UNIT 1 INTRODUCTION

STRATEGIC MANAGEMENT

MEANING

It is the process by which organisations try to determine what needs to be done to achieve Corporate objectives and more importantly how these objectives are to be met.

DIMENSIONS OF STRATEGIC DECISIONS

Strategic issues require Top Management Decisions Strategic issues involve the allocation of large amounts of company resources Strategic issues are likely to have a significant impact on the long term prosperity of the firm Strategic issues are future oriented Strategic issues usually have Multifunctional or Multibusiness consequences

Strategic issues necessitate considering factors in the firms external environment

CHARACTERISTICSBUSINESS OF CHARACTERI CORPORATE

STIC TYPE MEASURABILI TY ADAPTIBILTY CONCEPTUAL MIXED

LEVEL OF STRATEGY FUNCTIONAL OPERATIONA L

VALUE SEMIQUANTIF USUALLY JUDGEMENTS IABLE QUANTIFIABL E LOW MEDIUM HIGH

RELATION TO PRESENT ACTIVITIES

RISK PROFIT POTENTIAL COST TIME HORIZON FLEXIBILITY

INNOVATIVE

MIXED

SUPPLEMENT ARY
LOW SMALL SMALL SHORT RANGE LOW

WIDE RANGE LARGE MAJOR LONG RANGE HIGH

MODERATE MEDIUM MEDIUM MEDIUM RANGE MEDIUM

BENEFITS OF STRATEGIC MANAGEMENT

Enhance the problem prevention capabilities of the firm Group based strategic decisions reflect the best alternatives Improvement in Employee Motivation Clarification of role differentiation Elimination of uncertainity associated with change

COMPANY MISSION

Company Mission is defined as the fundamental unique purpose that sets a business apart from other firms of its type and identifies the scope of its operations in product and market terms.

FORMULATING A MISSION
Belief that the product or service can provide benefits atleast equal to its price Belief that the product or service can satisfy a customer need currently not met adequately for specific market segments Belief that the technology to be used in production will provide a product or service that is cost and quality competitive

Belief that with hard work and support of others the business can do better than just survive ,it can grow and be profitable Belief that the management philosophy of the business will result in a favorable public image and will provide financial and Psychological rewards for those willing to invest their labor and money in helping the firm to succeed.

MISSION STATEMENT OF GOOGLE

To organize the worlds information and make it universally accessible and useful.

COMPONENTS OF MISSION STATEMENT

1.

2.

3.
4. 5.

Basic Product or Service; Primary Market; Principal Technology Company Goals : Survival ; Growth;Profitability Company Philosophy Public Image Company Self Concept

COMPANY VISION
A strategic vision delineates managements aspirations for the business ,providing a panoramic view of where we are going and a convincing rationale for why this makes good business sense for the company. A strategic vision points an organization in a particular direction ,charts a strategic path for it to follow in preparing for the future, and molds organizational identity.

LINKING THE VISION WITH COMPANY VALUES

Values means the beliefs, business principles ,and practices that are incorporated into the way the company operates and the behavior of company personnel . Values relate to such things as treatment of employees and customers,integrity,ethics,innovativeness,em phasis on quality or service, social responsibility, community citizenship.

Company values statements are tightly connected to and reinforce the companys vision strategy and operating practices.

ELEMENTS OF A VISION STATEMENT

An organisations fundamental reason for existence beyond just making money. Its timeless,unchanging the Core values. Huge and audacious but achievable aspirations for future. CLARITY REACHABLE,ACHIEVABLE BREVITY.

VISION STATEMENT OF PROCTER AND GAMBLE

To provide branded products and services of superior quality and value that improve the lives of the worlds consumers

COMMUNICATING THE STRATEGIC VISION

To lower Level Managers and Employees PAYOFFS OF A CLEAR VISION STATEMENT 1. It crystallizes senior executives own views about the firms long direction 2. It reduces the risk of rudderless decision making 3. It is a tool for winning the support of organizational members for internal changes that will help make the vision a reality.

BALANCED SCORE CARD APPROACH

The score card allows managers to evaluate a firm from different complementary perspectives. The arguments run thus: i) A firm can offer superior returns to stockholders if it has a competitive advantage in its product or service

ii) To sustain a competitive advantage , a firm must offer superior value to customers. iii) Development of operations with necessary capabilities iv) Necessity of requisite skills,creativity,diversity and motivations .

FOUR PERSPECTIVES
FINANCIAL 1. EVA 2. Profitability 3. Growth II) CUSTOMER 1. Differentiation 2. Cost 3. Quick Response
I.

III) OPERATIONS 1. Product Management 2. Demand Management 3. Order Fulfillment IV) ORGANISATIONAL 1. Leadership 2. Organisational Learning 3. Ability to Change.

SETTING OBJECTIVES
IMPORTANCE OF OBJECTIVES 1. Justify the organization 2. Provide Direction 3. Basis for Management by Objectives 4. Help Strategic Planning /Management 5. Help Co-Ordination 6. Provide Standards for assessment and control 7. Help Decentralization

FINANCIAL OBJECTIVES
1.

2.
3. 4.

5.

6.

Profitability Return on investment Low Risk Share price,earnings,Dividends and market Value. Price/Earnings Ratio Growth

THE HIERARCHY OF STRATEGIC INTENT

vision Mission Objectives Goals Plans

MERGING THE STRATEGIC VISION OBJECTIVES AND STRATEGY

The Vision is a primary Statement.Based on the vision statement , the Mission statement is formed. The Objectives of the company helps to prepare strategic plan in various areas like marketing , finance , production.

RELATIONSHIP BETWEEN A COMPANYS STRATEGY AND BUSINESS MODEL

The mission statement reflects the companys strategy and Business Model. It is the organizations Plan to establish the relationship with other social institutions and stockholder group to maintain the overall character of the organisation. Business Model is translation of the strategy into operational Procedure.