Unit 1:

Introduction of Strategic Management

Zenith International College

Biratnagar

What Is Strategy?
The term strategy is derived from a Greek
word Strategos which means general ship
the actual direction of military force, as
distinct from the policy governing its
deployment. Strategy is a broad game plant
to achieve objectives. It provides direction
and scope to the organization over the long
term. Literally the word strategy means the
art of the general.

Strategy:

Strategy can be defined as the management

action plan for achieving the chosen objectives.
It commits the organization to specific products,
market, resources and technology. It specifies
how the organization will be operated, run &
what entrepreneur, competitive & functional
area approach & action will be taken to put the
organization into the desired position.
Strategy considers both means & ends. The
goals & decisions making up an organization's
strategy may be planned ahead of time or may
just evolve as a pattern in the stream of
significant decisions.

Strategy:

It determines the basic long-term goals &

objectives of an enterprise and the
adoption of courses of action and the
allocation of resources necessary for
carrying out these goals.

Strategic Management:
Strategic management is the art and science
of formulating, implementing and evaluating
cross-functional decisions that will enable an
organization to achieve its objectives. It is the
process of specifying the organization's
objectives, developing policies and plans to
achieve these objectives, and allocating
resources to implement the policies and plans
to achieve the organization's objectives.
Strategic management, therefore, combines
the activities of the various functional areas
of a business to achieve organizational
objectives.

Strategic Management:
Strategic management is a set of decisions &
actions that result in formulating &
implementation of plans designed to achieve
a companys objectives.
Because it involves long term, future
oriented, complex decision making & requires
considerable resources, top management
participation
is
essential.
Strategic
management is a three-tier process involving
corporate, business & functional level
planners, & more specific, narrow, shortterm, & actions oriented, with lower risks but
fewer opportunities for dynamic impact.

Strategic Management:
The purpose of strategic management is to
exploit and create new and different
opportunities for tomorrow, long range
planning, in contrast, tries to optimize for
tomorrow the trends of today.
Strategic management provides overall
direction to the enterprise and is closely
related to the field of Organization Studies.
In the field of business administration it is
possible
mention
to
the
"strategic
consistency.
.

Strategic Management:
Strategic Management is simply the art of
turning strategies into action.
Strategy
management
exploits
new
opportunities for tomorrow.
Well implementation of corporate to
achieve & maintain competitive advantage
Strategy management refers to strategic
decisions
&
actions
of
the
top
management.
Strategy management is known as a
process
of
strategy
formulation,
implementation, &evaluation & control.

Characteristic of Strategic ManagementUncertain

Complex
Organization

wide

Fundamental
Long

term implications
Implementation:

Characteristic of Strategic Management-

[1] Uncertain: Strategic management deals

with future oriented non-routine situation. They
create uncertainty. Managers are unaware
about the consequences of their decisions.
[2] Complex: Uncertainty brings complexity
for strategic management. Managers face an
environment which is difficult to comprehend.
[3]
Organization
wide:
Strategic
management
has
organization
wide
implications. It has system wide application. It
is a continuous process. It is an interactive
process among various functional areas.

Characteristic of Strategic Management[4] Fundamental: Strategic management is

fundamental for improving the long term
performance of the organization.

[5]
Long
term
implications:
Strategic
management is not concerned with day to day
operations. It has long term implications.

[6] Implementation: Strategic management

ensures that strategy is put into action.
Implementation is its essence. It also evaluates
performance for future decision making.

Importance of Strategic Management

To meet the organizational goal: Strategies are formulated after

assessing the organization's resources, competencies and changeability
so such formulation of strategies provides realistic framework to set &
meet organizational objectives.
Proactive: Strategic Management allows an organization to be more
proactive than reactive in shaping its own future. It allows an
organization to initiate & influence (rather than just respond to)
activities & thus exert control over its own destiny.
Empowerment: it helps to achieve the understanding &commitment
from all managers & employees. all employees knows what the
organization doing and why, they often feel that they are a part of the
firm & become committed to assisting it.
Managers & employees become surprisingly creative & innovative where
they understand & support the firm's mission , objectives & strategies.
a great benefit of strategic management is the opportunity
that the process provides to empower individuals. Empowerment is the
act of strengthening employees sense of effectiveness by encouraging
them to participate in decision making & to exercise initiative &
imagination & rewarding them for doing so.

Importance of Strategic Management

4. Change Management: strategic management reduces

resistance to change. The participative approach promotes
participation & communication. Alternative actions are already
planned, so, uncertainty is reduced. It alerts management to
respond to change.
5. Meet competition: strategic Management helps to explore
core competencies. Knowing & utilizing core competencies (in all
resources) makes organization strong to compete. Organization can
also build strategic alliance with global companies to meet
competition.
6. Effective resource utilization: Strategic management takes a
coordinated approach to resource planning & management.
Integration of resource while formulating plan ensures better
utilization.

DIFFERENT LEVELS OF
STRATEGY
Corporate

Operational

Business

Functional

DIFFERENT LEVELS OF
STRATEGY:
Business level
Operational
or functional level

et
as
cre
In
he
n
po
res
sib
ili
ty

CORPORATE LEVEL:
Top managements overall plan for
the entire organization and its
strategic business units.
Corporate level strategy occupies
the heights level of DECISION
MAKING.
the nature of the decisions tends to
be value oriented, conceptual than
the Business level, and
Operational or Functional level.

Types of Corporate Strategies:

Growth: expansion into new products and
markets.
Stability: maintenance of the status of the
organization.
Renewal: redirection of the firm into new
markets.

CORPORATE LEVEL STRATERGY

Growth

Strategy

Seeking to increase the organizations business by

expansion into new products and markets.

Types

of Growth Strategies

Concentration
Vertical integration
Horizontal integration
Diversification

GROWTH STRATERGIES:
Concentration:

Focusing on a primary line of

business and increasing the number of products
offered or markets served.
Vertical Integration: 1). Backward vertical
integration.
2). Forward vertical
integration.
Horizontal Integration: Combining operations
with another competitor in the same industry to
increase competitive strengths.

GROWTH STRATERGIES(contd)
Diversification:
1). Related Diversification:
Expanding by merging with firms in
different, but related industries.
2). Unrelated Diversification:
Growing by merging with firms in
unrelated industries where higher
financial returns are possible.

CORPORATE LEVEL STRATERGY(contd)

Stability

Strategy: A strategy that seeks to

maintain the status with the uncertainty of the

environment, when the industry is experiencing slowor no-growth conditions.
Renewal

Strategy: Developing strategies to

counter organization weaknesses that are leading to

performance declines.

Business-Level Strategies:

A strategy that seeks to determine

how an organization should
compete in each of its SBUs
(strategic business units).

At Business-level ALLOCATION
of re-sources among Functionallevel an COORDINATE with the
Corporate
level
to
the
ACHIEVEMENT of the Corporate
level OBJECTIVES.

Business-Level Strategies(contd)
Cost

leadership: Attaining, then using the

lowest total cost basis as a competitive
advantage.

Differentiation:

Using product features or

services to distinguish the firms offerings from
its competitors.

Market

focus: Concentrating competitively on

a specific market segment.

Functional-Level Strategies:
Focus

is on improving the
effectiveness of operations
within a company.
Which is done by:
Manufacturing
Marketing
Materials management
Researchand development
Human resources

STRATEGIC MANAGEMENT
PROCESS

Process of formulation, implementation,

evaluation and control of strategies to realize the
organization's strategic intent. The strategic
management process encompasses three phases,
which together involve a number of systematic steps.
1.Strategy formulation
2.Implementation
3.Evaluation & control.
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FORMATION
OF MISSION
&
OBJECTIVES

EVALUATIO
N AND
CONTROL

SWOT
ANALYSIS

IMPLEMENTAT
ION

STRATEGIC MANAGEMENT PROCESS

CONSIDERATI
ON OF
STRATEGIC
ALTERNATIVES

CHOICE OF
STRATEGY

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STRATEGIC FORMULATION
Strategic formation involves four important
steps which are,
1. Determination of mission and objectives
2. Analysis of strengths and weakness of the firm
3. Environmental opportunities and threats
4. Generation of alternatives strategies and
choosing the most appropriate strategies.
27

1.DETERMINATION OF MISSION AND

OBJECTIVES
Strategic

management can be defined as the art and

science of formulating, implementing and evaluating
cross-functional
decisions
that
enables
an
organization to achieve its objectives.

In

short, strategy is a means to achieve the

objectives. It is, therefore, quite obvious that
determine the mission and objectives, is the first step
in the strategic formation.
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The mission defines the board social

purpose and scope of the organization
whereas objectives more specifically define
the direction to achieve the mission

Objectives help translate the organization

mission into results while objectives may be
generic in their expression, goals sets
specific targets to be achieved with in a time
frame.
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2.SWOT ANALYSIS
In

strategic management, the term strategic

is used to mean pertaining to the relation
between the firm and its environment this
indicates the role of SWOT in strategic
management.

In

strategic management the strength and

weakness of the firm and opportunities and
threats in the environment will indicate the
portfolio strategy and other strategies it30

3.STRATEGIC ALTERNATIVES
Given the mission and objectives and
having analyzed the strength and
weakness of the firm and environmental
opportunities and threats. This
strategies should proceed to generate
possible alternatives strategies. There
may be different strategies options for
accomplishing a particular objectives.
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4.EVALUATION AND CHOICE

The purpose of considering different

strategic options is to adopt the most
appropriate strategy. This necessitates
the evaluation of strategic alternatives
with reference to certain criteria.

Criteria such as suitability, feasibility and

acceptability are commonly employed to
evaluate the strategic options.
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5.IMPLEMENTATION
Operationalizing

the strategy requires

transcending the various components of
strategy to different levels, mobilization and
allocation of resource, structuring authority,
responsibility, task and information follows, and
establishing polices.

Implementation

of strategy involves a number

of administrative and operational decisions.
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6.EVALUATION AND CONTROL

Evaluation and control is the last phase of

the strategic management process. The
objective is to examine whether the strategy
as implemented is meeting its objectives and
if not to take corrective measures.

Continuous monitoring of the environment

and implementation of the strategy is
essential.
34

BENEFITS AND RELEVANCE OF

STRATEGIC MANAGEMENT
1. Strategic

management helps to envision an

organizations future, formulate mission and
make objectives clear.

2. Strategic

management makes the management

dynamic, appropriate to the environment and
future oriented.

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3. It make people realize what are they working

for, what is expected of each SBU, division,
functional department and, to some extend,
individuals.
4. Strategic management facilitates better
delegation, organization monitoring,
performance evaluation and control.
5. Strategic management would enable a

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Elements of Strategic Management Process

Strategic management encompasses the main

elements of strategic position, strategic
choices, strategy implementation & strategic
control. Each of these elements have sub
elements. They are as follows: