CHAPTER – I

INTRODUCTION

Strategy:
Meaning of strategy:-
A plan of action or policy designed to achieve a major
or overall plan is called as the strategy. Or the art and science of
planning and organizing resources for their most effective use. Or
a method or plan to bring about desired future, such as
achievement of goal or solution to problem.

A strategy is a long term plan of action designed to

achieve a particular goal. Strategy applies to many fields such as:
military strategy, economic strategy, environmental strategy,
corporate strategy, business strategy, industry strategy,
investment strategy etc. Strategy is essentially linked with
military science. It implies facing the enemy under war
conditions that are to one’s advantage. Strategy includes the
determination and evaluation of alternatives paths to an already
established mission or objective, and eventually choosing the
right alternatives. In common sense, a strategy outlines how
management decides and plans to achieve its goals and
objectives. Management formulates strategy to shed out the
effects of other policy of its overall plan and programs of the
competitors, policy to avail competitive advantage.

Origin/ evolution of the word strategy:-

The word strategy is derived from the Greek word
‘Strategia’ combination of two words- ‘stratus’ ( means army) and
‘ago’ ( meaning lead / moving) which implies the science, art,
tact, and quality of being an efficient and effective army general.
The word ‘Strategia’ was first time quoted around 400BC
among the Greeks. A Greek army general had to define and
explain the purpose; the objectives and tactical procedures
followed in leading an army against the enemies to win the
battle, hold territory, defend and protect the country from the
invasion or to conquer new territory.
Definition of strategy:-
• According to Alfred D. Chandler
“The determination of the long-run goals and objectives
of an enterprise and the adoption of courses of action and
the allocation of resource necessary for carrying out these
goals”

• According to Henry Mintzberg

“A pattern in a stream of decisions”

FEATURES OF THE STRATEGY:-

A listed below the important characteristics of the
strategy they are:

1. It is generally long-range in nature. Though it is valid for short

range situations also and short-range implications.
2. Strategies are action oriented.
3. Strategies are specific actions suggested to achieve the
objectives.
4. Strategies are mean to an end.
5. Strategies are concerned with competitive situations like risk,
uncertainty to take place at a future date.
6. Strategy is deployed (used) to mobilize the available resources
in the best interest of the company.
7. Strategy relates the firm to its environment, particularly the
external environment in all actions whether objective setting, or
actions and resources required for its achievement. This
definition emphasizes on the systems approach of management
and treats an organization as part of the society consequently
affected by it.
8. Strategy is the right combination of factors both external and
internal. In relating an organization to its environment, the
management must also consider the internal factors too,
particularly its strengths and weaknesses, to take various
courses of action.
9. Strategy is relative combination of actions. The combination is
to meet a particular condition, to solve certain problems, or to
attain a desirable objective. It may take any form; for every
situation varies and, therefore, requires a somewhat different
approach.
10. Strategy may even involve contradictory action. Since
strategic action depends on environmental variables, a manager
may take an action today and revise or reverse his steps
tomorrow depending on the situations.
11. Strategy is forward looking. It has orientation towards the
future. Strategic action is required in a new situation. Nothing-
new requiring solutions can exist in the past, and so strategy is
relevant only to the future.

STRATEGIC MANAGEMENT
Meaning:-
The set of managerial decisions and actions that determines
the long-run performance of a corporation. It includes:
 Environmental scanning (internal & external)
 Strategy formulation
 Strategy implementation
 Evaluation and control
It focuses on integrating management, marketing,
finance or accounting, production or operations, research and
development, and computer information systems to achieve
organizational success.

Definition of strategy:-
“Strategic management is the process of managing the
pursuit of organizational mission while managing the
relationship of the organization to its environment” (James M.
Higgins).
“Strategic management is defined as the set of decisions
and actions resulting in the formulation and implementation of
strategies designed to achieve the objectives of the organization”
(John A. Pearce II and Richard B. Robinson).
 “Strategic management is the process of examining both
present and future environments, formulating the organization's
objectives, and making, implementing, and controlling decisions
focused on achieving these objectives in the present and future
environments” (Garry D. Smith, Danny R. Arnold, Bobby G.B).
“Strategic management is a continuous process that
involves attempts to match or fit the organization with its
changing environment in the most advantageous way possible”
(Lester A. Digman).

Strategic management includes strategic planning and

strategic control.

Strategic planning describes the periodic activities

undertaken by organizations to cope with changes in their
external environments (Lester A. Digman)
It involves formulating and evaluating alternative strategies,
selecting a strategy, and developing detailed plans for putting the
strategy into practice.

Strategic Management includes

Strategic Planning and Strategic Control.

Formulation Implementation

Strategic planning consists of formulating strategies from

which overall plans for implementing the strategy are developed.
Strategic control consists of ensuring that the chosen
strategy is being implemented properly and that it is producing
the desired results.
 Based on Robert Anthony's framework, three types of
planning and control are required by organizations:

* Strategic Planning and Control –

The process of deciding on changes in organizational
objectives, in the resources to be used in attaining these
objectives, in policies governing the acquisition and use of these
resources, and in the means (strategies) of attaining the
objectives. Strategic planning and control involve actions that
change the character or direction of the organization.

* Management Planning and Control –

The process of ensuring that resources are obtained and
used efficiently in the accomplishment of the organization's
objectives. Management planning and control is carried on
within the framework established by strategic planning and is
analogous to operating control.

* Technical Planning and Control –

The process of ensuring efficient acquisition and use
of resources, with respect to those activities for which the
optimum relationship between outputs and resources can be
accurately estimated (e.g., financial, accounting, and quality
controls).

Strategic management process

Introduction

Strategy formulation is the process by which an organization

chooses the most appropriate courses of action to achieve its
defined goals. This process is essential to an organization’s
success, because it provides a framework for the actions that will
lead to the anticipated results. Strategic plans should be
communicated to all employees so that they are aware of the
organization’s objectives, mission, and purpose. Strategy
formulation forces an organization to carefully look at the
changing environment and to be prepared for the possible
changes that may occur. A strategic plan also enables an
organization to evaluate its resources, allocate budgets, and
determine the most effective plan for maximizing ROI (return on
investment).

A company that has not taken the time to develop a strategic

plan will not be able to provide its employees with direction or
focus. Rather than being proactive in the face of business
conditions, an organization that does not have a set strategy will
find that it is being reactive; the organization will be addressing
unanticipated pressures as they arise; and the organization will
be at a competitive disadvantage. Strategy formulation requires a
defined set of six steps for effective implementation. Those steps
are:

1. Define the organization,

2. Define the strategic mission,
3. Define the strategic objectives,
4. Define the competitive strategy,
5. Implement strategies, and
6. Evaluate progress.

In this reading, we will explore each of the six steps for strategy
formulation.

Step 1. Define the Organization

The first step in defining an organization is to identify

the company’s customers. Without a strong customer base,
whose needs are being filled, an organization will not be
successful. A company must identify the factors that are valued
by its customers. Is the value based on a superior product or
service relative to the competition? Are your customers buying
your products for your low prices? Do you produce products that
meet image needs of your customers? Let’s review some of the
ways in which companies can define themselves. End Benefit
Organizations must remember that people are buying benefits
not features. For example, if an airline only defined itself as being
in the business of flying people from one place to another, then it
would view its competition as being only other airlines. However,
if it views itself as being in the transportation business, then it
will recognize that its competition includes not only other
airlines, but also trains, buses, car rental companies, and other
ways of getting people from one place to another place. An airline
must highlight the benefits of using its method of transportation
as a means of persuading customers to purchase its service.

Let’s review some of the ways in which companies can define

themselves.

 End Benefit
Organizations must remember that people are buying
benefits not features. Inevitably, customers will ask the question,
“What’s in it for me?” Companies must be able to answer this
question in order to meet the needs of their customers.
They must be able to respond effectively to the “so what?” in
order to influence customers to buy their product or service.

 Target Market
Companies can become successful by identifying themselves
with a particular target group. This focus should not be limited
only to demographic segmentation (i.e., age, income, education,
gender, income, family life-cycle, culture) but also by
psychographic indicators. For example, by understanding the
values, attitudes, opinions, and lifestyles of a company’s
customers, the organization can better provide ways in which to
meet its customers’ needs. For example, Nike has successfully
identified itself not only with professional athletes, but with those
who want to be part of the athlete world. Nike’s marketing
message has made everyone who wishes to participate in sports
feel as if they can achieve their athletic goals. While most people
who purchase Nike products are not professional athletes, the
people who buy Nike’s products are able to identify with Nike’s
culture and feel like they are part of an exclusive group.
 Technology
Computer companies, medical research companies, and
other companies that identify themselves with the tech world will
find that they must be able to quickly adapt to changes in the
marketplace. New products, services, and inventions are
frequently introduced, making this a very difficult and
challenging business environment in which to operate. For
example, Genentech, Inc. conducts genetic engineering and
medical research for the pharmaceutical industry. This company
uncovers and discovers new advances every day, making it
challenging to develop a specific strategy plan for its products
and services. However, by defining the company as being in the
biotech industry, it can develop a strategy for its overall
corporate goals.

Step 2. Define the Strategic Mission

An organization’s strategic mission offers a long-range

perspective of what the organization strives for going forward. A
clearly stated mission will provide the organization with a guide
for carrying out its plans. Elements of a strong strategic mission
statement should include the values that the organization holds
the nature of the business, special abilities or position the
organization holds in the marketplace, and the organization’s
vision for where it wants to be in the future.

Step 3. Define the Strategic Objectives

This third step in the strategic formulation process

requires an organization to identify the performance targets
needed to reach clearly stated objectives. These objectives may
include: market position relative to the competition, production
of goods and services, desired market share, improved customer
services, corporation expansion, advances in technology, and
sales increases. Strategic objectives must be communicated with
all employees and stakeholders in order to ensure success. All
members of the organization must be made aware of their role in
the process and how their efforts contribute to meeting the
organization’s objectives.
 Additionally, members of the organization should have
their own set of objectives and performance targets for their
individual roles.

Step 4. Define the Competitive Strategy

The next step in strategy formulation requires an

organization to determine where it fits into the marketplace. This
applies not only to the organization as a whole, but to each
individual unit and department throughout the enterprise. Each
area must be aware of its role within the company and how those
roles enable the organization to maintain its competitive position.
Another step in the competitive strategy process requires an
organization to develop proactive responses to potential changes
in the marketplace. As discussed in earlier readings, an
organization must not wait for events in the marketplace to occur
before taking steps; they must identify possible events and be
prepared to take action. The final step in defining a competitive
strategy is identifying an organization’s resources and
determining how those resources will be used. Each department,
division, or location will have its own set of needs, and a
company must determine how it will allocate resources in order
to meet those needs. Three factors must be considered when
determining the overall competitive strategy: the industry and
marketplace, the company’s position relative to the competition,
and the company’s internal strengths and weaknesses.

 The Industry
When evaluating the overall industry, factors to be looked
at include:
 Size of the market,
 past and potential market growth,
 competitive profitability,
 new market entries, and
 industry threats.

These market factors must be evaluated on a regular basis, as

small changes may have a large impact on an organization’s
business activities. For example, if an organization becomes
aware of new technology that is on the verge of being introduced
into the marketplace, then it can avoid making any new plans
that would involve the older, existing technology available. Also,
if an organization is considering global expansion, then it would
be beneficial to be aware of emerging markets, other areas of
potential growth, and what other companies have already
entered in those markets.

 The Competition
An organization cannot be successful unless it has a full
understanding of the other players in marketplace. A company
must be able to identify the strengths and weaknesses of the
competition and analyze the ways in which the competition’s
products or services meet the needs of its customer base. Has
the competition created a significant product differentiation
strategy? Has the competition cornered a specific target market?
Is the competition in full-scale competition with another
company? It is essential for these questions to be answered in
order to develop the appropriate strategy for successful
competition. As mentioned earlier, we discussed how competition
for an airline is not only other airlines, but also other modes of
transportation. Evaluating competition requires a company to
look at organizations that provide substitutes for its product or
service as well as those who provide the same products and
services.

 Strengths & Weaknesses

Let’s go back to the traditional, well-known marketing tool
of the SWOT analysis. As you may recall, SWOT is an acronym
for Strengths, Weaknesses, Opportunities, and Threats.
Opportunities and threats are external factors; strengths and
weaknesses are internal factors. When developing a competitive
strategy, it is vital for an organization to be fully aware of its
internal strengths and how those strengths relate to the
competition. These strengths should be maximized and leveraged
to the company’s advantage as well as highlighted in all business
and marketing activities that the company undertakes. It is
equally important for an organization to take an honest look at
its areas of weakness. This is where a company can become
vulnerable to outside market conditions, such as competitive
gains, advances in technology, economic shifts, and other
factors. By identifying areas in need of improvement and taking
steps to remedy those areas, a company will be in a stronger
competitive position.

Step 5. Implement Strategies:-

Developing a strategy is only effective if it is put into place.
An organization may take all the necessary steps to understand
the marketplace, define it, and identify the competition. However,
without implementing the strategy, the organization’s work will
be of little to no value. The methods employed for implementing
strategies are known as tactics. These individual actions enable
an organization to build a foundation for implementation.
Companies are able to identify which of their efforts are more
successful than others and will uncover new methods of
implementation, if necessary.

Step 6. Evaluate Progress

As in any plan, a regular evaluation of processes and

results is vital to ongoing success. An organization must keep
track of the progress it is making as defined by its strategic plan.
If goals are not being met, the organization must be adaptable
and flexible to recognize that changes may be needed. An
organization should consider the following questions on a
continuous basis in order to evaluate progress: Have market
conditions changed that may require a change in corporate
direction? Are there new entries in the marketplace to pose a
competitive threat? Has the organization been successful in
translating their strategy into actionable steps? An organization
will be able to successfully implement its strategy both now and
in the future through evaluating feedback.
Conclusion:-
A strategic plan is a living document that changes and
grows as the conditions around it change. If an organization
recognizes that it must constantly be aware of the business world
around it and must be flexible to the changes that will inevitably
occur, then it will be in a position to adapt and modify its plans
to achieve maximum success.
 Hierarchical Levels of Strategy

Strategy can be formulated on three different levels:

 Corporate level
 Business unit level
 Functional or departmental level.

While strategy may be about competing and surviving as

a firm, one can argue that products,
ucts, not corporations compete,
and products are developed by business units. The role of the
corporation then is to manage its business units and products so
that each is competitive and so that each contributes to
corporate purposes. Considerder Textron, Inc., a successful
conglomerate corporation that pursues profits through a range of
businesses in unrelated industries. Textron has four core
business segments:
 Aircraft - 32% of revenues
 Automotive - 25% of revenues
 Industrial - 39% of revenues
 Finance - 4% of revenues.
While the corporation must manage its portfolio of
businesses to grow and survive, the success of a diversified firm
depends upon its ability to manage each of its product lines.
While there is no single competitor
competitor to Textron, we can talk about
the competitors and strategy of each
each of its business units. In the
finance business segment, for example, the chief rivals are m major
banks providing commercial financing. Many managers consider
the business level to be the proper focus for strategic planning.
* Corporate Level Strategy:-
Corporate level strategy fundamentally is concerned with
the selection of businesses in which the company should
compete and with the development and coordination of that
portfolio of businesses. Corporate level strategy is concerned with
the following points:
 Reach -
Defining the issues that are corporate responsibilities;
these might include identifying the overall goals of the
corporation, the types of businesses in which the corporation
should be involved, and the way in which businesses will be
integrated and managed.
 Competitive Contact –
Defining where in the corporation competition is to be
localized. Take the case of insurance: In the mid-1990's, Aetna
as a corporation was clearly identified with its commercial and
property casualty insurance products. The conglomerate Textron
was not. For Textron, competition in the insurance markets took
place specifically at the business unit level, through its
subsidiary, Paul Revere. (Textron divested itself of The Paul
Revere Corporation in 1997)
 Managing Activities and Business Interrelationships –
Corporate strategy seeks to develop synergies by sharing &
coordinating staff and other resources across business units,
investing financial resources across business units, and using
business units to complement other corporate business
activities. Igor Ansoff introduced the concept of synergy to
corporate strategy.
 Management Practices –
Corporations decide how business units are to be
governed: through direct corporate intervention (centralization)
or through more or less autonomous govt. (decentralization) that
relies on persuasion and rewards. Corporations are responsible
for creating value through their businesses. They do so by
managing their portfolio of businesses, ensuring that the
businesses are successful over the long-term, developing
business units, and sometimes ensuring that each business is
compatible with others in the portfolio.

* Business Unit Level Strategy

A strategic business unit may be a division, product line,
or other profit center that can be planned independently from the
other business units of the firm. At the business unit level, the
strategic issues are less about the coordination of operating units
and more about developing and sustaining a competitive
advantage for the goods and services that are produced. At the
business level, the strategy formulation phase deals with:
 Positioning the business against rivals
 Anticipating changes in demand and technologies and
adjusting the strategy to accommodate them
 Influencing the nature of competition through strategic
actions such as vertical integration and through political
actions such as lobbying. Michael Porter identified three
generic strategies (cost leadership, differentiation, and focus)
that can be implemented at the business unit level to create
a competitive advantage and defend against the adverse
effects of the five forces.

* Functional Level Strategy

The functional level of the organization is the level of the
operating divisions and departments. The strategic issues at the
functional level are related to business processes and the value
chain. Functional level strategies in marketing, finance,
operations, human resources, and R&D involve the development
and coordination of resources through which business unit level
strategies can be executed efficiently and effectively. Functional
units of an organization are involved in higher level strategies by
providing input into the business unit level and corporate level
strategy, such as providing information on resources and
capabilities on which the higher level strategies can be based.
Once the higher-level strategy is developed, the functional units
translate it into discrete action-plans that each department or
division must accomplish for the strategy to succeed.
 Scope of strategic management

J. Constable has defined the area addressed by strategic

management as "the management processes and decisions which
determine the long-term structure and activities of the
organization". This definition incorporates five key themes:
* Management process. Management process as relate to how
strategies are created and changed.
* Management decisions. The decisions must relate clearly to a
solution of perceived problems (how to avoid a threat; how to
capitalize on an opportunity).
* Time scales. The strategic time horizon is long. However, it for
company in real trouble can be very short.
* Structure of the organization. An organization is managed by
people within a structure. The decisions which result from the
way that managers work together within the structure can result
in strategic change.
* Activities of the organization. This is a potentially limitless
area of study and we normally shall centre upon all activities
which affect the organization. These all five themes are
fundamental to a study of the strategic management field and
are discussed further in this chapter and other part of this
thesis.

Importance of Strategic Management to an Organization

Strategic management involves managers using different

strategies to get maximum performance from workers and
business processes. Managers consider the impact of each
decision, and decisions that might detract from other objectives
are abandoned. Before a decision is finalized, it might be
considered by multiple players in the organization. Diverse
perspectives help the organization adopt a well-rounded
approach to managing work.

 Decision-Making
Strategic decisions are made using a model; managers
align workers, routines and resources with company goals and
policies. Managers make routine decisions using a decision
matrix or a flowchart, or according to policies and procedures
manuals, to ensure standardized quality of products and
services. In other models, workers and managers might have
more discretion. Strategic management involves studying how
decisions help the organization achieve its goals.

 Resource Management
Managers get input from whomever they need. If a manager
needs to cut costs in car production, she can talk to car
designers, engineers, material buyers, purchasing agents,
equipment manufacturers and other employees with potential
input. Next, she uses a standard process for making a decision.
She might even get a team of managers to vote on the best
option. A decision must have maximum returns, and resources
are not for serving the narrow requirements of an individual or
department.

 Flexibility
A strategic management system must include a high degree
of flexibility. Even when managers use a decision matrix or
another model for making decisions, they need flexibility to break
from the model when business conditions demand it. For
example, a customer service manager can approve a special
refund for a long-time customer so that he will continue to do
business with the company even when customer service reps
cannot automatically issue refunds to customers.

 Talent Development
Managers who use strategic management concepts to lead
their teams realize the importance of organizational learning.
They use different strategies to develop the talents of their
workers. They plan for the future to ensure workplace learning
prepares the next generation of workers to fill key positions. An
organization that doesn't make the best use of talents and
prepare the work force for the future cannot strategically
manage. That's because human resources aren't strategically
used if they are underutilized. A well-formulated strategy can
bring various benefits to the organization in present as well as in
future.
Other important Importance’s of strategic management are as
follows:-
1. Strategic management takes into account the future and
anticipates for it.

2. A strategy is made on rational and logical manner, thus its

efficiency and its success are ensured.

3. Strategic management reduces frustration because it has been

planned in such a way that it follows a procedure.

4. It brings growth in the organization because it seeks

opportunities.

5. With strategic management organizations can avoid helter &

skelter and they can work directionally.

6. Strategic management also adds to the reputation of the

organization because of consistency that results from
organizations success.

7. Often companies draw to a close because of lack of proper

strategy to run it. With strategic management companies can
foresee the events in future and that’s why they can remain
stable in the market.

8. Strategic management looks at the threats present in the

external environment and thus companies can either work to get
rid of them or else neutralizes the threats in such a way that
they become an opportunity for their success.

9. Strategic management focuses on proactive approach which

enables organization to grasp every opportunity that is available
in the market.
 Business Policy

Meaning:
A Policy is a deliberate system of principles to guide
decisions and achieves rational outcomes.
Business Policy defines the scope or spheres within which
decisions can be taken by the subordinates in an organization. It
permits the lower level management to deal with the problems
and issues without consulting top level management every time
for decisions. Business policies are the guidelines developed by
an organization to govern its actions. They define the limits
within which decisions must be made. Business policy also deals
with acquisition of resources with which organizational goals can
be achieved. Business policy is the study of the roles and
responsibilities of top level management, the significant issues
affecting organizational success and the decisions affecting
organization in long-run.

Definition:-
As per R.E. Thomas “It basically deals with decisions
regarding the future of an ongoing enterprise. Such policy
decisions are taken at the top level, after carefully
evaluating the organizational strengths and weaknesses in
relation to its environment”.

Origin of business policy:

 BP as field of study was introduced at Hayward business
School in 1911.
 Main objective was imparting general management
competence among students.
 In 1969 BP course was made mandatory for all business
school by American Assembly of collegiate School of
Business. (AACSB)
 In every B-school BP focused on the task of the top
management.
 Features of Business Policy:-

An effective business policy must have following features:-

1. Specific- Policy should be specific/ definite. If it is uncertain,

then the implementation will become difficult.

2. Clear- Policy must be unambiguous. It should avoid use of

jargons & connotations. There should be no misunderstandings
in following the policy.

3. Reliable/Uniform- Policy must be uniform enough so that it

can be efficiently followed by the subordinates.

4. Appropriate- Policy should be appropriate to the present

organizational goal.

5. Simple- A policy should be simple and easily understood by

all in the organization.

6. Inclusive/Comprehensive- In order to have a wide scope, a

policy must be comprehensive.

7. Flexible- Policy should be flexible in operation/application.

This does not imply that a policy should be altered always, but it
should be wide in scope so as to ensure that the line managers
use them in repetitive/routine scenarios.

8. Stable- Policy should be stable else it will lead to

indecisiveness and uncertainty in minds of those who look into it
for guidance.

Conclusion: - Policies are broad statements, adopted by a

business, that set out what the business stands for and what its
goals are. Procedures are usually implemented to support each
policy explaining how to apply the policy to the business's
customers, employees and products, and the instructions
necessary to follow the policy.
 Examples of areas where businesses typically institute
policies are ethics, human resources, accounting and customer
service.

 Ethics:-
Ethics policies address issues such as honesty, fairness,
integrity and respect. For example, the long-standing ethics
policy regarding honesty instituted at Levi Strauss and Co. as
quoted by [Link] reads: “Honesty: We will not say things that
are false. We will never deliberately mislead. We will be as candid
as possible, openly and freely sharing information, as
appropriate to the relationship.”
 Human Resources:-
Policies imposed in the area of human resources address
issues such as hiring and termination, benefits, promotion and
salary increase and discipline. For example, a typical human
resources policy addressing hiring might read: “New hires shall
be subject to a three month probationary period during which
employment is 'at-will.'”
 Customer Service:-
Customer service policies address issues such as
employee attitude toward customers. A sample policy dealing
with customer relations as reported by [Link] reads: “All
employees deal with our customers! No matter what your
position, every employee impacts the customer in some way.
Employees are reminded to promote the company just as they
would represent their families. This means being friendly and
courteous on the business property, while visiting our stores,
driving our vehicles on roads and highways and in daily
interactions. After all, you never know who knows the person you
are talking to... Other ways employees can enhance customer
relationships are to answer phones before three rings, transfer
office calls correctly, follow through on promises, give updates if
necessary, greet walk-in customers or just smile and say hello.
Treating other as you expect to be treated goes a long way in
customer service relationships.”
 Accounting:-
Accounting policies deal with how money is handled in
the company, both the spending and the documenting of inflow
and out-flow. An example of a typical accounting policy regarding
receipt of gifts to an organization might read: “Gifts of stock,
bonds, manuscripts, art and antiques are recorded and such
information is openly available to officers, stock holders and
employees as with any other corporate asset.”

Difference between Policy and Strategy

The term “policy” should not be considered as

synonymous to the term “strategy”. The difference between
policy and strategy can be summarized as follows-

Policy Strategy
Policy is a blueprint of the Strategy is concerned with those
organizational activities which organizational decisions which
are repetitive/ routine in have not been dealt/ faced
nature. before in same form.
Policy formulation is Strategy formulation is basically
responsibility of top level done by middle level
management. management.
Policy deals with routine/daily Strategy deals with strategic
activities essential for effective decisions.
and efficient running of an
organization.
Policy is concerned with both Strategy is concerned
thought and actions. mostly with action.
A policy is what is, or what is A strategy is the methodology
not done. used to achieve a target as
prescribed by a policy.
 GAP ANALYSIS

The evaluation of the difference between a desired outcome

and an actual outcome. This difference is called a gap. Strategic
gap analysis attempts to determine what a company should do
differently to achieve a particular goal by looking at the time
frame, management, budget and other factors to determine
where shortcomings lay. After conducting this analysis, the
company should develop an implementation plan to eliminate the
gaps.
For example, if a small restaurant wanted to become a top
tourist destination but currently only served locals, a strategic
gap analysis would look at the changes required for the
restaurant to meet its goals. These changes might include
relocating to an area with more tourists, altering the menu to
appeal to out-of-town visitors, hiring more staff so the
restaurant's hours become more convenient for travelers, and so
on. The analysis would also determine how to make these
changes happen. If a business doesn't know where it stands in
relation to its goals, it is not likely to achieve them. Gap analysis
is a formal study of what a business is doing currently and
where it wants to go in the future. It can be conducted, in
different perspectives, as follows:
1. Organization (e.g., human resources)
2. Business direction
3. Business processes
4. Information technology

Gap analysis provides a foundation for measuring investment of

time, money and human resources required to achieve a
particular outcome. The need for new products or additions to
existing lines may emerge from portfolio analysis, in particular
from the use of the Boston Consulting Group Growth-share
matrix—or the need may emerge from the regular process of
following trends in the requirements of consumers. At some
point, a gap emerges between what existing products offer and
what the consumer demands. The organization must fill that gap
to survive and grow. Gap analysis can identify gaps in the
market. Thus, comparing forecast profits to desired profits
reveals the planning gap. This represents a goal for new activities
in general and new products in particular. The planning gap can
be divided into three main elements:
1. Usage gap:-
This is the gap between the total potential for the market
and actual current usage by all consumers in the market. Data
for this calculation includes:
a. Market potential: - The maximum number of consumers
available is usually determined by market research, but it may
sometimes be calculated from demographic data or government
statistics.
b. Existing usage: - Existing consumer usage makes up the total
current market, from which market shares are calculated.
c. Current industrial potential: - Usage gap is most important
for brand leaders. If a company has a significant share of the
whole market, they may find it worthwhile to invest in making
the market bigger.

Usage gap = market potential – existing usage

2. Product gap:-
The product gap-also called the segment or positioning
gap-is that part of the market a particular organization is
excluded from because of product or service characteristics. This
may be because the market is segmented and the organization
does not have offerings in some segments, or because the
organization positions its offerings in a way that effectively
excludes certain potential consumers—because competitive
offerings are much better placed for these consumers.
3. Competitive gap:-
The competitive gap is the share of business achieved
among similar products, sold in the same market segment and
with similar distribution patterns or at least, in any comparison,
after such effects has been discounted. The competitive gap
represents the effects of factors such as price and promotion,
both the absolute level and the effectiveness of its messages.
 Other Types of GAP analysis in general:-
1. Performance gap: The difference btw expected performance &
the actual performance.
2. Product gap: The gap between budgeted sales & actual sales.
3. Profit gap: The variance between a targeted & actual profit of
the company.
4. Manpower gap: When there is a lag between required number
& quality of workforce & actual strength in the organization.

STRATEGIC MANAGEMENT VS
OPERATIONAL MANAGEMENT

Strategic management Operations management

Long Term Short Term
Exposes Choices Continuity
Expresses professional
Guided by political values
concerns
Developed in an organizational Has the necessity of
pause continuing activity
Grounded in the environment Grounded in the organization
Looks outward to impact Focuses on activity
Looks to the network of other Limited by organizational
organization boundaries
Sees interrelationships with
Is centered on specific tasks
tasks
Has an awareness of concerned with certainty of
uncertainty continuity
Non-routinized tasks. Routinized tasks.
It is a complex process. It is an easy process.
Survival of the organization is Survival of the organization is
directly linked. not directly linked.
It is concerned with the
It considers organization as a different operations from top
whole. level to bottom level of the
organization.
 Reasons why strategic plans fail

Understanding the value of and need for a strategic plan is

a great place to start, but just wanting something, isn’t enough.
If it were, we’d all be famous actors in Hollywood. Developing a
strategic plan takes discipline, foresight, and a lot of honesty.
Regardless how well you prepare, you’re bound to encounter
challenges along the way. Here are 10 reasons why plans fail.
Avoid these traps and you’ll be closer to your goal of
implementing a strategic plan that actually achieves results and
improves your business.

1. Having a plan simply for plans sake:-

Some organizations go through the motions of
developing a plan simply because common sense says every good
organization must have a plan. Don’t do this. Just like most
everything in life, you get out of a plan what you put in. If you’re
going to take the time to do it, do it right.
2. Not understanding the environment or focusing on
results:-
Planning teams must pay attention to changes in the
business environment, set meaningful priorities, and understand
the need to pursue results.
3. Partial commitment:-
Business owners/CEOs/presidents must be fully
committed and fully understand how a strategic plan can
improve their enterprise. Without this knowledge, it’s tough to
stay committed to the process.
4. Not having the right people involved:-
Those charged with executing the plan should be
involved from the onset. Those involved in creating the plan will
be committed to seeing it through execution.
5. Writing the plan and putting it on the shelf:-
This is as bad as not writing a plan at all. If a plan is to
be an effective management tool, it must be used and reviewed
continually. Unlike Twinkies or a fine vine, strategic plans don’t
have a good shelf life.
6. Unwillingness or inability to change:-
Your company and your strategic plan must be
nimble and able to adapt as market conditions change.
7. Having the wrong people in leadership positions:-
Management must be willing to make the tough decisions
to ensure the right individuals are in the right leadership
positions. The “right” individuals include those who will advocate
for and champion the strategic plan and keep the company on
track.
8. Ignoring marketplace reality, facts, and assumptions: -
Don’t bury your head in the sand when it comes to
marketplace realities, and don’t discount potential problems
because they have not had an immediate impact on your
business yet. Plan in advance and you’ll be ready when the tide
comes in.
9. No accountability or follow through:-
Be tough once the plan is developed and resources are
committed and ensure there are consequences for not delivering
on the strategy.
10. Unrealistic goals or lack of focus and resources:-
Strategic plans must be focused and include a
manageable number of goals, objectives, and programs. Fewer
and focused is better than numerous and nebulous. Also be
prepared to assign adequate resources to accomplish those goals
and objectives outlined in the plan. By avoiding these pitfalls,
you can create an effective planning process, build a realistic
business direction for the future, and greatly improve the
chances for successful implementation of your strategy.

STRATEGIC INTENT

An organization’s strategic intent is the purpose that it

exists and why it will continue to exist, providing it maintains a
competitive advantage. Strategic intent gives a picture about
what an organization must get into immediately in order to
achieve the company’s vision. It motivates the people. It clarifies
the vision of the vision of the company. Strategic intent helps
management to emphasize and concentrate on the priorities.
Strategic intent is nothing but, the influencing of an
organization’s resource potential and core competencies to
achieve what at first may seem to be unachievable goals in the
competitive environment. A well expressed strategic intent
should guide/steer the development of strategic intent or the
setting of goals and objectives that require that all of
organization’s competencies be controlled to maximum value.
Strategic intent includes directing organization’s attention on the
need of winning; inspiring people by telling them that the targets
are valuable; encouraging individual and team participation as
well as contribution.

Why is strategic intent important?

 An organizations capacity to improve existing skills and

learn new ones is the most defensible competitive advantage
of all.
 To achieve a strategic intent, a company must usually take
on larger, better financed competitors that mean carefully
managing competitive engagements so that scarce resources
are conserved.

STRATEGIC INTENT HIERARCHY:

 VISION- It implies the blue print of the company’s future

position. It describes where the organization wants to land. It
is the dream of the business and an inspiration, base for
planning process. It depicts the company’s aspiration for the
business and provides a peep of what the organization would
like to become in future. Every single components of the
organization is required to follow its vision.

 MISSION- Mission describes the firm’s business, its goals and

the ways to reach the goals. It explains the reason for the
existence of the business. It is designed to help potential
shareholders and investors to understand the purpose of the
company. A mission statement helps to identify ‘what business
 the company undertakes.’ It defines the present activities and
customer focus.

 BUSINESS DEFINITION- It seeks to explain the business

undertaken by the firm, with respect to the customer needs,
target audience and alternative technologies. With the help of
business definition one can ascertain the strategic business
choices.

 BUSINESS MODEL-As the name implies it is a strategy for the

effective operation of the business, ascertaining source of
income, desired customer base and financing detail.

 GOALS AND OBJECTIVES- Goals are the end results, that the
organization attempts to achieve. On the other hand objectives
are time based measurable actions, which helps in
accomplishment of goals. These are the end results which are
to be attained with the help of overall plan over the particular
period.

C0NCLUSION: -

 The Vision, Mission, business definition & the business model

explains the philosophy of the business but the goals and the
objectives are established with the purpose of achieving them.
 Strategic intent is extremely important for the future growth
and success of the enterprise, Irrespective of its size and
nature.

THANK YOU…!!