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Chapter 1

Introduction to Strategic
Management
Management

• In-charge of organisational affairs.

Management as key
• Making organisation a purposeful and productive entity.
group
• Brings together/integrates the resources.

• The functions include Planning, Organising, Directing,

Management as set of Staffing & Control.
functions • Determine goals & activities Helps in allocation of tasks
and resources

• Management is an influence process to make things

happen, to gain command over phenomena, to induce and
Management direct events and people in a particular manner.
• It is backed by power, knowledge, competence and
resources.

Strategy

♦It is a long term blueprint of desired image, direction and destination i.e. what
it wants to be and where it wants to be.
♦It is used to take market position, conducts its operations, attract and satisfy
customer, compete successfully.
♦It is game plan or ways to respond to dynamic and hostile external forces by top
level to pursue vision, mission and objectives.
♦It is no substitute for sound, alert and responsible management.
♦It can never be perfect, flawless and optimal.

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♦As per William F. Glueck, ‘A unified, comprehensive and
integrated plan designed to assure that the basic objectives of
the enterprise are achieved’.

♦As per Igor H. Ansoff, “The common thread among the

organization’s activities and product-markets that defines the
essential nature of business that the organization has or planned
to be in future”.

Strategy is Partly Proactive and Partly Reactive

A company’s strategy is typically a blend of:

♦Proactive actions on the part of managers to improve the company’s market
position and financial performance.
Example - Exercising may be difficult and a struggle, but it’s a proactive strategy
to make sure you’re fit and healthy well into the future.

♦Reactions to unanticipated developments and fresh market conditions in the

dynamic business environment.
Example – Online classes of all levels at times of Covid-19.

♦In proactive strategy, organisations will analyse possible environmental

scenarios and create strategic framework after proper planning and set
procedures and work on these strategies in a predetermined manner.
♦However, in reality no company can forecast both internal and external
environment exactly. Everything cannot be planned in advance.
♦There can be significant deviations between what was visualized and what
actually happens.
♦Strategies need to be attuned or modified in the light of possible environmental
changes.
♦Reactive strategy is triggered by the changes in the environment and provides
ways and means to cope with the negative factors or take advantage of emerging
opportunities.

♦In other words, a company uses both proactive and reactive strategies to cope
up the uncertain business environment. Proactive strategy is planned strategy
whereas reactive strategy is adaptive reaction to changing circumstances.

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Strategic Management

► It refers to the managerial process of

ü developing a strategic vision,
ü setting objectives,
ü crafting a strategy,
ü implementing and evaluating the strategy, and
ü finally initiating corrective adjustments were deemed appropriate.
The process does not end, it keeps going on in a cyclic manner.

►Strategic management emphasizes the monitoring and evaluation of external

opportunities and threats in the light of a company’s strengths and weaknesses
and designing strategies for the survival and growth of the company.

►It has two fold objectives:

• To create competitive advantage (unique and valued by customer) so that
company can outperform competitors.
• To guide the company successfully through all changes in the environment
i.e. to reach in the right manner.

Importance/Advantages of Strategic Management

►Charles Darwin:- 'Survival of the fittest', the only principle of survival for all
organizations, where 'fittest' are not the 'largest' or ‘strongest’ organizations
but those who can change and adapt successfully to the changes in business
environment.

►Many business giants have followed the path of extinction failing to manage
drastic changes in the business environment.
Thus, it becomes imperative to study Business Strategy.
►The major benefits of strategic management are:
1. A direction Gives a direction to the company to move ahead. It helps define
to the company the goals and mission. It helps management to define realistic
objectives and goals which are in line with the vision of the
company.
[Link] Organisations are able to analyse and take actions instead of being
to be proactive mere spectators. It helps organisations to be proactive instead of
instead of
reactive in shaping its future. It helps them in working within
reactive

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vagaries of environment and shaping it, instead of getting carried

away by its turbulence or uncertainties.
3. Frameworks Frameworks for all major decisions of an enterprise such as
for all major decisions on businesses, products, markets, manufacturing
decisions
facilities, investments and organisational structure.
4. Prepares the Seeks to prepare the organisation to face the future and act as
organisation to pathfinder to various business opportunities. Organisations are
face the
able to identify the available opportunities and identify ways and
future
means to reach them.
5. A corporate Serves as a corporate defence mechanism against mistakes and
defence pitfalls. It helps organisations to avoid costly mistakes in product
mechanism
market choices or investments.
against
mistakes and
pitfalls
[Link] the It helps to enhance the longevity of the business. With the state
longevity of of competition and dynamic environment it may be challenging for
the business
organisations to survive in the long run. Actions over expectations
is what strategic management ensures.
7. Develop It helps the organisation to develop certain core competencies and
certain core competitive advantages that would facilitate assist in its fight for
competencies
survival and growth.

Limitations of Strategic Management

Complex and It is difficult to understand the complex environment and exactly

Turbulent pinpoint how it will shape-up in future. The organisational estimate
Environment about its future shape may awfully go wrong
and jeopardise all strategic plans.
Example: Two-Wheeler Electric Vehicles
brands counted on strategic benefits they
would have because of the huge push from the government for
electric mobility. However, customers are getting reluctant to
purchase EVs due to the safety concerns amid the frequent
incidents of battery's catching fire.
Time- Organisations spend a lot of time in preparing, communicating the
consuming strategies that may impede daily operations
Process and negatively impact the routine business.

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Costly Expert strategic planners need to be engaged,

Process efforts are made for analysis of external and
internal environments devise strategies and
properly implement. These can be really costly
for organisations.
Difficult to Competition is unpredictable. Since all Organizations are trying to
estimate move strategically, it is difficult to estimate competitive response
competitor's as such decisions are taken within closed doors.
response Example: Apple changed the market dynamics
of the speaker industry by choosing to remove
3.5mm audio jack from iPhones. Now, all
major speaker brands had to put concentrated efforts to develop
their own true wireless speakers (TWS) and compete with new
entrants.

Strategic Intent
(Vision, Mission, Goals, Objectives & Values)

Strategic Intent
►It refers to purposes of what the organisation strives for

►Senior managers must define "what they want to do" and "why they want to do".

►It provides the framework within which the firm would operate to achieve
strategic objectives.

►Clarity in strategic intent is extremely important for the future success and
growth of the enterprise, irrespective of its nature and size.

►It could be in the form of vision and mission statements for the organisation
at the corporate level.

►It is generally stated in broad terms but when stated in precise terms it is an
expression of aims to be achieved operationally, i.e., goals and objectives.

►Component of Strategic Intent

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Values/Value System Strategic Intent

Vision

Mission

Goals and Objective

Vision

›»By the top management.

›»It tells us “where we want to be”
›»It is the blueprint of future position.
›»It communicates management aspirations to stakeholders.
›»It define directional path, company should take in product, customer, market,
technology.

›»Essentials of a strategic vision

ü The entrepreneurial challenge in developing a strategic vision is to think
creatively about how to prepare a company for the future.
ü Forming a strategic vision is an exercise in intelligent entrepreneurship.
ü A well-articulated strategic vision creates enthusiasm among the members
of the organisation.
ü The best-worded vision statement clearly illuminates the direction in which
organisation is headed.

Mission

›»It tells us 'what business are we in and what we do'.

›»It states what customer it serves, what need it
satisfies and what type of product it offers.
›»It is the way to get to the vision.
›»Things to be kept in mind while writing mission
• Gives organisation its own special identity

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• Defines needs to satisfy, target customer group,
technologies and competencies it uses.
• Unique to the organisation.

›»Why should an organisation have a mission?

ü To ensure unanimity of purpose within the organisation.
ü To develop a basis, or standard, for allocating organisational resources.
ü To provide a basis for motivating the use of the organisation's resources.
ü To establish a general tone or organisational climate, to suggest a business-
like operation.
ü To serve as a focal point for those who can identify with the organisation's
purpose and direction.
ü To facilitate the translation of objective and goals into a work structure
involving the assignment of tasks to responsible elements within the
organisation.
ü To specify organisational purposes and the translation of these purposes
into goals in such a way that cost, time, and performance parameters can
be assessed and controlled.

›»What is our mission and what business are we in?

ü As per Peter Drucker and Theodore Levitt, company should raise basic
questions and get correct & meaningful answer:
• What is our mission?
• What is out ultimate purpose?
• What do we want to become?
• What kind of growth do we seek?
• What business are we in?
• Do we understand our business correctly?
• Whom do we intent to serve?
• What human need do we intend to serve?
• What brings us to this particular business?
• What would be the nature of business in future?
• In what business would we like to be in future?
For example: Lakme – what business are we in?
Production oriented answer: In the factory we make cosmetics
Marketing oriented answer: In the retail outlet, we sell hope

Vision Mission
It describes future identity It is an ongoing and time independent
guide

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It is success It is a key to success

It tells us “where we want to be” It tells us, “what we are and what we
do”
It is specific in terms of future and time Mission if crafted well can remain in
frame existence for a very long time
It motivates the people to achieve It provides a path to realise the
defined objectives vision.

Goals & Objectives

›»Goals are open-ended attributes that denote the future states or outcomes.
›»Objectives are close-ended attributes which are precise and expressed in
specific terms.
›»Accordingly, we will also use the term interchangeably.
›»Objectives are organisation’s performance targets.
›»Objectives serves as yardsticks for tracking an organisation’s performance and
progress.
›» Thus, the Objectives are more specific and translate the goals to both long
term and short-term perspective.
›»Objectives must possess the following characteristics:
ü They should be concrete and specific.
ü They should be measurable and controllable.
ü They should be challenging.
ü They should provide standards for performance appraisal.
ü They should be related to a time frame.
ü Different objectives should correlate with each other.
ü They should define the organisation's relationship with its environment.
ü They should be facilitative towards achievement of mission and purpose.
ü They should provide the basis for strategic decision-making.
ü Objectives should be set within the constraints of organisational resources
and external environment.

›»Need for both Short-Term and Long-Term objectives:

►As a rule, Co’s set of objectives include both short-term and long-term
performance targets.

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►Having quarterly/annual (short-term) objectives focuses attention on
delivering immediate performance improvements.
►Targets to be achieved within 3 to 5 years’ prompt considerations of what to
do now to put company in position to perform better down the road.
►By spelling out short-term performance targets, management indicates the
speed at which longer-range targets are to be approached.

›»Long-term objectives: To achieve long-term prosperity, strategic planners

commonly establish long-term objectives in seven areas.
ü Profitability
ü Productivity
ü Public Responsibility
ü Competitive Position
ü Employee Development
ü Employee Relations
ü Technological Leadership

›»Short-term objectives:
►These can be identical to long-term objectives if an organisation is already
performing at the targeted long-term level.
►Short-range objectives then serve as steps toward achieving long term
objective.
►The most important situation in which short-range objectives differ from long-
range objectives occurs when managers are trying to elevate organisational
performance and cannot reach the long-range target in just one year.

Values

›»E.g. Integrity, trust, accountability, innovation and diversity

›»It sets the tone for how the people think and behave, especially in situations
of dilemma.
›»It creates a sense of shared purpose to build a strong foundation and focus on
longevity of the company's success.
›»It have both internal as well as external implications.
›»It remain the core of vision, mission, goals and objectives and putting them all
into action.

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Intent Vs Values
›»Intent is the purpose of doing business.
›»Values are the principles that guides decision making of business.
›»They both go hand in hand, while the intent is driven by values.
›»So, values are more broader than intent.

Strategic Levels in Organizations

CORPORATE LEVEL
CEO, other senior
executives, Board of Head office
directors, and Corporate
staff

BUSINESS LEVEL
Division A Division B Division C
Divisional managers & staff

FUNCTIONAL LEVEL
Business Business Business
Functional managers Function Function Function
(marketing, finance, etc....)

›»Corporate Level
›It consists of the Chief Executive Officer (CEO), other senior executives, the
board of directors, and corporate staff.
›They participate in strategic decision making and oversee development of
strategies for whole organization.
›For this his task includes:
a) Defining mission and goals of Organization
b) Determining what businesses, it should be in
c) Allocating resources among different divisions
d) Formulating and implementing strategies that span individual businesses
e) Providing leadership for Organization
f) Acts as a linkage between Management and Shareholders
›Corporate level managers, especially CEO is viewed as guardian of shareholder
welfare and must make strategies to maximize the wealth of shareholders.

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›»Business or Divisional Level

›A Principle General Manager or Business level manager is head of a division.
›They are responsible for working of Division and overseeing all functions of the
Division or a particular business.
›They are responsible to translate general statements of direction of Corporate
Level into concrete business plans.
›They should listen to the functional level managers.

›»Functional Level
›They are responsible for specific business functions in a division or company like
marketing, Research & Development, Human Resource, Finance etc.
›Thus, a functional manager’s sphere of responsibility is generally confined to one
organizational activity or area.
›Functional managers are also responsible for
a) developing functional strategies in their area to fulfil strategic objectives
set by corporate and business level managers; and
b) implementing/ executing strategies of corporate level and business level
managers.
›They are closer to customers and provide most of information that enable
corporate level and business level managers to formulate realistic and attainable
strategies.

►Which is better - Top-Down Approach or Bottom-Up Approach?

Do you know the concepts of Top-Down and Bottom-Up approach of decision
making?
Ans: A top-down approach to decision making is when decisions are made solely by
leadership at the top i.e. corporate level of management, while the bottom-up
approach gives all teams across the levels a voice in decision making.

Network of Relationship between the Three Levels

The corporate level decides what the business want to achieve while the business
level draws ideas and plan to execute the same, which eventually flow down to
functional level to execute and achieve results. There are many ways in which all
the 3 levels of management are interlinked.

There are 3 major types of networks of relationship between the levels and also
amongst the same levels of a business;

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Functional and - It is an independent relationship, where each function or a

Divisional division is run independently headed by the function/division
Relationship head, reporting directly to the business head, who is a
corporate level manager.
- Functions maybe like Finance, Human Resources, Marketing,
etc. while Divisions may depend on the products like for a toys
manufacturer - kid’s toys, teenager toys, etc. could be
divisions.

Horizontal - All positions, from top management to staff-level employees,

Relationship are in the same hierarchical position.
- It is a flat structure where everyone is considered at same
level.
- This leads to openness and transparency
- It focus more on idea sharing and innovation.
- This type of relationship between levels is more suitable for
startups where the need to share ideas with speed is more
desirable.

Matrix - It features a grid-like structure of levels in an organisation,

Relationship with teams formed with people from various departments that
are built for temporary task-based projects.
- This relationship helps manage huge conglomerates with ease
where it is nearly impossible to track and manage every single
team independently.
- In Matrix relationship - there are more than one business
level managers for each functional level teams.
- It is complex for smaller organisations, but extremely useful
for large organisations.

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Test Your Knowledge - MCQ

Q1. Strategy is a game plan used for which of the following?

(a) To take market position
(b) To attract and satisfy customers
(c) To respond to dynamic and hostile environment
(d) All of the above

Q2. Which of the following is correct?

(a) Strategy is always pragmatic and not flexible
(b) Strategy is not always perfect, flawless and optimal
(c) Strategy is always perfect, flawless and optimal
(d) Strategy is always flexible but not pragmatic

Q3. Strategy is:

(a) Proactive in action
(b) Reactive in action
(c) A blend of proactive and reactive actions
(d) None of the above

Q4. Reactive strategy can also be termed as-

(a) Planned strategy
(b) Adaptive strategy
(c) Sound strategy
(d) Dynamic strategy

Q5. Formulation of strategies and their implementation in a strategic

management process is undertaken by-
(a) Top level executives
(b) Middle level executives
(c) Lower level executives
(d) All of the above

Q6. Which of the following are responsible for formulating and developing
realistic and attainable strategies?
(a) Corporate level and business level managers
(b) Corporate level and functional level managers
(c) Functional managers and business level managers
(d) Corporate level managers, business level managers and functional level
managers

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Q7. Which of the following managers’ role is to translate the general statements/
strategies into concrete strategies of their individual businesses-
(a) Supervisor
(b) Functional manager
(c) CEO of the company
(d) All of the above

Q8. Which statement should be created first and foremost?

(a) Strategy
(b) Vision
(c) Objectives
(d) Mission

Q9. Strategic management enables an organisation to ______, instead of

companies just responding to threats in their business environment.
(a) Be proactive
(b) Determine when the threat will subside
(c) Avoid the threats
(d) Defeat their competitors

Q10. Read the following three statements:

(i) Strategies have short-range implications
(ii) Strategies are action oriented
(iii) Strategies are rigidly defined
From the combinations given below select an alternative that represents
statements that are true:
(a) (i) and (ii)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

Q11. What involves formulating, implementing, and evaluating cross-functional

decisions that enable an organization to achieve its objectives?
(a) Strategy formulation
(b) Strategy evaluation
(c) Strategy implementation
(d) Strategic management

Q12. Strategic management allows an organization to be more

(a) Authoritative
(b) Participative
(c) Commanding

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(d) Proactive

1 (d) 2 (b) 3 (c) 4 (b) 5 (d) 6 (d)

7 (b) 8 (b) 9 (a) 10 (a) 11 (d) 12 (d)

Test Your Knowledge – Case Studies

Question – 1 [SM]
Swati is the marketing manager at a software company. She is responsible for
developing and implementing marketing strategies for the company’s products.
Swati leads a team of marketing professionals and works closely with the
product development and sales teams to ensure that the company's products
are effectively promoted in the market. She also analyses market trends and
customer feedback to refine the marketing strategies. Which level is she
working at, discuss the roles and responsibilities of this level in organization?
Answer
Swati operates at the functional level of management, specifically as the
marketing manager at a software company. Functional managers like Swati
oversee specific departments or functions within an organization, such as
marketing, finance, or operations. Their primary responsibilities include
implementing corporate strategies and policies within their area of expertise and
ensuring that daily operations are conducted efficiently and effectively.

In Swati's case, as a marketing manager, her role involves developing and

executing marketing strategies for the company's products. This includes leading
a team of marketing professionals, collaborating with product development and
sales teams, and analyzing market trends and customer feedback to refine
strategies. By working closely with these teams, Swati ensures that the
company's products are effectively promoted in the market and that marketing
efforts align with overall business goals.

Functional managers like Swati play a critical role in the organization by bridging
the gap between corporate strategy and daily operations. They are responsible
for translating high-level strategic goals into actionable plans for their
departments and ensuring that these plans are executed effectively.
Additionally, they are often key decision-makers within their areas of
responsibility, making strategic choices that impact on the company's success.
Overall, Swati's role as a marketing manager exemplifies the importance of
functional managers in driving the success of their organizations.

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Question – 2 [SM]
ABC retail chain regularly monitors consumer trends and supply chain
flexibility. The retail chain tracks consumer trends to adjust its offerings,
ensuring they meet customer needs. Simultaneously, it maintains a flexible
supply chain to respond swiftly to demand fluctuations. This strategy enables
ABC retail chain to anticipate market shifts and adapt to them effectively,
ensuring its competitiveness and customer satisfaction. Which type of strategy
is the retail chain employing?
Answer
The retail chain is employing a strategy that combines both proactive and reactive
elements. Monitoring consumer trends and adjusting product offerings
accordingly demonstrates a proactive approach to anticipate and meet customer
needs. On the other hand, maintaining a flexible supply chain to respond quickly
to changes in demand reflects a reactive strategy to address unforeseen shifts
in the market.

This combination allows the retail chain to both anticipate future trends and
react effectively to immediate market changes, making its strategy partly
proactive and partly reactive. This dual strategy of proactive trend monitoring
and reactive supply chain flexibility enables the retail chain to anticipate market
shifts and adapt to them effectively, ensuring its competitiveness and customer
satisfaction.

Question – 3 [SM] [RTP – Nov23]

ABC Pharmaceuticals, a leading pharmaceutical company, is in the process of
formulating its strategic intent. The top management of ABC Pharmaceuticals
wants to define the company's future direction, objectives, and goals. Their
aim is to create a vision that sets the organization apart and provides a roadmap
for future growth. ABC Pharmaceuticals aspires to enrich the lives of people
by producing high-quality pharmaceutical products at competitive prices and
wants to become the world's leading pharmaceutical company by 2030." Based
on this context, draft a vision and mission statement that could be formulated
by the top management of ABC Pharmaceuticals.
Answer
ABC Pharmaceuticals may have following vision and mission:
Vision: Vision implies the blueprint of the company’s future position. It describes
where the organisation wants to land. ABC Pharmaceuticals may have vision "To
be the globally recognized leader in pharmaceutical innovation and enriching the
lives of people worldwide by providing high- quality, affordable, and accessible
pharmaceutical products."

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Mission: Mission delineates the firm’s business, its goals and ways to reach the
goals. It explains the reason for the existence of the firm in society. It is
designed to help potential shareholders and investors understand the purpose of
the company.

ABC Pharmaceuticals may identify mission in the following lines:

• To improve the well-being of individuals and communities by relentlessly
pursuing excellence in pharmaceutical research, development, and
manufacturing.
• Committed to producing safe, effective, and sustainable medicines that
address unmet medical needs and enhance the quality of life for patients.
• Through innovation, collaboration, and ethical practices, we aim to make a
positive impact on global healthcare and become the trusted partner of
healthcare providers and patients alike.

Question – 4 [SM]
Imagine you are a strategic consultant advising a retail company that is facing
increasing competition from online retailers. The company is considering several
strategic options to improve its market position. Using the concept that
strategy is partly proactive and partly reactive, explain how the company can
develop a strategic approach to address this challenge.
Answer
The retail company can develop a strategic approach that is both proactive and
reactive to address the challenge of increasing competition from online retailers.
To achieve this, the company can:
Ø Proactive Strategy: The company can proactively analyze market trends and
customer preferences to identify opportunities for growth. For example, it
can invest in market research to understand what customers value in a retail
experience and tailor its offerings to meet those needs. This proactive
approach can help the company stay ahead of competitors and attract new
customers.
Ø Reactive Strategy: In addition to proactive measures, the company should
also be prepared to react to changes in the market environment. For
example, if a competitor launches a new online shopping platform, the
company should quickly assess the impact on its business and develop a
response. This reactive strategy can help the company adapt to changing
market conditions and maintain its competitiveness.

By combining proactive and reactive strategies, the retail company can develop a
comprehensive approach to addressing the challenge of increasing competition

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from online retailers. This approach will allow the company to capitalize on
opportunities for growth while also mitigating risks and responding to threats in
the market.

Question – 5 [SM]
Tech Innovators Inc., a rapidly expanding technology company, aims to lead in
artificial intelligence (AI) and machine learning (ML). With recent growth, the
company is evaluating which organizational structure will best support its vision
for innovation and leadership in AI technologies. They are considering three
options: the Functional and Divisional Relationship for specialization, the
Horizontal Relationship for flat, collaborative management, and the Matrix
Relationship for cross-functional teams. Which of these relationships—
Functional and Divisional, Horizontal, or Matrix—will most effectively achieve
Tech Innovators Inc.’s strategic goals, and why?
Answer
The Matrix Relationship is the most effective structure for Tech Innovators Inc.
to achieve its vision of leadership in AI technologies. This structure promotes
cross-functional collaboration, essential for managing complex AI projects and
fostering innovation. By integrating expertise from various departments into
temporary, task-based teams, the Matrix Relationship supports dynamic project
management and aligns well with the company’s strategic goals for advancing AI
technologies. Despite its complexity, this approach provides the flexibility and
collaboration necessary for a leading-edge AI and ML focus.
Relationship Benefits Drawbacks Suitability for AI
Leadership
Functional & Specialization, clear Potential for Less effective
Divisional management of departmental for cross-
functions and isolation, limited functional AI
products. collaboration. projects.
Horizontal Open communication, Hard to scale Suitable for
encourages unclear roles and startups, less for
innovation and fast responsibilities. large AI
idea sharing. initiatives.
Matrix Facilitates cross- Complex Ideal for
functional reporting managing diverse,
collaboration, structures, innovative AI
flexible resource potential projects.
management for conflicts.
complex projects.

Question – 6 [SM] [RTP – Nov20, Nov19]

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Mr. Raj has been hires as a CEO of XYZ Ltd. a FMCG company that has
diversified into affordable cosmetics. The company intends to launch Feelgood
brand of cosmetics. XYZ wishes to enrich the lives of people with its products
that are good for skin and are produced in ecologically beneficial manner using
herbal ingredients. Draft vision and mission statement that may be formulated
by Raj.
Answer
Feelgood brand of cosmetics may have following vision and mission:
Vision – Vision implies the blueprint of the company’s future position. It describes
where the organisation wants to land. Mr. Raj should aim to position “Feelgood
cosmetics” as India’s beauty care company. It may have vision to be India’s largest
beauty care company that improves looks, give extraordinary feeling and bring
happiness to people.

Mission – It delineates the firm’s business, its goals and ways to reach the goals.
It explains the reason for the existence of the firm in the society. It is designed
to help potential shareholders and investors understand the purpose of the
company.
Mr. Raj may identify mission in the following lines:
- To be in the business of cosmetics to enhance the lives of people, give them
confidence to lead.
- To protect skin from harmful elements in environment and sun rays.
- To produce herbal cosmetics using natural ingredients.

Question – 7 [SM] [RTP – Nov18] [MTP – Nov21, May23]

Yummy Foods and Tasty Foods are successfully competing in the business of
ready to eat snacks in Patna. Yummy has been pioneer in introducing innovative
products. These products will give them goods sale. However, Tasty Foods will
introduce similar products in reaction to the products introduced by the Yummy
Foods taking away the advantage gained by the former.
Discuss the strategic approach of the two companies. Which is superior?
Answer
Yummy foods is proactive in its approach. On the other hand, Tasty Food is
reactive. A proactive strategy is a planned strategy whereas reactive strategy is
an adaptive reaction to changing circumstances. A company’s strategy is typically
a blend of proactive actions on the part of managers to improve the company’s
market position and financial performance and reactions to unanticipated
developments and fresh market conditions.

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If organisational resources permit, it is better to be proactive rather than
reactive. Being proactive in aspects such as introducing new products will give you
an advantage in the mind of customers.

At the same time, crafting a strategy involves stitching together a

proactive/intended strategy and then adapting first one piece and then another
as circumstances surrounding the company’s situation change or better options
emerge-a reactive/adaptive strategy. This aspect can be accomplished by Yummy
Foods.

Question – 8 [SM] [RTP – Nov19, Nov20]

Ramesh Sharma has fifteen stores selling consumer durables in Delhi region.
Four of these stores were opened in last three years. He believes in managing
strategically and enjoyed significant sales of refrigerator, televisions, washing
machines, air conditioners and like till four years back. With shift to the
purchases to online stores, the sales of his stores came down to about seventy
per cent in last four years.

Analyse the position of Ramesh Sharma in light of limitations of strategic

management.
Answer
Ramesh Sharma, is facing declining sales on account of large-scale shift of
customers to online stores. While he is using the tools of strategic management,
they cannot counter all hindrances and always achieve success. There are
limitations attached to strategic management as follows:
Ø Environment under which strategies are made is highly complex and
turbulent. Entry of online stores, a new kind of competitor brought a
different dimension to selling consumer durables. Online stores with their
size power could control the market and offer stiff competition to
traditional stores.
Ø Another limitation of strategic management is that it is difficult to predict
how things will shape-up in future. Ramesh Sharma, although managing
strategically failed to see how online stores will impact the sales.
Ø Although, strategic management is a time-consuming process, he should
continue to manage strategically. The challenging times require more efforts
on his part.
Ø Strategic management is costly. Ramesh Sharma may consider engaging
experts to find out preferences of the customers and attune his strategies
to better serve them in a customized manner. Such customized offerings
may be difficult to match by the online stores.

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Ø The stores owned by Ramesh Sharma are much smaller than online stores.
It is very difficult for him to visualize how online stores will be moving
strategically.

Question – 9 [SM] [RTP – May21]

Dharma Singh, the procurement department head of Cyclix, a mountain biking
equipment company, was recently promoted to look after sales department
along with procurement department. His seniors at the corporate level have
always liked his way of leadership and are assured that he would ensure the
implementation of policies and strategies to the best of his capacity buy have
never involved him in decisions making of the company.

Do you think this is the right approach? Validate your answer with logical
reasoning around management levels and decision making.
Answer
Functional managers provide most of the information that makes it possible for
business and corporate level managers to formulate realistic and attainable
strategies.

This is so because functional managers like Dharama Singh are closer to the
customers/suppliers/operations than the typical general manager is. A functional
manager may generate important ideas that subsequently may become major
strategies for the company. Thus, it is important for general managers to listen
closely to the ideas of their functional mangers and involve them in decision
making.

An equally great responsibility for managers at the operational level is strategy

implementation; the execution of corporate and business level plans, and if they
are involved in formulation, the clarity of thoughts while implementation can
benefit too.

Thus, the approach of Cylcix Corporate management is not right. They should
involve Dharama Singh, as well as other functional managers too in strategic
management.

Question – 10 [SM] [Jan21] [MTP – Nov22, Nov23]

ABC Limited is in a wide range of businesses which include apparels, lifestyle
products, furniture, real estate and electrical products. The company is looking
to hire a suitable Chief Executive Officer. Consider yourself a the HR
consultant for ABC Limited, you have been assigned the task to enlist the
activities involved with the role of the Chief Executive Officer. Name the

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strategic level that this role belongs to and enlist the activities associated with
it.
OR
Enumerate the task to be performed as a strategic manager of a company.
Answer
The role of Chief executive Officer pertains to corporate level.

The corporate level of management consist of the Chief executive Officer (CEO)
and other top-level executives. These individuals occupy the apex of decision
making withing the organisation.

The role of CEO (Top Management/corporate level managers) is too:

Ø oversee the development of strategies for the whole organization;
Ø defining the mission and goals of the organization;
Ø determining what business it should be in;
Ø allocating resources among the different businesses;
Ø formulating and implementing strategies that span individual business;
Ø providing leadership for the organization;
Ø ensuring that the corporate and business level strategies which company
pursues are consistent with maximizing shareholders wealth; and
Ø managing the divestment and acquisition process

Question – 11 [Nov18] [RTP – May22]

ABC Ltd. currently sells its product in two major markets - Europe and Asia.
While market leader in Europe, ABC Ltd. has struggled to penetrate the more
competitive Asian market. ABC Ltd. hired a strategic consultant to analyse the
situation and submit his report to them. After the report received from the
strategic consultant, it has therefore decided to pull out of Asia entirely and
focus on its European markets only. This decision relates to which level in ABC
Ltd. and explain the role of managers at this level in the organization.
OR
Define the role of corporate level managers.
Answer
Corporate level strategy relates to the markets and industries that the
organization chooses to operate in, as well as other decisions that affect the
organization as a whole. The role of corporate-level managers is to oversee the
development of strategies for the whole organization. This role includes defining
the mission and goals of the organization, determining what businesses it should
be in, allocating resources among the different businesses, formulating and
implementing strategies that span individual businesses, and providing leadership
for the organization.

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Question – 12 [MTP – May21]

Kamal Sweets Corner, a very popular sweets shop in Ranchi, was facing tough
competition from branded stores of packaged sweets and imported goods. The
owners realised that their business reduced by 50% in the last six months, and
this created a stressful business environment for them. To find a solution, they
consulted a business consultant to help them develop a strategy to fight
competition and sustain their century old family business. The business
consultant advised them to innovate a new snack for the public and market it
as a traditional snack of the region. The owners liked the idea and developed a
new snack called Dahi Samosa, which very quickly became popular amongst the
public and it helped regain the lost business of Kamal Sweets Corner.

One of the very crucial importance of strategic management was used by the
business consultant to help the owners of Kamal Sweets Corner. Which one
could it be? Also, was this strategy Reactive or Proactive? According to you
who are more beneficial in general parlance?
Answer
The strategy used here was of developing a competitive advantage via product
which helped Kamal Sweets Corner regain their lost business. This is also one of
the major importance cum advantage of strategic management, that is helps to
develop core competencies and competitive advantages to overcome competition.

This strategy was a Reactive strategy. Wherein, the owners saw their business
fall to 50% of revenue and then seeking a strategic advisory. They did not plan
proactively as to when the new shops were already opening. They reacted only
when the business started to lose up.

Generally, it is always beneficial to develop strategies proactively, so that the dip

in businesses is small and manageable, and even if they are huge, the management
has ample time to fix it.

Question – 13 [RTP – Nov21]

Mr. Mehta sharing with his friend in an informal discussion that he has to move
very cautiously in his organization as the decisions taken by him has
organization wide impact and involves large commitments of resources. He also
said that his decisions decide the future of his organization. Where will you
place Mr. Mehta in the organizational hierarchy and explain his role in the
organization.

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Answer
Mr. Mehta works in an organization at top level. He participates in strategic
decision making within the organization. The role of corporate-level managers is
to oversee the development of strategies for the whole organization. This role
includes defining the mission and goals of the organization, determining what
businesses it should be in, allocating resources among the different businesses,
formulating and implementing strategies that span individual businesses, and
providing leadership for the organization.

Question – 14 [July21]
'ALBELA' Foods and 'Just BE' Foods are successfully competing chain of
restaurants in India. ALBELA' s are known for their innovative approach, which
has resulted in good revenues. On the other hand, Just BE is slow in responding
to environmental change. The initial stages of Covid-19 pandemic and the
ensuring strict lockdown had an adverse impact on both the companies. Realizing
its severity and future consequences. ALBELA, foods immediately chalked out
its post lockdown strategies, which include initiatives like:
(a) Contactless dinning
(b) New category of foods in the menu for boosting immunity
(c) Improving safety measures and hygiene standards
(d) Introducing online food delivery app

Seeing the positive buzz around these measures taken by ALBELA Food, Just
BE Foods also thinks to introduce these measures.
(i) Identify the strategic approach taken by 'ALBELA' Foods and 'Just BE'
Foods.
(ii) Discuss these strategic approach.
(iii) Which strategic approach is better and why?
Answer
ALBELA’ foods are proactive in its approach. On the other hand, ‘Just BE’ foods
are reactive in its approach.
• Proactive strategy is planned strategy. While continuing with the previously
initiated business approaches that are working well, the newly launched
managerial initiatives aim to strengthen the company's overall position and
performance. These are outcomes of management's analysis and strategic
thinking about the company's situation and its conclusions about the
positioning of the company in the marketplace. If done well, it helps the
company to effectively compete for buyer patronage.
• Reactive strategy is an adaptive reaction to changing circumstances. It is
not always possible for a company to fully anticipate or plan for changes in
the market. There is also a need to adapt strategy as new learnings emerge

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about which pieces of strategy are working well and which aren't. By itself
also, the management may hit upon new ideas for improving the current
strategy.

In reference to the given case, proactive strategy seems to be better because

ALBELA foods had been able to utilize available opportunities, reduce adverse
impact, enhance the demand for product and is also able to avail the first mover
advantage.

Test Your Knowledge – Descriptive Questions

Question – 1 [SM] [Dec21] [RTP – Nov18, Nov19, Nov22, May23] [MTP –

Nov18]
What is Strategic Management? What benefits accrue by following a strategic
approach to managing?
OR
“Each organization must build its competitive advantage keeping in mind the
business warfare. This can be done by following the process of strategic
management.” Considering this statement, explain major benefits of strategic
management.
OR
Briefly explain the importance of strategic management.
Answer
The term ‘strategic management’ refers to the managerial process of developing
a strategic vision, setting objectives, crafting a strategy, implementing and
evaluating the strategy, and initiating corrective adjustments were deemed
appropriate.
The overall objective of strategic management is two-fold:
Ø To create competitive advantage, so that the company can outperform the
competitors in order to have dominance over the market.
Ø To guide the company successfully through all changes in the environment.

The following are the benefits of strategic approach to managing:

Ø Strategic management helps organisations to be more proactive instead of
reactive in shaping its future. Organisations are able to analyse and take
actions instead of being mere spectators. Thereby they are able to control
their own destiny in a better manner. It helps them in working within
vagaries of environment and shaping it, instead of getting carried away by
its turbulence or uncertainties.
Ø Strategic management provides frameworks for all the major decisions of
an enterprise such as decisions on businesses, products, markets,

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manufacturing facilities, investments and organisational structure. It
provides better guidance to entire organisation on the crucial point - what
it is trying to do.
Ø Strategic management is concerned with ensuring a good future for the
firm. It seeks to prepare the corporation to face the future and act as
pathfinder to various business opportunities. Organisations are able to
identify the available opportunities and identify ways and means as how to
reach them.
Ø Strategic management serves as a corporate defence mechanism against
mistakes and pitfalls. It helps organisations to avoid costly mistakes in
product market choices or investments. Over a period of time strategic
management helps organisation to evolve certain core competencies and
competitive advantages that assist in its fight for survival and growth.

Question – 2 [SM] [May18, Nov22] [RTP – May18, May19, May21, Nov21,

Nov23] [MTP – May19, May20, May21, May22, Nov22, Nov23]
Define strategic management. Also discuss the limitations of strategic
management?
OR
"The strategic management cannot counter all hindrances and always achieve
success for an organization." Do you agree with this statement? Give arguments
in support of your answer.
Answer
The term ‘strategic management’ refers to the managerial process of developing
a strategic vision, setting objectives, crafting a strategy, implementing and
evaluating the strategy, and initiating corrective adjustments where deemed
appropriate. The presence of strategic management cannot counter all hindrances
and always achieve success as there are limitations attached to strategic
management.
These can be explained in the following lines:
• Environment is highly complex and turbulent. It is difficult to understand
the complex environment and exactly pinpoint how it will shape-up in future.
The organizational estimate about its future shape may awfully go wrong
and jeopardize all strategic plans. The environment affects as the
organization has to deal with suppliers, customers, governments and other
external factors.
• Strategic management is a time-consuming process. Organizations spend a
lot of time in preparing, communicating the strategies that may impede
daily operations and negatively impact the routine business.
• Strategic management is a costly process. Strategic management adds a
lot of expenses to an organization. Expert strategic planners need to be

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engaged, efforts are made for analysis of external and internal
environments, devise strategies and properly implement. These can be
really costly for organizations with limited resources particularly when
small and medium organizations create strategies to compete.
• Competition is unpredictable. In a competitive scenario, where all
organizations are trying to move strategically, it is difficult to clearly
estimate the competitive responses to the strategies.

Question – 3 [Nov18]
List the different strategic levels in an organization.
Answer
There are three main strategic levels in an organization:
• Corporate level – consisting of CEO, Board of Directors and other senior
executives.
• Business level – Divisional Managers and staff.
• Functional level – Functional Managers – Marketing, Finance, Production,
Human Resource.

Question – 4 [SM] [RTP – May20] [MTP – Nov18, May23]

Explain the difference between three levels of strategy formulation.
Answer
A typical large organization is a multidivisional organisation that competes in
several different businesses. It has separate self-contained divisions to manage
each of these. There are three levels of strategy in management of business -
corporate, business, and functional.

The corporate level of management consists of the chief executive officer and
other top-level executives. These individuals occupy the apex of decision making
within the organization. The role of corporate-level managers is to oversee the
development of strategies for the whole organization. This role includes defining
the mission and goals of the organization, determining what businesses it should
be in, allocating resources among the different businesses and so on rests at the
Corporate Level.

The development of strategies for individual business areas is the responsibility

of the general managers in these different businesses or business level managers.
A business unit is a self-contained division with its own functions - For example,
finance, production, and marketing. The strategic role of business-level manager,
head of the division, is to translate the general statements of direction and intent
that come from the corporate level into concrete strategies for individual
businesses.

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Functional-level managers are responsible for the specific business functions or

operations such as human resources, purchasing, product development, customer
service, and so on. Thus, a functional manager’s sphere of responsibility is
generally confined to one organizational activity, whereas general managers
oversee the operation of a whole company or division.

Question – 5 [Nov22] [RTP – May18, May19, May20]

"Strategic intent provides the framework within which the firm would adopt a
predetermined direction and would operate to achieve strategic objectives." In
the light of this statement, discuss the elements of strategic intent.
OR
Define strategic intent. Briefly explain the elements of strategic intent.
Answer
Strategic intent can be understood as the philosophical base of strategic
management. It implies the purposes, which an organization endeavours to
achieve. It is a statement that provides a perspective. Strategic intent gives an
idea of what the organization desires to attain in future. Strategic intent
provides the framework within which the firm would adopt a predetermined
direction and would operate to achieve strategic objectives.
Elements of strategic management are as follows:
(i) Vision: Vision implies the blueprint of the company’s future position. It
describes where the organisation wants to land. It depicts the organisation’s
aspirations and provides a glimpse of what the organization would like to become
in future. Every sub system of the organization is required to follow its vision.

(ii) Mission: Mission delineates the firm’s business, its goals and ways to reach
the goals. It explains the reason for the existence of the firm in the society. A
mission statement helps to identify, ‘what business the company undertakes.’ It
defines the present capabilities, activities, customer focus and role in society.

(iii) Business Definition: It seeks to explain the business undertaken by the firm,
with respect to the customer needs, target markets, and alternative
technologies. With the help of business definition, one can ascertain the strategic
business choices.

(iv) Business Model: Business model, as the name implies is a strategy for the
effective operation of the business, ascertaining sources of income, desired
customer base, and financial details. Rival firms, operating in the same industry
rely on the different business model due to their strategic choice.

(v) Goals and Objectives: These are the base of measurement. Goals are the end
results, that the organization attempts to achieve. On the other hand, objectives

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are time-based measurable targets, which help in the accomplishment of goals.
These are the end results which are to be attained with the help of an overall
plan. However, in practice, no distinction is made between goals and objectives
and both the terms are used interchangeably.

Question – 6 [SM] [Nov18] [RTP – May18, Nov18, Nov20, May23] [MTP –

Nov19, May21, May22]
“Strategy is partly proactive and partly reactive”. Discuss.
OR
"A business organization cannot always plan all their strategies in advance and
often need to blend planned strategies with reactive strategies." Do you agree
with the statement?
Answer
Strategy is partly proactive and partly reactive. In proactive strategy,
organisations will analyse possible environmental scenarios and create strategic
framework after proper planning and set procedures and work on these strategies
in a predetermined manner. However, in reality no company can forecast both
internal and external environment exactly. Everything cannot be planned in
advance. It is not possible to anticipate moves of rival firms, consumer behaviour,
evolving technologies and so on.

There can be significant deviations between what was visualized and what actually
happens. Strategies need to be attuned or modified in the light of possible
environmental changes. There can be significant or major strategic changes when
the environment demands. Reactive strategy is triggered by the changes in the
environment and provides ways and means to cope with the negative factors or
take advantage of emerging opportunities.

Question – 7 [May23]
“Management at all levels develop strategies”. Explain the different strategies
formulated at different levels of management.
Answer
At different levels of management, various strategies are formulated to align
with organizational goals and objectives which are as follows:

Corporate-Level Strategies: At the highest level of management, corporate-level

strategies are developed. These strategies focus on the overall direction and
scope of the entire organization. Major corporate-level strategies include
Stability strategies, Growth strategies, Retrenchment strategies and
Combination strategies.

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Business-Level Strategies: Business-level strategies are developed by middle-
level management and focus on individual business units or divisions within the
organization. These strategies aim to achieve competitive advantage within
specific markets. Common business-level strategies include Cost Leadership,
Differentiation and Focus strategies.

Functional-Level Strategies: Functional-level strategies are formulated by lower-

level management or department heads responsible for specific functional areas,
such as marketing, finance, operations, or human resources. These strategies
align with business-level strategies and focus on achieving functional objectives.
These strategies include Marketing strategies, financial strategies, Operations
strategies, Research & Development strategy and Human Resource strategies.

In conclusion, management at all levels develops strategies that align with the
organization's goals. Corporate-level strategies determine the overall direction,
business-level strategies focus on competitive advantage within specific markets,
and functional-level strategies aim to achieve functional objectives in support of
the broader strategies.

Question – 8 [RTP – Nov22]

What should be the major components of a good mission statement?
Answer
Mission statements broadly describe an organizations' present capabilities,
customer focus, activities, and business makeup. Following points are useful while
writing a good mission statement of a company:
• It is highly personalized - unique to the organization for which it is
developed.
• It should emphasize on giving an organization its own special identity,
business emphasis and path for development.
• It should clearly specify that, what needs it is trying to satisfy, customer
groups it is targeting, technologies & competencies it uses and the activities
it performs.
• Technology, competencies & activities are important in defining a company's
business because they indicate the boundaries on its operation.
• The mission should not be to make profit.

Question – 9 [May19] [RTP – May21, May22] [MTP – May23]

What are objectives? What characteristics it must possess to be meaningful?

Answer
Objectives are organizations performance targets 4 the results and outcomes it
wants to achieve. They function as yardstick for tracking an organization`s

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performance and progress. Objectives with strategic focus relate to outcomes
that strengthen an organization`s overall business position and competitive
vitality. Objectives, to be meaningful to serve the intended role, must possess
the following characteristics:
• Objectives should define the organization`s relationship with its
environment.
• Objectives should be facilitative towards achievement of mission and
purpose.
• Objectives should provide the basis for strategic decision-making.
• Objectives 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.

Question – 10 [RTP – May18, May19] [MTP – Nov18, May22]

Distinguish between vision and mission statement.
Answer
A Mission statement tells you the fundamental purpose of the organization. It
concentrates on the present. It defines the customer and the critical processes.
It informs you of the desired level of performance. On the other hand, a vision
statement outlines what the organization wants to be. It concentrates on the
future. It is a source of inspiration. It provides clear decision-making criteria.

A mission statement can resemble a vision statement in a few companies, but that
can be a grave mistake. It can confuse people. Following are the major differences
between vision and mission:
1) The vision states the future direction while the mission states the ongoing
activities of the organisation.
2) The vision statement can galvanize the people to achieve defined objectives,
even if they are stretch objectives, provided the vision is specific,
measurable, achievable, relevant and time bound. A mission statement
provides a path to realize the vision in line with its values. These statements
have a direct bearing on the bottom line and success of the organisation.
3) A vision statement defines the purpose or broader goal for being in
existence or in the business and can remain the same for decades if crafted
well while a mission statement is more specific in terms of both the future

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state and the time frame. Mission describes what will be achieved if the
organization is successful.

Question – 11 [May18,Nov20] [RTP – Nov18] [MTP – May18]

What is strategic vision? Describe the essentials of strategic vision.
Answer
A strategic vision delineates organisation’s aspirations for the business, providing
a panoramic view of the position where the organisation is going. A strategic vision
points an organization in a particular direction, charts a strategic path for it to
follow in preparing for the future, and moulds organizational identity.

A Strategic vision is a road map of a company’s 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.

Essentials of 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.
• A well-articulated strategic vision creates enthusiasm among the members
of the organization.
• The best-worded vision statement clearly illuminates the direction in which
organization is headed.

Question – 12 [RTP – May21, Nov22] [MTP – May22]

Explain briefly the. key areas in which the strategic planner should concentrate
his mind to achieve desired results.
Answer
A strategic manager defines the strategic intent of the organisation and take it
on the path of achieving the organisational objectives. There can be a number of
areas that a strategic manager should concentrate on to achieve desired results.
They commonly establish long-term objectives in seven areas as follows.
• Profitability
• Productivity
• Competitive Position
• Employee Development
• Employee Relations
• Technological Leadership
• Public Responsibility

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Question – 13 [RTP – May23] [MTP – Nov20, May21]
Mission statements of a company focuses on the question: ‘who we are’ and ‘what
we do’. Explain briefly.
Answer
A company’s mission statement is typically focused on its present business scope
– “who we are and what we do”; mission statements broadly describe an
organizations present capability, customer focus activities and business makeup.
An organisation’s mission states what customers it serves, what need it satisfies,
and what type of product it offers. It is an expression of the growth ambition of
the organisation. It helps organisation to set its own special identity, business
emphasis and path for development. Mission amplifies what brings the
organization to this business or why it is there, what existence it seeks and what
purpose it seeks to achieve as a business organisation.

In other words, the mission serves as a justification for the firm's very presence
and existence; it legitimizes the firm's presence.

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