Strategic Management:

Establishstrategic

Intent

Formulatestrategies

Implementstrategies

Strategicevaluation

Strategic

control

Establish

strategicIntent

SWOTanalysis

Strategicalternatives

Strategicevaluation

Strategic

Analysis& choice

Strategic

implement-ation

Strategic control

Working model of Strategic Management:



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Model of Strategic Management Process:

Establish strategic intent:Vision, Mission, objectives,

Business definition

Formulate strategies:Environmental appraisal,organizational appraisal, SWOT analysis,Corporate & business level strategies,Strategic choice, strategic plan.

Implement strategies:Project, procedure, resource allocation,Structural, behavioral, functionaland operational implementation.

Strategic evaluation

strategiccontrol



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VISION:1st level of Strategic Intent

VISION: It is a position that a company would like to

achieve in the distant future (10-15 years). It is a powerfulmotivator to action.Vision of Walt Disney: To make others happy

It is a category of intentions that are broad, all-inclusive andforeward-thinking.

Why vision is needed?a. Good visions are inspiring.b. Good visions help in creation of a common identity and a

shared sense of purpose.c. Good visions are competitive, original and unique.d. It promotes risk-taking and experimentation.e. It promotes long-term thinking … IO



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MISSION:2nd level of Strategic Intent

Vision is a foreward-thinking view of what an organizationwants to be. Mission is what an organization is and why itexists.

Mission is a statement that defines the role an organizationplays in a society.Eg: A newspaper & TV news editor: mission- information.

It is the purpose or reason for the organization’s existence..



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MISSION:2nd level of Strategic Intent

Characteristics of Mission:1. It should be feasible.2. It should be precise; not too narrow & broad.

3. It should be clear.4. It should be motivating.5. It should be distinctive; unique from competitors.6. It should indicate how objectives are to be achieved...



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Goals & Objectives:

Goals & Objectives represent a future state or an outcome of

efforts put at present. Objectives are the ends that state how goalswill be achieved.Goals are generalized & qualitative. Objectives are concrete,measurable and specific.Objectives make the goals operational.

Roles of Objectives:1. Objectives define the organization’s relation with

environment.2. It helps an organization to achieve its vision & mission.3. It provides the basis for strategic decision-making.4. It provides the standards of performance appraisal …



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Goals & Objectives:

Characteristics of objectives:

1. It should be understandable.2. It should be concrete and specific.

3. It should be related to a time-frame.4. It should be measurable.5. It should be challenging.6. It should be set within limits..



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Role of Top Management in Strategic Management

Role of CEO/ GM/ MD/ President:Prime responsibility for strategic management.1. He is the chief architect, strategist, organization builder

and coordinator.2. He sets the mission of organization.3. He decides organization objectives and goals.4. He formulates and implements strategy.5. He manages external environmental and relationships.6. He is communicator of organizational purpose,

motivator and mentor.7. He checks progress to avoid deviation from path ..



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Role of Top Management in Strategic Management

Role of Board of Directors:Board of Directors include owners, shareholders,controllers, MD, Govt., financial institutions, employeerepresentatives etc. Role:

1. They set the vision and strategic direction.2. They establish objectives and strategy.3. They guide the senior managers in setting and achieving

objectives, reviewing organizational performance andevaluation.

4. They monitor the progress.5. They take corrective action when required..

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