Strategic management is not a box of tricks or a bundle of techniques.

It is analytical thinking and commitment of

resources to action.
Peter Drucker

Definition:
The on-going process of formulating, implementing and controlling broad plans guide the
organizational in achieving the strategic goods given its internal and external environment.
Alfred D Chandler (1962)
, Chandler defined strategy as: The determination of the basic long-term goals and objectives of an enterprise
and the adoption of the courses of action and the allocation of resources necessary for carrying out these
goals. Note that Chandler refers to three aspects
Features of strategic Management
1. On-going process:
Strategic management is a on-going process which is in existence through out the life of organization.
2. Shaping broad plans:
First, it is an on-going process in which broad plans are firstly formulated than implementing and finally
controlled.
3. Strategic goals:
Strategic goals are those which are set by top management. The broad plans are made in achieving the goals.
Evolution of strategic management
From his extensive work in the field, Bruce Henderson of the Boston Consulting Group concluded that
intuitive strategies cannot be continued successfully if
(1) the corporation becomes large,
(2) the layers of management increase, or
(3) the environment changes substantially.
Phase 1 - Basic financial planning: Seek better operational control by trying to meet budgets.
Phase 2 - Fore-cast based planning: Seeking more effective planning for growth by trying to predict the future
beyond next year.
Phase 3. Externally oriented planning (strategic planning): Seeking increasing responsiveness to markets and
competition by trying to think strategically.

Phase 4. Strategic management: Seeking a competitive advantage and a successful future by managing all
resources.
Phase 4 in the evolution of the strategic management includes a consideration of strategy implementation and
evaluation and control, in addition to the emphasis on the strategic planning in Phase 3.
General Electric, one of the pioneers of the strategic planning, led the transition from the strategic planning to
strategic management during the 1980s. By the 1990s, most corporations around the world had also begun the
conversion to strategic management.
In general, a corporate strategy has the following characteristics:
It is generally long-range in nature, though it is valid for short-range situations also and has short-range
implications.
It is action oriented and is more specific than objectives.
It is multipronged and integrated
It is flexible and dynamic.
It is formulated at the top management level, though middle and lower level managers are associated in their
formulation and in designing sub-strategies.
It is generally meant to cope with a competitive and complex setting.
It flows out of the goals and objectives of the enterprise and is meant to translate them into realities.
It is concerned with perceiving opportunities and threats and seizing initiatives to cope with them. It is also
concerned with deployment of limited organizational resources in the best possible manner.
It gives importance to combination, sequence, timing, direction and depth of various moves and action
initiatives taken by managers to handle environmental uncertainties and complexities.
It provides unified criteria for managers in function of decision making.

Framework
The five stages are as follows:
Stage one: This is the starting point of strategic planning and consists of doing a situational analysis of the
firm in the environmental context. Here the firm must find out its relative market position, corporate image,

its strength and weakness and also environmental threats and opportunities. This is also known as SWOT
(Strength, Weakness, Opportunity, Threat) analysis. You may refer third chapter for a detailed discussion on
SWOT analysis.

Stage two: This is a process of goal setting for the organization after it has finalised its vision and mission. A
strategic vision is a roadmap of the companys future providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create. An organizations Mission states what customers it serves, what
need it satisfies, and what type of product it offers.
Stage three: Here the organization deals with the various strategic alternatives it has.
Stage four: Out of all the alternatives generated in the earlier stage the organization selects the best suitable
alternative in line with its SWOT analysis.
Stage five: This is a implementation and control stage of a suitable strategy. Here again the organization
continuously does situational analysis and repeats the stages again.

6.2 Importance of Strategic Management

Strategic management provides the framework for all the major business decisions of an enterprise such as
decisions on businesses, products and markets, manufacturing facilities, investments and organizational
structure.
In a successful corporation, strategic planning works as the pathfinder to various business opportunities;
simultaneously, it also serves as a corporate defence mechanism, helping the firm avoid costly mistakes in
product market choices or investments. S
trategic management has the ultimate burden of providing a business organization with certain core
competencies and competitive advantages in its fight for survival and growth.
It seeks to prepare the corporation to face the future and even shape the future in its favour. Its ultimate
burden is influencing the environmental forces in its favour, working into the environs and shaping it, instead
of getting carried away by its turbulence or uncertainties.
THE TASK OF STRATEGIC MANAGEMENT
The strategy-making/strategy-implementing process consists of five interrelated managerial tasks. These are
Setting vision and mission: Forming a strategic vision of where the organization is headed, so as to provide

long-term direction, delineate what kind of enterprise the company is trying to become and infuse the
organization with a sense of purposeful action.
Setting objectives: Converting the strategic vision into specific performance outcomes for the company to
achieve.
Crafting a strategy to achieve the desired outcomes.
Implementing and executing the chosen strategy efficiently and effectively.
Evaluating performance and initiating corrective adjustments in vision, long-term direction, objectives,
strategy, or execution in light of actual experience, changing conditions, new ideas, and new opportunities.

Strategy Formation Process

Simple model
Working model of strategic planning process

Step 1: Identifying the organisations

current mission, objectives, and
strategies

Mission: the firms reason for being

The scope of its products and services
Goals: the foundation for further planning
Measurable performance targets

Step 2: Conducting an external analysis

The environmental scanning of specific and general

environments
Focuses on identifying opportunities and threats

Customers: Who are the organisations customers?

Products or services: What are the organisations major products or
services?
Markets: Where does the organisation compete geographically?
Technology: How technologically current is the organisation?

 Concern for survival growth, and profitability: Is the organisation

committed to growth and financial stability?
Philosophy: What are the organisations basic beliefs, values, aspirations,
and ethical priorities?
Self-concept: What is the organisations major competitive advantage and
core competencies?
Concern for public image: How responsive is the organisation to societal
and environmental concerns?
Concern for employees: Does the organisation consider employees a
valuable asset?
Source: Based on F. David, Strategic Management, 8th ed. (Upper

Step 3: Conducting an internal analysis

Assessing organisational resources, capabilities, activities, and culture:

Strengths (core competencies) create value for the customer and strengthen the competitive position of the
firm.
Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage.

Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)

Step 4: Formulating strategies

Develop and evaluate strategic alternatives

Select appropriate strategies for all levels in the organisation that provide relative advantage over
competitors
Match organisational strengths to environmental opportunities
Correct weaknesses and guard against threats

Step 5: Implementing strategies

Implementation: effectively fitting organizational structure and activities to the environment

The environment dictates the chosen strategy; effective strategy implementation requires an organisational
structure matched to its requirements.

Step 6: Evaluating results

How effective have strategies been?

What adjustments, if any, are necessary

VISION, MISSION AND OBJECTIVES

Since organizations are deliberate and purposive creations, they have some objectives; the end results
for which they strive. These end results are referred to as mission, purpose, objective, goal, target,
This contextual difference among various terms is important in understanding their nature relevant for
managerial actions.From planning point of view, an organization must define why it exists, how. it justifies
that existence, and when it justifies the reasons for that existence. The answers of these questions lie in the
organizations:
1. Mission and purpose,
2. Long-term objectives, a
A Strategic vision is a road map of a companys future providing specifics about technology and customer
focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of
company that management is trying to create
The three elements of a strategic vision:
1. Coming up with a mission statement that defines what business the company is presently in and
conveys the essence of Who we are and where we are now?
2. Using the mission statement as basis for deciding on a long-term course making choices about Where
we are going?
3. Communicating the strategic vision in clear, exciting terms that arouse organization wide commitment.
How to develop a strategic vision
The entrepreneurial challenge in developing a strategic vision is to think creatively about how to prepare a
company for the future.
Forming a strategic vision is an exercise in intelligent entrepreneurship.
Many successful organizations need to change direction not in order to survive but in order to maintain their
success.
A well-articulated strategic vision creates enthusiasm for the course management has charted and engages
members of the organization.
The best-worded vision statement clearly and crisply illuminate the direction in which organization is head

Mission
According to Glueck & Jauch mission is answer to the question what business are we in that is faced by
corporate-level strategist
A companys Mission statement is typically focused on its present business scope who we are and what we
do; mission statements broadly describe an organizations present capabilities, customer focus, activities,
and business makeup.

Why organization should have mission?

To ensure unanimity of purpose within the organization.
To provide a basis for motivating the use of the organizations resources.
To develop a basis, or standard, for allocating organizational resources.
To establish a general tone or organizational climate, for example, to suggest a businesslike operation.
To serve as a focal point for those who can identify with the organizations purpose and direction, and to
deter those who cannot form participating further in the organizations activities.
To facilitate the translation of objective and goals into a work structure involving the assignment of tasks to
responsible elements within the organization.
To specify organizational purposes and the translation of these purposes into goals in such a way that cost,
time, and performance parameters can be assessed and controlled.

Examples of mission statement

Mission of Unilever: The mission of our company, as William Hasketh Lever saw it, is to make cleanliness
commonplace, to lessen work for women, to foster health, and to contribute to personal attractiveness that life
may be more enjoyable for the people who use our products.
Mission of Mckinsey & Co: To help business corporation and governments to be more successful.
Mission of Cadbury India: To attain leadership position in the confectionary market and achieve a strong
presence in the food drinks sector.
Mission of Reliance Industries: To become a major player in the global chemicals business and

simultaneously grow in other growth industries like infrastructure.

Mission of Ranbaxy: To become a $1 billion research-based global pharmaceuticals company.
Objectives and Goals
Objectives are organizations performance targets the results and outcomes it wants to achieve. They
function as yardstick for tracking an organizations performance and progress.
Objectives are open-ended attributes that denote the future states or outcomes. Goals are close-ended
attributes which are precise and expressed in specific terms.
Objectives with strategic focus relate to outcomes that strengthen an organizations overall business position
and competitive vitality. Objective to be meaningful to serve the intended role must possess following
characteristics:
Objectives should define the organizations relationship with its environment.
They should be facilitative towards achievement of mission and purpose.
They should provide the basis for strategic decision-making
They should provide standards for performance appraisal.
Objectives should be understandable.
Objectives should be concrete and specific
Objectives should be related to a time frame
Objectives should be measurable and controllable
Objectives should be challenging
Different objectives should correlate with each other
Objectives should be set within constraints

Social responsibility
Social Responsibility towards different Interest groups: 1. Responsibility towards owners: Owners are the persons
who own the business. They contribute capital and bear the business.

Responsibility towards Investors: Investors are those who provide finance by way of investment in shares, bonds, etc. Banks,
financial institutions and investing public are all included in this category Ensuring safety of their investment Regular payment
of interest.
Responsibility towards employees: Business needs employees or workers to work for it. If the employees are satisfied
and efficient, then the business can be successful.

r better career prospects.

Responsibility towards customers: No business can survive without the support of customers.

les-service

Responsibility towards competitors: Competitors are the other businessmen or organization involved in a similar type
of business.

Responsibility towards suppliers: Suppliers are businessmen who supply raw materials and other items required by
manufacturers and traders.

8. Responsibility towards Government: Business activities are governed by the rules and regulations framed by the
government. Payment of fees, duties and taxes regularly as well as honestly Conforming to pollution control norms set
up by government Not to indulge in restrictive trade practices.
9. Responsibility towards society: A society consists of individuals, groups, organizations, families etc. They all are
the members of the society.

ation, medical science, technology etc.

9. Responsibility towards society: A society consists of individuals, groups, organizations, families etc. They all are
the members of the society.

DISCUSSIONS COMPILED BY : TARAK SHARMA

FACULTY- IHTM, CSJMU, KANPUR