INTRODUCTION

Strategic Management - An Introduction

Strategic Management is all about identification and description of the
strategies that managers can carry so as to achieve better performance and a competitive
advantage for their organization. An organization is said to have competitive advantage if
its profitability is higher than the average profitability for all companies in its industry.
Strategic management can also be defined as a bundle of decisions and acts
which a manager undertakes and which decides the result of the firms performance. The
manager must have a thorough knowledge and analysis of the general and competitive
organizational environment so as to take right decisions. They should conduct a SWOT
Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best
possible utilization of strengths, minimize the organizational weaknesses, make use of
arising opportunities from the business environment and shouldnt ignore the threats.
Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the
smallest organization face competition and, by formulating and implementing appropriate
strategies, they can attain sustainable competitive advantage.
Strategic Management is a way in which strategists set the objectives and
proceed about attaining them. It deals with making and implementing decisions about
future direction of an organization. It helps us to identify the direction in which an
organization is moving.
Strategic management is a continuous process that evaluates and controls the
business and the industries in which an organization is involved; evaluates its competitors
and sets goals and strategies to meet all existing and potential competitors; and then
reevaluates strategies on a regular basis to determine how it has been implemented and
whether it was successful or does it needs replacement.

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Strategic Management gives a broader perspective to the employees of an

organization and they can better understand how their job fits into the entire
organizational plan and how it is co-related to other organizational members. It is nothing
but the art of managing employees in a manner which maximizes the ability of achieving
business objectives. The employees become more trustworthy, more committed and more
satisfied as they can co-relate themselves very well with each organizational task. They
can understand the reaction of environmental changes on the organization and the
probable response of the organization with the help of strategic management. Thus the
employees can judge the impact of such changes on their own job and can effectively
face the changes. The managers and employees must do appropriate things in appropriate
manner. They need to be both effective as well as efficient.
One of the major role of strategic management is to incorporate various
functional areas of the organization completely, as well as, to ensure these functional
areas harmonize and get together well. Another role of strategic management is to keep a
continuous eye on the goals and objectives of the organization.

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What is strategy?
The word strategy is derived from the Greek word stratgos; stratus
(meaning army) and ago (meaning leading/moving).
Strategy is an action that managers take to attain one or more of the
organizations goals. Strategy can also be defined as A general direction set for the
company and its various components to achieve 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
scarce resources within the organizational environment so as to meet the present
objectives. While planning a strategy it is essential to consider that decisions are not
taken in a vacuum and that any act taken by a firm is likely to be met by a reaction from
those affected, competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of the goals, the uncertainty of events
And the need to take into consideration the likely or actual behavior of others. Strategy is
the blueprint of decisions in an organization that shows its objectives and goals, reduces
the key policies, and plans for achieving these goals, and defines the business the
company is to carry on, the type of economic and human organization it wants to be, and
the contribution it plans to make to its shareholders, customers and society at large.
Elements of Strategic Management
Strategic management, as minimum, includes strategic planning and strategic control.
Strategic planning describes the periodic activities undertaken by organizations to cope
with changes in their external environments (Lester A. Digman) it involves formulating
and evaluating alternative strategies, selecting a strategy, and developing detailed plans
for putting the strategy into practice. Strategic planning consists of formulating strategies
from which overall plans for implementing the strategy are developed. Strategic control

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consists of ensuring that the chosen strategy is being implemented properly and that it is
producing the desired results.
Based on Robert Anthony's framework, three types of planning and control are required
by organizations:
* Strategic Planning and Control - the process of deciding on changes in organizational
objectives, in the resources to be used in attaining these objectives, in policies governing
the acquisition and use of these resources, and in the means (strategies) of attaining the
objectives. Strategic planning and control involve actions that change the character or
direction of the organization.
* Management Planning and Control - the process of ensuring that resources are obtained
and used efficiently in the accomplishment of the organization's objectives. Management
planning and control is carried on within the framework established by strategic planning
and is analogous to operating control.
* Technical Planning and Control - the process of ensuring efficient acquisition and use
of resources, with respect to those activities for which the optimum relationship between
outputs and resources can be accurately estimated (e.g., financial, accounting, and quality
controls).
Another important term in the study of strategic management is long-range planning.
Long-range planning, planning for events beyond the current year, is not synonymous
with strategic management (or strategic planning). Not all long-range planning is
strategic. Scope of Strategic Management
J. Constable has defined the area addressed by strategic management as "the management
processes and decisions which determine the long-term structure and activities of the
organization".
* Management process. Management process as relate to how strategies are created and
changed.
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* Management decisions. The decisions must relate clearly to a solution of perceived

problems
* Time scales. The strategic time horizon is long. However, it for company in real trouble
can be very short
* Structure of the organization. An organization is managed by people within a structure.
The decisions which result from the way that managers work together within the structure
can result in strategic change
* Activities of the organization. This is a potentially limitless area of study and we
normally shall centre upon all activities which affect the organization. These all five
themes are fundamental to a study of the strategic management field and are discussed
further in this chapter and other part of this thesis.

Strategic Management Process

Strategic management process means defining the organizations strategy. It is
also defined as the process by which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance. Strategic management is a
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continuous process that appraises the business and industries in which the organization is
involved; appraises its competitors; and fixes goals to meet the entire present and future
competitors and then reassesses each strategy. There probably is general acceptance of
the idea that strategic management is concerned with the strategic processes that produce
desired responses to an organization's changing environment. The strategic management
process is concerned with a long-run perspective. The time horizon involved often is at
least 3 years and normally may be 5 or 10 years into the future. However, in certain
extremely dynamic industries, the strategic management process could be concerned with
much shorter time frames. Strategic management is the management of change. This
involves the system of corporate values, the corporate culture, and all managerial process
of change, such as leadership, planning, control, and human resources management.
There are four steps in Strategic Management Process:

Environmental Scanning Internal and External analysis of Environment)

Strategy Formulation
Strategy Implementation
Strategy Evaluation

Environmental Scanning Internal and External analysis of Environment)

Organizational environment consists of both external and internal factors.
Environment must be scanned so as to determine development and forecasts of factors
that will influence organizational success. Environmental scanning refers to possession
and utilization of information about occasions, patterns, trends, and relationships within
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an organizations internal and external environment. It helps the managers to decide the
future path of the organization. Scanning must identify the threats and opportunities
existing in the environment. While strategy formulation, an organization must take
advantage of the opportunities and minimize the threats. A threat for one organization
may be an opportunity for another.
Internal analysis of the environment is the first step of environment scanning.
Organizations should observe the internal organizational environment. This includes
employee interaction with other employees, employee interaction with management,
manager interaction with other managers, and management interaction with shareholders,
access to natural resources, brand awareness, organizational structure, main staff,
operational potential, etc.
A business becomes more competitive, and there are rapid changes in the
external environment, information from external environment adds crucial elements to
the effectiveness of long-term plans. As environment is dynamic, it becomes essential to
identify competitors moves and actions. Organizations have also to update the core
competencies and internal environment as per external environment. Environmental
factors are infinite, hence, organization should be agile and vigil to accept and adjust to
the environmental changes. For instance - Monitoring might indicate that an original
forecast of the prices of the raw materials that are involved in the product are no more
credible, which could imply the requirement for more focused scanning, forecasting and
analysis to create a more trustworthy prediction about the input costs.
In a similar manner, there can be changes in factors such as competitors
activities, technology, market tastes and preferences
While in external analysis, three correlated environment should be studied and analyzed

immediate / industry environment

national environment

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broader socio-economic environment

Strategy Formulation
Strategy formulation refers to the process of choosing the most appropriate
course of action for the realization of organizational goals and objectives and thereby
achieving the organizational vision. The process of strategy formulation basically

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involves six main steps. Though these steps do not follow a rigid chronological order,
however they are very rational and can be easily followed in this order.
a) Setting Organizations objectives - The key component of any strategy statement is
to set the long-term objectives of the organization. It is known that strategy is generally a
medium for realization of organizational objectives. Objectives stress the state of being
there whereas Strategy stresses upon the process of reaching there. Strategy includes both
the fixation of objectives as well the medium to be used to realize those objectives. Thus,
strategy is a wider term which believes in the manner of deployment of resources so as to
achieve the objectives.
While fixing the organizational objectives, it is essential that the factors which influence
the selection of objectives must be analyzed before the selection of objectives. Once the
objectives and the factors influencing strategic decisions have been determined, it is easy
to take strategic decisions.
b) Evaluating the Organizational Environment - The next step is to evaluate the
general economic and industrial environment in which the organization operates. This
includes a review of the organizations competitive position. It is essential to conduct a
qualitative and quantitative review of an organizations existing product line. The purpose
of such a review is to make sure that the factors important for competitive success in the
market can be discovered so that the management can identify their own strengths and
weaknesses as well as their competitors strengths and weaknesses. After identifying its
strengths and weaknesses, an organization must keep a track of competitors moves and
actions so as to discover probable opportunities of threats to its market or supply sources.
c) Setting Quantitative Targets - In this step, an organization must practically fix the
quantitative target values for some of the organizational objectives. The idea behind this
is to compare with long term customers, so as to evaluate the contribution that might be
made by various product zones or operating departments.

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d) Aiming in context with the divisional plans - In this step, the contributions made by
each department or division or product category within the organization is identified and
accordingly strategic planning is done for each sub-unit. This requires a careful analysis
of macroeconomic trends.
e) Performance Analysis - Performance analysis includes discovering and analyzing the
gap between the planned or desired performance. A critical evaluation of the
organizations past performance, present condition and the desired future conditions must
be done by the organization. This critical evaluation identifies the degree of gap that
persists between the actual degree of gap that persists between the actual reality and the
long-term aspirations of the organization. An attempt is made by the organization to
estimate its probable future condition if the current trends persist.
f) Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course
of action is actually chosen after considering organizational goals, organizational
strengths, potential and limitations as well as the external opportunities

Strategy Implementation
Strategy implementation is also defined as is also defined as the manner in
which an organization should develop, utilize, and amalgamate organizational structure,
control systems, and culture to follow strategies that lead to competitive advantage and a
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better performance. Organizational structure allocates special value developing tasks and
roles to the employees and states how these tasks and roles can be correlated so as
maximize efficiency, quality, and customer satisfaction-the pillars of competitive
advantage. But, organizational structure is not sufficient in itself to motivate the
employees. An organizational control system is also required. This control system equips
managers with motivational incentives for employees as well as feedback on employees
and organizational performance. Organizational culture refers to the specialized
collection of values, attitudes, norms and beliefs shared by organizational members and
group.

These are the main steps in implementing a strategy:

Developing an organization having potential of carrying out strategy successfully.

Disbursement of abundant resources to strategy-essential activities.

Creating strategy-encouraging policies.

Employing best policies and programs for constant improvement.

Linking reward structure to accomplishment of results.

Excellently formulated strategies will fail if they are not properly implemented.

Also, it is essential to note that strategy implementation is not possible unless there is
stability between strategy and each organizational dimension such as organizational
structure, reward structure, resource-allocation process, etc.
Strategy implementation poses a threat to many managers and employees in an
organization. New power relationships are predicted and achieved. New groups (formal
as well as informal) are formed whose values, attitudes, beliefs and concerns may not be
known. With the change in power and status roles, the managers and employees may
employ confrontation behavior

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Following are the main differences between Strategy Formulation and Strategy
ImplementationStrategy Formulation

Strategy Implementation

Strategy Formulation includes planning and Strategy Implementation involves all those
decision-making

involved

in

developing means related to executing the strategic plans.

organizations strategic goals and plans.

In short, Strategy Formulation is placing the In short, Strategy Implementation is managing
Forces before the action.

forces during the action.

Strategy Formulation is an Entrepreneurial Strategic

Activity based on strategic decision-making.

Implementation

is

mainly

an

Administrative Task based on strategic and

operational decisions.

Strategy

Formulation

emphasizes

on Strategy

Implementation

effectiveness.

efficiency.

Strategy Formulation is a rational process.

Strategy Implementation

emphasizes

is

basically

on

an

operational process.
Strategy Formulation requires co-ordination Strategy
among few individuals.

Implementation

requires

co-

ordination among many individuals.

Strategy Formulation requires a great deal of Strategy Implementation requires specific

initiative and logical skills.

motivational and leadership traits.

Strategy Evaluation
Strategy Evaluation is as significant as strategy formulation because it throws
light on the efficiency and effectiveness of the comprehensive plans in achieving the
desired results. The managers can also assess the appropriateness of the current strategy
in todays dynamic world with socio-economic, political and technological innovations.
Strategic Evaluation is the final phase of strategic management.
The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of performance.
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Strategic Evaluation is significant because of various factors such as - developing inputs

for new strategic planning, the urge for feedback, appraisal and reward, development of
the strategic management process, judging the validity of strategic choice etc.
The steps in Strategic Evaluation are as follows

Fixing benchmark of performance - While fixing the benchmark, strategists

encounter questions such as - what benchmarks to set, how to set them and how to
express them. In order to determine the benchmark performance to be set, it is essential to
discover the special requirements for performing the main task. The performance
indicator that best identify and express the special requirements might then be determined
to be used for evaluation. The organization can use both quantitative and qualitative
criteria for comprehensive assessment of performance. Quantitative criteria include
determination of net profit, ROI, earning per share, cost of production, rate of employee
turnover etc. Among the Qualitative factors are subjective evaluation of factors such as skills and competencies, risk taking potential, flexibility etc.

Measurement of performance - The standard performance is a bench mark with

which the actual performance is to be compared. The reporting and communication

system help in measuring the performance. If appropriate means are available for
measuring the performance and if the standards are set in the right manner, strategy
evaluation becomes easier. But various factors such as managers contribution are difficult
to measure. Similarly divisional performance is sometimes difficult to measure as
compared to individual performance. Thus, variable objectives must be created against
which measurement of performance can be done. The measurement must be done at right
time else evaluation will not meet its purpose. For measuring the performance, financial
statements like - balance sheet, profit and loss account must be prepared on an annual
basis.

Analyzing Variance - While measuring the actual performance and comparing it

with standard performance there may be variances which must be analyzed. The
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strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted. The positive deviation
indicates a better performance but it is quite unusual exceeding the target always. The
negative deviation is an issue of concern because it indicates a shortfall in performance.
Thus in this case the strategists must discover the causes of deviation and must take
corrective action to overcome it.

Taking Corrective Action - Once the deviation in performance is identified, it is

essential to plan for a corrective action. If the performance is consistently less than the
desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance. If the strategists discover that the organizational
potential does not match with the performance requirements, then the standards must be
lowered. Another rare and drastic corrective action is reformulating the strategy which
requires going back to the process of strategic management, reframing of plans according
to new resource allocation trend and consequent means going to the beginning point of
strategic management process.

Strategic management is an ongoing process

Because each one of the five tasks of strategic management requires, constant
evaluation and a decision with things as they are or to, make changes - the process of
managing strategy is ongoing. Nothing is final as all prior actions are subject to
modification as conditions in the surrounding environment change and ways for
improvement emerge. Strategic management is a process filled with constant motion.
Changes in the organization's situation, either from inside or outside or both, constantly
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drive strategic adjustments. The task of evaluating performance and initiating corrective
adjustments are found in both the end and the beginning of strategic management cycle.
The match of external and internal events guarantees revision in the four previous
components as this will be imperative sooner or later. It is always incumbent on
management to push for better performance to find ways to improve the existing strategy
and how it is being executed.
Changing external conditions add further impetus to the need for periodic
revisions in a companys mission, performance objectives, strategy and approaches to
strategy execution. Adjustments usually involve fine turning, but occasions for a major
strategic reorientation do arise-sometimes prompted by significant external developments
and sometimes by sharply sliding financial performance. Strategy managers must stay
close enough to the situation to detect when changing conditions require a strategic
response and when they do not. It is their job to read the minds of change reorganize
significant changes early and capitalize on events as they unfold.

Strategic decisions
Strategic decisions are the decisions that are concerned with whole environment
in which the firm operates the entire resources and the people who form the company and
the interface between the two.

Characteristics/Features of Strategic Decisions

Strategic decisions have major resource propositions for an organization. These
decisions may be concerned with possessing new resources, organizing others or
reallocating others.
Strategic decisions deal with harmonizing organizational resource capabilities with
the threats and opportunities.
Strategic decisions deal with the range of organizational activities. It is all about
what they want the organization to be like and to be about.
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 Strategic decisions involve a change of major kind since an organization operates

in ever-changing environment. Strategic decisions are complex in nature.

The Importance of the Strategic Management Process

In their quest for economic success, managers have always noticed that for
some reason, some companies seem to flourish apparently effortless, while others, despite
their continuous struggle, come across nothing but loss. The reason for this difference has
been long studied, in order to understand which are the most important managerial
actions that separate winners from losers. The results of these studies can be summarized
as follows:
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 In successful organizations, managers have a clear vision of the purpose and

direction of the company and dont hesitate to approach new directions or to
initiate major changes. The managers of unsuccessful companies, on the other
hand, are so preoccupied with current issues and details that simply neglect to
identify any purpose and direction.
The successful managers are those who know everything about the clients needs
and behaviour, the market requirements and the opportunities provided by the
environment. They often get their bestideas from their clients, and their innovative
vision is based on experience. These managers continuously seek new
opportunities, always acting on those they find more appealing. Other managers
dont always take into account their clients needs or the market opportunities.
They are less receptive to the clients attitudes, their instinct telling them to react
to the markets general direction instead of creating it. They can also reject new
ideas out of fear of making a mistake, while their actions and decisions are usually
those already tried and proved successful.

The managers of successful organizations must have a strategic plan in order to

insure a strong competitive position on the market and therefore achieve the
desired outcome. They believe that the competitive advantage is the key for
obtaining a high revenue and a long term success. Less profitable organizations are
always those that lack a good strategy. Their managers, preoccupied with internal
problems and paperwork deadlines, do a poor job of maneuvering their
organizations into favourable competitive positions; they don't develop effective
ways to compete more successfully. They often underestimate the strenght of
competitors and overestimate the ability of their own organizations to offset the
competitive advantage of the market leaders.

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 High-performing organizations are strongly results-oriented and performanceconscious. Their managers consider the individual performance of each emploee
as the motor of organizational competitiveness, and they fairly reward outstanding
results. The managers of poorly performing organizations excuse weak
performance on the basis of uncontrollable factors such as a depressed economy,
slack demand, strong competitive pressures, rising costs and unforeseen problems.
In their case, rewards are only loosely tied to standards of superior performance.
In best performing companies, managers are deeply involved in implementing the
chosen strategy and making it work as planned. They understand the internal
requirements for successful strategy implementation and they insist that careful
attention be paid to the details required for first-rate execution of the chosen
strategy. They personally lead the process of strategy implementation and
execution. In contrast, the managers of poorly performing organizations are into
the machinations of corporate bureaucracy; the bulk of their time is taken up with
studies, reports, meetings, policy making, memos and administrative procedure.
They don't see systematic implementation of strategic plans as their prime
administrative responsibility. They spend most of the workday in their offices,
remaining largely invisible to their employees, using immediate subordinates as a
conduit to the rest of the organization, and keeping tight control over most
decisions.

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Strategic Management benefits/advantages

There are many benefits of strategic management and they include
identification, prioritization, and exploration of opportunities. For instance, newer
products, newer markets, and newer forays into business lines are only possible if firms
indulge in strategic planning. Next, strategic management allows firms to take an
objective view of the activities being done by it and do a cost benefit analysis as to
whether the firm is profitable. Just to differentiate, by this, we do not mean the financial
benefits alone (which would be discussed below) but also the assessment of profitability
that has to do with evaluating whether the business is strategically aligned to its goals and
priorities. The key point to be noted here is that strategic management allows a firm to
orient itself to its market and consumers and ensure that it is actualizing the right strategy.
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Financial Benefits
It has been shown in many studies that firms that engage in strategic
management are more profitable and successful than those that do not have the benefit of
strategic planning and strategic management. When firms engage in forward looking
planning and careful evaluation of their priorities, they have control over the future,
which is necessary in the fast changing business landscape of the 21st century. It has been
estimated that more than 100,000 businesses fail in the US every year and most of these
failures are to do with a lack of strategic focus and strategic direction. Further, high
performing firms tend to make more informed decisions because they have considered
both the short term and long-term consequences and hence, have oriented their strategies
accordingly. In contrast, firms that do not engage themselves in meaningful strategic
planning are often bogged down by internal problems and lack of focus that leads to
failure.

Non-Financial Benefits
The section above discussed some of the tangible benefits of strategic
management. Apart from these benefits, firms that engage in strategic management are
more aware of the external threats, an improved understanding of competitor strengths
and weaknesses and increased employee productivity. They also have lesser resistance to
change and a clear understanding of the link between performance and rewards. The key
aspect of strategic management is that the problem solving and problem preventing
capabilities of the firms are enhanced through strategic management. Strategic
management is essential as it helps firms to rationalize change and actualize change and
communicate the need to change better to its employees. Finally, strategic management
helps in bringing order and discipline to the activities of the firm in its both internal
processes and external activities.
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Closing Thoughts
In recent years, virtually all firms have realized the importance of strategic
management. However, the key difference between those who succeed and those who fail
is that the way in which strategic management is done and strategic planning is carried
out makes the difference between success and failure..

Strategic planning
Strategic planning
Strategic planning is a management tool, period. As with any management tool,
it is used for one purpose only: to help an organization do a better job - to focus its
energy, to ensure that members of the organization are working toward the same goals, to
assess and adjust the organization's direction in response to a changing environment. In
short, strategic planning is a disciplined effort to produce fundamental decisions and
actions that shape and guide what an organization is, what it does, and why it does it,
with a focus on the future.
A word by word dissection of this definition provides the key elements that
underlie the meaning and success of a strategic planning process: The process is strategic
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because it involves preparing the best way to respond to the circumstances of the
organization's environment, whether or not its circumstances are known in advance;
nonprofits often must respond to dynamic and even hostile environments. Being strategic,
then, means being clear bout the organization's objectives, being aware of the
organization's resources, and incorporating both into being consciously responsive to a
dynamic environment.
The process is about planning because it involves intentionally setting goals (i.e.,
choosing a desired future) and developing an approach to achieving those goals. The
process is disciplined in that it calls for a certain order and pattern to keep it focused and
productive. The process raises a sequence of questions that helps planners examine
experience, test assumptions, gather and incorporate information about the present, and
anticipate the environment in which the organization will be working in the future.
Finally, the process is about fundamental decisions and actions because choices
must be made in order to answer the sequence of questions mentioned above. The plan is
ultimately no more, and no less, than a set of decisions about what to do, why to do it,
and how to do it. Because it is impossible to do everything that needs to be done in this
world, strategic planning implies that some organizational decisions and actions are more
important than others - and that much of the strategy lies in making the tough decisions
about what is most important to achieving organizational success.
The strategic planning can be complex, challenging, and even messy, but it is
always defined by the basic ideas outlined above - and you can always return to these
basics for insight into your own strategic planning process

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SWOT ANALYSIS AND STRATEGIC PLANNING

SWOT analysis is an examination of an organizations internal strengths and
weaknesses, its opportunities for growth and improvement, and the threats the external
environment presents to its survival. Originally designed for use in other industries, it is
gaining increased use in healthcare.

Steps in SWOT Analysis

The primary aim of strategic planning is to bring an organization into balance with the
external environment and to maintain that balance over time. Organizations accomplish
this balance by evaluating new programs and services with the intent of maximizing
organizational performance.

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Step 1 of SWOT analysis involves the collection and evaluation of key data.
Depending on the organization, these data might include population demographics,
community health status, sources of healthcare funding, and/or the current status of
medical technology. Once the data have been collected and analyzed, the organizations
capabilities in these areas are assessed.
Step 2 data on the organization are collected and sorted into four categories:
strengths, weaknesses, opportunities, and threats. Strengths and weaknesses generally
stem from factors within the organization, whereas opportunities and threats usually arise
from external factors. Organizational surveys are an effective means of gathering some of
this information, such as data on an organizations finances, operations, and processes.
Step 3 It involves the development of a SWOT matrix for each business
alternative under consideration. For example, say a hospital is evaluating the
development of an ambulatory surgery center (ASC). They are looking at two options;
the first is a wholly owned ASC, and the second is a joint venture with local physicians.
The hospitals expert panel would complete a separate SWOT matrix for each alternative.
Step 4 It involves incorporating the SWOT analysis into the decision-making
process to determine which business alternative best meets the organizations overall
strategic plan.

Strengths
Traditional SWOT analysis views strengths as current factors that have
prompted outstanding organizational performance. Some examples include the use of
state-of-the-art medical Equipment, investments in healthcare informatics, and a focus on
community healthcare improvement projects. Other strengths might include highly
competent personnel, a clear understanding among employees of the organizations goals,
and a focus on quality improvement.

Weaknesses
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Weaknesses are organizational factors that will increase healthcare costs or

reduce healthcare quality. Examples include aging healthcare facilities and a lack of
continuity in clinical processes, which can lead to duplication of efforts. Weaknesses can
be broken down further to identify underlying causes. For example, disruption in the
continuity of care often results from poor communication. Weaknesses also breed other
weaknesses. Poor communication disrupts the continuity of care, and then this
fragmentation leads to inefficiencies in the entire system. Inefficiencies, in turn, deplete
financial and other resources. Other common weaknesses include poor use of healthcare
informatics, insufficient management training, a lack of financial resources, and an
organizational structure that limits collaboration with other healthcare organizations. A
payer mix that includes large numbers of uninsured patients or Medicaid patients can also
negatively affect an organizations financial performance, and a lack of relevant and
timely patient data can increase costs and lower the quality of patient care.

Opportunities
Traditional SWOT analysis views opportunities as significant new business
initiatives available to a healthcare organization. Examples include collaboration among
healthcare organizations through the development of healthcare delivery networks,
increased funding for healthcare informatics, community partnering to develop new
healthcare programs, and the introduction of clinical protocols to improve quality and
efficiency. Integrated healthcare delivery networks have an opportunity to influence
healthcare policy at the local, state, and national levels. They also have an opportunity to
improve patient satisfaction by increasing public involvement and ensuring patient
representation on boards and committees. Organizations that are successful at using data
to improve clinical processes have lower costs and higher-quality patient care. For
example, healthcare organizations with CMS Hospital Compare quality scores above the
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90th national percentile are eligible for CMS pay-for performance incentives. (See
Chapter 6 for information on CMS Hospital Compare). The greater the number of
organizations achieving such scores, the greater patients access to quality healthcare.
Such scores also enhance an organizations Reputation in the Community.

Threats
Threats are factors that could negatively affect organizational performance.
Examples include political or economic instability; increasing demand by patients and
physicians for expensive medical technology that is not cost-effective; increasing state
and federal budget deficits; a growing uninsured population; and increasing pressure to
reduce health cost.

Some of the key elements that underlie the strategic planning process
1. The Process Strategic:
It is strategic process because it involves preparing the best way to respond to the
circumstances of the organisations environment, whether or not its circumstances are
known in advance. Being strategic means being clear about the organizations objectives
being aware of the organisations resources, and incorporating into consciously
responsive to a dynamic environment.
2. The Process Is About Planning:
It is considered to be related to planning because it involves setting goals (i.e. choosing a
desired future) and developing an approach to achieve those goals.

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3. The Process Is Disciplined:

Discipline highlights the relationship between the different steps in strategic planning.
Mission depends on environment. Strategic planning is also disciplined in that there is a
sequence of questions typically raised to examine experience and test assumptions, gather
and make use of information about the present, and try to anticipate the future
environment the organisation will be working in, it calls for a certain order and pattern to
keep it focused and productive.
4. The Process is About Fundamentals:
Strategic planning implies that some organisational decisions and actions are more
important than others and that much of the strategy lies in making the tough decisions
about what is most important to achieving organisational success.
5. The Process is About Decision-Making:
Strategic planning is based on decision-making because in order to answer the questions
raised in the structured planning process, choices must be made. The plan ultimately is no
more, and no less, than a set of decisions about what to do, how to do and why to do.
6. It Is The Long Range Plan:
Long range is the longest time period for which it makes sense to make plans. The time
period varies from organisation to organisation. For most organisations, a 3-5 year timeframe is appropriate for meaningful long range planning.
7. Based On Operating Plan:
Operating plans are the detailed action plans to accomplish the strategic goals laid out in
the strategic plan. An organisation should have operating plans for each major
organisational unit and correspond to its fiscal year.
8. Strategic Management:

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The concept of strategic planning implies managing day to day and month to month, in a
way that focuses on the most important decisions and actions. This requires the kind of
longer term perspective and priorities which result from a strategic plan. This concept
also incorporates the assumption that the environment is always changing; thus, strategic
management requires ongoing re-assessment of current plans in light of long term
priorities.

Environmental analysis
Porter wrote in 1980 that formulation of competitive strategy includes
consideration of four key elements:

Company strengths and weaknesses;

Personal values of the key implementers (i.e., management and the board);
Industry opportunities and threats; and
Broader societal expectations.
The first two elements relate to factors internal to the company (i.e., the internal

environment), while the latter two relate to factors external to the company (i.e., the
external environment).
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There are many analytical frameworks which attempt to organize the strategic
planning process. Examples of frameworks that address the four elements described
above include:
External environment: PEST analysis or STEEP analysis is a framework used
to examine the remote external environmental factors that can affect the organization,
such as political, economic, social/demographic, and technological. Common variations
include SLEPT, PESTLE, STEEPLE, and STEER analysis, each of which incorporates
slightly different emphases.
Industry environment: The Porter Five Forces Analysis framework helps to
determine the competitive rivalry and therefore attractiveness of a market. It is used to
help determine the portfolio of offerings the organization will provide and in which
markets Relationship of internal and external environment: SWOT analysis is one of the
most basic and widely used frameworks, which examines both internal elements of the
organization Strengths and Weaknesses and external elements Opportunities and
Threats. It helps examine the organization's resources in the context of its environment.

Strategic management process of e-business

The e-business strategic management process illustrated is based on the
traditional model of strategic management. It is a systematic process consisting of four
interrelated steps: (1) Analyze the external and internal environments, (2) Select the ebusiness strategy, (3) Implement the e-business strategy, and (4) Evaluate the success of
the e-business strategy.

Step 1: Analyze The Companys External And Internal Environments

In the traditional strategic planning model, managers identify their companys
strengths and weaknesses, as well as the obstacles and opportunities in their business
environment. They are then ready to make strategic decisions that seek to balance their

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companys competencies with the business opportunities around them. This step is
equally crucial for e-business planning.
The main barriers to e-business adoption
A wait-and-see attitude and skepticism on the part of clients and partners can put
up barriers that discourage e-business solutions. In other cases, the nature of the
companys product can make it more difficult to introduce e-business. Consider the
example of Moules Industrials, a Sherbrook, Que., firm that manufactures rubber and
plastic moulds-a customized product that is generally unsuitable for Web-based sales
because transactions cannot occur without prior personal contact. Moules Industrials can,
however, use the Web to foster initial client contact, and when an agreement is reached
with a client, the Internet can make further contact easier during the prototype
development phase.
For SMEs located outside major urban centers, it is sometimes hard to find
simple, economic solutions for distributing the products they sell on-line. La Ferme
Martinette, a maple-product business in Quebecs Eastern Townships that markets its
merchandise on-line, must rely on Canada Post to deliver goods to its customers. La
Fermee Martinette operates at a disadvantage because merchandise pickup is not an
option for many customers, and because it does not have personal contact with customers
at the time of sale or product receipt.
The Web makes it possible for SMEs like La Ferme Martinette to increase their
customer base, but it cannot solve all the logistical difficulties related to the sale.
However, our study found that by far the most important obstacle to e-business adoption
among small- and medium-sized enterprises was lack of financial resources.
The size of the investment and the long and sometimes uncertain payback
period frequently cause SMEs to postpone investing in e-business. For example, 20 per
cent of Polar Plastics customers wanted the Montreal-based plastic-ware manufacturer to
adopt an electronic data interchange (EDI) system, which was too costly, given the
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companys small client base. Polar Plastic knew that it would be very difficult to pay off
the $30,000 cost of the system over the short term. Instead, the company opted for EDI
Gateway, a technological solution offered by an external supplier that processes customer
orders and lets Polar Plastic transmit information to its clients EDI systems. Through this
intermediary company, Polar could receive and transmit information by fax to clients like
McDonalds Restaurants. Until recently, the cost of contracting this particular EDI
solution through an intermediary was a few hundred dollars per month.

What conditions enable e-business adoption?

When developing their e-business strategic plan, managers must take into
account the number and nature of external factors that are compatible with the adoption
of e-business.
Depending on the industry, government financing may be an incentive for
adopting e-business. Other proven incentives are the time spent with SMEs to understand
their needs and the investments in technological infrastructure made by the leaders of
sector-based associations like the QICG (Quebec Institute of Graphic Communications)
and the funding and technological expertise of partners such as government agencies and
large corporations. Many companies know how to identify and take advantage of such
arrangements. In our study, the triggering factor was usually the initiative of managers
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who realized the potential advantages of e-business. For example, the vision and
technological know-how of managers at Auberge de La Fontaine, a small hotel in
Montreal, and Colibri Tours, a travel agency, led these companies to develop a Web site.
After many years of negative growth, Revue Gestion, a magazine for business
practitioners and academics, also sought to boost readership by going on-line.

Step 2: Select An E-Business Strategy

The selection of an e-business strategy requires solid knowledge of how ebusiness can create economic value for the firm. Successful SMEs know how to identify
the scope of their activities and determine which products, clients and geographic
markets they should target. They also know how to set clear and measurable goals.

How can e-business create economic value?

The ultimate goal of any strategic decision is to create value. Amit and Zotto
identified four opportunities to create value with the help of e-business: efficiency,
complementarities, novelty and lock-in. Efficiency is mainly derived from lower costs
due to faster transactions, increased automation of the companys operations, and the ease
with which clients can research relevant information. Novelty refers to the design and
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adoption of new operational methods in a given sector that link up new or existing
participants, or introduces new products and services. By locking in to a particular,
reliable technological solution, a company gains approval and trust among its client base.
Complementarities are mainly concerned with the bundling of resources and
technological capabilities, as well as the bundling of products and services, of various
partners in one electronic network. In our study, the principal value driver was efficiency
for the firm and the customer. Using e-business allowed SMEs to reduce costs and find
new clients, as was the case with Montreals Auberge de La Fontaine, whose Web
presence boosted the inns revenues by 30 per cent. The inn was also able to save on
advertising costs by reducing the number of promotional flyers it printed. Its trilingual
site (French, English and Spanish) allows customers to view available rooms and obtain
information on Montreals tourist and cultural offerings, adding value for its patrons and
streamlining the booking process.

Value can also be created through complementarities and lock-in. CaractraNeomdia, a Quebec-based printing and new-media company, retains clients by
providing them with comprehensive content-management services and alternative
publishing methods.

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Step 3: Implement The E-Business Strategy

After defining the targeted client base and geographic markets for new or
traditional products, SME managers should plan the implementation of their e-business
and decide what type of technological solution and supply chain to adopt.

What are the most suitable technological solutions?

Companies have a wide range of technological options from which to choose (see Table
1). Our study shows that SMEs usually develop Web sites and e-shops that complement
their products and services, and fulfill their need for identity and independence. SMEs in
plastics and printing often are reluctant to embrace technological solutions that impose
standardization on the entire industry. In fact, portal solutions, virtual communities and emalls are usually not attractive to SMEs because they do not support the SMEs need for
identity and independence.

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Thanks to its Web site, Maison Laprise, a manufacturer of factory-built homes, is

able to provide customers with a complete catalogue of its products, along with the
relevant technical specifications for each home. The sites search engine allows clients to
input the features they want in a home and quickly access an appropriate model. About 60
per cent of buyers said they visited the Web site before heading to the companys
showroom. The companys on-line presence has bolstered its sales volume.
Some businesses prefer to involve other retailers or partners in their technological
solutions, and to devise a technical format that is tailored to the specific operations of
their association or sector. RECF, for example, runs an e-mall where editor partners can
advertise their products.

Step 4: Evaluate the success of the e-business strategy

After acquiring a sound understanding of how to create economic value with ebusiness and determining the firms desired positioning, managers must finalize
objectives relating to sales growth, cost reduction and profitability. They must also select
the indicators that will enable them to assess the success of the e-business solutionscorecards showing financial, client, internal process and learning and growth indicators
can be vital tools.

Indicators for evaluating e-business success

Overall, the businesses in this study used a small number of unsophisticated indicators.
They placed importance on the profitability of transactions, and measured performance
by analyzing additional sales volume and the savings realized by using e-business. In our
study, only Revue Gestion established a set of indicators to assess the performance of its

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e-business project prior to implementing e-business. Many of these indicators are

automatically captured on Revue Gestions Web site.

Conclusion
Business history shows that high performing enterprises often initiate and lead,
not just react and defend. They launch strategic offensive to secure sustainable
competitive advantage and then use their market edge to achieve superior financial
performance. Aggressive pursuit of a creative, opportunistic strategy can propel a firm
into a leadership position, paving the way for its goods and services to become the
industry standard. In a dynamic and uncertain environment, strategic management is
important because it can provide managers with a systematic and comprehensive means
for analyzing the environment assessing their organization's strengths and weakness and
identifying opportunities for which they could develop and exploit a competitive
advantage. The strategic management process includes eight steps identifying the
organization's current mission, objectives and strategies, analyzing the environment,
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identifying opportunities and threats in the environment, analyzing the organization

resources, identifying the organization's strengths and weaknesses, formulating strategies,
implementing strategies and evaluating.

WEBLIOGRAPHY

http://www.hul.co.in/aboutus/ourhistory/
http://www.managementstudyguide.com/strategic-management-process.htm
http://www.ache.org/pdf/secure/gifts/Harrison_Chapter5.pdf
http://jupapadoc.startlogic.com/compresearch/papers/JCR07-2.pdf

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