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Introduction toStrategic Management

- By Vidushi Sharma

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Definition

• “The Determination of the basic long termgoals and objectives of an enterprise andadoption of the course of action and

allocation of resources necessary forcarrying out these goals.” - Alfred D Chandler

(1962)

• Strategy is derived from the Greek word„Strategos ‟ which means the art of general.

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Cont….. 

• “A unified, comprehensive and integrated plandesigned to assure that the basic objectives ofthe enterprise are achieved.” 

- William F. Glueck (1972)

• Strategy is formulated to cope up with the

dynamic External Environment

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Characteristics of Strategy

1. Strategy is a long term plan.2. Any shifts or changes in strategy are costly

and difficult to make,

3. A wrong strategy may lead to many pitfalls(losses)

4. It is a plan leading to a particular direction.

5. It is related to company‟s activities. 

6. It depends on the vision/ mission of thecompany.

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Cont…. 7. It deals with the future.

8. It deals with the resources available

today and those that will be necessary inthe future for implementing a plan.

9. It is connected to the strategicpositioning of a firm (Unique position

which is advantageous for the firm).

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Cont… 

10. A Common thread binding all theorganizational activities.

11. Those activities which take organizationfrom current position to desired futurestate.

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Limitations of Strategy1. Oversimplification ofthings

2. Leads to apredetermined

path

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Levels at which Strategy

Operates

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Cont…. 

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SBU

• When a company has different businesses(portfolio of products); it is generallyorganized in the form of Strategic BusinessUnits. (SBU’s) 

• Companies divide their business into differentoperating divisions, each performing acommon set of activities. These divisions are

called as ‘Profit Centers’ or ‘Strategic BusinessUnits’ or SBU’s 

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Cont….. • Each SBU is unique in either – Product,Customers they serve and markets operatein.

Different levels of Strategy

• Levels vary for Single SBU firm andMultiple SBU firm

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Characteristics of SBU

1. Every SBU has a different set of managersresponsible for success and failure of thatSBU.

2. Every SBU has a different set ofcompetitors.3. Every SBU has a different requirement of

resources.

4. Different potential for generation ofprofits.

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Strategic Business Area (SBA)

“ A distinctive segment of environment inwhich the firm does the business.

• Different SBU‟s with their relevantSBA‟s form a corporate umbrella

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Societal Level

• Certain companies have a societal level abovethe corporate level.

• Societal level emphasizes on what the

company wants to for society.• It is some needs of the society which the

company wants to serve.

• E.g. company wants to provide alternatesource of energy at affordable prices

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Strategic management• It focuses on second generation planning.

• 2nd

generation planning: analysis ofbusiness and preparation of severalscenarios of future and preparingcontingency strategies. 

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Definitions 

• “It is a stream of actions which lead to thedevelopment of effective strategy orstrategies to help achieve corporateobjectives.” 

• “ A systematic approach to a major andincreasingly important responsibility ofgeneral management to position and relatethe firm to its environment in a way that will

assure its continued success and make itsecure from surprises.” 

- Ansoff

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• “ The formulation and implementation ofplans and carrying out of activities relatingto matters which are of vital, pervasive orcontinuing importance to total organization” 

- Sharplin

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Latest Definition

• “The process through which organizationsanalyze and learn from their internal andexternal environments, establish strategicdecision, create strategies that are intended

to help achieve established goals, andexecute these strategies, all in effort tosatisfy key organizational stakeholders.” 

- Harrison & St. John

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Strategic Management Process

Phase I: Hierarchy of Strategic ManagementProcess

• It makes clear the purpose of organization – What it stands for?

• It states various purposes it wants to fulfillin long run.

• Strategic intent includes deciding the vision,mission, business definitions, objectives andgoals for an organization

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• These objectives act as yardstick &benchmark for measuring organizational

performancePhase II: Environmental Scanning

• It includes appraising both the external

environment and organizational environment.• External environment scanning helps in

finding out various opportunities and threats.

• A detailed appraisal helps in finding thestrengths and weaknesses

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Phase III Formulation of Strategies:

• Here many alternative strategies areworked on and the best alternative, as perthe opportunities and threats is selected.

• Strategies are selected at the corporateand SBU level.

• End result of this phase is strategic planwhich needs to be implemented.

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Phase IV: Implementation of Strategy

• A strategic plan can be implemented through6 sub processes

i. Project Implementation – deals with settingof organization

ii. Procedural Implementation – deals withvarious regulatory frameworks within whichan organization has to work.

iii. Resource Allocation – deals withprocurement and commitment of resources.

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iv. Structural Implementation – deals with

organizational structures, one which matchesthe strategy.

v. Behavioral Implementation – deals withcorporate culture, use of power, businessethics and social responsibility.

vi. Functional and Operational implementation – deals with productivity, processes, people and

pace of implementing strategies.

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Phase V: Strategic evaluation and control

• Appraisal of implementation of strategies isdone.

• Organizational performance is measured.

• As per the feedback of strategic evaluation;strategic control is exercised.