Strategic Management

Competitive advantage
 Doing the right things  is more important than doing things right
 Effectiveness vs. Efficiency  Competitive advantage for the firm

An Introduction
 It is derived from the word strategos which means generalship.  A process by which organisational objectives are formulated and achieved.  It is the grand design of an overall plan which an organisation choose in order to move towards the set objectives by making use of its resources.  Strategy helps the organisation to meet its uncertain situation with due diligence.

Definition
It is a unified, comprehensive and integrated plan that is designed to ensure that basic objectives of the enterprise are achieved through proper implementation process. For example : strategies of the organisations like Nestle, Mc Donals and Tata Motors that enable them to grow during the period of recession.

Tasks involved in strategic Management

 Formulation of the company s mission- broad statement about the purpose, philosophy and goals of the organisation.  Analysis of the company s internal condition and capabilities.  Access the external environment of the company.  Analyse- company s option by matching its resources with external environment.  Identify- the most desirable option by evaluating each option with company s mission.  Select a set of short term objectives and long term objectives.  Implement strategic choices by means of budgetary resources.  Evaluate the success of strategic choices.

Stages of strategic management

 The strategic management process consist of three

stages
 Strategic Formulation  Strategic Implementation  Strategic Evaluation

Strategic Formulation
y It includes following processes  Developing a vision and mission.  Identifying organisational external opportunities and threats.  Determining internal strengths and weakness.  Establishing long-term objectives.  Generating alternative strategies and choosing the best strategic alternatives to pursue.

Issues of strategic formulation

 What new business to enter.  What business to abandon.  How to allocate resources.  Whether to expand operations or diversify.  Whether to enter international market.  Whether to merge or form a joint venture.

Strategy determine long term competitive advantage.

Strategic Implementation
 It is often called the action stage of the strategic management.
Creating an effective organisational structure. Redirecting marketing efforts Preparing budgets Developing and utilising information system Linking employees compensation to organisational performance.

Interpersonal skills are critical for the successful implementation.  Strategic implantation include following processes
    

 It requires a firm to  Establish annual objectives  Devise policies  Motivate employees  Allocate resources so that formulated strategies can be executed.

Strategic Evaluation
y It is the final stage in strategic management, mangers

desperately need to know when particular strategies are not working well. y All strategies are subjected to the future modification. y Fundamental activities in strategic evolution are
y Reviewing external and internal factors that are the bases

for current strategies. y Measuring performance y Taking corrective actions

Levels of strategic management

y Corporate y Composed of board of directors, CEO, - responsible for the firm s financial performance and of non-financial goals. y Divisional or strategic business unit y It is composed of business and corporate mangers. These managers must translate the statements of direction and intent generated at the corporate level into concrete objectives. They strive to identify and secure the most promising market segment within that arena. y Functional unit y It is composed primarily of the mangers of product and functional areas. They develop annual objectives and short term strategies in areas like production, operation, marketing and finance. Their principal responsibility is to implement and execute the firm s strategic plan.