STRATEGIC MANAGEMENT

UNIT-I
STRATEGY:
Strategy is a general plan to achieve one or more long-term or overall goals under conditions
of uncertainty. Strategy is important because the resources available to achieve goals are
usually limited. Strategy generally involves setting goals and priorities, determining actions
to achieve the goals, and mobilizing resources to execute the actions.
A strategy describes how the goals will be achieved by the means (resources). Strategy can be
intended or can emerge as a pattern of activity as the organization adapts to its environment
or competes. It involves activities such as strategic planning and strategic thinking.

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TYPES/ LEVEL OF STRATEGY:

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●​ Corporate level Strategy: Defines the overall direction and scope of the entire
organization, including decisions about which industries or markets to compete in and
how to allocate resources across different business units.
●​ Business level Strategy: Focuses on how a specific business unit within a larger
organization will compete in its particular market or industry.
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●​ Functional level Strategy: Outlines how each functional department (like marketing,
finance, or HR) will support the broader business strategy through specific objectives
and actions.
●​ Operating level Strategy: Details the day-to-day operational decisions, policies, and
actions needed to deliver the functional and business strategies effectively.
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●​ Competitive level Strategy: Determines how a company will gain and maintain
competitive advantage in its industry or market, often through differentiation, cost
leadership, or focus strategies.
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STRATEGIC MANAGEMENT:
Igor Ansoff: Father of the Strategic Management
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Strategic management is how a company puts its plans into action, and checks its big-picture
decisions. It's an ongoing process that helps a business reach its long-term goals. Strategic
management helps to analyze, what your company can do, to matches the market needs, so
that one can stay ahead of their competitors over a period of time.
FEATURES OF STRATEGIC MANAGEMENT:
●​ It provides directions
●​ Dynamic Process (not rigid or ever-changing process)
●​ Ongoing Process/ Continuous process (never-ending process)
●​ Multidisciplinary (involve multiple departments of the organization)
●​ Follows hierarchy (top level-middle level-lower level)
●​ Future Oriented.
PROCESS OF STRATEGIC MANAGEMENT:
1.​ Environmental Scanning- Environmental scanning refers to a process of collecting,
scrutinizing and providing information for strategic purposes. It helps in analyzing the
internal and external factors influencing an organization. After executing the
environmental analysis process, management should evaluate it on a continuous basis
and strive to improve it.
2.​ Strategy Formulation- Strategy formulation is the process of deciding best course of
action for accomplishing organizational objectives and hence achieving organizational
purpose. After conducting environment scanning, managers formulate corporate,
business and functional strategies.

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3.​ Strategy Implementation- Strategy implementation implies making the strategy
work as intended or putting the organization’s chosen strategy into action. Strategy

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implementation includes designing the organization’s structure, distributing resources,
developing decision making process, and managing human resources.
4.​ Strategy Evaluation- Strategy evaluation is the final step of strategy management
process. The key strategy evaluation activities are: appraising internal and external
factors that are the root of present strategies, measuring performance, and taking
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remedial/corrective actions. Evaluation makes sure that the organizational strategy as
well as its implementation meets the organizational objectives.
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APPROACHES TO STRATEGIC DECISION MAKING:

Strategic Decision-Making:
Strategic decision-making refers to the process of identifying and implementing the most
effective strategies to achieve an organization's long-term goals. It involves analyzing internal
and external factors to make decisions that will shape the organization's direction and
competitive advantage.
 1.​ Rational Approach: This approach involves a systematic and logical analysis of all
available alternatives to make the best decision for the organization. It emphasizes
gathering and analyzing data to make informed choices.
2.​ Incremental Approach: In this approach, decisions are made through a series of
small, incremental steps rather than through a comprehensive, all-encompassing
strategy. It allows for flexibility and adaptation to changing circumstances.
3.​ Political Approach: This approach recognizes that strategic decisions are often
influenced by power dynamics and conflicting interests within the organization. It
focuses on managing these political forces to achieve strategic goals.
4.​ Cultural Approach: This approach emphasizes the influence of organizational
culture on decision-making. It considers the values, beliefs, and norms within the

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organization that shape strategic choices.
5.​ Cognitive Approach: The cognitive approach focuses on the mental processes and

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decision-making biases of individuals involved in strategic decision-making. It seeks
to understand how cognitive factors influence strategic choices.

ROLE OF STRATEGIST IN STRATEGIC MANAGEMENT:

●​ Board of directors are the owners of an organization such as shareholders,
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controlling agencies, government, financial institutions, etc. They are responsible
for governance of an organization, technology collaboration, new product
development and senior management appointments. They guide the senior
management in setting and accomplishing objectives, review and
evaluate organization performance.
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●​ The chief executive officer is answerable for all aspects of strategic

management from the formulation to the evaluation of strategy. They play a major
role in strategic decision making and provide the direction for the organization so that
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it can achieve its purpose. They assist in setting the mission of the organization. They
are responsible for deciding the objectives, formulating and implementing the
strategy.
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●​ Entrepreneurs are strategist who starts a new business, initiator, searches for change,
respond to it and exploits its as an opportunity. By their nature, entrepreneurs play a
proactive role. They are implementers and evaluators of strategies.
●​ Senior management or top management consists of managers at highest level
managerial hierarchy. They look after renovation, technology up
progression, diversification and expansion and also focus on new product
development. They assist the board and chief executives in formulating, implementing
and evaluating the strategy.
 UNIT-II
ENVIRONMENTAL CONCEPT AND ITS COMPONENTS:
The business environment involves factors, internal and external to the firm, that affect it
regarding operation, management decisions, and profitability. These may be economic,
social, technological, political, legal, or environment-related.
Importance of business environment:
●​ Helps in Decision Making: Knowledge of the business environment plays a
significant role in formulating policies that bear on all aspects of an organization,
from setting the price of products to developing the product itself.
Identifies Opportunities and Threats: The manager can identify new opportunities

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and threats and the surrounding environment through various factors such as market
trends and regulatory or legal factors.

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●​ Enhances Strategic Planning: Business environment knowledge empowers
organizations to predict future changes and obstacles or circumstances they are likely
to face and then develop strategic plans.
●​ Encourages Innovation and Adaptation: Recognising changes in current
technology, customs, or competition enables business organisations to change and
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introduce new ideas relevant to the market.
●​ Regulatory Compliance: Legal and political factors guide legal requirements and
procedures that affect the business environment to prevent firms from falling foul of
the law and bearing the resulting consequences.
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The business environment can be divided into two key categories:

●​ Internal Environment: This comprises all the variables the firm can truly manage.
Such factors are reasonably stable and can be negotiated by the company to exclude
influences that have adverse effects on operation.
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●​ External Environment: It covers factors beyond the company’s influence. They are
often unpredictable since a company cannot influence or forecast change in them.
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Something that may suddenly negatively or positively affect a company’s activities

remains unpredictable.
Components of Business Environment:
Internal Environment
The internal business environment consists of several internal forces or elements within a
business that are within the business’s ambit about force.
●​ Value: This business ethical belief steers the business in accomplishing its mission
and objective. The value system embraces all the structures that comprise a business’s
legal framework: organizational culture, climate, workflows, management strategies
and organizational standards.
 ●​ Vision, Mission, and Objectives: Business’s vision, mission and objective deal with
what an entity intends to do in the future. That is why the business is created.
●​ Organisational Structure: They explain how the activities coordinate within the
organizational system to accomplish its objectives. They consist of the regulation
governing organizational affairs, the authority and mandate of subordinates, how the
work is distributed, and the movement of information within the various strata of an
organization.
●​ Human Resources: Human resources form all the employees and other personnel
associated with the business. It forms the organisation’s most valuable asset, as
success or failure depends on it.
●​ Physical Resources and Technological Capabilities: It encompasses fixed assets

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and the operational skills that determine its strategic capacity and the business’s
growth potential.

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External Environment
The external environment happens outside the business and affects its operations and
decision-making process. These factors are the microenvironment and the macro environment
in which the business operates.
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●​ Micro Environment
●​ Macro Environment
Micro Environment
Micro environment refers to the close outside conditions that affect the business since it
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directly impacts the firm’s routine operational activities. They are beyond the control of the
business but are considered while managing the business to avoid any business losses.
●​ Competitors: Other businesses that can acquire market and resource shares that the
present business has.
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●​ Suppliers: Essential sources that provide the resources necessary for the company’s
products and practices.
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●​ Partners: All kinds of collaborative entities helping customer service: consultancy

firms, advertising agencies, etc.
●​ Public: Entities that can affect the company’s customer service.
●​ Customers: The set of customers for which the company provides products or
services in exchange for revenue.
●​ Media: It is used as a media, a marketing, or a communication platform.
●​ Intermediaries: Facilitating groups that transfer products or services to customers.
Macro Environment
Larger industry forces influence business but cannot necessarily be managed by the business.
Key components include:
 ●​ Political Factors: Government policies, laws, and order situations influence the
business landscape.
●​ Economic Environment: Inflation, employment level, interest rate and economic
growth rate.
●​ Social and Cultural Environment: Consumer behaviour characteristics or
preferences, societal norms or behaviour, alterations to life patterns, and changes in
population profile.
●​ Technological Environment: Solutions or ideas implemented in organisations or
within production or service delivery processes.
●​ Legal Factors: These industry-specific laws and regulations govern business

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practices.
●​ Environment: Environmental conditions influencing the organization include

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regulatory systems, sustainable development and natural resources.
ENVIRONMENTAL SCANNING:
The process of collecting, evaluating, and delivering information for a strategic purpose is
defined as environmental scanning. The process of environmental scanning requires both
accurate and personalised data on the business environment in which the organisation is
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operating or considering entering.
Importance of Environmental Scanning
●​ Goal Accomplishment: The objectives of an organization cannot be fulfilled unless it
adapts itself to environmental changes. One has to adjust the strategies to fit in the
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changing demands of the environment.

●​ Threats and Weakness Identification: For an organization to grow, it must minimize
its threats and identify its weaknesses. This is made possible with the help of
environmental scanning with which better strategies can be developed.
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●​ Future Forecast: Environmental changes are often unpredictable. An organization

cannot anticipate all the future events but based on the analysis, it can make better
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strategic decisions in the future. Hence, environmental analysis helps to forecast the
prospects of the business.
●​ Market Knowledge: Every organization must be aware of the ongoing changes in the
market. If it fails to incorporate strategic changes due to changing demands, it will not
be able to achieve its objectives.
●​ Focus on the Customer: Environmental scanning and analysis make an organization
sensitive to the changing needs and expectations of the customer.
●​ Opportunities Identification: With the analysis of the current environment, an
organization will be able to identify the possible opportunities and take necessary
steps.
 Environmental Scanning Techniques
1.​ SWOT Analysis- SWOT analysis is an acronym for Strengths, Weaknesses,
opportunities and threats analysis of the environment. Strengths and weaknesses are
considered as internal factors whereas opportunities and threats are external factors.
These factors determine the course of action to ensure the growth of the business.
2.​ PEST Analysis- PEST stands for Political, economic, social, and technological
analysis of the environment. It deals with the external macro-environment.
3.​ ETOP- ETOP stands for the Environmental Threat Opportunity Profile. It helps an
organization to analyze the impact of the environment based on threats and
opportunities.

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4.​ QUEST- QUEST stands for the Quick Environmental Scanning Technique. This
technique is designed to analyze the environment quickly and inexpensively so that
businesses can focus on critical issues that have to be addressed in a short span.

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ENVIRONMENTAL APPRAISAL:
Environmental appraisal is the systematic process of identifying, assessing, and interpreting
the potential beneficial and adverse impacts of a proposed project or a business's external
environment on the natural world and human health. It ensures that environmental factors are
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integrated into decision-making, aiming to minimize harm, explore alternatives, promote
sustainable practices, and comply with legal requirements. Key methods include
environmental impact assessment (EIA), feasibility studies, and SWOT analysis, which help
to understand environmental opportunities and threats
STRUCTURING ORGANIZATIONAL APPRAISALS:
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Structuring an organizational appraisal involves a systematic approach to evaluating an

organization’s performances, strengths, weaknesses, opportunities, and threats.
1.​ Define the purpose and scope:
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Identify the objectives of the appraisal.

Determine the scope of the appraisal (e.g., entire organization, specific department, or
function).
2.​ Gather Information:
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Collect relevant data and documents, such as financial reports, performance metrics,
employee feedback, customer feedback, market research etc.
3.​ Conduct SWOT Analysis:
Identify the organizations like strengths (internal capabilities and resources),
Weakness (internal vulnerabilities and limitations), Opportunities (external factors
that can benefit the organization), Threats (external factors that can harm the
organization).
4.​ Evaluate Performance:
Assess the organization’s performance in key areas, such as financial performance,
operational efficiency, customer satisfaction, employment engagement, innovation
and adaptability.
5.​ Identify Areas for Improvement:
Based on the appraisal findings, identify areas that require improvement or attention.
 6.​ Develop Recommendations:
Provide actionable recommendations for addressing areas for improvement and
leveraging strengths and opportunities.
7.​ Implement Changes:
Develop a plan to implement the recommended changes, and assign responsibilities
and timelines for implementation.
8.​ Monitor Progress:
Regularly review and assess the effectiveness of the changes implemented, and make
adjustments as needed to ensure continuous improvement.
SWOT ANALYSIS:
A SWOT analysis is a simple but powerful tool to evaluate a company's strengths,

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weaknesses, opportunities, and threats. It provides a clear picture of your current position in
the market and helps you identify areas for growth.

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Strengths Internal factors that give you an advantage over competitors (e.g., brand
reputation, strong distribution network)
●​ Strong customer base
●​ Robust development team
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●​ Integrations
Weaknesses Internal weaknesses that hinder your performance (e.g., limited product range,
weak online presence)
●​ Limited experience
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●​ Resource allocation
●​ Market knowledge
Opportunities External factors that present potential for growth (e.g., emerging markets,
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changing customer needs)

●​ Growing demand
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●​ Cross-selling opportunities
●​ Innovation:
Threats External factors that could negatively impact your business (e.g., new regulations,
economic downturn, competitor innovations)
●​ Intense competition
●​ Rapid technological changes
 UNIT -III

Strategy Formulation

Definition

Strategy formulation is the process of defining the strategy or direction for an organization
and making decisions on allocating resources to pursue this strategy. It involves setting the
mission, vision, and objectives, as well as developing plans and policies to achieve these
goals.

Key Components

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1.​ Mission and Vision Statements:
o​ The mission statement defines the organization's purpose and primary
objectives. It answers the question, "Why do we exist?"

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o​ The vision statement outlines what the organization wants to be in the future.
It provides a long-term view and answers the question, "Where do we want to
go?"
2.​ Environmental Scanning:
o​ This involves analyzing external and internal environments to identify
opportunities, threats, strengths, and weaknesses (SWOT analysis). It helps in
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understanding the competitive landscape and the internal capabilities of the
organization.
3.​ Setting Objectives:
o​ Objectives are specific, measurable targets that the organization aims to
achieve. They provide a clear direction and a basis for evaluating
performance.
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4.​ Strategy Development:

o​ Based on the insights from environmental scanning and SWOT analysis,
strategies are developed to leverage strengths and opportunities while
addressing weaknesses and threats. This can include corporate strategy
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(overall scope and direction), business strategy (competitive positioning), and

functional strategy (specific areas like marketing, finance, operations).
5.​ Setting Organizations’ objectives - The key component of any strategy statement is
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to set the long-term objectives of the organization. It is known that strategy is

generally a medium for realization of organizational objectives. “Objectives stress
the state of being there whereas Strategy stresses upon the process of reaching there”.
Strategy includes both the fixation of objectives as well the medium to be used to
realize those objectives. Thus, strategy is a wider term which believes in the manner
of deployment of resources so as to achieve the objectives. While fixing the
organizational objectives, it is essential that the factors which influence the selection
of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take
strategic decisions.
Process in Strategy Formulation

1.​ Defining the Mission and Vision:

o​ The first step is to establish a clear mission and vision. These statements
provide a framework for all strategic planning activities and ensure that
everyone in the organization understands the long-term goals and purpose.
2.​ Conducting Environmental Scanning:
o​ This step involves gathering information about the external environment (e.g.,
market trends, competitive landscape, regulatory environment) and internal
environment (e.g., resources, capabilities, processes). Tools like PESTEL
analysis (Political, Economic, Social, Technological, Environmental, and
Legal) and SWOT analysis are commonly used.
3.​ Setting Strategic Objectives:

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o​ Based on the mission, vision, and insights from environmental scanning, the
organization sets strategic objectives. These objectives should be Specific,
Measurable, Achievable, Relevant, and Time-bound (SMART).

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4.​ Formulating Strategies:
o​ The next step is to develop strategies to achieve the set objectives. This
involves identifying and evaluating various strategic options and selecting the
most appropriate ones. Strategies can be formulated at different levels:
corporate, business, and functional.
5.​ Strategy Implementation Planning:
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o​ After formulating the strategies, an implementation plan is developed. This
plan outlines the specific actions required, allocates resources, and assigns
responsibilities. It also includes timelines and performance metrics to monitor
progress.

TYPES OF STRATEGIES IN STRATERY FORMULATION

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1.​ Directional Strategies: also known as grand strategy. Directional strategy includes
stability strategy+ expansion or growth strategy+ Retrenchment Strategy+
Combination Strategy.
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A directional strategy is an approach used in business or investing to take a position

based on an expected market movement or an overarching corporate goal. Its two
primary contexts are financial trading and corporate management, and the specific
application determines its meaning and methodology.
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2.​ Stability Strategies:

a)​ No Change Strategy: Small and medium sized firms rely on this
strategy. A "no change" strategy, also known as a stability strategy, is a
business approach where a company intentionally maintains its current
operations, products, and market position without making significant
alterations. This is a conscious decision, often made in a stable market
environment, to focus on consistency, customer retention, and
operational stability rather than growth or innovation. It minimizes
risks associated with change but can lead to a loss of market relevance
if competitors innovate.
b)​ Profit Strategy: When firm focus on profit only. A profit strategy is a
plan to increase profitability, which can involve a variety of actions
like cutting costs, raising prices, improving efficiency, or, in the
short-term, selling assets. It is often used to overcome temporary
 financial difficulties, such as an economic downturn, and can focus on
maximizing profits from existing operations or creating a
more profitable growth strategy that balances expansion with
efficiency.
c)​ Pause/Proceed with caution Strategy: A "pause/proceed with
caution" strategy is a temporary stability approach where a company
halts aggressive action to assess the market and its own capabilities
before resuming growth at a more measured pace. It's used to test the
waters, wait for more favorable conditions, or consolidate resources
after rapid expansion. This strategy involves pausing major initiatives,
evaluating internal strengths and weaknesses, and gathering data on
market trends before re-engaging cautiously
3.​ Expansion Strategies:

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Expansion through Concentration: Expansion through concentration involves
attaining expansion by combining the resources in one or more area of the
organisation’s business. This is also known as focus or intensification strategy,

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implying that an organisation would like to concentrate more on the business that it is
already doing. It involves the investment of larger resources in a product line for an
identified market, with the help of a proven technology.
The expansion can be followed by adopting the following means:
●​ Market penetration: It implies selling more products in the same market.​
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●​ Market development: It refers to identifying the new markets for selling the existing
products.​

●​ Product development: It refers to selling new products in the existing markets

Expansion through Integration: Expansion through integration is performed by
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combining activities or functions of the business with no change in customer groups.

This is done through a value chain, which consists of a number of interlinked
activities (performed by an organisation) ranging from the procurement of raw
materials to the marketing of finished goods. Thus, an organisation may move up or
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down the value chain to integrate activities so that the needs of the existing customers
could be fulfilled more efficiently. Thus, expansion through integration widens the
scope of an organisation’s growth.
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The two types of integration strategies are explained as follows:

●​ Vertical integration: This type of integration is carried out with the purpose of
supplying inputs, such as raw materials or distributing the final product to customers.
Vertical integration is further divided in backward and forward integration.​
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In backward integration, the organisation becomes its own supplier; whereas in
forward integration, the organisation takes control of distributing the products. For
example, if an automobile organisation buys its tyre supplier organisation, it is a
backward integration. On the other hand, if a wholesaler purchases a retailing outlet to
directly sell products to end-costumers; it is a forward integration.​

●​ Horizontal integration: It refers to a situation when an organisation merges with or

acquires other organisations serving the same customers, with the same or similar
 products, and adopting the same marketing process. Horizontal integration increases
the size and profits of an organisation by increasing its market share. An example of
horizontal integration can be a pizza restaurant expanding its product range by
acquiring a hamburger chain.
Expansion through Diversification:
Expansion through diversification involves an extensive change in the business of an
organisation in terms of customer functions, customer groups or alternative
technologies. In simple words, it means diversification into related or unrelated
businesses.
Under the diversification strategies, an organisation launches new products, serves
new markets, or does both simultaneously.
There are two types of diversification strategies:

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●​ Concentric diversification: This type of diversification strategy is taken by an
organisation that expands in business, related to its existing business. This is also
known as related diversification. For example, an organisation, selling household

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electrical equipment, may diversify its business to kitchenware appliances to serve the
same set of consumers.
●​ Conglomerate diversification: It implies a strategy that requires taking up activities
unrelated to the existing business of an organisation. This is also called unrelated
diversification. Conglomerate diversification is practiced in organisations when they
have excess surplus capital. For example, ITC is into numerous unrelated businesses,
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such as agri-business, hotels, paperboards and packaging.
Expansion through Internalization:
Expansion through internationalisation refers to an expansion strategy that helps
organisations to perform their operations internationally. Organisations need to devise
their strategies to enter into foreign markets. Today, many organisations are
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internationalising their operations because of high competition in domestic markets.

Organisations that plan to operate in international markets need to consider various
issues, such as government regulations as well as economic, social and legal forces
that shape the international markets.
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Expansion through Cooperation:

Expansion through cooperation refers to the mutual cooperation between
organisations belonging to the same industry to achieve a shared objective. For
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example, if an organisation works in cooperation with other organisations, it can

establish a favourable position in the industry relative to its competitors. Cooperation
strategies available to organisations are discussed as follows.
Mergers and Acquisitions
Mergers and acquisitions have become popular strategies in the last few decades to
expand the scope of business for an organisation. A merger can be defined as a
combination of two or more organisations, in which both the organisations are
dissolved and their assets and liabilities are combined to form a new business entity.
Various types of mergers that help in expanding the size of organisations are as
follows:
●​ Horizontal mergers: This type of merger takes place when two or more organisations
in the same business activity merge. The merger results in a larger organisation and
large-scale operations for the merged organisation. Organisations may merge
 horizontally by sharing their resources and skills. For example, an organisation in
computer hardware manufacturing may merge with the organisation having the same
business.
●​ Vertical mergers: This type of merger occurs between two or more organisations
having different stages of business in the same industry. For instance, organisation A,
which is involved in the manufacturing of certain products, merges with organisation
B, which sells the products of organisation A. In such a case, the vertical merger has
taken place between the two organisations. The reasons for vertical mergers are
reducing the costs of communication, coordinating production, and better planning for
inventory and production.
●​ Concentric mergers: It refers to a combination of two or more related organisations
with similar production or distribution technologies. For example, a merger between

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the motorcycle manufacturer and a car manufacturer.
●​ Conglomerate mergers: In this type of merger, two or more unrelated organisations
merge horizontally or vertically. For example, the merger of a fast-food outlet with a

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cloth manufacturing organisation is a conglomerate merger.

Joint Ventures
Joint Ventures (JVs) are a combination of two or more organisations that want to
attain similar objectives for a specific period. A JV is usually a business agreement in
which the concerned parties form (for a specified time period) a new entity and new
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assets, by contributing equity.
Various reasons for forming a JV are as follows:
●​ Access to new markets and distribution networks
●​ Increased capacity
●​ Sharing of risks and costs with a partner
●​ Access to more resources, including specialised staff, finance and technology
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4.​ Retrenchment Strategies:

a)​ Turnaround Strategy: Turnaround strategies are defined as a set of strategies
that help in managing, establishing, funding and fixing a distressed
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organisation. These strategies aim at reversing the negative trend and turning
around the organisation to profitability. In other words, turnaround strategies
help an organisation to regain satisfactory levels of profitability, cash flow and
liquidity. Some of the major conditions for turnaround strategies are as
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follows:
●​ Declining revenues/market share
●​ Persistent negative cash flow
●​ Negative profit
●​ High turnover of employees
●​ Lack of adequate resources
●​ Poor execution of projects
●​ uncompetitive products/services
●​ Burden of high debt
●​ Insufficient financial control

b)​ Disinvestment Strategy: A divestment strategy is another form of

retrenchment strategy and is used to downsize the scope of a business by
 selling or liquidating a portion of the business. This strategy is a part of the
restructuring plan and is practiced when a turnaround has been attempted and
proven a failure. This strategy is also called a divestiture or cutback strategy.
The alternative of this strategy is harvesting strategy, which includes a process
of gradually letting an organisation wither away in a carefully controlled and
standardised manner. The reasons for the adoption of the divestment
strategy are as follows:
●​ Predicting that continuity of the business would be unviable​

●​ Increasing financial problems because of negative cash flows​

●​ Increasing competition and inability of the organisation to cope with it​

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●​ Mismatching of resources in case of mergers and acquisitions; it happens when the
resources of one organisation are not useful for the other organisation​

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●​ Failing to invest in technological advancements​

●​ Getting an opportunity to invest in a better alternative rather than in an unprofitable

business
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c)​ Liquidation Strategy: Liquidation strategies are the most unattractive and
severe retrenchment strategies, as the strategies involve closing down an
organisation and selling its assets. It can be referred as the last resort for the
organisation.
5.​ Combination Strategies: A combination strategy involves a company using two or
more business strategies simultaneously or sequentially to achieve its goals. This
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approach is often necessary for large, complex organizations with multiple business
units and is used to improve overall efficiency and flexibility. For example, a
company might pursue expansion in one division while retrenching from another and
maintaining stability in a third. Types of combination strategies
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Simultaneous: A company implements multiple strategies at the same time across

different business units. For instance, one division might focus on growth, while
another focuses on stability.
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Sequential: A company adopts strategies one after another in a specific order. For
example, it might first retrench from a struggling division before pursuing expansion
in a more promising one
6.​ Contingency Strategies: A contingency strategy is a pre-planned "Plan B" for how
an organization will respond to unexpected, disruptive events to minimize damage
and keep operations running. These plans are a form of risk management, providing a
defined course of action for a specific scenario that could negatively impact a project
or business, such as a natural disaster, data loss, or the departure of a key client.
 CORPORATE SOCIAL RESPONSIBILITY
(CSR)

Corporate social responsibility (CSR) refers to strategies that companies put into action as
part of corporate governance that are designed to ensure the company’s operations are ethical
and beneficial for society.

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Categories of CSR

Although corporate social responsibility is a very broad concept that is understood and
implemented differently by each firm, the underlying idea of CSR is to operate in an
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economically, socially, and environmentally sustainable manner.

1. Environmental responsibility
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Environmental responsibility initiatives aim to reduce pollution and greenhouse gas

emissions and the sustainable use of natural resources.

2. Human rights responsibility

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Human rights responsibility initiatives involve providing fair labour practices (e.g., equal pay
for equal work) and fair-trade practices, and disavowing child labour.

3. Philanthropic responsibility
Philanthropic responsibility can include things such as funding educational programs,
supporting health initiatives, donating to causes, and supporting community beautification
projects.
4. Economic responsibility
Economic responsibility initiatives involve improving the firm’s business operation while
participating in sustainable practices – for example, using a new manufacturing process to
minimize wastage.
 Business Benefits of CSR

In a way, corporate social responsibility can be seen as a public relations effort. However, it
goes beyond that, as corporate social responsibility can also boost a firm’s competitiveness.
The business benefits of corporate social responsibility include the following:

1. Stronger brand image, recognition, and reputation: CSR adds value to firms by
establishing and maintaining a good corporate reputation and/or brand equity.
2. Increased customer loyalty and sales: Customers of a firm that practices CSR feel that
they are helping the firm support good causes.
3. Operational cost savings: Investing in operational efficiencies results in operational cost
savings as well as reduced environmental impact.
4. Retaining key and talented employees: Employees often stay longer and are more

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committed to their firm knowing that they are working for a business that practices CSR.
5. Easier access to funding: Many investors are more willing to support a business that
practices CSR.

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6. Reduced regulatory burden: Strong relationships with regulatory bodies can help to
reduce a firm’s regulatory burden.

CORPORATE RESTRUCTURING
Corporate restructuring is an action taken by the corporate entity to modify its capital
structure or its operations significantly. Generally, corporate restructuring happens when a
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corporate entity is experiencing significant problems and is in financial jeopardy.
The process of corporate restructuring is considered very important to eliminate all the
financial crisis and enhance the company’s performance. The management of the concerned
corporate entity facing the financial crunches hires a financial and legal expert for advisory
and assistance in the negotiation and the transaction deals. Usually, the concerned entity may
look at debt financing, operations reduction, any portion of the company to interested
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investors. In addition to this, the need for corporate restructuring arises due to the change in
the ownership structure of a company. Such change in the ownership structure of the
company might be due to the takeover, merger, adverse economic conditions, adverse
changes in business such as buyouts, bankruptcy, lack of integration between the divisions,
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over-employed personnel, etc.

Types of Corporate Restructuring
1.​ Financial Restructuring: This type of restructuring may take place due to a severe
fall in the overall sales because of adverse economic conditions. Here, the corporate
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entity may alter its equity pattern, debt-servicing schedule, equity holdings, and
cross-holding pattern. All this is done to sustain the market and the profitability of the
company.
2.​ Organisational Restructuring: Organisational Restructuring implies a change in the
organisational structure of a company, such as reducing its level of the hierarchy,
redesigning the job positions, downsizing the employees, and changing the reporting
relationships. This type of restructuring is done to cut down the cost and to pay off the
outstanding debt to continue with the business operations in some manner.
Reasons for Corporate Restructuring
Corporate restructuring is implemented in the following situations:
●​ Change in the Strategy: The management of the distressed entity attempts to
improve its performance by eliminating certain divisions and subsidiaries which do
not align with the core strategy of the company. The division or subsidiaries may not
appear to fit strategically with the company’s long-term vision. Thus, the corporate
 entity decides to focus on its core strategy and dispose of such assets to the potential
buyers.
●​ Lack of Profits: The undertaking may not be enough profit-making to cover the cost
of capital of the company and may cause economic losses. The poor performance of
the undertaking may be the result of a wrong decision taken by the management to
start the division or the decline in the profitability of the undertaking due to the
change in customer needs or increasing costs.
●​ Reverse Synergy: This concept is in contrast to the principles of synergy, where the
value of a merged unit is more than the value of individual units collectively.
According to reverse synergy, the value of an individual unit may be more than the
merged unit. This is one of the common reasons for divesting the assets of the
company. The concerned entity may decide that by divesting a division to a third
party can fetch more value rather than owning it.

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●​ Cash Flow Requirement: Disposing of an unproductive undertaking can provide a
considerable cash inflow to the company. If the concerned corporate entity is facing
some complexity in obtaining finance, disposing of an asset is an approach in order to

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raise money and to reduce debt.
Characteristics of Corporate Restructuring
●​ To improve the Balance Sheet of the company (by disposing of the unprofitable
division from its core business)
●​ Staff reduction (by closing down or selling off the unprofitable portion)
●​ Changes in corporate management
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●​ Disposing of the underutilised assets, such as brands/patent rights.
●​ Outsourcing its operations such as technical support and payroll management to a
more efficient 3rd party.
●​ Shifting of operations such as moving of manufacturing operations to lower-cost
locations.
●​ Reorganising functions such as marketing, sales, and distribution.
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●​ Renegotiating labour contracts to reduce overhead.

●​ Rescheduling or refinancing of debt to minimise the interest payments.
●​ Conducting a public relations campaign at large to reposition the company with its
consumers.
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Important Aspects to be Considered in Corporate Restructuring Strategies

●​ Legal and procedural issues
●​ Accounting aspects
●​ Human and Cultural synergies
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●​ Valuation and funding

●​ Taxation and Stamp duty aspects
●​ Competition aspects, etc.
Types of Corporate Restructuring Strategies
1.​ Merger: This is the concept where two or more business entities are merged together
either by way of absorption or amalgamation or by forming a new company. The
merger of two or more business entities is generally done by the exchange of
securities between the acquiring and the target company.
2.​ Demerger: Under this corporate restructuring strategy, two or more companies are
combined into a single company to get the benefit of synergy arising out of such a
merger.
3.​ Reverse Merger: In this strategy, the unlisted public companies have the opportunity
to convert into a listed public company, without opting for IPO (Initial Public offer).
 In this strategy, the private company acquires a majority shareholding in the public
company with its own name.
4.​ Disinvestment: When a corporate entity sells out or liquidates an asset or subsidiary,
it is known as “divestiture”.
5.​ Takeover/Acquisition: Under this strategy, the acquiring company takes overall
control of the target company. It is also known as the Acquisition.
6.​ Joint Venture (JV): Under this strategy, an entity is formed by two or more
companies to undertake financial act together. The entity created is called the Joint
Venture. Both the parties agree to contribute in proportion as agreed to form a new
entity and also share the expenses, revenues and control of the company.
7.​ Strategic Alliance: Under this strategy, two or more entities enter into an agreement
to collaborate with each other, in order to achieve certain objectives while still acting
as independent organisations.

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8.​ Slump Sale: Under this strategy, an entity transfers one or more undertakings for
lump sum consideration. Under Slump Sale, an undertaking is sold for consideration
irrespective of the individual values of the assets or liabilities of the undertaking.

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 UNIT-IV

Strategy Implementation

Definition

Strategy implementation is the process of putting the chosen strategies into action to achieve
the strategic objectives. It involves aligning the organization's structure, processes, and
resources with the strategy and ensuring that everyone is working towards the same goals.

Key Components

1.​ Resource Allocation:

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o​ This involves distributing the necessary resources (financial, human,
technological) to various departments and functions to support the execution
of strategies.

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2.​ Organizational Structure:
o​ Ensuring that the organization's structure aligns with the strategy. This might
involve restructuring, creating new roles, or redefining existing roles to better
support strategic objectives.
3.​ Leadership and Culture:
o​ Effective leadership is critical for successful strategy implementation. Leaders
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must communicate the strategy clearly, motivate employees, and foster a
culture that supports strategic initiatives.
4.​ Performance Management:
o​ Implementing systems to monitor and evaluate progress towards strategic
objectives. This includes setting performance metrics, conducting regular
reviews, and making adjustments as necessary.
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5.​ Change Management:

o​ Managing the transition and addressing resistance to change. This involves
communicating the benefits of the strategy, providing training and support,
and involving employees in the implementation process.
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Process in Strategy Implementation

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1.​ Communication of Strategy:

o​ Communicating the strategy to all stakeholders is crucial. This ensures that
everyone understands the strategic objectives and their role in achieving them.
2.​ Aligning Organizational Structure and Culture:
o​ Ensuring that the organizational structure supports the strategy. This may
involve restructuring, change management practices, and foster a culture that
aligns with the strategic goals.
3.​ Resource Allocation and Budgeting:
o​ Allocating the necessary resources to support the strategy. This includes
budgeting for new initiatives, reallocating existing resources, and ensuring that
all departments have what they need to execute their parts of the strategy.
4.​ Developing Action Plans:
 o​Creating detailed action plans that outline the specific steps needed to
implement the strategy. These plans should include timelines, responsibilities,
and performance metrics.
5.​ Monitoring and Control:
o​ Establishing systems to monitor progress and performance. This involves
setting up key performance indicators (KPIs), conducting regular reviews, and
making adjustments to the strategy or implementation plan as needed.
6.​ Feedback and Continuous Improvement:
o​ Gathering feedback from stakeholders and using it to make continuous
improvements. This ensures that the strategy remains relevant and effective in
achieving the organization's objectives.

Strategy formulation and implementation are crucial components of strategic management.

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They involve the development of plans and actions that will enable an organization to achieve
its goals and objectives. Strategy formulation is the process of deciding what to do, while
strategy implementation is the process of making those decisions work. Together, they ensure

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that the organization not only has a clear direction but also effectively executes its plans.

In summary, strategy formulation and implementation are integral parts of strategic

management. They involve setting a clear direction for the organization, developing plans to
achieve strategic objectives, and ensuring that these plans are effectively executed. Through
careful planning, resource allocation, and performance management, organizations can
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achieve their long-term goals and maintain a competitive advantage.

ASPECTS OF STRATEGIC IMPLEMENTATION

Procedural implementation
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●​ What it is: The process of adhering to the rules, regulations, and procedures that
govern how the organization operates.
●​ Key activities: Understanding and following government regulations, licensing
requirements, and any other relevant procedural aspects.
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Resource allocation

●​ What it is: Committing the necessary resources—such as funds, equipment, and

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personnel—to support the strategic plan.

●​ Key activities: Procuring resources and assigning them to the specific projects and
initiatives defined by the strategy.

Structural implementation

●​ What it is: Adjusting the organization's structure to align with the strategy.
●​ Key activities: Redesigning the organizational chart, defining reporting relationships,
and grouping individuals into units or departments to meet strategic requirements.

Behavioral implementation

●​ What it is: Addressing the human elements of strategy execution, including

leadership, culture, and employee behavior.
 ●​ Key activities: Ensuring the leadership style, corporate culture, values, ethics, and
employee motivation are all supportive of the strategy.

Leadership implementation

●​ What it is: A critical component of behavioral implementation, focusing on the role

of leaders in driving the strategy.
●​ Key activities: Providing vision, motivating employees, and managing change
effectively to ensure the strategy's success.

BUSINESS ETHICS:

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Business ethics involves the moral principles guiding companies and individuals in the
business world. These principles go beyond legal obligations, establishing a code of conduct

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that promotes trust and integrity at every level of a business. By understanding and
implementing effective business ethics, companies can enhance their reputation, foster
customer loyalty, and achieve long-term success.

●​ Business ethics are foundational principles that guide the behaviour and
decision-making of companies and individuals, promoting trust and fairness in
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business operations.
●​ Ethical business practices not only comply with legal standards but also enhance a
company's reputation, fostering customer trust, brand growth, and long-term success.
●​ A comprehensive understanding of business ethics includes a focus on leadership,
accountability, transparency, and environmental concerns, among other key principles.
●​ Companies with strong ethics programs can better avoid scandals and legal issues,
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benefiting from increased customer and investor confidence.

●​ Corporate social responsibility is a crucial aspect of business ethics, as it emphasizes
balancing stakeholder needs with a commitment to societal welfare and sustainability.
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Key Principles Driving Business Ethics

●​ Leadership: The conscious effort to adopt, integrate, and emulate the other 11
principles to guide decisions and behaviour in all aspects of professional and personal
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life.
●​ Accountability: Holding yourself and others responsible for their actions.
Commitment to following ethical practices and ensuring others follow ethics
guidelines.
●​ Integrity: Incorporates other principles—honesty, trustworthiness, and reliability.
Someone with integrity consistently does the right thing and strives to hold
themselves to a higher standard.
●​ Respect for others: To foster ethical behaviour and environments in the workplace,
respecting others is a critical component. Everyone deserves dignity, privacy, equality,
opportunity, compassion, and empathy.
●​ Honesty: Truth in all matters is key to fostering an ethical climate. Partial truths,
omissions, and under or overstating don't help a business improve its performance.
Bad news should be communicated and received in the same manner as good news so
that solutions can be developed.
●​ Respect for laws: Ethical leadership should include enforcing all local, state, and
federal laws. If there is a legal grey area, leaders should err on the side of legality
rather than exploiting a gap.
●​ Responsibility: Promote ownership within an organization, allow employees to be
responsible for their work, and be accountable for yours.
●​ Transparency: Stakeholders are people with an interest in a business, such as
shareholders, employees, the community a firm operates in, and the family members
of the employees. Without divulging trade secrets, companies should ensure
information about their financials, price changes, hiring and firing practices, wages
and salaries, and promotions are available to those interested in the business's success.
●​ Compassion: Employees, the community surrounding a business, business partners,
and customers should all be treated with concern for their well-being.
●​ Fairness: Everyone should have the same opportunities and be treated the same. If a

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practice or behaviour would make you feel uncomfortable or place personal or
corporate benefit in front of equality, common courtesy, and respect, it is likely not
fair.

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●​ Loyalty: Leadership should demonstrate commitment to their employees and the
company. Inspiring loyalty in employees and management ensures that they are
committed to best practices.
●​ Environmental concern: In a world where resources are limited, ecosystems have
been damaged by past practices, and the climate is changing, it is of utmost
importance to be aware of and concerned about the environmental impacts a business
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has. All employees should be encouraged to discover and report solutions for
practices that can add to damages already done.

The Importance of Business Ethics:

There are several reasons business ethics a are essential for success in modern
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business. Importantly, ethics programs set a code of conduct guiding personnel

behaviour, from executives to new employees. When all employees make ethical
decisions, the company establishes a reputation for ethical behaviour. Its reputation
grows, leading to benefits like:
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●​ Brand recognition and growth

●​ Increased ability to negotiate
●​ Increased trust in products and services
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●​ Customer retention and growth

●​ Attracting talent
●​ Attracting investors

CORPORATE CULTURE
Corporate culture shapes employee behavior, decision-making, and interactions with
colleagues, customers, and stakeholders. Corporate culture is the personality of an
organization. It includes both formal elements, such as policies and procedures, and
informal elements, such as unwritten rules and social norms. This culture influences
how employees approach work, solve problems, and collaborate.
 Corporate culture is not static; it evolves and can be influenced by leadership styles,
industry trends, and societal changes. A strong corporate culture positively impacts a
company's success, affecting employee satisfaction, retention rates, productivity, and
overall business performance.
The Importance of Corporate Culture
A strong and favorable corporate culture can be a fundamental driver of
organizational success and sustainability, creating measurable business advantages
like the following:
●​ Employee performance and retention: Organizations with highly engaged teams see
much less turnover and absenteeism, and more productivity compared to
low-engagement teams, according to a 2024 Gallup report.4 This reduces the costs

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and disruption associated with frequent hiring cycles, and it can translate direct ly into
better financial outcomes, with highly engaged businesses seeing 23% more

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profitability than less-engaged counterparts.5
●​ Competitive differentiation: Strong corporate cultures create unique identities that
attract both customers and talent, providing an edge that competitors can't easily
replicate.1
●​ Organizational resilience: Companies with cultures built on trust and transparent
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communication navigate problems and crises more effectively. These organizations
demonstrate greater adaptability during market shifts and industry transformations.6
●​ Innovation and growth: When employees feel able to share ideas and take calculated
risks, creativity is rewarded rather than penalized.
Types of Corporate Culture
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The four main types of corporate cultures—clan, adhocracy, market, and hierarchy—derive
from the competing values framework developed by researchers Robert Quinn and Kim
Cameron in the 1980s. This framework emerged from research on organizational
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effectiveness and has become one of the most influential and widely used.

Clan Culture
Clan culture emphasizes collaboration, teamwork, and a family-like atmosphere. It fosters
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strong relationships, employee loyalty, and open communication. Organizations with clan
cultures often have flat hierarchies and focus on mentorship and employee well-being. This
culture type is particularly effective in small to medium-sized businesses and family-owned
companies.

Adhocracy Culture
Adhocracy culture prioritizes creativity, and adaptability. It encourages risk-taking and quick
decision-making to stay ahead in rapidly changing markets. Employees are empowered to
share ideas and challenge the status [Link] culture type is common in tech startups and
industries that require constant change.
Market Culture
Market culture is results-oriented and focuses on competition and achieving measurable
goals. It emphasizes profitability, market share, and customer satisfaction. Employees are
driven to excel but also often work in a high-pressure environment. This culture type is
common in highly competitive industries.

Hierarchy Culture
Hierarchy culture values structure, clear roles, and established procedures. It emphasizes
efficiency, stability, and predictability. Decision-making is typically centralized, with a clear
chain of command. This culture type is often found in large corporations and highly regulated
industries such as banks and utilities.

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UNIT-5

FUNCTIONAL IMPLEMENTATION
 1.​ Functional Strategy: Functional strategies are defined as those strategies that
achieve goals and objectives in a specified functional area and allot different
resources among various processes within that functional area so as to achieve
the business and corporate objectives in whole. Functional strategies are a part
of the business and corporate strategies. Let’s take an example to understand
this in a better manner. Suppose a company opts for the cost leadership
business strategy for one of its businesses. So now all actions and procedures
should be focused on how to achieve a low-cost structure and decrease the
overall cost. Now all the functional areas of marketing, finance, operations,
human resource and information technology will contribute in achieving the
objective of lowering the cost in their own specialized manner. This will make
the overall cost leadership strategy successful for the company.
2.​ Functional plans & policies: Glueck suggested that there are five reasons

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why a company needs functional plans and policies. The reason for developing
functional plans and policies are:

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1) The strategic decisions are implemented throughout the organisation
uniformly.

2) All activities of the organisation can be controlled easily as strategies are

sub divided in smaller plans and policies.
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3) The time taken by the functional mangers in decision making is reduced
as plans make everyone clear of what is to be done and in what manner.

4) Similar situations that occur in different functional areas are handled in a

consistent manner.
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5) Coordination within various functional areas can be achieved easily

NATURE OF FUNCTIONAL PLANS AND POLICIES: To achieve

effectiveness, it is very important for the strategic management to choose the
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right way in which the strategies are implemented. As functional strategies are
a part of corporate and business strategies, thus it is very critical for the
company to design these strategies in a proper manner and within the
framework of the strategies and plans set at the higher level. Functional
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strategies constitute various sub-functional plans and policies which are

equally important namely:

Marketing plan and policies

Financial plan and policies

Operations plan and policies

Human resource management plan and policies

Information Technology plan and policies

 3.​ Marketing Plans & policies: Plans and policies of the marketing have to be
created and put into practice on the basis of the 4 P’s of marketing mix:

Product: Product for an organisation means that goods and services which it
is offering in the market. Plan and policies related to product are based on the
various characteristics the product poses such as its quality, quantity, features,
packaging, brand name etc.

Price: Price is the money or consideration that the customers pay in exchange
of goods or services. It is important to the seller as it represents the returns on
investment the seller has made on developing the goods or services it offers.

Place: Place or distribution is the process by which goods or services are

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made available to the end user. Distribution plans and policies include issues
related to inventory, transportation, store management, selection of channel
etc. In today’s competitive environment, the success of the company all

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depends upon the efficiency and effectiveness of the distribution system.
Supply chain management and customer relationship management are the
latest building blocks of the companies that help them to perform more
competently.

Promotion: Promotion deals with the entire set of communication activities

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that create awareness to the prospective buyer about the company and product
or service. The promotion mix consists of four elements namely: Advertising,
Personal Selling, Sales promotion and publicity. We can take an example of
the promotion of ‘Clean India or Swach Bharat’. The ‘Swach Bharat’
promotion campaign is a mix of both print and media base. It encourages
people to clean their surroundings and promote cleanliness so as to market
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internationally and nationally brand Clean India.

4.​ Financial plans & policies: The financial plans and policies of the company
are related to the availability, usage and management of resources and funds.
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For effective implementation of strategies it is critical to formulate plans and

policies in these areas efficiently.

i. Sources of funds: Plan and policies that deal with sources of funds are
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related to financing decisions. The major decision includes capital structure,

procurement of long term and short-term funds and relationship of the
company with banks, lenders, borrowers and financial institutions. Out of the
entire most important factor is the procurement of long and short-term fund.
There are various financing needs of the company some are long term and
some short term for which it has different sources of funds available. To meet
its short-term needs, the company can go for borrowing through commercial
papers or can borrow money from its creditors and to ful-fill its long-term
needs, it can take help of the loans and advances offered by various banks and
financial institutions.

ii. Usage of funds: The plan and policies under this category deals with the
investment decisions. As investments are related to the future and future is
always uncertain thus the investment decision should be taken very cautiously
 taking all the possible risk involved into consideration. The essential factors
regarding with plan and policies are made are; capital investment, investment
decisions related to fixed asset and current asset, dividend decision and
relationship of the company to its shareholders. This policy is important as it is
related to the efficiency and effectiveness of resource and funds employment
in the process of strategy implementation.
​
Dividend decision is also a key area of the company’s financial policy as it
affects the cost of capital of the business. A dividend policy in the public
sector is governed by the Government of India. All profit-making companies
are obligatory to declare the higher of a minimum dividend of 20 percent on
equity or a minimum of 20 percent of post-tax profit. The private sector is
under no such obligations of declaring its dividend.

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iii. Management of funds: The area deals with the decisions related to
orderly implementation of financial management. The major factors that are

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under this decision are: management control system, cash credit and risk
management, tax planning, budgeting and cost control and reduction. The
management of funds is a vital aspect in strategy implementation as it relates
the funds and objectives of the company and makes sure that there is an
optimum utilization of resources.
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5.​ Personnel Plans & policies:

Plans and policies related to personnel system deals with manpower planning,
selection, development, compensation, communication and appraisal. Mostly
companies depend upon the personnel system for implementing strategies like
in case of Hindustan Petroleum Corporation Ltd. (HPCL). When oil sector
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deregulation came, it found itself to be not fit for the competitive market. So,
the company reformulated its HR system and came up with a transparent
appraisal system, reduction in transfers to facilitate specialization and
developed an effective communication system. Also Maruti-Suzuki has also
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adapted many of the Japanese oriented functional systems like suggestion

schemes and quality circles.

6.​ Information Technology Plan and Policies: Information capability factors

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related to design and management of the flow of information within and from
outside into, an organisation. The improvement of information technology and
growth of information management as a separate specialized function has
facilitated many organisations complied and organise the vast data available
with the company. By digitalizing the bulk communication and data, the
company can now concentrate on other important aspects and work more
efficiently and effectively.

7.​ Operational Plans & policies: The plan and policies under this category are
related to production system, operational planning and control and research
and development (R&D).
 [Link] system: The production system is related to the capacity,
location, layout, product or service design, work systems, degree of
automation etc. the plans and policies of production system are critical as it
affects the main objectives of the company. Strategy implementation have to
include the production system as it directly affects both the decisions that are
long term in nature and the day-to-day operational decisions.

ii. Operation Planning and control: Plans and policies of Operation

planning and control are related to Aggregate production planning. The
objective is optimum utilization of resources and to see that the day-to-day
operations are in line with the long- term objectives of the company.

iii. Research and Development (R&D): Plan and Policies for R&D deal

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with product development, personnel and facilities, level of technology,
technological collaboration and support etc. R&D is an important area in
Indian context as the companies have access to variety of sources of

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technology including foreign sources. Also, as India has highly qualified and
low-cost engineering skills, India is creating a center of attention through its
R&D for many foreign companies. R&D is also used as a foundation tool for
strategy implementation especially in case of diversification. Furthermore,
R&D can also be used as a competitive strategic instrument.
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STRATEGIC EVALUATION AND CONTROL

Strategic evaluation and control is the final phase of strategic management, where an
organization measures its performance against its strategic objectives and takes corrective
actions if needed. This process involves setting standards, measuring actual results,
identifying deviations, and adjusting strategies to ensure the organization stays on track and
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adapts to a changing business environment.

Key activities
●​ Setting performance standards: Establishing benchmarks against which actual
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performance will be measured.

●​ Measuring actual performance: Tracking key performance indicators to assess
progress.
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●​ Analyzing deviations: Comparing actual performance to the established standards to

identify any gaps or variances.
●​ Taking corrective action: Implementing changes to the strategy or its execution
when performance does not meet objectives.
Importance

●​ Aligns with objectives: Ensures that the organization's activities continue to support
its overall mission and vision.
●​ Enhances decision-making: Provides managers with the data and insights needed to
make effective strategic choices.
●​ Improves agility: Allows the organization to respond to market changes and
unexpected challenges by making timely adjustments to its strategy.
 ●​ Provides feedback: Generates lessons learned that inform future strategic planning.

Types of control
●​ Premise control: Regularly checks if the underlying assumptions on which the
strategy was built are still valid.
●​ Strategic surveillance: Monitors a broad range of events inside and outside the
organization that could impact the strategy.
●​ Implementation control: Focuses on monitoring the execution of the strategy to
ensure that it is being carried out as planned.
●​ Special alert control: Deals with unexpected and potentially threatening events that
require an immediate response.

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