Process of Strategic Management

• Why do some firms succeed while others

fail?
– A central objective of strategic management is
to learn why this happens.

TR PANDEY
• What is Process?
-Interrelated Stages of Flow of Information and Analysis.
• What is strategy?
– An action a company takes to attain superior
performance.

• What is the strategic management

process?
– The process by which managers choose a set
of strategies for the enterprise to pursue its
vision.
 Strategic Planning
• Rational planning by top management?
Basic Strategic Planning Model

Defining the Mission and Setting Top-Level Goals

External Analysis of Opportunities and Threats

Internal Analysis of Strengths and Weaknesses

Selection of Appropriate Strategies

Implementation of Chosen Strategies

Elements of Strategic Management
• Environmental Scanning
• Strategy Formulation
• Strategy Implementation
• Evaluation and Control
 Environmental Scanning
• Internal Analysis
• External Analysis
• SWOT Analysis
 Internal Analysis
• Identify strengths
– Quality and quantity of resources available
– Distinctive competencies
• Identify weaknesses
– Inadequate resources
– Managerial and
organizational deficiencies
 External Analysis
• Identify strategic opportunities and threats
in the operating environment.
Stakeholders

Immediate (Industry)

Macro Environment National

PEST
SWOT and Strategic Choice

•Strengths and Weaknesses

•Opportunities and Threats
(SWOT Analysis)

Strategic Choice
Business
Functional
Corporate
 Strategy Formulation
• Exploitation of Existing Opportunities
• Address the Challenges Faced by the
Organization
• Authority and Responsibility Check for
administering Change
• Providing an In-depth model for Social
Involvement—Social Approval
 Mission and Goals

• Mission
– Sets out why the organization
exists and what it should be doing.
• Major goals
– Specify what the organization hopes
to fulfill in the medium to long term.
• Secondary goals
– Are objectives to be attained that lead to
superior performance.
 Corporate-Level Strategies
• Vertical integration
• Diversification
• Strategic alliances
• Acquisitions
• New ventures
• Business portfolio
restructuring
 Business-Level Strategies
• Cost leadership
– Attaining, then using the lowest total cost basis
as a competitive advantage.
• Differentiation
– Using product features or services to distinguish
the firm’s offerings from its competitors.
• Market niche focus
– Concentrating competitively on
a specific market segment.
 Functional-Level Strategies
• Focus is on improving the effectiveness of
operations within a company.
– Manufacturing
– Marketing
– Materials management
– Research and development
– Human resources
 Strategy Implementation
• Designing organizational structure
Structure
• Designing control systems
–Market and output controls
–Bureaucratic controls
–Control through organizational culture
Controls
–Rewards and incentives
Budget and ROI
• Matching strategy, structure,
and controls Strategy
– Congruence (fit) among strategy,
structure, and controls
 Managing Strategic Change
• The only constant is change.
• Success requires adapting strategy and
structure to a changing world.
• The feedback loop in
strategic planning. Corporate

Operational Business

Functional
Strategic Intent vs Strategic Fit
 Vision=> Mission=>Objective

S
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Hierarchy of Goals
•Post-war ascent of Japanese companies
•Obsession to win
•Motivating People
•Creation of Opportunities for Team and Individuals
•Sustaining Enthusiasm
S
•Consistency of Intent
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