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UNIT – 1

It is derived from the Greek word “Strategos” which is used in military


Strategy is a course of action through which an organisation relates itself

with environment so as to achieve its objectives.

Strategic Management:

Strategic management is defined as set of decisions and actions resulting in

formulation & implementation of strategies design to achieve the objectives of an

Phases of Strategic Management:

They are four phases in strategic management they are……….

1. Defining the business mission purpose & objectives

2. Formulating of strategies

3. Implementing of strategies

4. Evaluation of strategies

These four phases sequentially to each other & each phase provides a feedback to

previous phase.

Defining the business mission Formulating of Implementing of Evaluation of

purpose & objectives strategies strategies strategies

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First Phase:

The first phase consists of establishing the strategic intent for the
organisation. Strategic intent is the hirerachy of the objectives of organisation. It consists
of vision, mission, objectives & business definition.

Second Phase:

The second phase is the formulation of strategies is concerned with the

dividing of the strategic. This phase is also called strategic planning. In these phase
strategic think, analyse & plan strategies.

Third Phase:

The third phase of implementation is the “Putting in to action phase”. The

strategies that are formulated are implemented to a series of administrative and
managerial action.

Fourth Phase:

The fourth phase is evaluation & control involves assessing how the
strategies are formulated & how effectively they are implementing. Examples of strategic
phases involved in financing of a business, pricing of a product, diversification of
organisation, restructuring of organisation.

Strategic Management Process:

It consists of following activities.

A. Establishing the hirerachy of strategic Intent:

1. Creating & communicating a vision.

2. Designing a mission statement

3. Defining the business

4. Adopting the business model

5. Setting objectives

B. Formulating of Strategies:

1. Performing environmental appraisal

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2. Doing organizational appraisal

3. Formulating corporate level strategies

4. Formulating business level strategies

5. Undertaking strategic analysis

6. Excersing strategic choice

7. Preparing strategic plan

C. Implementing of strategies:

1. Activating strategies

2. Designing the structure, system & process

3. Managing behavioural implementation

4. Managing function implementation

5. Operationalising strategies

D. Performing strategic evaluation & control:

1. Performing strategic evaluation

2. Excersing strategic control reformulating strategies

Business Policy:

Every business organisation makes 2 sets of decisions.

1. Decision relates to functional areas such as production, marketing, finance,


2. Integrated decision for the whole organisation after taking all the functional areas
in to a count such as mergers, acquisitions etc.

3. Where as functional areas decisions may be both long term & short term but where
as business policy decisions is always long term decisions. Business policy
decisions are usually taken by Top management.

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4. Business policy has also been used in the past for corporate planning, strategic
planning, management planning & for strategic management.

5. Business policy is hence defined as the “study of the functions & responsibilities
of Top Management”. The crucial problems that effect success in the total
enterprise and the decisions that are determined the direction of the organisation &
shape its future.

Business policy is also concerned with “The mobilization of resources for the attainment
of goals in the face of completion”.

Characteristics of Business Policy:

1. It is concerned with goals & objectives which affect the success of total enterprise.

2. It is concerned with the study of functions & responsibilities of senior


3. It deals with future course of action.

4. To realize its goals & objectives.

Business policy – An Integrated approach:

Business policy focuses on strategic planning & strategic management. Its elements are

1. Mission, objectives, & goals

2. Environmental Analysis

3. Strategic alternatives

4. Swot analysis

5. Strategic analysis

6. Strategic implementation

7. Strategic evaluation

Six major operation are to be integrated into the business policy process. They are

1. Production

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2. Marketing

3. Finance

4. Personal

5. R & D

6. Legal


The production department will address the questions relating to size of

production quality of the product to consumer expectation.


The marketing department will highlight the capabilities & limitations of the
product promotion. Physical distribution & personal etc.


The finance department is responsible for both short term & long term financers at
competitive costs return on investments.

Research & Development:

R&D is nerves system of the organisation. It plays vital role in translation vision in to


The legal department should answer the questions relating to patent rights & liabilities.


Personal is most crucial component of the organisation. It is involved in all

functional areas. It is concerned with selecting the best people. Satisfying them through
motivation & training.

Importance :

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 Business policy is a course of study.

 Understanding & scanning of environment.

 Emphasis on social responsibilities & ethical aspects on the business.

 Understanding of interpersonal & intrapersonal & organisation level development.

Business policy course provides the knowledge and content based to people & enterprise.


 Knowledge is needed to decision in functional areas.

 Environment obtaining within or outside the organisation.

 It knows the strengths & weaknesses of organisation.

 Identifying the alternative expansion mergers etc.

 Analyzing alternatives

 Changes in the organizational structure.

 Evaluation & control.

Nature & Scope:

Nature & Scope of business policy may be judge in relation to the

following characteristics.

 It deals with future perspective of business.

 Vital role of top management.

 Emphasis on research & development.

 Greater involvement of experts.

Business policy is used to achieve long term goals & objectives once the goal has
been indentified they are executed by operational mangers. Operational managers puts
additional responsibility on strategic manager to monitor and evaluate the performance in
the realization of goals. Goals & objectives are adjusted according to the changes in the
environment. Business policy is formulated by top management comprising of board of
directors & managing directors. Experts are back bone of effective business policy.
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Experts are needed to advised & assessed top management to take important role at
planning, execution, evaluation & control levels.

Purpose of business policy:

The main purpose of business policy are

 Knowledge generation

 Skill creation

 Attitudinal changes to cope with business situations

Every business practicing business policy to achieve long term goals & objectives
of the organisation which has to generate fresh knowledge through R&D and with

Research is going on in every functional area such as production, marketing,

finance & personal. Lot of research is under taken to improve operating efficiency of
business enterprises. In these process lot of data & knowledge is generated. Which is not
only useful to the organization but also to the outside work.

Knowledge is contributed by most functional department through investigations,

group discussions, training programmes like sensitivity training, brain stroming sections
etc. skills are required through

 Take decisions

 Performing the jobs

 Improving the process

 And to make the organisation effective

Business policy helps in the development of analytical ability, the ability to apply
theory in the practice improved mental ability & skill to find solutions for the complex
problems. Skills like technical skills, human skills, conceptual skills.

Benefits of business policy:

Business policy has created many benefits to the organisation in the modern times.
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 Determine the corporate policies

 Co-ordination of finance, production and distribution

 Ultimate control of executive

Financial Strengths:

Higher performance firms resort to systematic planning to prepare them selves for
future fluctuations in external & internal environment. Most of the business failures like
liquidation on be avoided through business policy planning.

Non-financial benefits:

 It allows for identification exploitation of opportunities.

 It provides objectives view of management problems.

 Represents the frame work for improve coordination & control of activities.

 Minimizes the effect of adverse conditions.

 It allows major decisions to support established objectives.

 It allows effective allocation of time & resources.

 Encouragement for forward planning.

 It encourages favourable attitude towards changes.



The starting point of every organisation is to examine on basis on which structure

these organisation was founded that is strategic intent. Strategic intent is the choice it
modes the vision, mission value statement reflects the strategic intend of the organisation.
Strategic intent is the basis on which organisation provide products services for
consumers profits for investors jobs for employees taxes for government. The core
concept of strategic management are vision, mission & value statement. Objectives
determined how the vision, values & goals are integrated in to the operation of the

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Vission: vission keeps the organisation moving forward vission is the motivation in the

Mission: it is the founders intention at the outside of the organisation. What they want to

Values: values manifest in what the organisation does as a group and how it operates.



“Kotter defines vission as Description of something in the future”. In strategic

management literature vission being future aspirations that lead to an inspiration to be the
best in one’s field of activity.


 An organisation charter of core values & principles.

 The ultimate source of our priorities, plans and goals.

 A puller in the future

 A determination that what makes us unique.


A vission should not be like

 A history of our proud past

 Passion less

 Higher concept statement or literature or advertising slogan.

Benefits of Vission:

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There are several benefits to the organisation by having a vission.

 Good visions are inspiring

 Good visions posters, risk taking & experimentation.

 Good vission postures long term winning

 Good vission helps in creation of identity & shared it

 Good vission are competitive original & unique.

Characteristics of Vission:

1. Directional: A well stated vission says something about company’s journey and
signals the king of business & strategic changes that will be fourth coming.

2. Focused: A well stated vission is specific enough to provide managers with

guidance in decision making & allocating resources.

3. Flexible: A well stated vission is not a one’s- and- for- all- time- pronouncements-
vission. About the company’s future part may need to change as events.

4. Feasible: A well stated vission should be possible one.

5. Desirable: A well stated mission appeals to the long term interest of stake holders,
employees, customers.

6. Easy: A well stated vission is explained in less than 10 minutes & can be reduced
to communicate simple, memorable slogan.

Process of creating a vission or process of envisioning:

The process of envisioning is difficult according to colleen & porras, a well conceived
vission consists of 2 major components core ideology & envision future.

Core ideology: it defines the enduring character of an organisation that remains

unchangeable as it passes through many problems such as technology competition,
management fools, core ideology rests, core values & cores purposes.

Environment future: It consists of 2 components ‘At 10 to 30 years goals & viewed

description of what it will be like to achieve that goals many organisations mentioned

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terms such as corporate philosophy , corporate values that are used to convey what they
stand for and what guides them in strategic and day to day decision making.

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