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Management Theory & Prac

M.Com-I

Strategic Management :
The art & science of formulating, implementing and
evaluating cross functional decisions that enable organization
to achieve its objectives.
This means, strategic management focuses on integrating
management , marketing, finance/ accounting, production,
/ operations , research , development and computer
information systems to achieve organizational success.
the term Strategic Management is synonym of strategic
planning.
The notion of strategic management is to achieve and
maintain competitive advantage.
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Mgmt Theory & Prac Chap- 5

Stages of Strategic Management Process:


Strategy Formulation, Strategy Implementation and
Strategy Evaluation.
Strategy Formulation:

developing a vision and mission,


identify organizations external opportunities and threats
determining internal strengths & weaknesses,
establishing long term objectives,
generating alternative strategies
choosing particular strategy to pursue.

Strategy Implementation :
establish annual objectives;
devise policies
motivate employees
allocate resources
preparing budgets
re-directing marketing efforts
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Strategy Evaluation:
1-reviewing internal & external factors basis for current strategies
2-measuring performance
3-taking corrective actions.
What is External Opportunity and Threat ?
These refer to economic, cultural, social demographic, political, legal,
technological and competitive trends and events that could significantly
benefit and harm an org in future.. e.g wireless revolution, mobile
revolution, biotechnology, population shifts, changing work values,
attitudes
What is Internal Strength & Weaknesses:
These are organizations controllable activities . e.g marketing, finance/
accounting, production, / operations , research , development and
computer information systems to achieve organizational success
What is Long Term Objectives?
This refers to specific results that an organization seeks to achieve in
pursuing its basic mission. Objectives should be challenging, measurable,
consistent, reasonable and clear.
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Mgmt Theory & Prac Chap- 5

The Strategic Management Model:

Perform External Audit

Dev Vision
& Mission Statements

Estab
Long Term
Obj

Generate
Evaluate
Select
Strategies

implement
strategies
MGMT Issues

Implement
Strategies
Marketing,
Fin, R&D
MIS

Measure &
evaluate
performance

Perform
Internal Audit

Strategy Formulation

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Strategy Implementation

Mgmt Theory & Prac Chap- 5

Strategy Evaluation

Benefits of Strategic Management:


1- Financial Benefits:
e.g significant improvement in sales, profitability( prosperity,
success), and productivity.

Preparation for future fluctuations in internal & external


environments
2- Non Financial Benefits:
An improved understanding of competitors strategies
increased employee productivity
understanding of performance reward relationship
efficient & effective managerial system
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Mgmt Theory & Prac Chap- 5

cont. benefits of strategic management.


Identification, prioritization & exploration of
opportunities
Objective view of management problems
improved coordination & control of activities
effective allocation of time & resources
internal communication among personnel
encourages forward thinking
encourages favorable attitude towards CHANGE
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Mgmt Theory & Prac Chap- 5

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