Strategic management Strategic management is an ongoing process that evaluates and controls the business and the industries

in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [i.e. regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment. Strategic Management can also be defined as "the identification of the purpose of the organization and the plans and actions to achieve the purpose. It is that set of managerial decisions and actions that determine the long term performance of a business enterprise. It involves formulating and implementing strategies that will help in aligning the organization and its environmental to achieve organizational goals." Stages Of Strategic Management The strategic management process represents a logical, systematic, and objective approach for determining an enterprise's future direction. However, a clear separation is needed between the managerial process by which an organization formulates, evaluates, implements, and controls the relationships between its objectives, its strategies, and its environment. Researchers usually distinguish three stages in the process of strategic management: Strategy formulation Strategy implementation, and Evaluation and control . Strategy Formulation Strategy formulation is the process of establishing the organization's mission, objectives, and choosing among alternative strategies. Sometimes strategy formulation is called" Strategic planning Strategy Implementation Strategy implementation is the action stage of strategic management. It refers to decisions that are made to install new strategy or reinforce existing strategy. The basic strategy -implementation activities are establishing annual objectives, devising policies, and allocated resources. Strategy implementation also includes the making of decisions with regard to matching strategy and organizational structure; developing budgets, and motivational systems. Strategy Evaluation And Control The final stage in strategic management is strategy evaluation and control. All strategies are subject to future modification because internal and external factors are constantly changing. In the strategy evaluation and control process managers determine whether the chosen strategy is achieving the organization's objectives. The fundamental strategy evaluation and control activities are: reviewing internal and external factors that are the bases for current strategies, measuring performance, and taking corrective actions. The five tasks of Strategic Management 1 Developing a Vision and a Mission

2 Setting Objectives: convert the Mission into specific performance targets 3 Crafting a Strategy to achieve performances: 5 approaches Macroeconomic Analysis Industry Analysis Game Theory Capabilities-Based-Strategy formulation Dynamic capabilities and evolutionary thinking 4 Implementation & executing the Strategy 5 Evaluating performances, reviewing the situation & initiating corrective adjustments Basic Concepts in Strategic Management Strategic management consists of business owners' and managers' actions to plan for the future success of a company. Strategic plans identify opportunities and threats in the marketplace, as well as strengths and weaknesses from within, to steer companies to success by pursuing unique strategies. Understanding the basic concepts in strategic management is essential to guiding your company to a profitable future. Developing a Mission Statement 1. Basically, the mission statement describes the overall purpose of the organization. 2. If the organization elects to develop a vision statement before developing the mission statement, ask Why does the image, the vision exist -- what is its purpose? This purpose is often the same as the mission. 3. Developing a mission statement can be quick culture-specific, i.e., participants may use methods ranging from highly analytical and rational to highly creative and divergent, e.g., focused discussions, divergent experiences around daydreams, sharing stories, etc. Therefore, visit with the participants how they might like to arrive at description of their organizational mission. 4. When wording the mission statement, consider the organization's products, services, markets, values, and concern for public image, and maybe priorities of activities for survival. 5. Consider any changes that may be needed in wording of the mission statement because of any new suggested strategies during a recent strategic planning process. 6. Ensure that wording of the mission is to the extent that management and employees can infer some order of priorities in how products and services are delivered. 7. When refining the mission, a useful exercise is to add or delete a word from the mission to realize the change in scope of the mission statement and assess how concise is its wording. 8. Does the mission statement include sufficient description that the statement clearly separates the mission of the organization from other organizations? Developing a Vision Statement 1. The vision statement includes vivid description of the organization as it effectively carries out its operations. 2. Developing a vision statement can be quick culture-specific, i.e., participants may use methods ranging from highly analytical and rational to highly creative and divergent, e.g., focused discussions, divergent experiences around daydreams, sharing stories, etc. Therefore, visit with the participants how they might like to arrive at description of their organizational vision. 3. Developing the vision can be the most enjoyable part of planning, but the part where time easily gets away from you.

4. Note that originally, the vision was a compelling description of the state and function of the organization once it had implemented the strategic plan, i.e., a very attractive image toward which the organization was attracted and guided by the strategic plan. Recently, the vision has become more of a motivational tool, too often including highly idealistic phrasing and activities which the organization cannot realistically aspire

What are the benefits of strategic management? Strategic management allows and organization to be more proactive than reactive in shaping its own future; it allows an organization to initiate and influence activities and thus to exert control over its own destiny. Small business owners, chief executive officers, presidents and managers of many for-profit and non-profit organizations have recognized and realized the benefits of strategic management. Historically, the principle benefit of strategic management has been to help organizations formulate better strategies through the use of the more systematic, logical and rational approach to strategic choice. Financial Benefits: 1. Improvement in sales. 2. Improvement in profitability. 3. Improvement in productivity. Non-Financial Benefits: 1. Improved understanding of competitors strategies. 2. Enhanced awareness of threats. 3. Reduced resistance to change. 4. Enhanced problem-prevention capabilities. Market development Market develop is a marketing technique aimed at increasing a company's market in order to widen the customer base for the purpose of selling more products. There are several approaches that can be used to make a market larger, ranging from capturing customers of rival companies to expanding to a previously unnerved segment of the market. These practices are organized and driven by marketing personnel who can work within a company or be consulted specifically to assist with market development. When a company believes that it has a need to increase the size of its market, the first step is usually a development of a profile to find out what segments of the market are currently being served. This study includes an analysis of the kinds of customers the company has and what those customers are buying. This information is used to develop an efficient and comprehensive market development strategy. Companies must use cost effective strategies so that they do not end up spending more money developing a market than they could potentially earn by expanding the market.

PRODUCT DEV: The creation of products with new or different characteristics that offer new or additional benefits to the customer. Product development may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche. Diversification Strategy Diversification is a company strategy wherein a company tries to increase profitability through increased sales volume from new products and new markets. In laymans term, diversification means venturing out into new business, new products or new markets to increase profits. It is a form of growth strategy involving a significant increase in the performance objectives beyond past performance records. Diversification allows a company to venture out into new lines of business that are different from the present operations. Companies employ different diversification strategies to expand firms' operations by adding markets, products, services, or stages of production to the existing business. The concentric diversification is a strategy where a company adds a related product or market to achieve a strategic fit. This allows the company to achieve synergy making it possible for two or more parts of an organization to achieve greater total effectiveness or profitability than what would have been possible for a single entity. This strategy may be employed to attain financial synergy to let companies with stronger financial backing but limited growth opportunities work with a company that may not b financially strong but is having a greater market potentials. Another advantage of this strategy is that it opens ways to achieve management synergy, where management experience and expertise is applied to different situations. A conglomerate diversification takes place when a company diversifies into businesses or markets that are not related to their present business or market operations. Under this situation synergy may be achieved by combining management expertise or financial resources, while the main objective of conglomerate diversification is to improve the profitability of the parent company and make little of no efforts in trying to achieve marketing or production synergy.

Horizontal diversification The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers. In a competitive environment, this form of diversification is desirable if the present customers are loyal to the current products and if the new products have a good quality and are well promoted and priced. Moreover, the new products are marketed to the same economic environment as the existing products, which may lead to rigidity and instability. In other words, this strategy tends to increase the firm's dependence on certain market segments. For example, a company that was making notebooks earlier may also enter the pen market with its new product.

Defensive Strategy - PrincipleAlways counter an attack with equal or greater force.Defend every important market.The firm should be vigilant in scanning for potential attackers. Assess the strength of the competitor. The best defense is to attack yourself. Attack your weak spots and rebuild yourself anew.Defensive strategies should be the exclusive domain of the market leader. Retrenchment strategy Retrenchment occurs when an organization regroups through cost and asset reduction to reverse declining sales and profits. In some case, bankruptcy can be an effective type of retrenchment strategy.Vishal Mega Mart Subhiksha Stores Divestiture strategy Selling a division or part of an organization is called divestiture. Divestiture is often used to rise capital for further strategic acquisitions or investment. This strategy is also useful to rid unprofitable activities in a firm.IBM PCD Divestiture (Lenovo) Liquidation strategy Selling all of companys assets, in parts, for their tangible worth is called liquidation. However, it may be better to cease operating than to continue losing large sum of money. Diversification Strategies Concentric Diversification Adding new but related products or services is called concentric diversification strategy. Previously Suzuki in collaboration with Maruti Making CarsRecently, Suzuki Kiashi entered into individual car making company - making luxurious models Horizontal Diversification Adding new, related or unrelated products or services for present costumer is called horizontal diversification strategy. This strategy is not as risky as conglomerate diversification strategy, because a firm should already be familiar with its present customers.Park Avenue into garments (Traditionally) Park Avenue - into cosmetics (Recently) Conglomerate Diversification (Lateral Diversification)Adding new, unrelated products or services is called conglomerate diversification strategy. General Electric is an example of a firm that is highly diversified. GE makes locomotives, light bulbs, and refrigerators. GE manages more credit cards than American Express. GE owns more aircraft that American Airlines. Joint venture Joint venture is a popular strategy that occurs when two or more companies form a partnership for the purpose of capitalizing on some opportunity. This strategy allows companies to improve communication and networking, to globalize operation and minimize risk.Joint Venture of Maruti (51%) : Suzuki (49%)Joint Venture of Tata (73.3%) : DOCOMO (26.7%)

merger The combining of two or more entities into one, through a purchase acquisition or a pooling of interests. Differs from a consolidation in that no new entity is created from a merger. A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed upon goals or to meet a critical business need while remaining independent organizations. This form of cooperation lies between M&A and organic growth.

Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is a cooperation or collaboration which aims for a synergy where each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involves technology transfer (access to knowledge and expertise), economic specialization,[1] shared expenses and shared risk

Types of strategic alliances Various terms have been used to describe forms of strategic partnering. These include international coalitions (Porter and Fuller, 1986), strategic networks (Jarillo, 1988) and, most commonly, strategic alliances. Definitions are equally varied. An alliance may be seen as the joining of forces and resources, for a specified or indefinite period, to achieve a common objective. There are seven general areas in which profit can be made from building alliances.[2] Stages of Alliance Formation A typical strategic alliance formation process involves these steps:

Strategy Development: Strategy development involves studying the alliances feasibility, objectives and rationale, focusing on the major issues and challenges and development of resource strategies for production, technology, and people. It requires aligning alliance objectives with the overall corporate strategy. Partner Assessment: Partner assessment involves analyzing a potential partners strengths and weaknesses, creating strategies for accommodating all partners management styles, preparing appropriate partner selection criteria, understanding a partners motives for joining the alliance and addressing resource capability gaps that may exist for a partner. Contract Negotiation: Contract negotiations involves determining whether all parties have realistic objectives, forming high calibre negotiating teams, defining each partners contributions and rewards as well as protect any proprietary information, addressing termination clauses, penalties for poor performance, and highlighting the degree to which arbitration procedures are clearly stated and understood. Alliance Operation: Alliance operations involves addressing senior managements commitment, finding the calibre of resources devoted to the alliance, linking of budgets and resources with strategic priorities, measuring and rewarding alliance performance, and assessing the performance and results of the alliance. Alliance Termination: Alliance termination involves winding down the alliance, for instance when its objectives have been met or cannot be met, or when a partner adjusts priorities or re-allocates resources elsewhere.

The advantages of strategic alliance include:

1. Allowing each partner to concentrate on activities that best match their capabilities. 2. Learning from partners & developing competences that may be more widely exploited elsewhere. 3. Adequate suitability of the resources & competencies of an organization for it to survive. There are four types of strategic alliances: joint venture, equity strategic alliance, non-equity strategic alliance, and global strategic alliances.

Joint venture is a strategic alliance in which two or more firms create a legally independent company to share some of their resources and capabilities to develop a competitive advantage. Equity strategic alliance is an alliance in which two or more firms own different percentages of the company they have formed by combining some of their resources and capabilities to create a competitive advantage. Non-equity strategic alliance is an alliance in which two or more firms develop a contractual-relationship to share some of their unique resources and capabilities to create a competitive advantage. Global Strategic Alliances working partnerships between companies (often more than two) across national boundaries and increasingly across industries, sometimes formed between company and a foreign government, or among companies and governments.

What is strategic management? Strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines, etc.

What is 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. (Adapted from Bryson's Strategic Planning in Public and Nonprofit Organizations).

Delegation of Authority A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the manager should delegate authority. Delegation of Authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.

Elements of Delegation 1. Authority - in context of a business organization, authority can be defined as the power and right of a person to use and allocate the resources efficiently, to take decisions and to give orders so as to achieve the organizational objectives. Authority must be welldefined. All people who have the authority should know what is the scope of their authority is and they shouldn't misutilize it. Authority is the right to give commands, orders and get the things done. The top level management has greatest authority. Authority always flows from top to bottom. It explains how a superior gets work done from his subordinate by clearly explaining what is expected of him and how he should go about it. Authority should be accompanied with an equal amount of responsibility. Delegating the authority to someone else doesn't imply escaping from accountability. Accountability still rest with the person having the utmost authority.

1. Responsibility - is the duty of the person to complete the task assigned to him. A person who is given the responsibility should ensure that he accomplishes the tasks assigned to him. If the tasks for which he was held responsible are not completed, then he should not give explanations or excuses. Responsibility without adequate authority leads to discontent and dissatisfaction among the person. Responsibility flows from bottom to top. The middle level and lower level management holds more responsibility. The person held responsible for a job is answerable for it. If he performs the tasks assigned as expected, he is bound for praises. While if he doesn't accomplish tasks assigned as expected, then also he is answerable for that. 2. Accountability - means giving explanations for any variance in the actual performance from the expectations set. Accountability can not be delegated. For example, if 'A' is given a task with sufficient authority, and 'A' delegates this task to B and asks him to ensure that task is done well, responsibility rest with 'B', but accountability still rest with 'A'. The top level management is most accountable. Being accountable means being innovative as the person will think beyond his scope of job. Accountability, in short, means being answerable for the end result. Accountability can't be escaped. It arises from responsibility.

For achieving delegation, a manager has to work in a system and has to perform following steps :1. Assignment of tasks and duties 2. Granting of authority 3. Creating responsibility and accountability How does delegation help decision making? Effective delegation makes for faster, more effective decision making. An organization is most responsive to change in the environment when decisions are made by those individuals closest to the problems; that is, responsibility and decision making are pushed further down in an organization. Individuals closest to the problem have the

most information on which to base an intelligent decision. Decision making can be achieved more expediently through delegation, thus allowing the organization to be more responsive and hence more competitive. When team members participate in decision making there is an increase in employee motivation, morale, and job performance. The greater the employee participation, the greater the employee commitment to the job and the organization! Increases flexibility of operations. Effective delegation trains many people to do the same assignments. This overlap allows for greater flexibility of work assignments. When someone is absent or a crisis requires people to assist with tasks not regularly a part of their jobs, they will already be familiar with the assignment. Delegation prepares more individuals for promotion or rotation of responsibilities. And it allows you to appoint someone to supervise the work group when you're absent. Your team members are more highly motivated with effective delegation.

Develops team members' skills. Failure to effectively delegate deprives team members of opportunities to improve their skills and assume greater responsibility. Team members realize that they are not learning and gaining the experience they could. As a result, they may leave the firm for more challenging and supportive environments. Unfortunately, the most talented team members are the most likely to leave and those you least want to lose. A routine task for you is often a growth opportunity for a team member. Delegating a wide variety of assignments not only serves to train team members, it allows for backup personnel in times of emergency or termination of other employees. When others are well-versed in handling the responsibilities of different areas, you attain maximum flexibility and ensure that the project will not be at a standstill in your absence. Increases team member involvement. Proper delegation encourages team members to understand and influence the work the department does. It allows team members a chance to incorporate their values in the workplace and, in many cases, to work on activities that especially interest them. Increasing team members' involvement in the workplace increases their enthusiasm and initiative. Increases promotion potential. As with managers, a team member who receives extensive delegation will be ready and able to advance to new positions. In this regard, delegation serves both to train and to test an employee. Benefits to the Organization If both managers and team members benefit from delegation, it follows that the organization as a whole benefits. Maximizes efficient output. When you delegate tasks according to the skills and abilities of each member of the work group, the department as a whole is likely to produce a higher level of work. Work will also be completed more efficiently. Delegation helps you make the best use of available human resources and achieve the highest possible rate of productivity. In addition, it allows new ideas, viewpoints, and suggestions to flourish. Produces faster, more effective decisions.

What are the benefits of delegation for team members? Your team members are more highly motivated with effective delegation.

Develops team members' skills. Failure to effectively delegate deprives team members of opportunities to improve their skills and assume greater responsibility. Team members realize that they are not learning and gaining the experience they could. As a result, they may leave the firm for more challenging and supportive environments. Unfortunately, the most talented team members are the most likely to leave and those you least want to lose. A routine task for you is often a growth opportunity for a team member. Delegating a wide variety of assignments not only serves to train team members, it allows for backup personnel in times of emergency or termination of other employees. When others are well-versed in handling the responsibilities of different areas, you attain maximum flexibility and ensure that the project will not be at a standstill in your absence. Increases team member involvement. Proper delegation encourages team members to understand and influence the work the department does. It allows team members a chance to incorporate their values in the workplace and, in many cases, to work on activities that especially interest them. Increasing team members' involvement in the workplace increases their enthusiasm and initiative. Increases promotion potential. As with managers, a team member who receives extensive delegation will be ready and able to advance to new positions. In this regard, delegation serves both to train and to test an employee. Benefits to the Organization If both managers and team members benefit from delegation, it follows that the organization as a whole benefits. Maximizes efficient output. When you delegate tasks according to the skills and abilities of each member of the work group, the department as a whole is likely to produce a higher level of work. Work will also be completed more efficiently. Delegation helps you make the best use of available human resources and achieve the highest possible rate of productivity. In addition, it allows new ideas, viewpoints, and suggestions to flourish. Produces faster, more effective decisions.

What is SWOT Analysis? SWOT analysis is a methodology of examining potential strategies derived from the synthesis of organizational strengths, weaknesses, opportunities and threats (SWOT). The partnering of the different elements and the extensive data collected as a result of the analysis can serve as a spark for roundtable discussions and refinement of current strategies or generation of new strategies.

What is the difference between data, information and knowledge? Consider a document containing a table of numbers indicating product sales for the quarter. As they stand, these numbers are Data. An employee reads these numbers, recognizes the name and nature of the product, and notices that the numbers are below last years figures, indicating a downward trend. The data has become Information. The employee considers possible explanations for the product decline (perhaps using additional information and personal judgment), and comes to the conclusion that the product is no longer attractive to its customers. This new belief, derived from reasoning and reflection, is Knowledge. Thus,

information is data given context, and endowed with meaning and significance. Knowledge is information that is transformed through reasoning and reflection into beliefs, concepts, and mental models. What is the difference between a shareholder and a stakeholder?

Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of a company through stock ownership, while a stakeholder is interested in the performance of a company for reasons other than just stock appreciation. Stakeholders could be:

employees who, without the company, would not have jobs bondholders who would like a solid performance from the company and, therefore, a reduced risk of default customers who may rely on the company to provide a particular good or service suppliers who may rely on the company to provide a consistent revenue stream

Although shareholders may be the largest stakeholders because shareholders are affected directly by a company's performance, it has become more commonplace for additional groups to be considered stakeholders, too.

Leveraged buyout A leveraged buyout (or LBO, or highly leveraged transaction (HLT), or "bootstrap" transaction) occurs when an investor, typically a financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage (borrowing). The assets of the acquired company are used as collateral for the borrowed capital, sometimes with assets of the acquiring company. Typically, leveraged buyout uses a combination of various debt instruments from bank and debt capital markets. The bonds or other paper issued for leveraged buyouts are commonly considered not to be investment grade because of the significant risks involved.[1] If the company subsequently defaults on its debts, the LBO transaction will frequently be challenged by creditors or a bankruptcy trustee under a theory of fraudulent transfer.[2] Companies of all sizes and industries have been the target of leveraged buyout transactions, although because of the importance of debt and the ability of the acquired firm to make regular loan payments after the completion of a leveraged buyout, some features of potential target firms make for more attractive leverage buyout candidates, including:

Low existing debt loads; A multi-year history of stable and recurring cash flows;

Hard assets (property, plant and equipment, inventory, receivables) that may be used as collateral for lower cost secured debt; The potential for new management to make operational or other improvements to the firm to boost cash flows, such as workforce reductions or eliminations; Market conditions and perceptions that depress the valuation or stock price.

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.[1] For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising

Referent power is individual power of an individual over the Team or Followers, based on a high level of identification with, admiration of, or respect for the powerholder/ leader. Nationalism, patriotism, celebrities, mass leaders and widely-respected people are examples of referent power in effect. Referent power is one of the Five Bases of Social Power, as defined by Bertram Raven and his colleagues in 1959. Definition: Referent power refers to the ability of a leader to influence a follower because of the follower's loyalty, respect, friendship, admiration, affection, or a desire to gain approval. Referent power is gained by a leader who has strong interpersonal relationship skills. Referent power, as an aspect of personal power, becomes particularly important as organizational leadership is increasingly about collaboration and influence rather than command and control.